The Income Challenge for Sophisticated Investors

In today's financial landscape, generating reliable income without taking on excessive risk is a significant hurdle. Traditional fixed-income instruments often offer yields that barely keep pace with inflation, while direct equity investments can expose portfolios to substantial volatility. Many accredited investors are therefore exploring alternative income streams that can offer a more attractive risk-adjusted return.

FG Capital Advisors' Private Income Fund addresses this by employing a disciplined strategy focused on covered call Exchange Traded Funds (ETFs). While public covered call ETFs like JEPI or XYLD are accessible to all, our private fund structure allows for active management, potentially enhanced risk controls, and a focus tailored to the needs of accredited investors. We aim to capture the income potential of options premiums while managing downside risk.

Our Investment Process: A Disciplined Approach to Covered Call ETFs

Our strategy is built on a foundation of careful ETF selection, active options overlay, and diligent risk management. Here’s how we operate:

1. Step 1: Core ETF Selection — We primarily invest in established, liquid covered call ETFs that track major indices like the S&P 500 or Nasdaq 100. Selection criteria include historical yield consistency, expense ratios, and underlying holdings.
2. Step 2: Active Options Management (Where Applicable) — While many of our core holdings are passive ETFs that execute their own covered call strategies, our fund structure allows for tactical adjustments. This may include layering additional, shorter-dated covered calls on the ETF positions themselves or on a portion of the underlying index if deemed appropriate to enhance yield or manage risk. This is not a primary strategy but a tactical tool.
3. Step 3: Risk Overlay & Diversification — We maintain diversification across multiple covered call ETFs to avoid concentration risk. A portion of the fund may also be allocated to short-duration, investment-grade bonds or cash equivalents to buffer against market volatility and provide liquidity.
4. Step 4: Income Distribution — The fund aims to distribute income generated from ETF dividends and options premiums on a regular basis (typically quarterly or monthly, as outlined in the fund documents).
5. Step 5: Continuous Monitoring & Rebalancing — The portfolio is continuously monitored, and positions are rebalanced based on market conditions, yield opportunities, and risk assessments.

Key Characteristics of Our Fund Strategy

• Focus on Established ETFs: Primarily utilizing well-known covered call ETFs (e.g., those tracking S&P 500, Nasdaq 100).
• Income Generation: Emphasis on collecting premiums from selling call options and ETF distributions.
• Moderate Risk Profile: Aims for a balance between yield generation and capital preservation, though not risk-free.
• Liquidity Considerations: Structured to offer periodic liquidity (e.g., quarterly redemptions), as detailed in the Private Placement Memorandum (PPM).
• For Accredited Investors: This fund is exclusively available to investors who meet SEC accreditation standards.

Fund Terms & Investor Profile

• Target Annual Yield: 8-10% (net of fees). This is a target, not a guarantee. Actual returns may vary.
• Management Fee: Typically 1.0% per annum on assets under management.
• Performance Fee: Often 10% of profits above a predetermined hurdle rate (e.g., 6% annual return).
• Minimum Investment: Generally $100,000 - $250,000 (subject to change, as per PPM).
• Investor Suitability: Best suited for accredited investors with a moderate risk tolerance, seeking enhanced income, and who understand the mechanics and risks of options-based strategies.

All specific terms, fees, and risk factors are detailed in the Fund’s Private Placement Memorandum, which should be reviewed carefully before investing.

Frequently Asked Questions About Our Covered Call ETF Strategy

How does this differ from just buying JEPI or XYLD myself?
Our fund offers active oversight, potential for tactical adjustments, diversification across multiple covered call ETFs, and a structure designed for accredited investors. We also handle the operational aspects of managing a diversified options-income portfolio.

What are the primary risks involved?
The main risks include: 1) Market Risk: A significant stock market decline can impact the value of the underlying ETFs. 2) Capped Upside: Covered call strategies limit participation in strong market rallies. 3) Yield Variability: Option premiums, and thus fund distributions, can fluctuate with market volatility. 4) Liquidity Risk: Redemptions are typically offered periodically (e.g., quarterly) and are not on-demand like publicly traded ETFs.

Is the 8-10% yield guaranteed?
No. The 8-10% is a target yield based on historical market conditions and our strategy. Actual returns can be higher or lower and are not guaranteed. Past performance is not indicative of future results.

How is income from the fund typically taxed?
Income from covered call strategies can be complex, often involving a mix of ordinary income (from short-term option premiums) and qualified dividends (from underlying ETF distributions). We recommend consulting with your tax advisor for personalized advice.

What is the process for investing?
Interested accredited investors should first request and carefully review our Private Placement Memorandum (PPM). This document contains all pertinent details about the fund, its strategy, risks, fees, and subscription process.

Important Disclosures & Considerations

This information is for educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. An offer can only be made by the Private Placement Memorandum (PPM) of FG Capital Advisors' Private Income Fund. Investing in the fund involves significant risks, including the possible loss of your entire investment. Past performance is not indicative of future results. The fund is speculative and illiquid. Investors must be accredited investors as defined by the SEC. Before investing, you should carefully consider the fund's investment objectives, risks, charges, and expenses, as detailed in the PPM. FG Capital Advisors does not provide tax or legal advice; please consult with your own professional advisors.