Cratus Capital LLC

High Income Strategy



  • Strategy ETFs / Funds
The Cratus High Income Strategy is designed to provide high yield with minimal downside risk.  This strategy invests in very short term high income bond ETFs with a small position invested in small- and mid-cap high dividend stocks.  

Overall risk is minimized through extensive due diligence on all companies and ETFs which Cratus Capital includes in this strategy.  Interest rate risk is virtually non-existent as these bonds have very low durations.  High dividend paying stocks are added opportunistically for diversification but may not represent for more than 20% of the total market value of the portfolio.  This is a low volatility strategy.
The focus on short term high yielding bonds allows us to screen for the ‘best in class’ short term high yielding fixed income ETFs.  We carefully analyze the composition of these ETFs and create a portfolio of short term high yielding ETFs from various sectors of the fixed income market.  Optimal portfolio construction minimizes correlation between the ETFs and stocks in the fund and maximizes return potential and capital preservation.
The portfolio is well diversified by sector and industry.  

Our objective is to find ETFs and stocks that are undervalued but have solid financials and have upside potential.Our value proposition is also based on the reinvestment of high income which compounds rapidly in all economic and financial market environments providing a strong cushion in the portfolio.

The Cratus approach involves selection of stocks which have consistently paid high dividends, have strong free cash flow and solid management teams.This is a focused strategy where the portfolio will hold up to 20 positions.  We are investing in securities where we have very strong conviction.

One other highlight is our focus on liquidity.  We are only buying stocks and fixed income ETFs that can be bought and sold daily.  While we have a long term time horizon, trading is done as necessary to continuously hold positions that have solid upside potential and a high stream of current income.
One of our distinguishing features at Cratus Capital is our in-depth, independent research on all of the companies and ETFs which are held in the portfolio.We seek companies which have strong management teams.

We conduct extensive due diligence on the companies of all of the stocks and ETFs we include in the portfolio.

We conduct onsite due diligence and meet with the management teams of the companies in our portfolio.

The research process begins with a lengthy report on the company.  We have access to over 50 different independent research firms which provide us with many of the facts and data on these companies.
The next step is to communicate with the company or manager and obtain all financials, press releases and interviews with senior management.  This is done through conference calls and onsite visits.
Industry and sector comparison analysis is done on prospective investments.    

We continue to communicate frequently with management.  Final summary reports are done on all companies and ETFs.
The first screen for all investments in the Cratus High Income Strategy is that they pay a minimum yield of 4.5%.  All ETF positions and stocks must be US dollar denominated.We seek a minimum float for all stocks as liquidity is essential. Diversification is key, however, when conviction is high, we may have more than one holding in the same industry.No more than 20% of the portfolio can be held in high dividend US stocks.
Since we are conducting ongoing due diligence on every position that is held in the Cratus High Income portfolio, if there is news that draws concern about the company's’ ability to pay their income or dividends, we will do additional research.  If we determine that there is severe deterioration in the financial condition which may prevent the company from meeting its dividend or deterioration in a sector we hold as an ETF, we will sell this position.  A sudden management change is an example of a red flag.

Positions are sold when there are new and better ideas with more value and more upside than the current positions.

Rebalancing occurs at least monthly to make certain that the holdings remain within their target allocations.

Performance

-0.1%

Month to date

MTD

-0.1%

Quarter to date

QTD

-0.1%

Year to date

YTD

Quarterly vs S&P500

Quarterly vs S&P500

Risk score

  • 6.4%

    Best quarter

  • 0.7%

    Worst quarter

    • 0.75% fee
    • $20,000 min

Performance detail

Performance history disclosure

Performance Portfolio inception January 13, 2016

as of January 18, 2017 Manager (net of fees ) U.S. Aggregate Bond ETF S&P 500
Month-to-date -0.1% 0.2% 1.5%
Quarter-to-date -0.1% 0.2% 1.5%
Last 365 Days 20.5% -0.5% 20.8%
Since inception (Annualized) 17.5% -0.2% 16.8%
2017 (YTD) -0.1% 0.2% 1.5%

Risk metrics Last 365 days

as of January 18, 2017 Manager (net of fees ) U.S. Aggregate Bond ETF S&P 500
Volatility 6.2% 3.4% 12.2%
Sharpe Ratio 3.21 -0.29 1.66
Sortino Ratio 4.93 -0.41 2.31
Maximum Drawdown -1.7% -5.4% -5.7%
Value-at-risk (95%, 1 week) -1.4% -0.8% -2.8%
U.S. Aggregate Bond ETF vs. S&P 500
Information Ratio 3.07 -0.03
Alpha 18.9% 13.0%
Beta 0.15 0.30
R-Squared 0.01 0.34

Exposure

49.1%
25.8%
12.2%
9.7%
  • Fixed Income Fund
  • Debt Fund
  • Misc Funds
  • Equity Fund

Top 5 securities

17.8%
13.6%
12.2%
11.8%
9.9%
View all

Latest transactions Average trades per month 1.9

Executed Symbol Security Type Price
December 27, 2016 SCHD Schwab US Dividend Equity ETF Sell $44.08
December 21, 2016 HYND WisdomTree WisdomTree Negative Duration High Yield Bond Fund Buy $21.25
December 20, 2016 HYZD WisdomTree Interest Rate Hedged High Yield Bond Fund Buy $24.06
December 20, 2016 SHYD VanEck Vectors Short High-Yield Municipal Index ETF Sell $23.78
December 19, 2016 LXP Lexington Realty Trust Sell $10.76
December 19, 2016 HYZD WisdomTree Interest Rate Hedged High Yield Bond Fund Buy $24.18
December 19, 2016 ANH Anworth Mortgage Asset Corp Sell $5.27
December 16, 2016 PGHY PowerShares Global Short Term High Yield Bond Portfolio Sell $24.40
View all

Important Information

  1. Past performance is no guarantee of future results.
  2. Performance of the Portfolio Manager's account is calculated by Covestor on a daily time-weighted basis, including cash, dividends and earnings distributions and reflects the deduction of broker commissions. Manager returns include trades and positions that fail Covestor's trading rules, as a result, actual client returns will differ. Covestor advisory fees are simulated and applied retroactively to present the portfolio return "net-of-fees".
  3. Average client returns are calculated by Covestor and are composed of the asset-weighted daily average returns of all active client investments (some of which may contain investment restrictions) to the underlying portfolio. These daily average returns are then linked together for the timeframe presented. These returns include cash, dividends, and earnings distributions, and reflect the deduction of Covestor advisory fees, brokerage and other commissions and expenses actually paid by clients.
  4. All graph data is as of the end of day for the referenced period, unless otherwise specified. The investment minimum is the minimum investment required to follow a particular portfolio. The minimum amount is determined by Covestor, based on the characteristics of the underlying portfolio. It should not be considered as specific investment advice for your investment situation.
  5. The performance charts are provided for informational purposes only, and should not be used as the basis for making an investment decision. We rely on mathematical formulas, computer programs, and pricing information from third-party vendors to provide these returns. Neither Covestor nor any of its data or content providers shall be liable for any errors in this information or any actions taken by you in reliance upon this information.
  6. Benchmark returns displayed have been calculated by Covestor using daily benchmark prices and do not include dividend income. More information here. For certain portfolios Covestor uses an index as a benchmark, while for others it uses an investable exchange traded fund (ETF) as a benchmark. Index returns do not reflect the deduction of any management fees, transaction costs or expenses. Individuals cannot invest directly in an index. Investable ETF returns reflect the deduction of (i.e., are net of) management fees, transaction costs and expenses.
  7. Leverage indicates the level of margin utilized and is calculated by dividing gross exposure by portfolio net liquidation value.
  8. All Portfolio Manager information including personal data, profiles, strategies, monthly investment reports, and historical results outside of Covestor has been provided by the Portfolio Manager. Covestor makes no representation or warranty of its accuracy, completeness or relevance and it does not represent the opinions of Covestor. Transaction history of Portfolio Managers is available upon request. Portfolio classifications are provided by Covestor, and are intended to serve as a general guide.
  9. Not all transactions listed will appear in accounts due to Covestor's trading rules and individual client constraints. Eligibility of these securities is monitored periodically, and may change over time. Actual client investment holdings may vary.
  10. This portfolio was launched on Covestor on August 22, 2016. Returns history prior to launch is derived from account position valuation and cash flow data at Interactive Brokers. Covestor has not reviewed this performance data but has received manager certification that it adheres to the current strategy.