Bridgeton Fund Management, LLC : Bridgeton Tactical Advisors Fund

Summary

Bridgeton Tactical Advisors Fund, LP (BTAF) provides risk managed and cost efficient access to Managed Futures. BTAF seeks to profit from price trends in a diversified portfolio of futures contracts by combining robust trend following methods with an innovative risk management approach. Global equity indexes, global interest rates, currencies, metals, energy and agricultural futures contracts are traded in the portfolio. In addition to low management fees, BTAF has no punitive investment constraints such as lock-ups and high incentive fees. In October 2014, Bridgeton Fund Management, LLC, introduced a streamlined structure to the Bridgeton Tactical Advisors Fund (“BTAF”) which will sharply reduce the expense hurdle to investors. Additionally, BTAF’s portfolio process was enhanced. The Fund will continue to utilize diversified momentum and trend following models, however, overlaying these strategies is a new cohort of risk management methods designed to sharply reduce volatility and drawdown.

Investment Strategy

The Fund’s investment process combines a diversified set of strategies that are active across multiple markets, including global equity indexes, global interest rates, currencies, metals, energy and agriculturals. During periods when trends are short in duration, the risk to return relationship may be negatively skewed. To mitigate downside risk, Bridgeton deploys risk budgeting strategies, volatility filters and trading models designed to profit from congested price action. Conversely, when the macro trading environment supports large price moves, Bridgeton utilizes option strategies to hedge or protect profits earned – a key differentiator in the managed futures space and unique to Bridgeton.

Risk Management

We believe risk management is our team’s principal challenge. How Bridgeton creates value within it funds and the investor’s experience with these funds is rooted in our risk management philosophy. Our risk process pivots around a central question: is the investor being sufficiently compensated for the risk they are assuming? Once this question is answered in the affirmative, we shift our focus to constructing a diversified basket of these exposures. We utilize a mosaic approach to risk calculation. We constantly monitor notional position size, contract exposures, standard deviation, average trading range, VaR, drawdown and rolling “edge” metrics (Kelly criteria). We have a morning risk-run and an evening risk-run. Summary sheets are distributed to the portfolio team after each run. The degree of leverage is determined by the coherence/correlation of signals generated by the models. If the Fund’s trading strategies are producing highly correlated signals (long or short) the amount of leverage employed will increase. In response, our risk management protocols are designed to identify and govern this form of portfolio exposure.