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The Swan Defined Risk U.S. Small Cap Fund

Applying the DRS to U.S. Small Cap Companies

The Swan Defined Risk U.S. Small Cap Fund seeks to address common investor concerns, such as seeking growth while mitigating risks when investing in small to mid-sized companies in the United States via the Russell 2000 Index ETF (IWM). 

The fund allows investors to seek participation in growth opportunities of small-cap stocks while also seeking to dampen losses during periods of major market losses that can be experienced when investing in these smaller, growth-oriented companies. 

Navigating market uncertainty. Capitalizing on market weakness.

 

The market is unpredictable, making it difficult to plan long-term outcomes.

That’s why we believe reducing downside risk can help smooth out returns over market cycles and taking advantage of opportunities in times of extreme market weakness can significantly impact wealth creation over the long term.

With this in mind, we developed our Defined Risk Strategy in 1997 as a way to offer our clients a distinctive, innovative hedged equity approach that remains passively invested in equities to pursue long-term growth of capital while actively managing the hedge to capitalize on large moves in the equity market: raising the hedge level after large gains and unlocking the hedge value to buy more equity shares after large market declines.

STRATEGY

SWAN DEFINED RISK U.S. SMALL CAP FUND OVERVIEW

 

Class A: SDCAX | Class C: SDCCX | Class I: SDCIX

Based on our Defined Risk Strategy, the Swan Defined Risk U.S. Small Cap Fund seeks superior risk-adjusted returns over a full market cycle with potentially less downside risk and volatility than the fund benchmark, Russell 2000 Index. See the disclosures below for more information.

The goal: is to achieve long-term growth of capital, while minimizing the downside risk of U.S. Small Cap equity markets.

Key elements of our Always Invested, Always Hedged strategy include:
> Always invested using low-cost ETFs
> Designed to seek long-term growth of capital
> Always hedged using long-term put options
> Aims to dampen losses during major market downturns

Fact Sheet

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Prospectus

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Defined Risk Strategy

 
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Other Defined Risk Funds

 
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PROCESS
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Invest in Equities
  • Always Invested in ETFs or a basket of stocks that closely represent the Russell 2000 Index
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Hedge the Equities
  • Always Hedged by actively managing long-term put options (LEAPs), generally one to two years to expiration, initially
  • Purchased at, or near near-the-money

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Seek Additional Return

  • Actively managing shorter-term options portfolio
  • Utilizing a disciplined, time-tested approach
PERFORMANCE
Q2_2024_Performance_Swan-Defind-Risk-SC-Fund

Performance shown is historical and does not guarantee future results. Current performance may be lower or higher. Because share price, principal value, and return will vary, you may have a gain or loss when you sell fund shares. Performance assumes the reinvestment of dividends and capital gains. “Without sales charge” performance does not reflect the current maximum sales charge. Had the sales charge been included, the Fund’s returns would have been lower. Class I shares have no sales charge and may be purchased by specified classes of investors. The Russell 2000 Index is designed to measure the equity market performance of U.S. small-cap to mid-cap companies. You cannot invest directly in an index or average. For performance information current to the most recent month end, please call (877) 896-2590. Maximum sales charge for Class A Shares is 5.50%. The fund’s investment adviser has contractually agreed to reduce its fees and/or absorb expenses of the fund, at least until November 1, 2024. Please review the fund’s prospectus for more information regarding the fund’s fees and expenses.

PORTFOLIO MANAGERS
Randy Swan

Randy Swan

Lead Portfolio Manager, Founder, President

Rob Swan

Rob Swan

Portfolio Manager, Chief Operations Officer

Chris Hausman, CMT®

Chris Hausman, CMT®

Senior Portfolio Manager, Managing Director-Risk

Randy Swan started Swan Global Investments in 1997, looking to supply investment management services that were not available to most investors. Early in his financial career, Randy saw that options provided an opportunity to minimize investment risk.

Randy Swan and Rob Swan have been managing the Funds since inception.

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Fund Documents

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XBRL Files

CONTACT

Swan Capital Management Logo

Swan Capital Management

1099 Main Avenue, Suite 206
Durango, Co 81301
Tel: 970.382.8901

Gemini Fund Services, LLC

PO Box 541150
Omaha, Ne 68154
877.896.2590

Direct Contacts

For general questions or support

Toll Free
P:  866-617-7926
E: Email Client Services

For advisors or institutions with questions

P: 970-382-8901, ext. 114
E: Email

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Disclosures

ETFs are subject to investment advisory and other expenses, which will be indirectly paid by the Fund. As a result, the cost of investing in the Fund will be higher than the cost of investing directly in ETFs and may be higher than other mutual funds that invest directly in stocks. ETFs are subject to specific risks, depending on the nature of the Fund.
Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges. Swan may invest in index ETFs as an underlying asset within each mutual fund, such as:
SPY: The SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index.
EEM: The iShares MSCI Emerging Markets ETF seeks to track the investment results of an index composed of large- and mid-capitalization emerging market equities.
IWM: The iShares Russell 2000 ETF seeks to track the investment results of an index composed of small-capitalization U.S. equities.
EAFE: The iShares MSCI EAFE ETF seeks to track the investment results of an index composed of large- and mid-capitalization developed market equities, excluding the U.S. and Canada.
The use of leverage, such as that embedded in options, could magnify the Fund’s gains or losses. Written option positions expose the Fund to potential losses many times the option premium received.
The adviser’s dependence on its Defined Risk Strategy process and judgments about the attractiveness, value and potential appreciation of particular ETFs and options in which the Fund invests or sells may prove to be incorrect and may not produce the desired results.
Purchased put options may expire worthless and may have imperfect correlation to the value of the Fund’s sector ETFs. Written call and put options may limit the Fund’s participation in equity market gains and may amplify losses in market declines. The Fund’s losses are potentially large in a written put or call transaction. If un-hedged, written calls expose the Fund to potentially unlimited losses.
Investments in underlying funds that own small and mid-capitalization companies may be more vulnerable than larger, more established organizations. Investments in foreign securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and different governmental and accounting standards. In addition to the risks generally associated with investing in securities of foreign companies, countries with emerging markets also may have relatively unstable governments, social and legal systems that do not protect shareholders, economies based on only a few industries, and securities markets that trade a small number of issues.
Investors should carefully consider the investment objective, risks, charges and expenses of the Swan Defined Risk Funds. Mutual funds involve risk, including possible loss of principal. There is no guarantee the Fund will meet its objective. This and other information is contained in the prospectus and should be read carefully before investing. For a prospectus please call Swan Defined Risk Funds at (877) 896-2590. The Funds are distributed by Northern Lights Distributors, LLC, member FINRA / SIPC. Northern Lights Distributors, LLC is not affiliated with Swan Capital Management, LLC, Swan Global Management, LLC, or Swan Global Investments, LLC. Swan Capital Management, LLC, Swan Global Management, LLC, and Swan Global Investments, LLC are affiliated entities. 6002-NLD-1/6/2015