Driehaus Active Income Fund

  • Overview
  • Performance
  • Characteristics
  • Risks
  • Portfolio Managers
  • Literature

Investment Strategy

The Driehaus Active Income Fund seeks to provide current income and capital appreciation. The Fund invests primarily in U.S. fixed income and floating rate securities, of both investment and non-investment grade credit quality, and engages in a variety of short-term trading strategies (involving fixed income, equity and derivative securities).

 

Fund Facts

Inception Date: 11/8/2005*
Ticker: LCMAX
Cusip: 262028855
Assets Under Management as of 6/30/2014: $4,673 Million
Open to New Investors: No
Minimum Initial Investment: $25,000
Minimum Subsequent Investment: $5,000
Minimum IRA Investment: $2,000
Minimum Subsequent IRA Investment: $500
Distributions: Dividends are distributed quarterly
Capital Gains are distributed annually
Investment Vehicles: Mutual Fund

 


Growth of $10,000 Since Inception (11/8/2005)*

as of 6/30/2014:

 


Sources: Driehaus Capital Management LLC, Barclays, Citigroup, Lipper Investment Management

Please consider the investment objectives, risks, fees and expenses of the Fund carefully prior to investing. The prospectus and summary prospectus contain this and other important information about the Fund. To obtain a copy of the prospectus/summary prospectus, please call us at (877) 779-0079.  Please read the prospectus and summary prospectus carefully before investing.

Performance Disclosure
The performance data shown above represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost.

Performance data represents the rate that an investor would have earned (or lost), during the given month, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change.

Since Fund performance is subject to change after the month-end, please call (877) 779-0079 or view our daily NAVs for more current performance information.

* The Driehaus Active Income Fund commenced operations on June 1, 2009 following the receipt of the assets and liabilities of the Lotsoff Capital Management Active Income Fund through a reorganization into the Driehaus Active Income Fund.

1 The Citigroup 3-Month T-Bill Index is designed to mirror the performance of the 3-Month U.S. Treasury Bill. The Citigroup 3-Month T-Bill Index is unmanaged and its returns reflect reinvestment of all distributions and changes in market prices.

2 The Barclays Capital U.S. Aggregate Bond Index, an unmanaged index, represents securities that are SEC-registered, taxable and dollar denominated.  This index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities.  These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis.

Driehaus Securities LLC, Distributor

 

 

Performance Disclosure
The performance data shown below represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Principal value and investment returns will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost.

Performance data represents the rate that an investor would have earned (or lost), during the given month, on an investment in the Fund (assuming reinvestment of all dividends and distributions). Average annual total return reflects annualized change.

Since Fund performance is subject to change after the month-end, please call (877) 779-0079 or view our daily NAVs for more current performance information.

Month-End Performance as of 8/31/2014

Fund/Index MTD YTD 1 Year 3 Year 5 Year 10 Year Since Inception* 30-Day SEC Yield** (as of 7/31/2014)
Driehaus Active Income Fund -0.28% 0.42% 1.75% 3.10% 3.21% n/a 4.42% 1.86%
Citigroup 3-Month T-Bill Index1 0.00% 0.03% 0.04% 0.05% 0.08% n/a 1.39% n/a
Barclays U.S. Aggregate Bond Index2 1.10% 4.81% 5.66% 2.92% 4.48% n/a 5.31% n/a



Calendar Quarter-End Performance as of 6/30/2014

Fund/Index QTR YTD 1 Year 3 Year 5 Year 10 Year Since Inception* 30-Day SEC Yield**
(as of 6/30/2014)
Driehaus Active Income Fund 0.35% 0.79% 2.42% 1.69% 4.05% n/a 4.56% 1.62%
Citigroup 3-Month T-Bill Index1 0.01% 0.02% 0.04% 0.05% 0.08% n/a 1.42% n/a
Barclays U.S. Aggregate Bond Index2 2.04% 3.93% 4.37% 3.67% 4.86% n/a 5.31% n/a



Annual Fund Operating Expenses3

 
Management Fee 0.55%
Other Expenses:
 
Other Expenses Excluding Dividends and Interest on Short Sales 0.24%
Dividends and Interest on Short Sales 0.35%
Total Annual Fund Operating Expenses 1.14%

 

 


Sources: Driehaus Capital Management LLC, Barclays, SS&C Inc.

Please consider the investment objectives, risks, fees and expenses of the Fund carefully prior to investing. The prospectus and summary prospectus contains this and other important information about the Fund. To obtain a copy of the prospectus/summary prospectus, please call us at (877) 779-0079.  Please read the prospectus and summary prospectus carefully before investing.

Average Annual Total Return

*Inception Date: 11/8/2005

**SEC yield 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.

1 The Citigroup 3-Month T-Bill Index is designed to mirror the performance of the 3-Month U.S. Treasury Bill. The Citigroup 3-Month T-Bill Index is unmanaged and its returns reflect reinvestment of all distributions and changes in market prices.

2 The Barclays U.S. Aggregate Bond Index, an unmanaged index, represents securities that are SEC-registered, taxable and dollar denominated.  This index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities.  These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis.

3Represents the Annual Fund Operating Expenses as disclosed in the current prospectus dated April 30, 2014.  It is important to understand that a decline in the Fund’s average net assets due to unprecedented market volatility or other factors could cause the Fund’s expense ratio for the current fiscal year to be higher than the expense information presented.

Driehaus Securities LLC, Distributor

 

 

Trading Strategy Type

as of 6/30/2014 | updated quarterly
  Gross Exposure
 Capital Structure Arbitrage1 17.6%
 Convertible Arbitrage2 4.0%
 Event Driven3 6.1%
 Pairs Trading4 0.5%
Directional Long5 41.6%
Directional Short5 3.8%
 Interest Rate Hedge 4.4%
 Volatility Trading 2.3%
 Cash Equivalent 19.7%
Total 100.0%

 

Credit Rating*

as of 6/30/2014 | updated quarterly
  Gross Exposure
AAA6 27.8%
AA 0.3%
A7 3.9%
BBB 10.0%
BB 12.9%
B 29.8%
CCC 7.0%
CC 0.1%
C 0.0%
D 0.0%
Not Rated 8.2%
Total 100.0%

 

Industry Sector

as of 6/30/2014 | updated quarterly
GICS8 Gross Exposure
Consumer Discretionary 20.2%
Consumer Staples 2.9%
Energy 4.5%
Financials 14.8%
Health Care 3.7%
Industrials 5.6%
Information Technology 8.3%
Materials 2.4%
Telecommunication Services 2.3%
Other9
Asset Backed Securities 0.6%
Cash Equivalent 19.0%
CDS Index 2.0%
Diversified 0.3%
ETF 1.8%
Interest Rate Swap 0.1%
Mortgage Securities 6.2%
U.S. Government 4.4%
USD Currency 0.7%
Total 100.0%

 

 


Sources: Driehaus Capital Management LLC, Bloomberg

*Credit ratings listed are subject to change. Credit quality ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). “NR” is used to classify securities for which a rating is not available. The Adviser receives credit quality ratings on underlying securities of the portfolio from the three major ratings agencies - Moody’s Investors Service (Moody’s), Fitch Ratings (Fitch), and Standard & Poor’s (S&P). When calculating the credit quality breakdown, the Adviser utilizes Moody’s and if Moody’s is not available the manager selects the lower rating of S&P and Fitch.

1 Capital Structure Arbitrage, where the Fund attempts to exploit a pricing inefficiency between two securities of the same company. Often times, the Fund may buy a debt instrument that it believes is undervalued, while simultaneously shorting a subordinated debt instrument of the same issuer that is believed to be overvalued.

2 Convertible Arbitrage, where the Fund attempts to profit from changes in a company's equity volatility or credit quality by purchasing a convertible bond and simultaneously shorting the same issuer's common stock.

3 Event Driven, where the Fund invests in positions intending to profit from the consummation of a given event, e.g. a takeover, merger, reorganization or conclusion of material litigation, or based upon the perceptions of a potential pending corporate event.

4 Pairs Trading, where the Fund seeks to exploit pricing inefficiencies between the securities of two similar companies by buying the security of one company and shorting the security of the other. In these trades, the Fund anticipates the relationship between these securities will diverge or converge to an expected level where it may profit from the long and short positions.

5 Directional Trading, where the Fund takes long or short positions in equity or corporate debt instruments in anticipation of profiting from movements in the prices of these assets.

6 All government bonds are rated AAA.

7 All agency Mortgage Backed Securities (MBS) are rated A. Credit Ratings: AAA and AA: High credit-quality investment grade A and BBB: Medium credit-quality investment grade BB, B, CCC, CC, C: Low credit-quality (non-investment grade), or “junk bonds” Not Rated: Bonds currently not rated

8 The Global Industry Classification Standard (GICS), a collaboration between Standard & Poor’s and Morgan Stanley Capital International, is a system of classification that identifies a company according to its business activity.

9 The Other Industry Group data is not categorized within the GICS classification system.

Please consider the investment objectives, risks, fees and expenses of the Fund carefully prior to investing. The prospectus and summary prospectus contains this and other important information about the Fund. To obtain a copy of the prospectus/summary prospectus, please call us at (877) 779-0079.  Please read the prospectus and summary prospectus carefully before investing.

Driehaus Securities LLC, Distributor

 

Principal Risks


All investments, including those in mutual funds, have risks. No investment is suitable for all investors. The Fund is intended for investors who can accept the risks involved with its investments, such as credit risk, and who can accept the fact that there will be principal fluctuation. Of course, there can be no assurance that the Fund will achieve its objective. You may lose money by investing in the Fund. Below are the main risks of investing in the Fund:

Main Risks of Debt Securities
Debt securities may be subject to credit risk, interest rate risk, prepayment and extension risk as well as call risk. Credit risk is the failure of an issuer or borrower to make timely interest or principal payments, or a decline or perception of a decline in the credit quality of a bond or creditworthiness of a borrower, which can cause the security’s price to fall, potentially lowering the Fund’s share price. Prices of bonds and Senior Loans tend to move inversely with changes in interest rates. Typically, a rise in rates will adversely affect bond and Senior Loan prices and, accordingly, the Fund’s share price. The longer the Fund’s effective maturity and duration, the more its share price is likely to react to interest rates. Interest rate changes normally have different effects on variable or floating rate securities than they do on securities with fixed interest rates. When interest rates fall, debt securities may be repaid more quickly than expected and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as “prepayment risk.” When interest rates rise, debt securities may be repaid more slowly than expected and the value of the Fund’s holdings may fall sharply. This is referred to as “extension risk.” If an issuer “calls” its bond before its maturity date during a time of declining interest rates, the Fund might have to reinvest the proceeds in an investment offering a lower yield.

Fixed-Income Market Risk. Economic and other market developments can adversely affect fixed-income securities markets in the United States, Europe and elsewhere. At times, participants in debt securities markets may develop concerns about the ability of certain issuers of debt securities to make timely principal and interest payments, or they may develop concerns about the ability of financial institutions that make markets in certain debt securities to facilitate an orderly market. Those concerns can cause increased volatility in those debt securities or debt securities markets and the related derivatives markets. Under some circumstances, those concerns could cause reduced liquidity in certain debt securities markets and the related derivative traded securities. A lack of liquidity or other adverse credit market conditions may hamper the Fund’s ability to sell the debt securities in which it invests or to find and purchase suitable debt instruments.

High Yield Risk. Low-rated and comparable unrated securities (“junk bonds”), while generally offering higher yields than investment grade securities with similar maturities, involve greater risks, including the possibility of default or bankruptcy. They are regarded as speculative with respect to the issuer’s capacity to pay interest and to repay principal. The market values of certain of these securities tend to be more sensitive to individual corporate development and changes in economic conditions than higher quality bonds. In addition, junk bonds tend to be less marketable than higher-quality debt securities because the market for them is not as broad or active. The lack of a liquid secondary market may have an adverse effect on market price and the Fund’s ability to sell particular securities.

Derivatives Risk
The performance of derivative instruments depends largely on the performance of an underlying currency, security or index and such instruments often have risks similar to their underlying instrument, in addition to other risks. Like most other investments, derivative instruments are subject to the risk that the market value of the instrument will change in a way detrimental to the Fund’s interest. Derivative instruments may give rise to leverage and losses on derivatives may substantially exceed the initial investment. The use of derivatives involves risks different from, and possibly greater than, the risks associated with investing directly in the underlying assets. Derivatives can be highly volatile, illiquid and difficult to value, and there is a risk of imperfect correlation between the value of the derivative and the underlying instrument. When used for hedging, the change in value of the derivative may also not correlate specifically with the currency, security or other risk being hedged. Further, the Fund may invest in derivatives for speculative purposes. Losses from speculative positions in a derivative may be much greater than the derivative’s original cost and potential losses may be substantial. With over-the-counter derivatives, there is the risk that the other party to the transaction will default.

Market Risk
The Fund is subject to market risk, which is the possibility that securities prices overall, including both debt and equity securities, will decline over short or even long periods. Securities markets tend to move in cycles, with periods of rising prices and periods of falling prices. These fluctuations are expected to have a substantial influence on the value of the Fund’s shares.

Small- and Medium-Sized Company Risk
The Fund invests in companies that are smaller, less established, with less liquid markets for their securities, and therefore may be riskier investments. While small- and medium-sized companies generally have the potential for rapid growth, the securities of these companies often involve greater risks than investments in larger, more established companies because small- and medium-sized companies may lack the management experience, financial resources, product diversification and competitive strengths of larger companies. In addition, in many instances the frequency and volume of trading in small- and medium-size companies is substantially less than is typical of larger companies. The value of securities of smaller, less well known issuers can be more volatile than that of larger issuers.

Short Sale Risk
Short sales expose the Fund to the risk that it will be required to buy the security sold short (also known as “covering” the short position) at a time when the security has appreciated in value, thus resulting in a loss to the Fund. The amount the Fund could lose on a short sale is theoretically unlimited (as compared to a long position, where the maximum loss is the amount invested). The use of short sales may also cause the Fund to have higher expenses than those of other funds.

Nondiversification
Because the Fund may invest a greater percentage of assets in a particular issuer or a small number of issuers, it may be subject to greater risks and larger losses than diversified funds. The value of the Fund may vary more as a result of changes in the financial condition or the market’s assessment of the issuers than a more diversified fund.

Allocation Risk
The Fund’s overall risk level will depend on the market sectors in which the Fund is invested and the current interest rate, liquidity and credit quality of such sectors. The Fund may overweight or underweight certain issuers, industries or market sectors, which may cause the Fund’s performance to be more or less sensitive to developments affecting those issuers, industries or sectors. The Fund may have significant weightings in a particular issuer, sector or industry, which may subject the Fund to greater risks than less focused funds.

Manager Risk
How the investment adviser manages the Fund will impact the Fund’s performance. The Fund may lose money if the investment adviser’s investment strategy does not achieve the Fund’s objective or if the investment adviser does not implement the strategy successfully.

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Please consider the investment objectives, risks, fees and expenses of the Fund carefully prior to investing. The prospectus and summary prospectus contains this and other important information about the Fund. To obtain a copy of the prospectus/summary prospectus, please call us at (877) 779-0079.  Please read the prospectus and summary prospectus carefully before investing.

Driehaus Securities LLC, Distributor

 


Photo of KC Nelson

K.C. Nelson

Portfolio Manager

K.C. Nelson is the portfolio manager of the Driehaus Long/Short Credit and Event Driven strategies. As portfolio manager of the Driehaus Active Income Fund (LCMAX), the Driehaus Select Credit Fund (DRSLX), and the Driehaus Event Driven Fund (DEVDX) he is responsible for implementing a multi-strategy approach to the credit markets with an emphasis on achieving absolute returns with limited volatility. Mr. Nelson has been quoted in numerous financial publications, including the Wall Street Journal and Bloomberg, and has appeared as a guest contributor on CNBC. In addition to his role as portfolio manager, Mr. Nelson serves on the firm's management committee.

Prior to joining Driehaus Capital Management in 2009, Mr. Nelson was a senior portfolio manager at Lotsoff Capital Management. While at Lotsoff, he managed a credit arbitrage hedge fund and a mutual fund. Mr. Nelson has also held assistant portfolio manager and analyst positions at Akela Capital, Andersen Corporate Finance LLC and J.C. Bradford & Co. He received his B.A. in economics from Vanderbilt University and an MBA from Duke University's Fuqua School of Business, where he was a Keller Scholar.


Photo of Elizabeth Cassidy

Elizabeth Cassidy

Assistant Portfolio Manager

Elizabeth Cassidy is an assistant portfolio manager for the Driehaus Long/Short Credit strategies. As an assistant portfolio manager, she is responsible for idea generation, portfolio construction, security selection and investment research.

Prior to joining Driehaus Capital Management in 2009, Ms. Cassidy was a vice president at Bank of America Merrill Lynch where she spent five years on their distressed debt proprietary trading desk. While at Merrill Lynch, Ms. Cassidy was responsible for taking both long and short positions in bonds, bank loans and derivatives of distressed issuers across a variety of industries. Prior to Merrill Lynch, Ms. Cassidy worked in the investment banking division of Credit Suisse First Boston. She earned a B.A. in economics and French from Middlebury College and an MBA from Duke University's Fuqua School of Business, where she was a Keller Scholar. She has 14 years of investment related experience.


Photo of Adam Abbas

adam abbas

Assistant Portfolio Manager

Adam Abbas is an assistant portfolio manager for the Driehaus Long/Short Credit and Event Driven strategies. He is responsible for idea generation, portfolio construction, security selection and investment research.

Prior to joining Driehaus Capital Management in 2010, Mr. Abbas was an analyst for Neuberger Berman/Lehman Brothers Asset Management where he focused on high yield bond and loan investments within the information technology, media and telecom space. Prior to this role, Mr. Abbas worked as a consultant for Huron Consulting Group, LLC. He earned a B.S. in industrial engineering from Northwestern University and an MBA from the University of Chicago.

 

 

 

 

Driehaus Securities LLC, Distributor

 

Fund Literature

Fund Fact Sheet
August 31, 2014
Fund Commentary with Attribution
August 31, 2014
Portfolio Holdings
August 31, 2014
Prospectus
April 30, 2014
Summary Prospectus
April 30, 2014
Statement of Additional Information
April 30, 2014
Annual Shareholder Report
December 31, 2013
Semi-Annual Shareholder Report
June 30, 2014

 

 

XBRL File*
April 30, 2014

 

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Driehaus Securities LLC, Distributor