Focused Investing

INCOME

5 Minute Portfolio Strategy Update, as of Dec 31st, 2020

A3 Alternative Income Fund (AAACX)

 

As of June 30, 2021

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Past performance is not indicative of future results.

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Overview 

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The A3 Alternative Income Fund, a closed-end interval fund, offers investors efficient access to a portfolio of non-traditional income-generating assets. The Fund’s investment objective is to seek total return through investments that offer regular income or the potential for price appreciation. A3 Financial Investments is led by an investment team with decades of experience investing in capital markets. Interval funds provide investors such features as daily pricing, 1099 tax reporting, and quarterly repurchase offers with a fund-level redemption of 5-25% of NAV. The interval fund structure allows non accredited investors the opportunity to access less liquid, potentially higher yielding alternative investments.

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Performance Summary

Monthly Return
(1.64)% 

1

Year to Date
(1.56)%

1

Since Inception
+6.88%

1

30 Day SEC Yield
+5.45%
+1.84%

4

3

US Agency Exposure
59.39%

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Fact Sheet
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Monthly Net Total Returns

1

Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
YTD
2021
(0.89)
(0.70)
1.40
0.50
(0.20)
(1.64)
(1.56)
2020
5.11
(1.68)
1.05
(1.24)
0.96
1.08
(1.06)
1.65
(0.97)
(5.37)
6.29
(0.53)
4.88
2019
0.60
0.40
2.49
3.52

  1. Inception date is September 30, 2019. Returns are net total returns. 

  2. U.S. Government Agency securities are considered to have an "implied AAA rating". Government National Mortgage Association issued securities carry the full faith and credit guarantee of the U.S. Government.

  3. "30-Day SEC Yield (subsidized)" is an annualization of the Fund's total net investment income per share for the 30 day period ended on the last day of the month and reflects any net fees waivers and reimbursements in effect during the yield calculations period.

  4. "30-Day SEC Yield (unsubsidized)" reflects the 30-day yield if the investment adviser were not reimbursing the fund for part of its expenses or waiving all or part of its fee.

Correlation

Correlation is a statistic that measures the strength of the relationship between two securities. The correlation coefficient ranges from +1.0 and -1.0 which indicate perfect positive and negative linear relationships. A value of 0 indicates no linear relationship between the two securities corresponding to no correlation. 

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  1. LEGATRUU is the Bloomberg Barclays Global Fixed Income Aggregate Index Unhedged is the flagship measure of global investment grade debt from twenty- four local currency markets.

  2. LF98TRUU is the Bloomberg Barclays US Corporate High Yield Bond Index measure the USD-denominated, high yield, fixed-rate corporate bond market.

  3. SPX is the S&P 500 large-cap US Equity Index of the 500 large companies listed on the stock exchanges in the US.

  4. I00078US is the Bloomberg Barclays US Treasury Bill 1-3 Month Index designed to measure the performance of public obligations of the US Treasury that have a remaining maturity of greater tan or equal to 1 month and less than 3 months .

  5. LUMSTRUU is the Bloomberg Barclays US MBS Index tracking fixed rate agency mortgage backed securities.

  6. LUCMTRUU is the Bloomberg Barclays US CMBS Index tracking investment grade agency and non-agency commercial mortgage backed securities that are ERISA eligible.

  7. SPBDAL is the S&P/LSTA Leveraged Loan Index tracking US Leveraged Loans.

  8. SPBDCUT is the S&P Business Development Company Index.

  9. BABUTRUU is the US aggregate Asset Backed Securities AAA index.

  10. RMZ is the Morgan Stanley US Real Estate Investment Trust price-only index.

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1

Fund Highlights

Fund Structure

Interval closed-end fund

Share class

Institutional

Administrator

UMB Fund Services

Qualifications

Non Accredited Investor

Ticker

AAACX

Counsel

Thompson Hines LLP

Subscriptions/ NAV

Daily

Inception Date

September 30, 2019

Auditor

BBD LLP

Redemptions

Q2 2021 15% of fund NAV

Management Fee

1.50%

Distributor

Foreside Financial Services, LLC

Distributions

Quarterly

Expense Limitation

1.95%

2

3

Net Expense Ratio / Gross Expense Ratio

1.95%/7.99%

  1. The Adviser has entered into an expense limitation agreement to pay the ordinary operating expenses of the Fund that exceed 1.95% per annum.

  2. The Net expense ratio reflects the reduction of expenses from fee waivers and reimbursements. Elimination of these reductions will result in higher expenses and lower performance. These reductions are contractual and will continue until at least 01/31/2022.

  3. The Gross Expense Ratio reflects additional expenses embedded in the Fund's performance, such as the indirect costs of investing in other investment companies.

  4. Based on the volume of repurchase requests, there is no guarantee that all repurchase requests will be honored each quarter.

Portfolio Characteristics & Composition

Year-to-Date Total Return

- 1.56%

Current Distribution Rate

6.78%

1

30-Day SEC Yield (subsidized)

5.45%

30 Day SEC Yield (unsubsidized)

1.87%

# of Positions

68

Largest Position

5.09%

Leverage

0.00%

Long Term Capital Gains - Year 2020

0.00%

Short Term Capital Gains - Year 2020

0.00%

Screen Shot 2021-07-08 at 8.51.20 AM.png

Credit Rating Exposure

US Govt Agency Securities

2

59.39%

AAA

1.99%

AA

0.00%

A

0.00%

BBB

4.98%

Non-Investment Grade

0.00%

Not Rated

33.63%

  1. Current Distribution Rate is expressed as a percentage equal to the projected annualized distribution amount which is calculated by annualizing the current cash distribution per share without compounding), divided by the current net asset value and does not reflect any return of capital.

  2. U.S. Government Agency securities are considered to have an "implied AAA rating". Government National Mortgage Association issued securities carry the full faith and credit of the U.S. Government. Credit Rating Exposure reflects the underlying securities nationally recognized statistical ratings organization's credit rating.

Fund Materials

Q2 2021
 Presentation
Screen Shot 2021-06-24 at 8.45.53 AM.png
Annual Report
September 30, 2020
Screen Shot 2020-12-01 at 9.06.03 AM.png
Latest Monthly
 Fact Sheet
Screen Shot 2021-07-09 at 11.01.57 AM.png
Semi Annual Report March 31, 2021
SAR 3.31.2020.png
 2021 Repurchase Dates
Screen Shot 2020-10-21 at 12.30.54 PM.pn
Prospectus
Prospectus.png
Repurchase
Offer
Screen Shot 2020-09-17 at 4.42.14 PM.png
Statement of 
Additional Information
SAI.png
Schedule of Investments
12-31-2020
Screen Shot 2021-04-27 at 3.22.35 PM.jpg
Schedule of Investments
06-30-2020
Screen Shot 2021-04-27 at 3.22.35 PM.jpg
Prospectus
Sticker
Screen Shot 2021-06-01 at 2.06.18 PM.jpg
Fund Account Opening Documents
Account Application
AAACX Taxable Account Opening Doc.png
Account Application - IRA
AAACX IRA Account Doc.png
IRA Conversion & 
Transfer Form
AAACX IRA Conversion.png

Fund Account Disclosures

IRA Disclosure
Traditional IRA Disclosure.png
ROTH IRA Disclosure
Roth IRA Disclosure.png

Contact Us

90 Madison Street, Suite 303 

Denver, CO 80206

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Tel: 1 (303) 997-9010

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© 2021 A3 FINANCIAL INVESTMENTS LLC

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ABOUT    JOBS 

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The A3 Alternative Income Fund is a continuously-offered, non-diversified, registered closed-end fund with limited liquidity. There is no guarantee the Fund will achieve its objective.  An investment in the Fund should only be made by investors who understand the risks involved, who are able to withstand the loss of the entire amount invested and who can bear the risks associated with the limited liquidity of Shares.  

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Important Risks: Shares are an illiquid investment. You should generally not expect to be able to sell your Shares (other than through the repurchase process), regardless of how the Fund performs. Although the Fund is required to implement a Share repurchase program only a limited number of Shares will be eligible for repurchase by the Fund.

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The prices provided by a pricing service or independent dealers or the fair value determinations made by the valuation committee of the Board of Trustees may be different from the prices used by other funds or from the prices at which securities are actually bought and sold. The prices of certain securities provided by pricing services may be subject to frequent and significant change, and will vary depending on the information that is available. Pricing services that value fixed-income securities generally utilize a range of market-based and security specific inputs and assumptions, as well as considerations about general market conditions, to establish a price. Investments may transact in a negotiated manner via appointment, auction, offer or bid wanted in competition. Transaction price and valuation may vary by position size, asset type, investment holding period constraints and modeled cash flow assumptions. The Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third-party service providers. Pricing services generally value debt securities assuming orderly transactions of an institutional size, but such securities may be held or transactions may be conducted in such securities in smaller sizes. Investment size can influence price in negotiated markets and result in the same security having a wide range of prices. Standalone smaller investment positions often trade at lower prices than larger institutional positions. The Fund’s investments in certain fixed-income instruments purchased in smaller sized transactions may contribute positively to the Fund’s performance. As Fund asset levels increase, similar smaller sized transactions, if any, may not have the same relative impact on the Fund’s performance and are not anticipated to have the same relative impact on the Fund’s future performance.

 

An investment in the Fund is speculative, involves substantial risks, including the risk that the entire amount invested may be lost, and should not constitute a complete investment program. The Fund may leverage its investments by borrowing, use of swap agreements, options or other derivative instruments. The Fund is a newly-organized closed-end management investment company that has limited operating history and no public trading of its shares. The Fund is a non-diversified management investment company, meaning it may be more susceptible to any single economic or regulatory occurrence than a diversified investment company. In addition, the fund is subject to investment related risks of the underlying funds, general economic and market condition risk.

 

Alternative investments provide limited liquidity and include, among other things, the risks inherent in investing in securities, futures, commodities and derivatives, using leverage and engaging in short sales.  The Fund’s investment performance depends, at least in part, on how its assets are allocated and reallocated among asset classes and strategies. Such allocation could result in the Fund holding asset classes or investments that perform poorly or underperform.  Investments and investment transactions are subject to various counterparty risks. The counterparties to transactions in over the-counter or “inter-dealer” markets are typically subject to lesser credit evaluation and regulatory oversight compared to members of “exchange-based” markets. This may increase the risk that a counterparty will not settle a transaction because of a credit or liquidity problem, thus causing the Fund to suffer losses.  The Fund and its service providers may be prone to operational and information security risks resulting from breaches in cyber security.  A breach in cyber security refers to both intentional and unintentional events that may cause the Fund to lose proprietary information, suffer data corruption, or lose operational capacity.

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The Adviser and the Fund have entered into an operating expenses limitation agreement under which the Adviser has agreed, until at least one year after the effective date of the Fund’s registration statement, to pay or absorb the ordinary operating expenses of the Fund (excluding (i) interest expenses and dividends on short sales, and any fees and expenses incurred in connection with credit facilities including any commitment fees on borrowings, if any, obtained by the Fund; (ii) transaction costs and other expenses incurred in connection with the acquisition, financing, maintenance, and disposition of the Fund’s investments and prospective investments, including without limitation bank and custody fees, brokerage commissions, legal, data, consulting and due diligence costs, servicing and property management costs, collateral valuations, liquidation and custody costs; (iii) acquired fund fees and expenses; (iv) taxes; and (v) extraordinary expenses including but not limited to litigation costs), to the extent that its management fees plus applicable distribution and shareholder servicing fees and the Fund’s ordinary operating expenses would otherwise exceed, on a year-to-date basis, 1.95% per annum of the Fund’s average daily net assets. The Expense Limitation Agreement may not be terminated by the Adviser, but it may be terminated by the Board, on 60 days written notice to the Adviser. Any waiver or reimbursement by the Adviser is subject to repayment by the Fund within the three years from the date the Adviser waived any payment or reimbursed any expense, if (after taking the repayment into account) the Fund is able to make the repayment without exceeding the expense limitation in place at the time of the waiver and at the time of the reimbursement payment. See “Management of the Fund.”

 

BEFORE INVESTING YOU SHOULD CAREFULLY CONSIDER THE FUND’S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES.  THIS AND OTHER INFORMATION IS IN THE PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED FROM (877) 774-7724 or click here.  PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.

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Check the background of this firm on FINRA's BrokerCheck.

 

Foreside Financial Services, LLC, distributor.