https://www.sec.gov/Archives/edgar/data/915802/000139834421000510/fp0061082_497.htm
497 1 fp0061082_497.htm
FINANCIAL INVESTORS TRUST
Emerald Small Cap Value Fund
(the “Fund”)
Supplement dated January 11, 2021
to the Fund’s
Prospectus and Statement of Additional Information
dated August 31, 2020, as supplemented
As previously disclosed, on December 8, 2020, the Board of Trustees (the “Board”) of Financial Investors Trust (the “Trust”), based upon the recommendation of Emerald Mutual Fund Advisers Trust (the “Adviser”), the investment adviser to the Fund, a series of the Trust, determined to close and liquidate the Fund on or about January 11, 2021. The date for such liquidation is now expected to be on or about January 29, 2021 (the “Liquidation Date”).
If the Fund has not received your redemption request or other instruction prior to the close of business on the Liquidation Date, your shares will be redeemed, and you will receive proceeds representing your proportionate interest in the net assets of the Fund as of the Liquidation Date, subject to any required withholdings. As is the case with any redemption of fund shares, these liquidation proceeds will generally be subject to federal and, as applicable, state and local income taxes if the redeemed shares are held in a taxable account and the liquidation proceeds exceed your adjusted basis in the shares redeemed. If the redeemed shares are held in a qualified retirement account such as an IRA, the liquidation proceeds may not be subject to current income taxation under certain conditions. You should consult with your tax adviser for further information regarding the federal, state and/or local income tax consequences of this liquidation that are relevant to your specific situation.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE

It is interesting to observe balanced funds during this phase in the business cycle. Within the M* 50-70% equity category the risk level an investor assumes can vary widely. It tips the hand of the fund's perception of risk vs reward. M* produces data showing 2016-2020 Historical Equity trends. Some Balanced funds have assumed more equity exposure at stock market highs after a decade + long bull market. These funds sit at 66% up to 70%+ equities. Others funds have reduced equities from 2016-2020 protecting investors from a possible downturn (less than 60% equity). Totally opposite viewpoints of the same market. Extreme examples of two within 50-70 are BRUFX and BALFX. This wide descrepancy is obviously going to produce much different CAGR, SD and MDraw going forward. To each his own.

@JonGaltIII,
Drawdown has considerable impact on future returns. Let me try to explain this with some calculation.
Let say you lost 10% in fund A in 2020. An amount of $100 investment is reduced to $90.
100 X (1-0.1) = 90
In order to regain the $10 lost, you must gain 11% in 2021 (not merely 10%).
100 = (1+X)*90 (original 2020 value) and solve for X. X is the percentage gain required for 2021.
X = 0.11 or 11%
Therefore the deeper the "hole" or drawdown is, the larger % gain is required and often longer duration to fully recover the loss. Case in point, S&P 500 index lost 40+% in 2008, and it took 53 months to fully recover and many investors can't handle the pain or patience to wait it out. Many cut their loss and sell near the bottom which is the worst outcome as the investors now lock-in the loss permanently. Therefore the magnitude of drawdown has a significant psychological effect that often lead to panic selling. The key here is minimize the drawdown while balancing a reasonable return. Thus a well balanced portfolio with the right asset allocation will likely to have a much smaller drawdown in a down market. This would allow the investors to sleep well.
There are many very useful tools in MFO Premium site that allow one to compare fund candidates with respective to their drawdown %, recovery period, and annual return for various market cycles. And I am barely scratching the surface of Premium capabilities.

... can understand where you are coming from. If I panicked in March 2020, I would have missed out on a huge finish to 2020. I know we can't time the market ...

I did not panic, I trust, and was not trying to time, in the usual sense. By May 11 all of our equity fund holdings were back to breakeven or abovewater (except for FRIFX, not a huge portion). I projected that this plague was going to be much worse and longer-lived than most were saying, which has turned out to be the case. (I'd lost to covid at end March my oldest college friend, of 55y nonstop acquaintance, healthy etc. --- a jarring, sudden-enough death.) I believed the economic impact was going to be much worse than predicted, including crippled consumer spending. Turned out to be only partly the case; certainly the latter did not occur. All this thinking of mine was informed by extensive reading and some crude numbercrunching. I thought if we could avoid a >20% monthslong / yearslong drop in this early stage of our retirement we would be better off. So as with so much in life I regret it only in hindsight.
I can however guarantee that right after I get back in the really big broad market drops will occur, without fail.

None, none, none.
This perplexing scenario to witness I have discussed in the briefest of ways w the august LBraham and JWaggoner, meaning exchanging a few rueful wtf words, and they list the usual suspects, chiefly fomo w tina (per the ongoing likely course of interest rates, mentioned above, plus new and ongoing disaster relief payments).
Plus a certain amount of rich-millennial behaviors (robinhood etc.).
But these ain't insights, really, nor is saying that this time some of it 'really is different' (permanent shift in p/e).
Also, these handful of factors many people have been pointing out for a long time.
I have been out of equities 100% since May 11, when nobody saw a 30% rise still ahead, of course.
Now. A real and significant dip takes us back to only say 28k Dow, a defined bear market back to only ~25k. It was not long ago at all that more than one big investment house were saying Well, okay, when we slump into the 26k area or whatever, it will be time to buy aggressively.
Anyway, greed stamina, and fundamentals, being what they are, that ain't happening. There has been a lasting shift upward, and no 2000 or 2009 ahead. CWood at Ark and others like her have started to write about the chronic underestimation of technology.
So ... upon dips I intend (he said) to put lots into VONV (p/e ~27) and CAPE and then sit tight (he said) for a few years. At ages 72 and 74 soon, we have enough years of cash for us to manage, looks like.
All very vexing, and if I had stayed the course in May we could be sending out so many more donations!

Warning: Investors need to understand their individual circumstances and their volatility and risk tolerances.....
FWIW....Most of the time I just observe. Market timing is left to others. (2019 to 2020 were exceptions to this observer mind set while a new secondary investment portfolio was being established.)
These are just a few somewhat random thoughts and opinions as 2021 begins from a generalist investor who typically acts with multi-year investment time frames:
***Its important to acknowledge the stock market is very expensive by historical measures -- particularly on the growth side. The articles linked above make that clear.
But...
***The Fed is now part of the investment landscape in ways it was not in the past. That hit home to me in early 2019 when the Fed abandoned its rate tightening efforts ( Powell Put ).
***The Fed further clarified the breadth of the Powell Put by acting very aggressively last winter when the markets were in turmoil. It has also suggested it will intervene aggressively if market turmoil erupts again in the near term.
***Having Janet Yellen as Treasury Secretary will probably increase coordination between the Fed and Treasury.
***Having the Democrats in charge probably means additional fiscal stimulus will occur this year.
***The pandemic will probably have a significant ongoing disruptive economic impact for much/most of this year. The probable shape of the post-pandemic investment landscape may not come into focus until late this year or next year.
My investment portfolio thinking:
The combination of near zero interest rates, the Feds aggressive stance, and substantial fiscal stimulus helped me to decide to leave my allocation to stocks somewhat elevated by my standards when the annual review was completed in December (strong stock market performance and a shift of about 5% of the portfolio from ZEOIX to utility stocks in August had bumped it up during 2020). But, a nod to uncertainty resulted in the purchase of GBLMX, CRAAX, and SVARX as well as some trimming of growth stock holdings during the transition from 2020 to 2021.
Now I am just watching while keeping my eye on VIX out of curiosity. My crystal ball is still quite unclear about how long the Fed/fiscal stimulus part of the equation will succeed in keeping the bulls mostly in charge of the stock market. Maybe for multiple years if the Fed and fiscal policy makers navigate well??? But, maybe Grantham will prove to have been correct and the profitably investable top occurred last summer!!!
Other portfolio notes:
***There is adequate cash in reserve (SPAXX, JPST, and RPHYX) and enough investments in bond funds to enable an investment portfolio reallocation into stocks if a significant (20%+) market decline occurs.
***I am a 70 year old retiree. The dividends, distributions, and any capital gains received during the year are invested separately in the "Cash Pot" for release to a non-investment account at the end of the year. So, the set-aside beginning this month is for probable release at the end of 2021. But, there are adequate reserves outside the investment accounts to ride out an investment apocalypse event if that occurs during the year.

While JHQAX perked an interest in MFO discussion, it is important to assess how JHQAX performed in 2020 relative to its peers with respect to their returns and risk. As @fred495 noted that the fund uses an options strategy for the past seven years. The fund is categorized as “Alternative long/short” fund in MFO Premium.
I compared this fund to Vanguard S&P 500 index (VFIAX) as the proxy for S&P500 index without the option strategy for 2020. The option strategy enabled lower drawdown in March, -5.1% versus -19.5%, respectively, and having a shorter recovery period, 3 months versus 4 months, respectively.
However, this lower volatility is accomplished at the expense of the annual return as the market recovered in July; the S&P 500 index out-performed JHQAX, 18.4% versus 13.8% by year end. Question I ask myself is this an apple-to-apple comparison?
I also took this analysis further to over the 7 year period since the inception of JHQAX (2014). I also include Vanguard Balanced index fund, VBIAX to see if 40% total bond allocation would work better or not than the option strategy.
Here is the result in Portfolio Visualizer,
https://portfoliovisualizer.com/backtest-portfolio#analysisResults
1. JHQAX has the lowest drawdown ratio and comparable Sortino ratio to VBIAX.
2. JHQAX trails the annal returns of VFIAX and VBIAX for 1,3,5 and 7 years period.
3. The negative asset correlation of bond performed better than the option strategy over this 7 year period.
4. Overall the 60/40 allocation provides the best balance on return versus risk. However this is my personal opinion but every investors need to evaluate their own risk tolerance with respect to the return.

@Stillers ... I've done a lot of reading on FPURX vs FBALX. They are so closely correlated. Good suggestions everyone. Thank you! This is a good primer but would like your opinion. https://finance.yahoo.com/news/balanced-vs-puritan-fidelity-fund-100000950.html

John, an argument can be made for either and it would be a very close debate (as your linked article shows), ultimately decided by simple personal preference.
I prefer the L/M/S and G/B/V splatters and the slight/marginal 1-3-5-10-yr consistent outperformance of FBALX over FPURX.
That said, either one of these two is a great LT holding, AA choice, and coupled with others on my "short list," make for great core holdings in a balanced portfolio. If in doubt about FBALX vs FPURX, simply buy both at 50/50 weightings.
EDIT: BTW, I own all of the AA funds on my short list except JABAX. I have previously owned JABAX and VGSTX. I never owned FPURX. I reduced my AA holdings at EOY 2020 to just PRWCX, VLAAX, FBALX, VBIAX, FMSDX and VWIAX, all with just about the same allocations. Also, I've spent YEARS crunching AA fund options and the result of all of that time/research is these selected AA funds.

@Stillers ... I've done a lot of reading on FPURX vs FBALX. They are so closely correlated. Good suggestions everyone. Thank you! This is a good primer but would like your opinion. https://finance.yahoo.com/news/balanced-vs-puritan-fidelity-fund-100000950.html

I would add VGSTX to the above list. Very diversified and had a stellar 2020. It is a fund of funds that I have had for 25 years and has never disappointed.

Agreed, VGSTX is an excellent 50%-70% AA fund that is the rough, TR equivalent of VBIAX. It being my "short list" though I decided to only include VBIAX, but VGSTX could easily replace VBIAX or be added.
Also just missing my "short list" threshold is NAINX, another AA OEF worthy of consideration in the 50%-70% cat given its Current-5yr performance.
FPURX is NOT on my "short list" as FBALX is IMO the choice between these two.

I would add VGSTX to the above list. Very diversified and had a stellar 2020. It is a fund of funds that I have had for 25 years and has never disappointed.

A little more from Grantham:

his “favorite Tesla tidbit” is that it boasts a market cap of $1.25 million for every car it sells, 140 times the GM figure of $9,000.

Investing legends Carl Icahn and Jeremy Grantham see a stock market bubble

VLAIX has two bond managers and one equity manager as contrasted with two and two for JBALX. Otherwise there doesn't seem to be much difference in responsibilities.
 
JBALX Prospectus

Messrs. Keough and Wilensky focus on the fixed-income portion of the Fund. Messrs. Buckley and Pinto focus on the equity portion of the Fund.

 
VLAIX Prospectus

Stephen E. Grant has primary responsibility for the day-to-day management of the Value Line Asset Allocation Fund’s equity portfolio and its asset allocation. Jeffrey Geffen and Liane Rosenberg have primary responsibility for the day-to-day management of the fixed income portion of the Fund’s portfolio.

The institional share of Thornberg funds are no load and requires $5K at Fidelity plus $49.95 transaction fee. It is better to go with ARTYX, NTF at Fidelity with $3K minimum. I gradually move some overseas funds toward growth style over several years. Finding good managers took sometime. So far Mr. Kaufman has done very well. I am okay with 20% invested in US growth companies. Stock picking has been right on so far. The only minor negative is the higher than average expense ratio, 1.36%.

+1. But THDAX with a front-load of 4.5%... ? No, thanks.

@fred495. JHQAX is very interesting. Will review the risk profile on MFO Premium and report back.

Thanks, Sven. Look forward to your assessment of JHQAX.
A quick look at its profile indicates that in its category the fund has a MFO Risk=2 ("Conservative") , a MFO Rating=5 ("Best") and is designated a "Great Owl". In last year's March debacle, the fund lost only 1.4%. On the other hand, VSCGX, an excellent 40/60 balanced fund, lost 6.6%.
I was surprised to see that the fund had only been mentioned once in the past on the MFO forum.
Fred

Dunno
Vs 45% spy, 55% ief?
Slightly less return, slightly less downside vs jhqax
Who knows going forward...
Baseball Fan

Looking at WAGTX, its a Foreign/Small Mid with a high expense ratio of 1.98 gross and a 2% redemption fee. If I'm looking for a foreign fund (without caring if its small/mid), BGAFX and MGGPX are stand outs to me. Longer track records and lower fees and lower turnover. WAGTX has a 176% turnover. They also have better returns over 1-3-5-10 than WAGTX. So, what am I missing? Why is there so much interest in WAGTX?
Another one I follow is PRGSX which has a long track record.

@fred495. JHQAX is very interesting. Will review the risk profile on MFO Premium and report back.

Thanks, JD, for sharing.
Never considered using options-based funds. But, after a quick review, both SWAN & DRSK look quite promising. Need to do more DD, of course.
Thanks, again.
Fred
After doing some research, I came across JHQAX, a fund that has successfully employed an options strategy for the past seven years. M*'s last fund analysis report says that:
"Attractive fees, a transparent and consistent process, and an experienced manager elevate JPMorgan Hedged Equity ahead of its peers. The strategy maintains a Morningstar Analyst Rating of Silver for its cheapest share classes."
The fund has a standard deviation of 7.94%, a Sortino ratio of 1.41, and a 5-year total return of 10.3%. JHQAX is available at Fidelity with NTF and load waived. Min. initial investment is $1,000.
I may consider matching JHQAX with DRSK which also has an excellent but very short record.
Fred