IASG continually works for you as it searches for great talent and the best places for its clients to allocate their capital, based on specific investment goals and risk tolerances. A new public Commodity Trading Advisor (CTA) has surfaced recently that we feel may be a great fit as part of your overall investment portfolio. Managed by John Matthew Peluse, Esulep LLC MAX looks to continue the success that has been realized in Esulep’s related, comparably-run private Permo Fund. Matt Peluse has provided consistent returns for his investors for over six years with his “singles versus home runs,” risk-averse philosophy. He would rather invest in a greater number of higher percentage, lower yielding strategies than risk attempts at a few big winners. While there is still a great deal of risk inherent with any CTA, Esulep has developed time-tested ways to mitigate risk and accept small gains that add up to larger returns over time. Its new CTA wing, Esulep LLC MAX (“MAX”), is now open to the public, looking to acquire a new 10M of assets under management by the end 2010, and operating under a CFTC 4.7 exemption, streamlining the account opening process. As only Qualified Eligible Participants (QEPs) may participate in the investment program through this CFTC exemption, please visit the NFA website or contact IASG if you are unsure if you qualify.

MAX’s investment program employs risk-averse, continually re-engineered strategies to return approximately two percent per month, or about twenty percent per year, regardless of market conditions. As displayed on our website, “[they] invest in market direction, or lack thereof, using options and synthetic futures positions” and currently invest solely in the S&P 500 equity index (though the correlation to this actual index is almost zero, by design). The current program can scale close to 100M before the strategies and risk profiles would be tailored for additional markets as needed, and this expansion is not anticipated to occur in 2010.

Please remember that futures investing is not suitable for everyone, and there is significant risk of loss with any futures investment program. The past results discussed herein certainly do not guarantee future results, and they have already taken place. The recent media coverage of financial derivatives, credit swaps, high frequency trading and a host of other non-mainstream investment vehicles has been somewhat confusing these past two years, even to many professionals in the business. To calm the public’s fear, it is possible that regulators in America have been pressured into making hasty decisions and rushed to combat one risk by developing another one shortly down the road. Add this to the uncertainty in corporate earnings, accounting scandals, and the surfacing of outright criminals, and it is no wonder people are experiencing debilitating levels of stress when making critical investment decisions.

IASG continually looks for those managers and funds that are able to weather these storms and make sense of the next complicated thing that may rear its ugly head. MAX keeps its investment process simple. It utilizes only listed, U.S. futures and options on futures, and currently only deals with the broadest market available, the S&P 500 index. Esulep’s private fund, Esulep LLC Permo Fund, which employs strategies very comparable to Esulep LLC MAX’s, has had an average 18.41% RoR, with just under a 3% standard deviation of monthly returns. Dating back over six years, Mr. Peluse’s investment programs have yielded an average return of just under 20% per year for his private investors. While there may be significant risk involved with any investment these days, and futures’ investment is not suitable for everybody because of the risk of loss beyond the total capital invested, Mr. Peluse’s new public CTA opens the door for qualified eligible participants (QEPs) to benefit from his years of engineering and refining of successful strategies that are better able to adapt to market conditions.


IASG believes Esulep LLC MAX captures the spotlight with its novel approach to profit engineering and risk-averse goal of small, consistent, positive monthly gains. Their profile on our website states they ”favor capital conservation during times of unpredictability and can accommodate large market moves.” With this duality, the management team seeks small, predictable, consistent gains, while scaling back capital deployment during times of uncertainty. Normally, capital is deployed multiple times during the month, most often when optimal proprietary conditions are present. Typically, less than half of available margin is required by the positions, which generally are open between 15 and 90 days. Mr. Peluse shared with IASG that better suited months have tended to return just above 2% over time in his comparable private Permo Fund, while the less fitting months have tended to be closer to just under 1.5%. He also explained to us the poor hedging strategy that befell September and October of 2009, and this can be furnished to any investor during the due diligence process. Their overall strategy anticipates, though does not rely on, large moves that may be either destructive or offer “home run” returns to other funds. The smaller than average gain in February of 2009 best exemplifies their capital conservation philosophy, and the positive return in October of 2008 is the best example of how they were able to manage a large, “fat- tail,” volatile market environment. While past results are not necessarily indicative of future results, the Permo Fund’s monthly returns have demonstrated Esulep’s commitments to quality and adaptive re-engineering that have made its strategies successful over time. As part of their rigorous risk management (displayed on our website), they found that “backtesting shows that approximately 99% of the months back to 1950 work well under [their] risk management, with the other 1% returning to the high water mark within 6 months (at most).” September of 2009 was not part of that 1%, and the negative return was due to a poor hedging strategy that is no longer used. The most recent “poor” months for their system were October of 2008, January of 2008, and September of 2001, the latter two which could have hypothetically been handled as well as October of 2008, though, naturally, there is no guarantee of that.

Seeing the markets crumble these last two years has left many investors and traders devastated. It is possible that longer-term buy-and-hold philosophies, that may have worked in the 20th century, will provide little comfort to those looking to retire in the 21st. In fact, the broad market S&P 500 itself just ended a whirlwind decade with over a 10% negative price return and ten years of opportunity gone by from 1/1/2000 through 1/1/2010, as shown by reputable SPX index quotes, such as those from Reuter’s. Consistent, steady gains have been desired for centuries, though finding those firms and those managers nimble enough to be able to stand the test of time has been difficult. In decades past, those managers may have only been employed by elite Wall Street firms; in recent times, some of those firms have even found difficulty producing positive years. Esulep LLC MAX opens the door for qualified investors, who are able to bear such risks that are associated with its investment program, to sleep better at night knowing their money is being put to work in a risk-controlled, market neutral, absolute-return environment, utilizing a plethora of techniques engineered to combat whatever challenges may surface in the years ahead.


Please feel free to contact and visit www.IASG.com directly with questions relating to Esulep LLC MAX, its managers, and investment program.