LJM Preservation and Growth Fund

The LJM Capital Preservation and Growth Fund was launched in January, 2013, selling shares to Customers in three different classes (LJMAX, LGMCX, LJMIX).  In its Prospectus, the LJM preservation and Growth Fund stated its goals as follows:  “capital appreciation and capital preservation with low correlation to the broader U.S. equity market.” 

The Fund was designed to capture gains on options sold on S&P futures contracts that can be closed at a later date for a lower price than realized when originally sold.  When looking at the Fund’s actual holdings, the Fund holds more uncovered option contracts than covered option contracts.  What that means is that the short option is not offset by a corresponding long stock, option, or futures position.  In other words, the Fund pursued the opposite of a capital preservation and growth strategy.  Instead, the options trading strategy has unlimited downside (no preservation) with a limited upside (no growth). 

In other words, the Fund’s investments were highly risk and even if the Fund’s strategies were successful, the Fund itself did not provide capital appreciation and capital preservation as promised. 

The fund managers knew that the strategy was risky and the Brokers that were recommending that Customers purchase the Fund could have easily known about these risks by looking at LJM Preservation and Growth Fund’s annual report.  If you were sold any of the LJM Preservation and Growth Fund stocks (LJMAX, LGMCX, LJMIX) and sustained losses in your account, you may be able to recover those losses.