Diversified Capital Management : Alpha Index

Summary

The Alpha Index program was designed to mimic many of the benefits of being long benchmark indices while mitigating many of the risks associated with them. With the major benchmark US indices near all-time highs, we believe mitigating the risk of a downturn has never been more important.

Investment Strategy

The program specializes in Long Only, but not ONLY and ALWAYS long. DCM’s managers use their market expertise to evaluate over and under bought market conditions and adjust the portfolio exposure accordingly. Additionally the program will hedge the long positions in a number of ways. Including; selling out of the money calls, purchasing puts, put spreads and selling call spreads to enhance income generation and provide a partial hedge to downside risk.

Risk Management

Although the Alpha Index program only goes long the major benchmark indices, it’s not ALWAYS long and it’s not always ONLY long. In fact, the program has two distinct methods of managing it’s long index exposure. The first is by adjusting it’s long holdings. Alpha Index has three potential weightings of the indices it purchases:Flat, Long, Over Weight The second method is hedging positions with options or calendar spreads. One method we implement is holding Short Call positions. However, if conditions merit, we will also hold long puts, put spreads and even hold a short futures calendar/cross-index spread to hedge our risk.