“The housing market is recovering, but at a pace where lenders are still willing to sell whole mortgage notes at a deep discount," according to President Bayard Closser.
Irvine, Calif. (PRWEB) January 17, 2013
Vertical Capital Income Fund (VCAPX) easily outperformed its benchmark in its first year of operations, with a return of 12.95%, compared with a 2.59% return for the Barclays U.S. Mortgage-Backed Securities (MBS) Index.
The fund’s performance from its inception on Dec. 30, 2011 through Dec. 31, 2012 surpassed the results of the index not only at net asset value, but at the fund’s maximum 4.50% sales charge; with the charge, the return for the year was 7.91%. The fund also declared a dividend of 4.01% on an annualized basis (3.54% after the sales charge of 4.50%) for the period ending Dec. 31, 2012, which is when the Vertical Capital Markets Group’s fiscal year ends. Vertical created and manages the VCAPX.
The performance data quoted here represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that investor’s shares, when redeemed, may be worth more or less than their original cost.
The fund’s investment adviser has contractually agreed to reduce its fees and/or absorb expenses of the fund, at least until 1/31/2014, to ensure that the net annual fund operating expenses will not exceed 1.85%, subject to possible recoupment from the fund in future years. Without these waivers, the fund’s total annual operating expenses would be 2.27%. Mutual funds involve risk including the possible loss of principal that issuers and counterparties will not make payments on securities and other investments held by the fund, resulting in losses to the fund. Please review the fund’s prospectus for more information regarding the fund’s fees and expenses. For performance information current to the most recent month-end, please call toll-free 866-224-8867.
VCAPX is a closed-end interval fund that invests in whole mortgage loans and deeds of trust. As a closed-end interval fund, it provides limited liquidity on a quarterly basis. The fund does not use leverage.
“VCAPX is potentially benefiting from a Goldilocks effect,” according to Vertical President Bayard Closser. “The housing market is recovering, but at a pace where lenders are still willing to sell whole mortgage notes at a deep discount. This creates what we believe is a ‘just right’ environment that we believe will continue for at least three more years.”
The fund (VCAPX) trades on NASDAQ and is available for a minimum investment of $5,000, or $1,000 for retirement accounts.
“People are getting older and becoming more dependent on income from their investments,” Closser said. “Their choices are getting more limited, especially relative to the risk they face in trying to obtain the returns they need to survive.
“Regardless of inflation and the institutional cleansing process that’s underway in the banking world, older investors should look for some participation in income-generating investments that are tied to a real asset – like real estate or precious metals, which historically have gone up when the economy finally recovers,” he continued. “However, there is no assurance that any investment strategy will achieve its objectives, generate profits or avoid losses.”
About Vertical: Founded in 2004, Vertical Capital Markets Group underwrites, monitors, and services the mortgages the firm purchases. The principals have more than 60 years of combined experience in the mortgage banking industry. With its network of relationships, Vertical strives to provide moderate, non-correlated products to investors. Vertical believes managing mortgage note portfolios requires sophisticated expertise and that to succeed in this arena; experts like Vertical are needed in this highly specialized marketplace. The company’s wide network of contacts within the banking industry allows the firm to uncover mortgage note opportunities that other buyers might not find. As mortgage servicer, Vertical also has access to information not readily available to most institutional investors.
The Barclays Capital U.S. MBS index measures the performance of investment grade fixed-rate mortgage-backed pass-through securities of GNMA, FNMA, and FHLMC. You cannot invest directly in an index and unmanaged index returns do not reflect any fees, expenses or sales charges.
Mutual Funds involve risk including the possible loss of principal. There is a risk that issuers and counterparties will not make payments on securities and other investments held by the Fund, resulting in losses to the Fund. In general, the price of a fixed income security falls when interest rates rise. A specific security can perform differently from the market as a whole for reasons related to the issuer, such as an individual's economic situation, the Fund's net asset value may be more volatile because it invests in notes of individuals. The Fund is a closed-end investment company with no history of operations. Securities may be subject to prepayment risk because issuers are typically able to prepay principal. The Fund will not invest in real estate directly, but, because the Fund will invest the majority of its assets in securities secured by real estate, its portfolio will be significantly impacted by the performance of the real estate market and may experience more volatility and be exposed to greater risk than a more diversified portfolio. Quarterly repurchases by the Fund of its shares typically will be funded from available cash or sales of portfolio securities. The sale of securities to fund repurchases could reduce the market price of those securities, which in turn would reduce the Fund's net asset value.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Vertical Capital Income Fund. This and other important information about the Fund is contained in the Prospectus, which can be obtained by calling 1-866-277-VCIF (866-277-8243). The prospectus should be read carefully before investing. The Vertical Capital Income Fund is distributed by Northern Lights Distributors, LLC member FINRA. Vertical Capital Markets Group, LLC is not affiliated with Northern Lights Distributors, LLC. 0118-NLD-1/14/2013