Alternative Income Fund 1
The Alternative Income Fund 1 uses a proprietary methodology using broad based S&P500 and Dow Jones index options to generate income with a risk-profile similar to US Treasuries. This strategy successfully overcomes limitations and drawbacks of traditional fixed income investing in bank CDs, US Treasuries, Muni/Corporate bonds and preferred stocks.
Summary of Benefits
Safety of Principal:
Income with yield and risk comparable to US Treasuries.
No upper limits:
Bank CDs are insured only up to $250,000 by FDIC
The investment is liquid unlike CD maturity terms. US Treasuries can suffer loss of value if liquidated before maturity.
60% of the yield is treated as long term capital gains and 40% of the yield is treated as short term capital gains. CDs or treasury yields are treated as ordinary income for tax purposes.
Redemption and laddering :
Optimal holding period for this investment is a month to a quarter. In a rising rate environment, investor can re-invest at the prevailing US treasury rate every month or every quarter. This achieves natural laddering effect. Other fixed income investments suffer a loss of value in a rising rate environment.