Growth oriented investment strategies

Merus targets growth-oriented investment strategies that are typically not correlated to traditional (public) markets. These strategies are implemented in portfolios to grow the asset base. Many of these strategies are attractive on a stand-alone basis or as a component of a broader growth portfolio, while others can be utilized to hedge downside risk scenarios.

The strategies listed below are examples and may or may not be currently offered over the Merus Advisors investment platform.

Managed Futures Trend

The strategy uses a quantitative and systematic approach to analyze market relationships that generate buy and sell signals predicting the direction of different markets. The portfolio utilizes trend following, mean reversion, relative value and pattern recognition models across varying time frames. Diversification is across four asset classes: fixed income, currencies, equity indices and commodities. Historically, the strategy exhibits a negative correlation to equities during periods of chaos. 

Long Short Equity

Long Short Equity involves establishing long positions in stocks that are expected to increase in value and short positions in stocks expected to decrease in value.  The stocks are evaluated on a fundamental basis and net market exposure is typically low (20-50%) but usually long.  The strategy uses minimal leverage, if any at all, and constructs the portfolio with a limited number of securities on either side of the portfolio resulting exposure to high conviction names.  The lower exposure of the strategy limits market risk (beta) and is most rewarded within environments where fundamentals are recognized.

Event Driven

These hedge funds trade across the capital structure (debt or equity) establishing long and short positions. Management expertise in complex financings and restructuring scenarios enable them to identify event driven, value propositions with asymmetric risk-return profiles. The target investments possess catalysts that when triggered, unlock value that drives returns. The catalyst driven nature of the strategy causes it to have low correlation to traditional securities markets.

Long Short - Options Based

A relative value options trading strategy, the manager looks to sell over-priced puts and calls that have strike prices at least two standard deviations away from the underlying index, the S&P 500.  Fund performance is linked to implied volatility levels which tend to fluctuate with investor anxiety levels.  The strategy is most effective in moderate volatility environments when option premiums are substantial but not extraordinary. 

Statistical Arbitrage

The strategy aims to capture transitory mis-pricings, relative to a factor model of fair value, across a large number of liquid exchange-traded equities. The model includes fundamental as well as price history factors. The strategy comprises regional underlying books on a global basis, where each portfolio is structured as market neutral by holding an equal market value of long and short positions.

Relative Value Volatility Trading

The strategy buys and sells options on single stocks, ETFs and indices based on their assessed under or over valuation.  Decades of experience and highly sophisticated pricing systems allow for rapid analysis of positions or portfolios where others are looking to take on or unload risk.  The strategy has and is projected to perform well in the future within market selloffs when volatility rises and the spread between implied and realized volatility measures spike.