Securitized Products: Back to the Future
It is often said that those who ignore the past are doomed to repeat it. For many scarred by the Great Financial Crisis, instruments like RMBS and CMBS became Wall Street’s version of four-letter words.
Short Term Bond Fund
The Red Cedar Short Term Bond Fund seeks to preserve capital and maximize current income.
Fund Overview
Capital Preservation
The Fund is focused on capital preservation through investment in a number of security types including U.S government bonds, investment grade corporate bonds, asset-backed and mortgage backed securities.
Yield Focus
Emphasis is placed on securities with a high level of current income through rigorous capital structure analysis to identify potential stable sources of yield.
Active Management
The fund employs an active management approach in an effort to achieve its investment objective, which is to seek preservation of capital and maximize current income.
Investment Approach
Under normal market circumstances, the Fund will invest at least 80% of its net assets in U.S. dollar-denominated debt obligations, including corporate bonds, bonds issued by municipalities and local authorities, U.S. treasury obligations, U.S. treasury inflation-protected securities (“TIPS”) and other U.S. government and agency securities, U.S. dollar denominated bonds issued by foreign governments and corporations, asset-backed, commercial mortgage-backed, mortgage-related and mortgage-backed securities.
The Fund only invests in debt obligations that, at the time of purchase, are rated at least Baa3 or higher by Moody’s Investors Services, Inc., or BBB- or higher by Standard & Poor’s Ratings Services or Fitch, Inc., or, if unrated, are determined by Red Cedar Portfolio Management to be of comparable quality.
Under normal circumstances, the Fund’s dollar-weighted average portfolio effective maturity will be more than one year but less than three. The Fund may shorten or lengthen its average weighted effective maturity for temporary defensive purposes.
The Fund may invest a significant portion of its assets in mortgage-backed securities, asset-backed securities and other securitized products. Securitized products may be structured as collateralized mortgage obligations (agency and non-agency), stripped mortgage-backed securities (interest-only or principal-only), commercial mortgage-backed securities, mortgage pass-through securities and other asset-backed securities. In addition to direct investments in securities, the Fund may hold a variety of derivatives, including futures contracts, options, swaps and forward contracts.
Ticker
RCSTX
cusip
75644E103
Inception date
Nov. 15, 2019
Expense Ratio1
Net: 0.45%
Gross: 0.69%
INDEX
Bloomberg Bar 1-3 Yr
US Gov/Credit
1Red Cedar Investment Management, LLC has contractually agreed to reduce the Management Fee and reimburse Other Expenses until November 1, 2021 to the extent necessary to limit Total Annual Fund Operating Expenses to an amount not exceeding 0.45% of the Fund’s average daily net assets.
Minimum Initial Investment
The minimum initial investment amount for all regular accounts is $10,000.
The minimum initial investment for IRA accounts is $2,000.
Minimum Additional Investment
Once an account is open, additional purchases of Fund shares may be made at any time with a minimum of $100 for all accounts.
Latest News & Commentary
Cincinnati investment advisory firm launches mutual fund
A Cincinnati investment advisory firm has launched its first mutual fund with plans to add more down the road.
Red Cedar Investment Management Announces Launch of Red Cedar Short Term Bond Fund (RCSTX)
The fund is focused on capital preservation through investment in a diverse set of security types including U.S. government bonds, investment grade corporate bonds, asset-backed and mortgage backed securities.
Disclosures and Definitions
The Fund may invest in mortgage and asset-backed securities which may be subject to prepayment risk and thus may be more sensitive to interest rate changes than other types of debt securities. The Fund may invest in derivative instruments which involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional instruments. The Fund may also invest in U.S. dollar-denominated securities issued by foreign issuers which involve additional risks including political and economic instability, differences in financial reporting standards and less regulated securities markets. A bond’s market value may be affected significantly by changes in interest rates – generally, when interest rates rise, the bond’s market value declines and when interest rates decline, its market value rises (“interest rate risk”).
The Bloomberg Barclays 1-3 U.S. Government / Credit Bond Index is an index consisting of Treasury or government agency securities and investment-grade corporate debt securities with maturities of one to three years. Indices are unmanaged and are not available for direct investment.
