We - XoomFi Advisors - are a Registered Investment Advisor (RIA) - SEC Registration # 314872 SEC File # 801-121438.
We have developed, devised and launched a new trading strategy and system - Equity Premium InCome (EPIC) - based on Buy-Write or Covered Call as the primary investment instrument - a system we refer to as EPIC Investing - https://xoomfi.com/epic-investing.
EPIC Investing trading strategy and XoomFi EPIC Investment Models offer premium income generation and equity appreciation while also providing intrinsic downside protection. The Fund offers Defined Reward / Risk profiles - Balanced, Turbo, Ultra - to match the investor’s risk profile and tolerance.
We - https://www.XoomFi.com - are based in San Jose, CA. The principals in our firm have more than 30 years of stocks and options trading experience combined with broad and deep experience in the Tech sector and Venture Capital industry. We are also the most ardent believer in the principles of EPIC Investing and the theory behind it and will continue to invest in developing EPIC Investing strategy and trading system for the US market and other markets around the World.
EPIC - Equity Premium InCome - Investing combines benefits of equity appreciation and income generation to investors. It’s an attractive option for a) Fixed Income investors looking to generate income without forgoing the equity appreciation upside and b) Equity investors who get the benefit of income generation from their equity investments during the holding period.
Buy-Write or Covered Call is the primary investment instrument utilized in EPIC Investing, which entails long & short positions in the same equity that are inversely correlated.
XoomFi Advisors has embraced EPIC Investing as its core strategy. We believe EPIC Investing is the most important development in the world of investing since Call and Put options were introduced to the US investors in 1872 - 150 years ago. It has the potential to upend conventional wisdom about investing in Fixed Income, Equity markets or 60:40 investment portfolios.
If all the investments in Fixed Income markets were instead made in EPIC Investing, investors could potentially realize an incremental $2.8T annual returns. Likewise, if all the investments in Equity markets were instead made in EPIC Investing, investors could generate an incremental $1.2T annual returns. Visit https://xoomfi.com/epic-investing for additional information on EPIC Investing and why we believe it is the most promising and exciting investment option to come around in over 150 years!
Management Fee = 0.25% of Assets Under Management (AUM) each quarter
At XoomFi, we have developed and implemented a new and unique trading strategy with Covered Calls as the key investment instrument or building block and a strategy that relies on a long-term market perspective and short-term adjustments.
Unlike most fund managers who have a naturally bullish or bearish bias and who then attempt to will the market to move in their preferred direction, we have the humility to know that no matter how hard we try we will not be able to will the market to move in a specific direction.
We have adopted a radically different approach which is a lot more nimble and one that lends itself to respond favorably to the frequent and volatile changes - up or down, bull or bear, growth or value - we have witnessed in three distinct phases of the market - Up, Down and Up again - in a brief span of 6+ months since July 1, 2022.
We have developed a set of core beliefs and guiding principles based on our experiences - core beliefs which make XoomFi unique and different. These core beliefs are:
These core beliefs have been incorporated into everything we do - our philosophy, our trading strategy and plan, selection of positions, entry / exit points.
There is a truism in the business world that Change is the only constant. The analogous truism for trading in the equity market is: Volatility is the only constant.
Whether the volatility in the market or individual security is driven by market forces, geo-political or other exogenous forces, or induced by the Fed - Federal Reserve Bank or the Federal Government - (subject of a separate blog post), we believe volatility needs to be factored into every trading strategy.
We have actually gone one step beyond just factoring Volatility into our strategy - we have embraced it as an integral component and driver of our trading strategy. For the three model portfolios- Balanced, Turbo and Ultra - we use volatility as the filter in the stock scanner to identify the securities for the Watch List, Select Few and investments for each of the model portfolios.
The Volatility Paradox
It may seem paradoxical that the EPIC Investing strategy which embraces Volatility actually has lower volatility and lower risk compared to trading stocks.
Historically, the Buy-Write Index, BXM, has had volatility that is about 30% lower than the S&P 500 Index. From June 1998 to December 2006, the annualized standard deviation of returns was 13.8% for the S&P 500 and 9.2% for BXM.
This Volatility Paradox is evidenced and exemplified by XoomFi portfolio which had higher beta and higher standard deviation but significantly better Sharpe and Sortino ratios compared to market indices - SPX, COMP and INDU - during both Up and Down cycles.
Think Global but Act Local has an analogous phrase in the XoomFi parlance : Think Long, Act Short.
At XoomFi, we have the humility to know and accept that try as we might we are not going to be able to will the market to move in a specific direction. Our approach is to develop a long-term - 2 to 3 year - view of the market to establish the long positions and then make short-term course adjustments.
These short-term adjustments have enabled us to be a lot more nimble and opportunistic in responding to the market conditions and volatility and to deliver market-leading performance through different cycles - bull or bear, up or down, growth over value - as evidenced by the XoomFi performance in three distinct market cycles since July 1, 2022 in which the market indices were up, down and then up again in 4 to 6 weeks by more than double digits. For the July 1, 2022 to June 30, 2023 time period (1 complete year), XoomFi generated 22.82% return in the aggregate.
Stock options and their price action relative to the price of the underlying stocks are determined and measured by the Greeks - Alpha, Beta, Delta, Gamma, Theta and Vega.
XoomFi trading strategy and algorithms, scanners, security and options selections, entry / exit points, and the system factor in and leverage the Greeks and can be summarized as :
To deliver superior Alpha relative to major market indices and other investment options…
Identify and invest in high Beta stocks…
While embracing Vega as the key driver of our investment thesis…
With Delta and Gamma as our guides in selecting the options in the underlying…
… and with Theta as our ally
Covered Call trading strategy offers inherent downside protection and consequently, lower left-tail risk. In an environment in recent times when we have seen elevated levels of volatility and with our trading strategy which embraces volatility, managing the left tail risk becomes even more crucial.
What is reassuring to note is that over the past 25 years, the worst monthly loss for the S&P 500 Index was a decline of 21.5% compared to 8.6% decline for the Buy-Write Index.
EPIC Investing and XoomFi EPIC Funds use Buy-Write or Covered Calls as their key investment instruments and as such they benefit from this intrinsic lower left-tail risk.
In recent times, we have witnessed much higher volatility and much larger swings in the market driven by a variety of macro and micro factors, geo-political forces, monetary and fiscal policies.
Some of these factors - like the Covid pandemic in 2020, global depression in 2008, 9/11 in 2001 were 'black swan' events which had gut-wrenching and traumatic impacts on the global markets.
All XoomFi model portfolios are protected against such unexpected 'black swan' events and associated left tail-risk with appropriate hedges.
Buy-Write strategies significantly outperformed stocks in modestly rising, flat or declining markets, but tend to underperform stocks in rapidly rising markets.
CBOE and Standard & Poor's developed and launched in April 2002 the CBOE S&P 500 BuyWrite Index (BXM). Data on daily BXM prices is now available from June 30, 1986.
CBOE & S&P also offer CBOE S&P 5500 2% OTM BuyWrite Index (BXY), a variation of BXM.
Since its introduction, BXM volume has grown 830% compared to 807% for S&P 500 Index.
BXM index had volatility that is about 30% lower than the S&P 500 Index. From June 1998 to December 2006, the annualized standard deviation of returns was 13.8% for the S&P 500 and 9.2% for BXM.
The intrinsic downside protection associated with covered calls reduce the left-tail risk. Over the past 25 years, the worst monthly loss for the S&P 500 Index was a decline of 21.5%, compared to 8.6% monthly decline for BuyWrite Index.
The average for the gross monthly premiums collected by the BXM Index has been 1.8%
For additional details on Buy-Write Trading Strategies & Buy-Write Indexes visit : https://www.cboe.com/us/indices/dashboard/bxm/
This Program Brochure (this “Brochure”) provides information about the qualifications and business practices of XoomFi. If you have any questions about this Brochure’s contents, please contact us at the above phone number and / or e-mail. The information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission (the “SEC”) or by any state securities authority.
This Brochure is for informational purposes only. It does not convey an offer of any type and is not intended to be, and should not be construed as, an offer to sell, or the solicitation of an offer to buy, any interest in any entity, investment, or investment vehicle.