Kinship Fund June 2012 Update

Blog Title: Kinship Fund - June 2012 Update

Welcome to our blog. We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Fund. Currently our status is that we are seeking capital in 2012. We will start trading our systems in September 2012. All results posted are theoretical gains from our systems that we track hourly. Real results could differ due to slippage or other factors. Kinship Investments is not an advisory service and does not provide investment advice. Please contact lee@kinshipinvestments.com for further information.

Happy Summer!

Our Kinship Fund was down a modest amount for June 2012 (-2.065%). Whereas other Hedge Funds have had wild double digit negative or positive swings recently, we believe it is better to have modest steady increases without those surprises.

Our Volatility System has had great success during the first part of the year but has been given back gains recently, regardless it is hitting its targets. The Medium Term Systems have not had a great run so far for 2012 which gives us a possible indication of potentially huge gains as it reverts back to the mean for the rest of 2012. Lastly, our Short Term Systems have been working as expected with gains of 11% for the first six months of 2012.

Our Results are posted @ www.kinshipinvestments.com/trustfund.html

The detailed breakdown of our three systems are:

Kinship Fund June 2012 Results = -2.065%

Year to date 2012, Kinship Fund Systems:

Medium Term Systems (MTS) = -5.551%

Short Term Systems (STS) = 11.082%

Volatility System (VTS) = 7.038%

Kinship Fund Total Year to date (June 2012) = 4.19%

Comparable Benchmarks Year to date (June 2012):

Newedge CTA Index = -0.261%

Barclay Hedge Fund Index = 2.35% (estimated from reported data from 2,681 funds)

Canada S&P/TSX 60 Index = -4.74%

S&P 500 Index benchmark = 8.31%

Our funds have been structured to have positive returns if the general markets are down or up. We describe this well (I believe) via our Kinship Presentation which is able to be viewed online @ http://www.slideshare.net/LeeKinship/hedge-fund-investment-v5 (we recommend viewing this presentation by first going to www.kinshipinvestments.com and following the instructions on the first page). We hope you had time to view this presentation now as we will be following up with interested investors very soon. In our presentation we show when the S&P 500 index is getting smacked with large losses - we are positive, and when the S&P is making huge gains - we may not be as good but we are still positive.

This is an interesting time to show one of our main advantages the Kinship Fund has over traditional funds. This is the fact that 'We do not make money until you the investor make money'. Simply put, we don't just have a Performance Fee hurdle, we also have a Management Fee hurdle.

Let's concentrate on the Management Fee and the 'hurdle' we need to maintain as this is timely. Management Fees are fees that are paid to an investment management company (Kinship Investments) that is responsible for directing the Fund (Kinship Fund). It is a % fee based on assets under management (AUM) that is paid out each month. Our Management Fee is 1.5% per year. To calculate our monthly fee, this 1.5% is divided by 12 (months) for a percentage of 0.125%. This 0.125% is what we multiply the AUM at the end of every month to receive a Management Fee. With me so far?

So, what does this mean to you? If you invested $1,000,000 and we had a result of 1% for the month then you would have a month ending with $1,010,000. To calculate our Management Fee we multiply this number by 0.125% to receive a Fee of $1262.50 ($1,010,000 X 0.00125) for this month.

So what makes us different? We have a hurdle to attain that is cumulative every month. We must provide a 0.8% gain for the Kinship Fund every month. This means in January we need to achieve 0.8%, in February we need to achieve 1.6064%, in March it would be 2.419% and so on.

Which brings us to our current month ending June 2012. At this point the Kinship Fund has a year to date result of 4.19% (end of June, 2012). For June our hurdle stipulates we need a result of at least 4.897% before we can receive our Management Fee. So, even though we may be able to receive our Management Fee for the first five months of the year, we would not receive our Management Fee for June.

But what investor wouldn't be happy with a return of 4.19% in six months? Regardless, we only receive Management Fees for 5 of the 6 months in 2012. This is our dedication to our clients' hard earned capital.

We've had great response over the last few months but we still need to raise a little more money to be able to start with our minimum amount on September 1st in the Kinship Fund. We are hopeful meetings in the next month will go well.

Hope to talk to you soon,

Lee MacFarlane
President
Kinship Investments Ltd.
cel (250-818-5330)
office (250-385-9132)
fax (250-385-9134)

http://www.kinshipinvestments.com/

check us out on

Legal:

Past performance is not necessarily indicative of future trading results.

Blog Title: Kinship Fund - Raising money for the Kinship Fund.

Welcome to our blog. We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Fund. Currently our status is that we are seeking capital in June of 2012. We will start trading our systems in July 2012. All results posted are theoretical gains from our systems that we track hourly. Real results could differ due to slippage or other factors. Kinship Investments is not an advisory service and does not provide investment advise.  Please contact lee@kinshipinvestments.com for further information.

 

Well we are at the end of May and the S&P 500 has given up most of it's gains for the year and is only up about 1.7% while the TSX-60 has managed to decline 4.9% for the YTD.  To put it mildly, it is a very difficult environment for Fund managers.

Thank god we do what we do.  We are up 6.3% for the year to the end of May.  Not bad.

We are now commencing our road show and hope to raise between $3 and $10 million.  There are a few main differences to our approach and our results:

1. Our incentive is to make you, the investor, money for the Kinship Fund.  That is the only way we can profit at Kinship Investments.  If we make less than 10% per year we do not make $1 for Management AND Performance fees.  Again, our Management Fee can only be granted if we hit a 0.8% a month (accumulative) target and our Performance Fee is only granted if we are able to achieve a 10% profit for the year.  By the way our fees are 1.5% and 15%, which we believe is reasonable.

2. Industry standard Hedge Fund risk exposure is usually 3:1.  Meaning, for every $1,000,000 a standard Hedge Fund has for assets under management (AUM), they are able to leverage it up to $3,000,000 in positions.  We are 1:1 at our maximum positions.  On the average we are only 0.25:1.  This means we take far less positions to make a profit.  We use leverage wisely...

3. Talk about risk... The Kinship Fund has 50% of it's holdings in a low risk non-correlated bond or similar instrument that provides a small but steady minimum yearly return of 2.5%.  In fact we only actively use a maximum of 25% of our total holdings for our positions.  25% of our total holdings are held as contingency.

4. The Kinship Investments Systems are completely computer driven and indicate when and where us mere humans are to make our trades.  There is no emotion or discretionary trading involved.

WE TAKE THE EMOTION OUT OF TRADING

Here are details from our 'tear sheet'

Fund Performance
	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sept	Oct	Nov	Dec	YTD
2012	4.42%	2.28%	3.73%	-0.49%	-3.49%								6.39%
2011	2.86%	6.53%	-5.28%	16.96%	-1.68%	0.41%	0.61%	-0.87%	8.31%	-4.95%	-6.26%	-6.54%	7.80%
2010	0.26%	18.42%	-3.40%	5.89%	11.86%	15.38%	-6.78%	8.92%	7.60%	-6.19%	2.24%	5.04%	72.53%
2009	0.63%	3.93%	14.50%	-1.39%	-2.55%	0.37%	6.69%	8.40%	8.05%	7.31%	-4.01%	-9.59%	34.42%
2008	11.83%	6.36%	13.48%	-1.19%	-14.49%	4.31%	1.42%	13.21%	15.53%	10.20%	2.09%	2.94%	82.77%

(Past performance is not necessarily indicative of future earnings)

2008 to 2011 are real-time and back-tested results for Kinship Fund which included ‘Kinship Investments - Medium Term Systems’

2012 to Present contains the current Kinship Fund model of ‘Kinship Investments - Medium Term Systems’, ‘Kinship Investments - Short Term Systems’, and the ‘Kinship Investments - Volatility System’.

All systems trade only Gold, Silver, Copper, Crude Oil, Natural Gas, and/or the S&P 500 index futures contracts.

Analytics
	Kinship Fund	S&P 500 Index
Compound Annual Returns	46.20%	8.64%
YTD Compound Returns	6.39%	4.19%
Annual Standard Deviation	34.64%	27.05%
Sharpe Ratio	0.087	-0.011
Worst Drawdown	16.72%	49.90%
Months To Recover (1)	5+	39+
Percentage Up Months	67.92%	52.83%
Fund AUM	N/A

(1) The Kinship Fund and the S&P 500 Index has not recovered from their respective ‘Worst Drawdown’.

Something we are careful to point out is that our previous years (2008-2011) systems used slightly higher risk mainly due to not having the diversification that we do have in our systems today.

Our internal system results that we currently use in 2012 and beyond has a CAGR of 24.9% with a .05% standard deviation (I know, ridiculously low).  We have been trading possible larger returns for less risk lately.  In a nutshell we are aiming our sights at creating for the Kinship Fund a 25% return per year compared to the historical norm of 46% per year.

We look forward to any comments and our presentation in the following weeks.

Cheers,

Lee MacFarlane
President
Kinship Investments Ltd.
cel (250-818-5330)
office (250-385-9132)
fax (250-385-9134)http://www.kinshipinvestments.com/

check us out on

Blog Title: Fledgling Hedge Fund. RISK!!!

Welcome to our blog. We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Fund. Currently our status is that we are seeking capital in April and May of 2012. We will start trading our systems in June 2012. All results posted are theoretical gains from our systems that we track hourly. Real results could differ slightly due to slippage or other factors. Please contact lee@kinshipinvestments.com for further information.

It's been forever since my last blog...  We are so busy that we are going to keep this short and sweet.

We have been working deligently on our power point presentation with review after review from our internal panel of experts.  You can't be to careful or too prepared I always say.  Also, it doesn't help that we have to go through over 50,000 data entry points to confirm our results... ugh...

It appears we will be setting up our meetings with our investors come June.  It is tight, but we hope to start our Kinship Fund July 1st.  It would be a perfect time since it would be halfway through the year.

Here are our results up until April, 2012:

(Past performance is not necessarily indicative of future results)

 Obviously there is much interest in what we are doing and we are very happy that we are on track with the current S&P 500 Benchmark and our own average results, but we are also doing better than many other indexes.

A colleage of mine reminded me to look at the TSX, the index of Canada.  It is down as I type -2.81% for the year to date.  Not great for many invested in this benchmark.  What about my favorite benchmark?  The Scotia Hedge Fund Index to the end of March is down 3.77% (or -0.27% on an equal weighted basis).

To make sure it is clear we are up 10.231% to the end of April 2012.  This is on track for our average earnings per year with standard deviations.

RISK!

I just love Helmut Weymar's (Commoditied Corporation): "The most dangerous people in the world are very smart traders that have never gotten their teeth kicked in"

We averagely use a maximum 25% of our Fund for our transactions.  This means we are currently seeking to invest half of our fund with a very low risk - non correlated investment.  Being who we are we cannot settle for less than inflation.  Who the hell would be happy with a 10 year treasury or a GIC?  It's called wealth destruction people!!!  Inflation is over 2% or haven't you heard?

Anyway we are happy to say we have agreements in place to provide a very low risk 3 to 4% per year on HALF of our Kinship Fund.

By the ways, we have an average risk of trade of 0.65%.  We take risk very seriously, but are still able to provide superior returns above the standard market averages.

May is very busy, as we are doing our final touches to our power point presentation.  We'll see what the investment environment will be in June as it seems like it is very tough to raise money.

Hopefully investors will see the attractiveness of having non-correlated great returns so far that our fund has posted.

Cheers,

Lee MacFarlane
President
Kinship Investments Ltd.
cel (250-818-5330)
office (250-385-9132)
fax (250-385-9134)http://www.kinshipinvestments.com/

check us out on

Blog Title: Power Point, systems update, and Alpha...

Welcome to our blog.  We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Fund.  Currently our status is that we are seeking capital in April and May of 2012.  We will start trading our systems in June 2012.  All results posted are theoretical gains from our systems that we track hourly.  Real results could differ slightly due to slippage or other factors.  Please contact lee@kinshipinvestments.com for further information.

First off, I am a business owner.  Another business I own had a client ask for a certain service that we normally do not provide.  Being the helpful type we agreed to provide this service and doing so provide a savings for the customer even though we weren't fully experienced in it... How hard can it be?  It's not that far out of our norm...

First mistake.  You only do what you are confident you can do to provide an end result that your clients appreciate.  I knew this as we usually differ to our professionals to make sure the project is done efficiently and professionally.  This I learned a long time ago.  Apparently I'm human...

Second mistake: Saving money... Believing you may be able to do it cheaper than competent professionals may be true, but ultimately may put egg on your face.

Anyway my point is I have done many things in my career, but Power Point I have not :-)  Needless to say, I am asking for help from close associates.  Oy Vey... again it's one thing to present something coherent, it's another to have someone take you seriously because of what they see.  Really looking forward to our meetings in April.

So far March 2012 is looking like another great month for us.  Our MTS and STS are slightly negative (-1% each), but our VTS has been kicking butt with the yo-yo volatility lately (currently up 7.4% for the month!).

Results are now in for the Scotia Canadian Hedge Fund Index for February 2012:
http://www.scmonline.com/analytics/cgi-bin/hedgefund/entry_screen.cgi

I really don't understand how the majority of great Canadian Hedge Funds are not at least keeping pace with the market.  It flys in the face of many pundits, but most funds been consistent in NOT outperforming for the past few years.  At least they can truly say they are uncorrelated to the market...

There is a post of a past email as well here:
http://kinshipinvestments.blogspot.ca/2011/12/welcome-to-our-blog.html

We are posting these emails to possibly bring clarity to viewers that may not have been on our email list from more than a year ago.  We will be posting more as we move forward as our past emails have many great nuggets of information and shows we actually have been working on our Fund for awhile :-)

I wanted to touch base on Alpha.  What this means is the amount of true return over and above the benchmark associated to what those trades are based on.  Basically alpha is what I can provide in excess of the S&P.  If you every read books on 'Quants' or computer driven traders, alpha has a slang meaning where simply stated in a sentence, "He can find hidden alpha in the gold market like no other!".

Alpha represents to me this hidden truth that profitable hedge funds are able to find.  My point is (sorry for my obvious lead in), we have found 'our' alpha.  It has taken over 12 years, but in a way that's not such a long time as others who have been in this field for many years longer than I.

I had email correspondence recently with a fund manager who stated (not picking on you at all sir, it just was helpful in bringing up this subject), "Lee, I'm particularly impressed with your 2009 numbers catching off of the lows very early in 2009.  Any insight on the types of systems that performed well in that environment?"  This lead me to thinking what truely we are doing in our profession as fund managers...

Alpha is what it comes down to really.  Every Fund trader him/herself started their Fund on the ability and secret knowledge that they can beat the market.  First comes a theory, then comes creation, then comes testing to prove your theory.  Stating this is simple, but it is extremely difficult in practice.  Especially when traders think their Alpha was created by them rather than just stumbling across a profitable time frame... Either way, its a matter of finding this hidden alpha that only you and you alone understand and can profit from.  It truly is one of the most rewarding feelings in the world.  Think about it, there are trillions of dollars being moved around everyday by people who can destroy or create our world, and we've found ways of taking that money from them.  It's empowering and liberating, sort of like the feeling you get at being complemented by a client for a job well done.

Like being complemented as a professional.  (Yes, I like how I've come back to this point :-)

Where we call home (Vancouver Island) there are approximately 800,000 people.  There are many high-net worth individuals, successful business people, and wealth management firms.  As far as I know there is only one fund on our island that actually trades markets similar to ours.  There are only about 200 Hedge Funds in Canada and about $2 Trillion dollars worth of assets controlled by all Hedge Funds world wide.  Not one of these (or any other in the world) are able to achieve the same Alpha as ours.  We are not saying we are better than them.  We are different from them, just as all Hedge Funds are different from each other to a greater or lesser degree.

In this regard there is a near impossibility other Hedge Funds can mimic or profit from our Alpha.  It's akin to being hit by lightning at the same time as winning the lottery for someone to achieve what we have.  Don't get me wrong, this is the same as any other successful Hedge Fund that keeps their secrets close with many negative legal impacts.  We have learned much from people like Jim Simmons who have not had a (serious) breach of information since their inception in 1982 of Renaissance Technologies.

There is no way anyone can know how we get our buy or sells, how we utilize past and present data, how we can utilize our own results, and how we profit from them.

I have been stating for many months our Alpha is only able to project a maximum assets under management of $300 million.

Do you really think a professional would stop there?


Cheers,

Lee MacFarlane
President
Kinship Investments Ltd.
cel (250-818-5330)
office (250-385-9132)
fax (250-385-9134)http://www.kinshipinvestments.com/

check us out on 

Welcome to our blog.  We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Fund.  Currently our status is that we are seeking capital in April and May of 2012.  We will start trading our systems in June 2012.  All results posted are theoretical gains from our systems that we track hourly.  Real results could differ slightly due to slippage or other factors.  Please contact lee@kinshipinvestments.com for further information.

Another month gone and WOW, what interesting markets they have been recently.  Little volume and grinding markets.

I love just getting to the point so here are our updated systems results for our Private Fund (Month end - February 2012):

As you can see we have no problem with good results.  But, the most telling time will be when the S&P has some down months, then we will shine.  Sure, we can make money when the market is making money, but the question you and many others ask is:  Can we make money when the market is going down?

Our 2009 to 2011 results say yes.  See for yourself at http://www.kinshipinvestments.com/

We are quite happy with the recent results as the risk in acquiring our profits have a lower standard deviation than the S&P index.  Obviously the markets have been on a tear, and I am happy for people invested in the general stock market, but for us slow and steady is the game.

January results mirrored our benchmark, but February saw a choppy sideways market that provided mediocre results.  Our Volatility System shined during that time as we had a large breakdown in volatility which at times gives us a condensed large profit while our other systems don't do as well.  This is the reason we have diversified to a more volatility controlled system.

These results fly in the face of most CTA or Hedge Funds in Canada.  In fact here is the Scotia Hedge Fund Index:
http://www.scmonline.com/analytics/cgi-bin/hedgefund/entry_screen.cgi

Simply stated we kick their butt (so far :-).  Unfortunately the results only encompass to January so it will be interesting to see how we compare for February.  They always take forever in reporting previous months returns.

As promised we have further details on our fund:

Fees.

This is a critical issue that can make or break a startup fund like ours.  Potential investors see you as greedy if they do not see the value in investing when the results are watered down by fees.  Management and Performance fees cannot fly in the face of clients that do not see results.  We take this to hart.

As shown on our above result graph, we are now aligning ourselves with the S&P Benchmark historical average of 10% a year.  If we do not achieve our 0.8% accumulated return per month then we do not receive our monthly Management Fees.  Period.  If we do not reach our minimum target of 10% a year return then we also do not receive a yearly Performance Fee.  Period.  Even if we beat the market this year by 20%  as the S&P could be at minus 11% for the year and we can be positive 9%...  We would still not receive one penny of a Performance Fee at the end of the year.
Our Management Fee is 1.5%.  This is calculated by taking the end of the month capital, multiplying it by 1.5% and dividing it by 12.  Again, this is ONLY received if we surpass our accumulated benchmark of 0.8% a month.  The fine details of course is if we do not receive our fees in the first month (such as if we made 0.6% for the month), but in the next month we are above our accumulated benchmark (such as 2% for the first two months), then we DO receive our past month fees as well as the current.  In a nutshell, we do not recive our Fees if we don't make you money.  But to be clear, if we did recieve Managment Fees in the first 6 months of the year, but we ended the year below 10% then we do not 're-imburse' these fees.  Management Fees are calculated and paid monthly.


Our Performance Fee is 15%.  This is calculated by the end of the year profits minus Management Fees.  Again, Management Fees ARE included in this calculation.  So for example, if we did achieve 10% return for the year, but we incurred Management Fees during the year to pull down our TOTAL return to 9%, then simply stated we receive NO Performance Fee.

One last thing.  These terms are ONLY available to our initial investors.  Any investor we acquire after our initial starting period will have to pay the usual 1.5% and 15% fees as per usual Hedge Fund standards.  This means receiving 1.5% per year on the AUM (assets under management) no matter what our results.  We would also receive our 15% Performance Fee as long as we are above 0% for the year including Management Fees.

We are currently renovating our new home office with the highest computer and physical security we can acquire for our five computer office.  We are also creating our Power Point presentation which will be available for meetings in April.  If you have any interest in setting up a meeting in that month, let us know.  Otherwise, we will be contacting all wealth management firms on the island, some on the lower mainland, and also groups of individuals to set up our meetings.

I promise at this point there will be weekly blogs discussing what we are doing to fill in greater detail of our activities and answer some of your questions in regards to our systems.  Also we have a great amount of email correspondence that has been sent in the past that will be posted as blogs in the coming days.  Look out for those soon.  This may provide clarity about who we are, where we have been, and where we are going.

We have laid the foundation for a very unique and professional Private Fund.  I hope you will join us!

Cheers,

Lee MacFarlane
President
Kinship Investments Ltd.
cel (250-818-5330)
office (250-385-9132)
fax (250-385-9134)http://www.kinshipinvestments.com/

check us out on 

Kinship Investments Fund update - January 2012

Welcome to our blog.  We are using this platform to acquire further interest in our Private Fund and to provide on-going information as to what we are doing and how we are progressing in this challenging field as a Private Fund.  Currently our status is that we are seeking capital in April and May of 2012.  We will start trading our systems in June 2012.  All results posted are theoretical gains from our systems that we track hourly.  Real results could differ slightly due to slippage or other factors.  Please contact lee@kinshipinvestments.com for further information.

Our 2011 Systems ended the year positive 7.80% (or approximately 7.41% with fees) which isn't too bad considering the Scotiabank Canadian Hedge Fund Index was a negative 3.77% for the year.  We have again acheived our goal by outperforming the S&P index for the year.  2011 was interesting to say the least for hedge funds.  It is a rare occasion that the general Hedge Fund industry under performs the S&P index.

But that's sooo 2012.. :-)

We were not impressed by our year end drawdown for 2011 on our systems (although this is an enevitable result of systems trading and was within our range of possibilities).  To help avoid these drawdowns we are required to further diversify.  We are now bringing together all our systems that we have.  These systems were to be brought online in the future when we had more capital, time, and resources.  We may not have capital but we at least we have time and resources.

There is a reason for everything, and not being able to raise our capital for 2012 quickly in November and December last year has left us opportunities for long term planning and current improvement.

Kinship is now able to provide smoother results and less drawdowns with three separate systems that allocate our total capital by a third to each.  Our risk per trade has been lowered from a 3% to 1% maximum level (on the average it is approximately 0.65% per trade).  This also means we have a lofty AUM (assets under management) ability of over $300 million dollars.

With the AUM that we are capable of and the results we are getting we now in contact with administrators, lawyers, other canadian hedge funds, and off shore professionals to deligently discuss our future after our private fund that we are currently setting up.

We are currently seeking $3million total for our private fund.

We are in discussions/negotiations with sales/marketing/brokers to accumulate most if not all our funds.  This is a very important step for us and we hope to have a sales contract in place very soon as we are looking to start our fund by June 1st of this year.

As I've stated there are many more things to notify our possible investors about such as changes to our fee structure, Kinship Investment ownership opportunities, and how our three systems are structured, but we will leave those to future emails / blogs.

We will end our email / blog with our current compiled (without fees) results for our three systems:

Results to end of January, 2012.

MTS Systems: +4.03% (complete)

VF Systems: +2.10% (complete)

STS Systems: Results are being compiled.

Lee MacFarlane
President
Kinship Investments Ltd.
cel (250-818-5330)
office (250-385-9132)
fax (250-385-9134)
http://www.kinshipinvestments.com/

check us out on