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A Nasty October Should Give Way to More Equity Upside, Expects CPLIX’s Grant

October was a grisly month in what has been a bull not a bear market for U.S. equities. Given its bias toward capital preservation for most of the year, Calamos Phineus Long/Short Fund (CPLIX) was down just -0.57% for the month.

how cplix minimized the october drawdown

By comparison, the S&P 500 had its worst October since 2011. At the height of the month’s drawdown from Oct. 4 to Oct. 29, the S&P was down 9.63% but finished -6.84%, thanks to the month’s last two days.

CPLIX also held its own as other long/short equity funds stumbled. The fund’s deviation from the Morningstar Long/Short category is a consistent characteristic of the fund, reflecting its active beta and exposure management (see interactive chart below). Many peers keep a low and consistent beta (for more, see this post).

This difference, as illustrated in the chart below, is why Michael Grant, Calamos Co-CIO, Head of Global Long/Short Strategies and Senior Portfolio Manager of CPLIX, calls many other long/short funds “long light.”

Past performance is not guarantee of future results. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

Grant acknowledges having been contrarian in his positioning in 2018, having overweighted Financials for their fundamentals and valuations and avoiding overcrowded mega-cap growth technology stocks.

nov 8 webcast

“Our approach in 2018 has been one of caution and patience. This has proven fortuitous as general equity losses have accumulated as the year has progressed. In October, the bear trend became more substantial, more geographically widespread and nastier with respect to individual stocks than the major U.S. benchmarks,” he says.

After Tuesday’s midterm elections, however, Grant expects a respite for U.S. equities. “The equity bull market is not dead yet,” he says. “Monetary normalization is likely to pause in the fourth quarter, allowing the S&P 500 one more assault on the 3000 level.”

Financial advisors, for more from Grant on positioning for the last hurrah, register for our Nov. 8 webcast.

To talk to a Calamos Investment Consultant, call 888-571-2567 or email [email protected].

Calamos ranks fifth on the list of alternative fund managers by assets under management in the Morningstar Alternatives Category as of 9/30/18.




Data as of 9/30/18

average annual returns phineus long short fund 9-30-18

CPLIX-expense

Before investing carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-800-582-6959. Read it carefully before investing.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The principal risks of investing in the Calamos Phineus Long/ Short Fund include: equity securities risk consisting of market prices declining in general, short sale risk consisting of potential for unlimited losses, foreign securities risk, currency risk, geographic concentration risk, other investment companies (including ETFs) risk, derivatives risk, options risk, and leverage risk.

Class I shares are offered primarily for direct investment by investors through certain tax-exempt retirement plans (including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans, defined benefit plans and non-qualified deferred compensation plans) and by institutional clients, provided such plans or clients have assets of at least $1 million. Class I shares may also be offered to certain other entities or programs, including, but not limited to, investment companies, under certain circumstances.

Important Information About Risk: An investment in the Fund(s) is subject to risks, and you could lose money on your investment in the Fund(s). There can be no assurance that the Fund(s) will achieve its investment objective. Your investment in the Fund(s) is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The risks associated with an investment in the Fund(s) can increase during times of significant market volatility. More detailed information regarding these risks can be found in the Fund’s prospectus.

Alternative investments may not be suitable for all investors, and the risks of alternative investments vary based on the underlying strategies used. Many alternative investments are highly illiquid, meaning that you may not be able to sell your investment when you wish to.

Active management does not guarantee investment returns or eliminate the risk of loss.

Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

S&P 500 Index is a market weighted index and is widely regarded as the standard for measuring U.S. stock market performance.

HFRI Equity Hedge Index consists of funds where portfolio managers maintain long and short positions in primarily equity and derivative securities.

MSCI World Index is a market capitalization weighted index composed of companies representative of the market structure of 21 developed market countries in North America, Europe, and the Asia/Pacific region. Unmanaged index returns assume reinvestment of any and all distributions and do not reflect fees, expenses or sales charges. Investors cannot invest directly in an index. The MSCI World Index consists of the following 23 developed market country indexes: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

Morningstar U.S. Funds Long/Short Category: Long-short portfolios hold sizable stakes in both long and short positions in equities and related derivatives. Some funds that fall into this category will shift their exposure to long and short positions depending on their macro outlook or the opportunities they uncover through bottom-up research. Some funds may simply hedge long stock positions through exchange-traded funds or derivatives. At least 75% of the assets are in equity securities or derivatives.

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