SCG Asset Management, an asset manager based in Nashville, Tenn., is relaunching a fund it took over last year, but is now using a new strategy for the product, one that creates a diversified portfolio of equity-linked structured notes and whose goal for its investors is to generate income.
The Alternative Strategies Income Fund’s goal is to provide investors with high income and consistent quarterly distributions no matter what the market is doing, the firm said. The fund’s ticker is LTAFX.
According to Gregory Sachs, the chairman and CEO of SCG, the notes in the fund are diversified and mature at various times. “They’re highly diversified as to industries and sectors and so forth,” he said.
The notes are chosen according to a proprietary system the firm has devised.
“Once they pass through our filtering system, we then have a very quantitative optimizing program which basically picks the equities that fit together nicely and are highly diversified,” Sachs said.
The fund offers low to moderate volatility and low correlation to the broader markets, SCG said.
The fund, which launched in 2010, was previously run by Ladenburg Thalmann & Co., but SCG took over management in 2022 with the intent of changing the investing approach. Previously, the fund invested in illiquid instruments such as non-listed REITs, business development companies, and undeveloped land funds.
SCG dedicated the last year and a half to getting rid of those legacy assets and building the new portfolio around the structured note idea, Sachs explained.
What hasn’t changed is the wrapper: The Alternative Strategies Income Fund is still an “interval fund,” a type of closed-end fund that sometimes buys back investors’ shares. SCG kept this vehicle because it allows the managers to handle the complexities of note selection, Sachs said.
Historically, when investors wanted to put money in structured notes linked to single stocks, they did not know ideally which ones to invest in, and single stock notes could implode, putting the investor at risk, Sachs said.
The fund has a $5,000 minimum and a 1.5% management fee. It will be available on major platforms, including retirement accounts and advisor channels, SCG said. The firm added that the fund requires no subscription documents or Schedule K-1 tax forms.
SCG will handle the management and won’t be working with subadvisors.
“We manage the money ourselves,” Sachs said. “We do not allocate the money to a subadvisor, so there are no subadvisor-type fees that are typically seen in an interval fund.”