Thanks, Indahook.
In the Schindler Fund we purposely take on a lot of leverage and expect big drawdowns. I tell our investors we expect a lot of volatility in the short term but we expect to make money in the long term. (No guarantees, of course.) Even though we are in a drawdown, we are still up over the past 12 months and since inception.
Look at it this way... If you want a Schindler Fund investment that has similar volatility as a mutual fund, then put 25% of your money in the Schindler Fund and 75% in a money market fund. Your current drawdown on your whole investment would be 25% as large, or only down 10%. But your 2002 returns would have only been +24% instead of +97%. We made a business decision to work the money we have under management hard and to accept high volatility. Investors can always invest fewer dollars with us if they want less dollar volatility.
The alternative would have been to trade the Schindler Fund at a much lower volatility and get smaller returns. But why charge investors 2% management fees on money investors could be doing something else with?? There are plenty of hedge funds that make small returns with low volatility. That's not our niche, though. Our primary objective (as posted on our homepage) is maximum absolute return.
All our strategies are performing within expectations and with a 52% return for the 20 months since inception (versus -17% for the S&P 500 over the same period), I'm certainly not withdrawing my money.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RETURNS.
