View as:
View as:

Announcement Alternative Strategies Fund Fee Reduction

The Litman Gregory Masters Alternative Strategies Fund has always maintained a competitive expense ratio. That expense ratio will now be even more competitive, as we are lowering the net operating expense ratio of the fund to 1.36% from 1.54%. Excluding interest and dividend expenses and acquired fund fees and expenses, our fund’s net expenses have declined to 1.28% from 1.46%. (Gross expenses remain the same at 1.64%.)

As a category, multi-alternative mutual funds continue to charge relatively high expenses compared to most other fund categories, despite generating low absolute returns over the past decade. The academic case for including alternatives in diversified portfolios is compelling, but the majority of funds in the liquid alternative space have not delivered.

While we are very pleased that our fund has produced the highest risk-adjusted returni among its Morningstar multi-alternative peers since inception, we felt it would be that much more compelling and beneficial to our shareholders to make a meaningful fee cut.

We Have Worked to Lower MASFX Expenses Since Inception

Recent Change in the Presentation of Fund Expense Ratios

FINRA disclosure requirements dictate that certain investment-related expenses be included in all presentations of total operating expense.

Specific to the Alternative Strategies Fund, interest expenses from the use of leverage and dividend/borrowing expenses related to short positions are both now included in its statutory expense ratio. Any mutual fund that participates in these investment activities has been affected.

Yet we consider these expenses to be among the regular costs of implementing the strategies managed by our sub-advisors, similar for example to traditional trading commissions. It’s important to note that the management fees and normal operating costs of managing the fund have gone down since we launched the fund (reflecting economies of scale). And now we are lowering expenses more.

Our Philosophy on Expenses

Expenses shouldn’t be the most important consideration when selecting a fund. Investors should be willing to pay for strong risk-adjusted performance or a truly diversifying, high-value strategy. But expenses should be commensurate with the benefits a strategy provides as fees can have a negative compounding impact on the actual returns realized by investors.

When we first conceived the Alternative Strategies Fund, we were determined to build a core liquid alternatives fund that could act as a diversifier and all-weather ballast for traditional investment portfolios—at a highly competitive cost to its shareholders. As significant shareholders ourselves, we have a vested interest in the continued success of the fund.

In addition to our ongoing due diligence work and monitoring of the fund’s sub-advisors, we will continue to work toward lowering expenses where possible to improve returns for our shareholders. This has been a consistent goal for Litman Gregory since we launched the fund. The decline in the fund’s expenses since its inception is evidence of that effort.

Stay Informed

iMGP Funds emails provide investors a way to stay in touch with us and receive information regarding the funds and investment principles in general. Topics may include updates on the funds and managers, further insights into our investment team’s processes, and commentary on various aspects of investing.


The fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The statutory and summary prospectus contains this and other important information about the investment company, and it may be obtained by calling 1-800-960-0188. Read it carefully before investing.

Inception Date 9/30/2011 9/30/2011
As Of Date 10/31/2019 10/31/2019
Total Net Operating Expenses (%)1 1.36% 1.61%
Gross Expense Ratio (%) 1.64% 1.89%

1 – The Advisor is contractually obligated to waive management fees and/or reimburse ordinary operating expenses through April 30, 2020. The total net operating expense includes Interest and Dividend expenses of 0.07% and 0.01% Acquired Fund Fees and Expenses, which are not typical operating expenses.

Net Operating Expenses (%) Exclusive of 0.07 Dividend & Interest Expense and 0.01 Acquired Fund Fees and Expenses: MASFX: 1.28 MASNX: 1.53

Though not an international fund, the fund may invest in foreign securities. Investing in foreign securities exposes investors to economic, political and market risks, and fluctuations in foreign currencies. Investments in debt securities typically decrease when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in mortgage-backed securities include additional risks that investor should be aware of including credit risk, prepayment risk, possible illiquidity, and default, as well as increased susceptibility to adverse economic developments. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management, and the risk that a position could not be closed when most advantageous. The fund may make short sales of securities, which involves the risk that losses may exceed the original amount invested. Multi-investment management styles may lead to higher transaction expenses compared to single investment management styles. Outcomes depend on the skill of the sub-advisors and advisor and the allocation of assets amongst them.

Investing in derivatives could lose more than the amount invested. The fund may make short sales of securities, which involves the risk that losses may exceed the original amount invested. Merger arbitrage investments risk loss if a proposed reorganization in which the fund invests is renegotiated or terminated.

The Morningstar Rating for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed products monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five, and 10-year (if applicable) Morningstar Rating metrics. The weights are 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10 year overall rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. iMGP Alternative Strategies Fund was rated against the following numbers of Multialternative funds over the following time periods as of of 9/30/2019: 248 funds in the last three years, and 178 funds in the last five years. With respect to these Multialternative funds, iMGP Alternative Strategies (MASFX) received a Morningstar Rating of 4 stars and 4 stars for the three- and five-year periods, respectively. Ratings for other share classes may be different. Morningstar rating is for the Institutional share class only; other classes may have different performance characteristics. The Investor share class received a rating of 4 stars and 4 stars for the three- and five-year periods, respectively.© 2019 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

iSharpe ratio is the measure of a fund’s return relative to its risk. The Sharpe ratio uses standard deviation to measure a fund’s risk-adjusted returns. The higher a fund’s Sharpe ratio, the better a fund’s returns have been relative to the risk it has taken on. Because it uses standard deviation, the Sharpe ratio can be used to compare risk-adjusted returns across all fund categories. The Fund’s Sharpe ratio ranked 1 out of 104 in its Peer Group, US OE Mulitalternative Morningstar Category from 10/1/2011 to 9/30/2019. Past performance is no guarantee of future results.

Diversification does not assure a profit nor protect against loss in a declining market.

Each Morningstar Category Average represents a universe of Funds with similar investment objectives. As of September 30, 2019 the Morningstar Multialternative Category average expenses were 2.01% gross and 1.71% net.

Fund holdings and/or sector allocations are subject to change at any time and are not recommendations to buy or sell any security.

Mutual fund investing involves risk. Principal loss is possible.

Litman Gregory Fund Advisors, LLC has ultimate responsibility for the performance of the iMGP Funds due to its responsibility to oversee the funds’ investment managers and recommend their hiring, termination, and replacement.

The iMGP Funds are Distributed by ALPS Distributors, Inc. LGM000858