Inside Litman Gregory’s High Income Alternatives Fund

Jeremy DeGroot, CFA, is a principal and the chief investment officer of Litman Gregory, a boutique wealth management firm based in the San Francisco Bay Area.

Jeremy joined Litman Gregory in 1999 and became a principal in 2003. He is responsible for overseeing the firm's manager due diligence, asset class research, and portfolio allocation decisions. Jeremy is also portfolio manager of the Litman Gregory Masters Alternative Strategies Fund and co-portfolio manager of the Litman Gregory Masters Equity, International, Smaller Companies and High Income Alternatives funds. He is frequently quoted in the national media in the areas of asset allocation and manager selection.

The Litman Gregory Masters High Income Alternatives Fund (MAHIX, MAHNX) seeks to generate a high level of current income from diverse sources, consistent with the goal of capital preservation over time. Capital appreciation is a secondary objective. It was launched on September 28, 2018.

I interviewed Jeremy last week.

You’ve recently launched the new Litman Gregory Masters High Income Alternatives Fund. What was behind the decision and what does the new fund seek to accomplish?

There were several factors behind our decision to launch the High Income Alternatives Fund. First and foremost, whenever we are considering creating a new Masters fund, we view it through the lens of Litman Gregory’s role as an independent investment advisor and fiduciary, managing diversified portfolios for our clients. We ask ourselves, “Does this fund deserve to exist from a fundamental investment perspective? Are there clear and compelling reasons to invest in it? Does the fund merit a meaningful allocation in our client portfolios and our own personal portfolios?” The High Income Alternatives Fund passed this test.

Litman Gregory has been investing in income-oriented strategies beyond traditional core investment-grade bond funds for many years. These investments have benefited our client balanced portfolios – improving their returns and diversifying risks. And we expect them to continue to play an important strategic portfolio role in navigating interest rate and credit cycles. We view the High Income Alternatives Fund within that context, as part of our diversified income exposure.