SilverPepper Long/Short Emerging Markets Currency Fund.

Discovering behavioral price-patterns in emerging-markets currencies

Distinguishing characteristics of the SilverPepper Long/Short Emerging Markets Currency Fund:

Unique. America’s only currency mutual fund.
Currencies have historically exhibited the lowest correlation to other major asset classes, making the Fund a potentially attractive diversifier.
The Fund’s secret sauce lies within its quantitative model’s ability to recognize and potentially profit from the Behavioral Price Patterns of greed and fear that are endemic to emerging-markets currencies.
- Stemming from the desire to earn a higher rate of return, investors purchase the currency of an emerging-markets country, which typically offer higher rates of interest than do the currencies of developed-markets countries. From these purchases, an ascending price pattern develops, reflecting the behavioral economic motive of greed. (We buy or go “long” the emerging-markets currency when greed patterns are matched).
- As a currency becomes overbought, selling ensues. This descending behavioral price pattern reflects the emotion of fear. (We sell or “short” the emerging-markets currency when fear patterns are matched).
The Fund seeks to profit from EM currencies in two ways.
- By exploiting the interest-rate differential (the “carry”) between the U.S. dollar and a select group of emerging-markets currencies, and
- By taking long or short currency positions in an attempt to profit from either an increase or decrease of an emerging-market currency’s price relative to the U.S. dollar.
Together, capturing both carry and changes in price present an excellent opportunity to potentially generate positive returns, uncorrelated with stock and bond markets.
The strategy is “absolute-return” oriented, attempting to profit in all market environments. It seeks equity-like returns with equity-like volatility.
The Fund may help solve three diversification problems. It may:
- Diversify a traditional asset-allocation mix of stocks and bonds,
- Replace or supplement an existing emerging-markets stock or bond allocation; or
- Potentially increase the expected return profile (and volatility as well) of a portfolio’s “Absolute-Return Bucket.”
Managed by Currency Experts. Portfolio Managers, John Dean and Ross Taylor, have held senior leadership roles at major global banks and trading firms, including Natixis, Bear Stearns, Currency Insights, and Donaldson, Lufkin & Jenrette before founding Absolute Return Strategies, Ltd in 2006 in London.

America’s Only Currency Mutual Fund

Why Emerging Markets Currencies?

A huge, inefficient, and largely unexplored asset class that offers opportunities for profit seekers.

Key takeaways about emerging-markets currencies as an asset class:

Currencies are a distinct asset class. Different from stocks and bonds, currencies aren’t securities but instead a medium of exchange, or legal tender.
Currency markets are the largest and most active market in the world, with nearly $6 trillion changing hands globally, every day.
Despite being huge and liquid, currency markets may not be an “efficient” market. Why?
- Approximately 70% of global currency transactions are not primarily profit motivated. For example,
- Tourists exchange currencies for vacations,
- Companies exchange currencies in the daily conduct of their business, such as purchasing raw materials, and
- Central Banks constantly manage, or manipulate, the value of their currencies to achieve both economic and political goals.
These currency transactions create inefficiencies and may present opportunities for profit-seeking traders.
The higher rates of interest associated with emerging-markets currencies offer a wider array of profit opportunities than do developed or G-10 currencies, many of which tend to more broadly co-ordinate rates to impede currency competition.
As a distinct asset class, currencies historically have low or negative correlation with stock and bond markets, making them a strong diversification candidate.
- The correlation of the broad-based MSCI Emerging Markets Currency Index to the S&P 500 is 0.49 and to the Bloomberg U.S. Aggregate Bond Index it is 0.31. (Trailing 10-year data as of 12-31-2022, Morningstar Direct).
Emerging-markets currencies offer pure emerging-markets diversification, in contrast to emerging-markets stocks and bonds with their embedded equity and bond-beta exposures.
The success of the Long/Short Emerging Markets Currency Fund’s is dependent upon multiple factors, including the Fund’s Behavioral Pattern-Matching Models’ ability to identify profitable long or short positions in emerging-markets currencies. The Fund faces other risks, such as Derivatives Risk, Emerging-Markets Risk, and Leveraging Risk, which can magnify volatility and losses. Investors in the Fund could lose money. SilverPepper investors need to be aware of these risks. Be a Smart Investor and view the Fund’s Principal Risks here.

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Candid observations of markets and current portfolio positioning from the managers of the SilverPepper Long/Short Emerging Markets Currency Fund.

Manager Commentary: 4Q 2022

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Returns as of 03.31.2023

	YTD	Since Inception
Institutional class - SPEFX	-4.40%	-4.40%
Bloomberg Index 1-3 month T-Bill	0.40%	0.40%

Correlation to Broad Market Indexes

	Since Inception
Bloomberg U.S. Bond Aggregate Index	TBD
S&P 500 Index	TBD
MSCI Emerging Markets Equity	TBD
Bloomberg Commodity Index	TBD

Standard Deviation

	Since Inception
Bloomberg U.S. Aggregate Bond Index	TBD
S&P 500 Index	TBD
MSCI Emerging Markets Index	TBD
U.S. Dollar Index	TBD

Monthly Returns, Institutional Class

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Year
2023	1.80%	-7.96%	2.03%	1.88%									-2.60%
2022												0.00%	0.00%

The returns represent past performance. Past performance does not guarantee future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Call 855-554-5540 for current month-end performance.

Total annual fund operating expenses are 2.01% for the Institutional class. The Advisor has contractually agreed to waive its fees and/or pay for expenses to ensure that total fund operating expenses (excluding, as applicable taxes, leverage interest, brokerage commissions, dividend and interest expenses on short sales, acquired fund fees and expenses (as determined in accordance with Form N-1A), incurred in connection with any merger or reorganization, or any extraordinary expenses such as litigation expenses) do not exceed 1.85% for the Institutional class. This agreement is in effect until October 31, 2032.

Inception date is December 28, 2022. Performance and risk measures greater than one year are annualized. Correlation and standard deviation figures are since the Fund’s inception and are for the Institutional class shares.

Behavioral Price Patterns are aligned with the concepts identified within the field of Behavioral Economics. Behavioral Economics is the study of psychology as it relates to the economic decision-making processes of individuals and institutions. In emerging-market currencies, because of the higher interest rates that are typically associated with emerging-market currencies, we attempt to identify price-patterns that are associated with the base phychological behaviors of greed and fear.

Correlation is a statistical measure of how two securities move in relation to each other, ranging from -1 to +1. A correlation of 0 means the relationship between the two securities is completely random, while +1 indicates a perfect positive relationship and -1 a perfect negative relationship.

Standard Deviation is a term used to indicate and quantify risk. Specifically, standard deviation indicates the volatility of a fund’s total returns. In general, the higher the standard deviation, the greater the volatility of return. If a fund had a mean (average return) of 10%, and a standard deviation of 2%, you would expect the fund’s returns to fall within 12% and 8%, 68% of the time. And 95% of the time, you would expect its returns to fall within 6% and 14%.

U.S. Dollar Index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of most of the U.S.’s most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies.

MSCI Emerging Markets Currency Index tracks the performance of 25 emerging market currencies relative to the US dollar.

The Bloomberg Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds. Index Performance is not intended to predict or project the performance of the Fund. Performance data quoted represents past performance, which is no guarantee of future results. Investing in an index is not possible.

Buying Greed and Selling Fear: John Dean, the expert behind the SilverPepper Long/Short Emerging Markets Currency Fund.

SilverPepper Long/Short Emerging Markets Currency Fund.

Discovering behavioral price-patterns in emerging-markets currencies

Distinguishing characteristics of the SilverPepper Long/Short Emerging Markets Currency Fund:

America’s Only Currency Mutual Fund

Short Film:

Central Banks’ high interest rates are, essentially, bribes.

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Why Emerging Markets Currencies?

A huge, inefficient, and largely unexplored asset class that offers opportunities for profit seekers.

Key takeaways about emerging-markets currencies as an asset class:

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Repository of insights.

Our hedge fund experts speak their minds

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Data for your brain.

Interactive fact sheet and performance

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