Auspice One Fund Trust Review: The Best Capital Efficient All-In-One Fund For Canadian Investors?

Auspice One Fund Trust: Principal Investment Strategy

To better understand the process of how the fund operates, let’s turn our attention towards the prospectus where I’ve highlighted what I feel are the most salient parts and summarized the key points at the very bottom. (source: summary prospectus)

Investment Objective:

“The Fund seeks to achieve superior absolute and risk-adjusted returns as compared to balanced fund approaches, or a long-only equity fund, with the added benefits of protection and performance during sustained downward trends while earning a yield.

This will be achieved by combining traditional assets with the Manager’s protective strategies on a near equal basis, which allows the Fund to benefit from the non-correlation of equity, fixed income and divergent alternative investments.”

Investment Strategies:

“The Fund maintains traditional exposure while markets move higher yet also protects capital, tactically adjusting to reduce inevitable corrections while maintaining the non-correlated opportunities at all times.

The Fund uses global futures contracts to efficiently generate the Manager’s core exposures (commodities, interest rates, currencies, equity indices) while the remaining assets are invested in traditional equity, fixed income, credit, cash, gold, and other instruments including exchange traded funds (each an ETF), exchange traded notes (each an ETN) and/or futures.

The Fund benefits from a rules-based active management core.

It combines the long-term track record of Auspice Diversified core strategies with tactical active and passive global equity and fixed income instruments (e.g., ETFs, ETNs and/or futures).

The Fund may use leverage through the use of cash borrowings, short sales and derivatives.

If used, the fund will manage its risk in such a manner as to keep the absolute VaR under 20% of its net asset value.”

Targeted Yield:

“The Fund is targeting to pay a yield on a quarterly basis depending on market conditions.

This return is not guaranteed.

Unitholders of the Fund can elect to reinvest such distributions for stronger growth oriented goals.”

Foundation Portfolio: Equity & Fixed Income

“Auspice uses liquid low-cost ETFs, ETNs, and futures in the foundation portfolio.

The portfolio is tilted towards equity and fixed income, but not exclusive to these asset classes: alongside, gold and other diversifying exposures may be added with the goal of creating a portfolio of assets that is more diversified with better risk-adjusted returns than a traditional 60/40 equity/fixed income portfolio.

Active futures strategies used successfully in Auspice’s other funds to tactically increase exposure, or reduce exposure in extreme volatility, are also employed.”

Active Alternative Strategies:

Auspice’s rules-based approach is rooted in trend following over global exchange traded commodity and financial markets.

Trends are determined by quantitative parameters but the concept is simple: participate in trends agnostic to direction or market.

Risk management is the backbone producing non-correlated returns to the equity market with lower volatility and drawdowns.

Auspice has a long history of outperforming in periods of volatility and stress when diversification is most valuable.”

Cash Management:

“As much of the portfolio achieves a high cash efficiency through the use of futures exposures, the fund tends to have a large cash position.

Cash is invested in a number of income producing instruments, ETFs, and ETNs inorder to achieve an attractive yield while always maintaining liquidity and other risk considerations.”

Result: One Fund Combination

A multi-strategy approach that combines the best of rules-based active and passive investing across traditional and alternative assets to generate alpha and efficiently capture equity gains while protecting and benefitting on the downside.

The combination is powerful and demonstrates the synergy from combining non-correlated strategies together resulting in low correlation to equity markets.

The Fund may enter into securities lending, repurchase and reverse repurchase transactions to earn additional returns, subject, in each case, to limits at least as stringent as those required by Canadian securities regulatory authorities.

As the Fund is considered an “alternative mutual fund” within the meaning of NI 81-102, as noted, it may use strategies generally prohibited to be used by conventional mutual funds, such as the ability to invest more than 10% of its NAV in securities of a single issuer, the ability to invest in physical commodities or specified derivatives, to borrow cash, to short sell beyond the limits prescribed for conventional mutual funds and to generally employ leverage.

The Fund may depart temporarily from its investment strategies in the event of adverse market, economic, political or other considerations.”

Auspice One Fund Trust Investment Strategy Key Points

1. Fund Objectives: Seeks superior absolute and risk adjusted returns in comparison to a traditional balanced portfolio or long only equity portfolio
2. Protection And Performance: Ability to generate positive returns in downward trends while earning a yield
3. Investing Universe: Combination of traditional assets (equity, fixed income, credit, cash, gold via ETFs/ETNs) and Futures (commodities, interest rates, currencies, equity indices)
4. Active Management: Rules-based Auspice Diversified core strategies with active tactical and passive global equity and fixed income
5. Risk Management: Keep the absolute VaR under 20% of its net asset value
6. Targeted Yield: Pay a yield on a quarterly basis
7. Foundation Portfolio (Equity & Fixed Income): Tilted towards equity and fixed income with gold exposure via low-cost ETFs/ETNs
8. Active Alternative Strategies: Rules based Trend-Following over global exchange traded commodity and financial markets
9. Cash Management: Cash is invested in income producing instruments, ETFs and ETNs to achieve an attractive yield
10. One Fund Combination: 100% rules based active/passive traditional assets plus 100% alternative trend-following assets
11. One Fund Goal: Multi-strategy approach of combining non-correlated strategies to generate alpha, offer downside protection and have low correlation with equity markets

Auspice One Fund Trust Info

Ticker: ACA301A (A), ACA303I (I), ACA305T (T)
Adjusted Expense Ratio: 1.00 + 10% or 15% Performance Fee
AUM: $15,659,251.75 (Series A) / $17,988,243.89 Million (Series I) / N/A (Series T)
Inception: October/2020

Auspice One Fund Trust Pros and Cons

Let’s move on to examine the potential pros and cons of Auspice One Fund Trust.

Auspice One Fund Trust Pros

1. Capital Efficient exposure to traditional global asset classes (stocks, bonds, gold) and non-correlated alternatives (managed futures trend-following)
2. 200% Expanded canvas portfolio that is evenly prepared for prosperity and economic turbulence with its multi-strategy approach
3. The potential to seriously outperform long-only balanced and equity portfolios with higher absolute and risk adjusted returns
4. A total portfolio all-in-one expanded canvas solution as opposed to being just a capital efficient puzzle piece
5. Underlying ETFs that deviate from merely MCW equity exposure
6. The capacity to generate positive returns during all economic environments with an adaptive alternative sleeve
7. A hybrid approach of rules based active, passive and adaptive management strategies
8. A unique fund in the Canadian marketplace offering capital efficient strategies that used to only be available to institutions
9. Novel fee structure for a diverse multi-strategy approach with a 1% management fee OR a 10/15% performance incentive (not both)
10. Chance to support an innovative boutique fund provider with an excellent long-term track record and award winning performance

Auspice One Fund Trust Cons

1. Sometimes the alternative “diversification” will be a drag on performance and investors need to be prepared for tracking error
2. Management fee that is higher than what low cost indexers are used to paying

Auspice One Fund Trust Model Portfolio Ideas

These asset allocation ideas and model portfolios presented herein are purely for entertainment purposes only. This is NOT investment advice. These models are hypothetical and are intended to provide general information about potential ways to organize a portfolio based on theoretical scenarios and assumptions. They do not take into account the investment objectives, financial situation/goals, risk tolerance and/or specific needs of any particular individual. 

We’re able to assemble a diversification masterpiece by utilizing Auspice One Fund Trust as the backbone of our portfolio while adding diversifying strategies in 10% and 5% slices.

50% AOFT – Auspice One Fund Trust Mutual Fund (Fund Code: ACA301A)
10% ONEC.TO – Accelerate OneChoice Alternative Portfolio ETF
10% HRAA.TO – Horizons ReSolve Adaptive Asset Allocation ETF
10% JFS.UN.TO – JFT Strategies Fund ETF
10% PFAE.TO – Picton Mahoney Fortified Active Extension Alternative Fund ETF
5% PFMN.TO – Picton Mahoney Fortified Market Neutral Alternative Fund ETF
5% ARB.TO – Accelerate Arbitrage Fund ETF

We’ve got Auspice One Fund Trust mutual fund taking up the bulk of the portfolio real-estate at 50% providing a hybrid of traditional asset class exposure (global stocks, bonds and gold) along with an equal parts adaptive alternative sleeve.

Accelerate OneChoice Alternative Portfolio brings a unique 10-1 alternative strategy where we gain diversified exposure to long-short equity, bitcoin and arbitrage to name just a few.

Horizons ReSolve Adaptive Asset Allocation brings a unique blend of global systematic managed futures strategies such as carry and seasonality (as opposed to just trend) across a wide variety of asset classes.

JFT Strategies Fund is a unique absolute return fund that has provided investors superior returns and low market correlation versus a static 60/40 portfolios.

Picton Mahoney Fortified Active Extensions Alternative Fund is a 140-40 long-short equity fund that packs a big punch and since its inception has crushed its benchmark of the TSX.

Picton Mahoney Fortified Market Neutral Alternative Fund brings a defensive equity approach to the table with an incredible track record of above water returns since its inception.

Accelerate Arbitrage Fund offers unique exposure to arbitrage as a diversify alternative strategy to add to the overall mix.

Overall we have exposure to the following 10 strategies with our uniquely Canadian expanded canvas portfolio:

1. Equities
2. Bonds
3. Gold
4. Managed Futures (Trend):
5. Global Systematic Macro (Carry, Seasonality, etc)
6. Long-Short Equity
7. Market-Neutral
8. Arbitrage
9. Bitcoin
10. Other Alt Strategies (REITS/MBS/ETC)

This is definitely a portfolio I could roll with long-term.

Nomadic Samuel Final Thoughts

Auspice Capital has dropped a game changer capital efficient bomb into the Canadian marketplace.

Not only is it on my radar but it’s completely obliterated the way I plan on constructing my portfolio.

And by “bomb” and “obliterate” I mean as terms of endearment in case that wasn’t quite clear…LOL

I’ve now got a new centrepiece fund to build around.

That means everything else in my portfolio is going to be playing a reduced role and/or second fiddle from now on.

I’m quite honestly still figuring things out.

But at this point in the review I’m more interested in what you’ve got to say.

What do you think of AOFT: Auspice One Fund Trust?

Is it on your radar?

Please let me know in the comments below.

That’s all I’ve got for today.

Ciao for now.

Important Information

Investment Disclaimer: The content provided here is for informational purposes only and does not constitute financial, investment, tax or professional advice. Investments carry risks and are not guaranteed; errors in data may occur. Past performance, including backtest results, does not guarantee future outcomes. Please note that indexes are benchmarks and not directly investable. All examples are purely hypothetical. Do your own due diligence. You should conduct your own research and consult a professional advisor before making investment decisions. 

“Picture Perfect Portfolios” does not endorse or guarantee the accuracy of the information in this post and is not responsible for any financial losses or damages incurred from relying on this information. Investing involves the risk of loss and is not suitable for all investors. When it comes to capital efficiency, using leverage (or leveraged products) in investing amplifies both potential gains and losses, making it possible to lose more than your initial investment. It involves higher risk and costs, including possible margin calls and interest expenses, which can adversely affect your financial condition. The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the official policy or position of anyone else. You can read my complete disclaimer here.