Hedge funds are financial partnerships that establish alternative investments using pooled funds that employ different strategies to earn active return, or alpha, for their investors. The pool of capital is contributed by sophisticated high net worth accredited investors and institutional investors. In short, it is the marriage of a professional fund manager (General Partner) and the investors (Limited Partner).
The fund strategy is derived from Cabana’s signature Target Drawdown Professional Series, which is a family of tactical, risk-based portfolios. The foundation of all Cabana portfolios and funds is our proprietary Cyclical Asset Reallocation Algorithm (CARA). CARA evaluates the economic cycle and signals reallocation as perceived conditions change.
As of December 31, 2021, Cabana’s Target Drawdown Professional 10, 13, and 16 are each rated four stars overall by Morningstar Inc. Target Drawdown Professional Portfolios are in Morningstar’s Tactical Allocation Category, which is made up of 375 total funds.
While Cabana’s signature Target Drawdown strategies concentrate primarily on loss prevention, Cabana Black emphasizes return maximization by utilizing portfolio leverage through borrowed capital.
On September 17, 2020, Cabana released a series of Target Drawdown ETFs, which are comprised of an optimal mix of broad asset-class ETFs (an ETF of ETFs). Beginning November 1, 2020 Cabana Black is 100% invested in TDSC (the Target Drawdown 10 ETF). By allocating to a Target Drawdown ETF, Cabana strives to provide a more tax-efficient hedge fund solution. Cabana Black also utilizes portfolio leverage by investing borrowed capital.
Cabana Black utilizes portfolio leverage by investing borrowed capital, combined with Cabana’s tactical, rules-based risk management process. While leverage increases risk, CARA still actively adjusts the level of risk to market conditions and as a result, risk parameters may be defined at the beginning of the investment process. Cabana believes that this synergy will facilitate outsized gains during favorable market conditions and incremental reduction of risk as conditions deteriorate.
Investors must qualify as an “accredited investor” as defined in Regulation D under the Securities Act of 1933 and meet the “qualified client” test of Rule 205-3 under the Investment Advisers Act of 1940. The “qualified client” test of Rule 205-3 changed on August 16, 2021, and requires investors to have a net worth in excess of $2,200,000 or make an investment of not less than $1,100,000. In addition, entity investors may be required to submit a financial statement to satisfy this requirement.
Cabana charges a 1.5% management fee in addition to an Incentive Allocation. Incentive Allocation is 15%, subject to a “High Water Mark” and only charged when clients make money.
The minimum investment is $250,000. Cabana Black, LLC has the right to waive the minimum investment amount at its discretion.
There are no restrictions, gates, or “lockups” to exit the fund beyond a quarterly withdrawal with 30 days’ notice.
Cabana has partnered with Duncan Administration Services, LLC to provide subscription processing and investor screening, offering materials for prospective investors, fund accounting and monthly performance, monthly individual capital account reports, facilitation of self-directed IRA investments in the fund, and investor inquiry responses.
Cabana Black is formed as a limited partnership, and actual funds were invested in Cabana Black beginning on March 3, 2020. An investment in the fund is an investment in Cabana’s experienced investment management, the Cabana investment philosophy, and the professional expertise of Cabana’s principals: G. Chadd Mason, Louis Shaff, Daniel Ippolito and Chris Carns.
Fund performance can be found at https://thecabanagroup.com/black/factsheet.
Please visit thecabanagroup.com for detailed information about the fund’s investment adviser, Cabana Asset Management, the Target Drawdown Professional Series, and its principals.
Advisors interested in offering Cabana Black to their clients:
Contact us at firstname.lastname@example.org or 479-442-6464. Our team will provide you with the fund’s objectives and terms, in addition to accredited investor certification requirements and next steps.
Investors interested in Cabana Black:
Contact your financial advisor for more information about the fund, including accredited investor certification requirements, and to request the private offering memorandum binder. If you do not have a financial advisor, contact us at email@example.com or 479-442-6464.