RGT Advisors LLC

RGT Managed Account Program

RGT Onshore is a long biased, long volatility futures fund. The investment premise is that a major bull market is underway in world wide commodity markets. There are two powerful fundamental factors driving these markets. First is a secular increase in economic growth rates, particularly in the less developed world, and second is the fact that, over the short and medium term, there is little or no excess production capacity for many commodities. Given the expense and particularly the long lead times associated with developing new supply, this bull market has the potential to last for a long while, on the order of ten or more years. However there are periods in which, even if this long term premise is correct, markets will go sideways or even down, and perhaps dramatically so. In such environments, RGT uses long volatility option strategies to exploit violent price action in either direction. Thus it becomes possible to speculate intelligently and profitably in the futures markets, while maintaining a fundamental investment belief, yet without being subject to the enormous swings in equity that characterize a great many market players. To control the variance of its returns, RGT employs minimal leverage. In addition, RGT uses option hedging techniques to control absolute risk and drawdowns, and sometimes to protect unrealized profits. Finally, RGT employs strict loss limits per position or idea so that mistakes are not allowed to get out of hand and dominate the portfolio. Currently the risk management rule is that no loss can exceed 1% of portfolio value. This style of investing allows RGT to take, if deemed appropriate, contrarian positions, where value seems compelling but trend followers and trading systems are on the other side of the market. The idea is to exploit situations in which a vast majority of black box systems has lined up on one side of the market, but where price activity and economic reality may have diverged. When trading outright, such positions can be extremely dangerous. However with intelligent use of options, RGT can act quickly and decisively to exploit such market anomalies. In particular, volatility strategies can be designed to give a position time to work while making certain that losses cannot exceed predetermined limits. Such strategies can turn a poorly timed idea into a profitable position. For these reasons, RGT expects its results to be independent not only of general financial market performance but also of most other investment managers in the futures industry.