The Fund invests in total return swaps, which are used to gain leveraged exposure to a range of asset classes, including: US Stocks, Foreign Developed Market Stocks, Emerging Market Stocks, Real Estate, US Bonds, and Emerging Markets Bonds. The Fund’s positions are reported quarterly on Form NQ or Form N-CSR. As of July 31, 2018, the Fund held total return swaps with an aggregate notional exposure of $2,258M, referencing the following ETFs:
- SPDR S&P 500 ETF (ticker: SPY); notional value of $144M.
- Vanguard FTSE Developed Markets (ticker: VEA); notional value of $82M
- iShares MSCI EAFE ETF (ticker: EFA); notional value of $79M
- Vanguard FTSE Emerging Markets ETF (ticker: VWO); notional value of $105M
- Vanguard Real Estate ETF (ticker: VNW); notional value of $173M
- iShares Core U.S. Aggregate Bond ETF (ticker: AGG); notional value of $1,335M
- iShares JP Morgan USD Emerging Markets Bond ETF (ticker: EMB); notional value of $240M
The total return swap positions are collateralized with holdings of cash and U.S. Treasury Bills with maturities less than three months. The portfolio holdings information provided above is as of July 31, 2018, which is subject to change and may not reflect the Fund’s current holdings. The foregoing information should not be considered investment advice.
The Wealthfront Risk Parity Fund (the “Fund”) is managed by Wealthfront Strategies LLC (formerly known as WFAS LLC), a registered investment adviser and an affiliate of Wealthfront Advisers LLC (“Wealthfront Advisers,” the successor investment adviser to Wealthfront Inc.) Wealthfront Strategies LLC receives an annual management fee equal to 0.25% of the Fund’s average daily net assets. Northern Lights Distributors, LLC, a member of FINRA and SIPC, serves as the principal distributor for the Fund. Both Wealthfront Advisers and Wealthfront Strategies LLC are not affiliated with Northern Lights Distributors, LLC. FINRA and SIPC, serves as the principal distributor for the Fund. Both Wealthfront Advisers and Wealthfront Strategies LLC are not affiliated with Northern Lights Distributors, LLC.
Before investing in the Wealthfront Risk Parity Fund, you should carefully consider the Fund's investment objectives, risks, fees and expenses. This and other information can be found in the Fund’s prospectus. Please read the Fund's prospectus or summary prospectus carefully before investing. There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.
Investments in the Wealthfront Risk Parity Fund (the “Fund”) involve risk including possible loss of principal. There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses. The Adviser's assessment regarding the risk and correlation of the various asset classes and the Fund's exposure to leverage through the use of derivatives may prove to be incorrect and may not produce the desired results. Financial leverage will magnify, sometimes significantly, the Fund’s exposure to any increase or decrease in prices associated with a particular reference asset resulting in increased volatility in the value of the Fund’s portfolio. While such financial leverage has the potential to produce greater gains, it also may result in greater losses, which in some cases may cause the Fund to liquidate other portfolio investments at a loss to comply with limits on leverage and asset segregation requirements imposed by regulations or to meet redemption requests. The net asset value of the Fund while employing leverage will be more volatile and sensitive to market movements. The Fund’s investments in total return swap agreements also involves the risk that the party with whom the Fund has entered into the total return swap agreements will default on its obligation to pay the Fund. The Fund’s use of derivatives may cause the Fund to realize higher amounts of short-term capital gains than if the Fund had not used such instruments. Overall equity market risk, including volatility, may affect the value of individual instruments in which the Fund invests. In addition, the Adviser relies heavily on models and information and data supplied by third parties (“Models and Data”). Models and Data are used to construct sets of transactions and investments and to provide risk management insights. The Fund may be exposed to additional risks when Models and Data prove to be incorrect or incomplete. The Adviser is also newly established and has not previously managed a mutual fund. The Fund is a new fund and as such has limited performance history. The Fund is not suitable for all investors. The Fund should be utilized only by investors who (a) understand the risks associated with the use of derivatives, (b) are willing to assume a high degree of risk, and (c) intend to actively monitor and manage their investments in the Fund. Investors who do not meet these criteria should not buy the Fund. An investment in the fund is not a complete investment program.