As part of our ongoing series, we are pleased to introduce the RAM Management Group, Ltd. located in New Canaan, CT in this issue’s CTA Spotlight.
Founder and President of RAM is Robert A. Moss, who brings three decades of direct futures trading experience, and has been a member of most US exchanges including; CBOE, CBOT, NYMEX, COMEX, FINEX, NYFE, Mid-West Stock Exchange, and Mid America Commodity Exchange. Mr. Moss started his career trading futures markets in 1973 under the tutelage of legendary futures traders and continues to oversee the trading of client funds today. The majority of Mr. Moss career and experience was garnered on the actual exchange floor.
RAM offers two trading programs for individual managed accounts: The RAM Conservative Program and the RAM Aggressive Program. The RAM Fund LLC is currently a client of the Aggressive Program.
The Conservative Program has an 18-year uninterrupted track record. The RAM Aggressive Program is for investors with higher risk appetites as it trades in similar fashion to the Conservative Program but at three times the monthly risk and reward of the Conservative Program.
RAM offers two trading platforms for accessibility for an investor to participate in managed futures. One is through granting RAM power of attorney to place trades in their account. This enables the investor to retain control and title to his capital. Although the managed account has a higher minimum investment, it offers daily liquidity and transparency benefits. On the other hand, an investor can choose accessing a fund structure, which offers limited liability and a lower minimum investment, but clients would give up daily reporting/transparency for monthly reporting and also must relinquish funds to the entity.
RJO: We’d like to thank RAM for participating in our CTA Spotlight, and in particular, Steve Capillo for offering his insight. If you would be so kind as to introduce yourself and tell us a little bit about RAM and its team.
Steve Capillo: My name is Steve Capillo, I hold a Series 3 license and I am a registered Associated Person with the NFA and with RAM Management Group. I live in the Chicago area and act as a marketing representative and customer liaison with RAM’s Chicago based clients.
RJO: Brief description of your trading program(s). What strategy (systematic or discretionary), trade generation (technical or fundamental), holding period, inception date etc.
Steve Capillo: RAM executes a quantitative investment model with a sound comprehensive risk management philosophy utilizing exchange traded, liquid, centrally cleared, transparent, daily market-to-marketfutures contracts. RAM's management team believes in a rule-based technical investment model using a strength/weakness, breakout,pattern recognition, and trend analysis to identify short-to-medium termopportunities, (2 days to 2 months) long or short, in over 25 markets across 7 economic sectors.The RAM Conservative Program has been trading client funds since 1993, The RAM Aggressive program began trading in 1998.
RJO: What makes your approach different from other CTAs?
Steve Capillo: What makes RAM Management unique and different from most other CTA’s is that its principals come from the futures exchange trading floors and have well over 100 years of cumulative trading experience. RAM’s proprietary risk management model limits market exposure at the contract, sector, and portfolio level. It utilizes a dynamic volatility based asset allocation.
Secondly, RAM is very trade selective; in fact 9% of the time RAM has no position at all. RAM limits its trading to approximately 28 US futures based contracts, but is only in 4 or 5 markets at a time, generally. Unlike many CTA’s we do not believe trading more contracts enables greater diversification.
Thirdly, RAM is a very capital efficient manager. 50% of the time, margin as a percentage of trading level is less than 5% and 96% of the time it is less than 10%.
Most importantly, in addition to offering potential for return, RAM has a very low correlation to traditional investments; 0.1 to Stocks and -0.1 Bonds, as well as a very low correlation to other CTAs, 0.39 to our peers as measured by the Barclay CTA Index.
RJO: What is your minimum capital requirement for your program(s)?
Steve Capillo: The Individual Managed Account has a minimum investment of $1million; however, as margin to equity averages 5% or $50,000 per $1million, notional funding is available. Notional Funding refers to funding an account without having to deposit the full trading level of the account in cash. For example, a qualified customer can open a $1m managed account by providing a brokerage account at an FCM such as RJ O’Brien with as little as $250k in cash.
The RAM Fund LLC has a minimum investment of $100k.
RJO: On what markets does your program focus?
Steve Capillo: RAM focuses their trading in seven economic sectors- energy, currency, interest rates, stock indices, agriculture, metals, and, softs.
RJO: Would you say your trading program(s) is better suited to be a stand alone or part of a multi-CTA portfolio?
Steve Capillo: We do not market RAM as a stand-alone investment. For a qualified investor, we believe that RAM makes a solid, non-correlating addition to a properly diversified portfolio. It does not matter if the portfolio is made up of more traditional investments such as Stocks and Bonds, or is a portfolio of other CTAs.
RJO: In regards to selecting a CTA or composing a portfolio of multiple CTAs, what piece of advice would you offer to a client?
Steve Capillo: Understand who you are about to do business with. Be comfortable with how the manager controls risk. Control the risk, and the good trades will take care of themselves. Make sure you construct a truly diversified portfolio containing a variety on non-correlating investments that match your risk tolerance.
RJO: We’d like to thank RAM Management Group and Steve Capillo for sharing their thoughts and information about their trading programs.
As always, we encourage everyone to check out the website: http://www.rjofutures.com/managed-futures/
In upcoming issues, we will spotlight each CTA to feature their particular area of expertise and the concepts behind their trading program(s). Anyone interested in more information regarding Managed Futures may feel free to contact me at CPeck@rjofutures.com or (312) 373-5338.