Austin Atlantic Asset Management Co. (“AAAMCO” or the “Firm”) is a wholly owned
subsidiary of Austin Atlantic Inc., a closely held corporation majority-owned by Rodger
D. Shay (deceased, pending trust settlement) and Rodger D. Shay, Jr. The Firm was
formed in 1981. As of July 16, 2019, the Firm managed $632,476,635 in assets on a
discretionary and $0.00 on a non-discretionary basis.
Mutual Fund Services
AAAMCO provides discretionary advisory services to Asset Management Fund Trust
Funds (“AMF”) The Firm provides investment advice with respect to large cap value
equity securities and fixed-income securities, which include mortgage- related
securities, U.S. government and agency securities, collateralized mortgage
obligations, repurchase agreements, and other money market instruments. Many of
AAAMCO’s fixed- income products and services are designed to meet the needs of
financial institutions. Certain portfolios of the Fund specifically limit their investments
to those that are eligible for purchase by national banks and credit unions.
On November 29, 2016, the Trust filed a Registration Statement with the Securities and
Exchange Commission for a new mutual fund under the AMF family of mutual funds
called the AAAMCO Ultrashort Financing Fund. The Fund seeks to achieve its
investment objective by investing primarily in a portfolio of repurchase agreements. The
Ultrashort Financing Fund commenced operations on June 7, 2017 and as of July 16,
2019 has $632.47 million in net assets.
Consulting Services.
AAAMCO also provides ad hoc credit analysis, consulting and investment accounting
services to institutional clients on a non-discretionary basis.
Other Business- Separate Accounts
AAAMCO may provide separate account investment management for all for its’
investment services. Services provided can be performed on a discretionary or non-
discretionary basis.
The firm’s allocation policy provides for equitable distribution between separate
accounts and investment
please register to get more info
Mutual Fund Clients
AAAMCO serves as investment adviser to funds in AMF Trust, a registered open-end
investment company with two portfolios. The fees charged to AMF by AAAMCO are
based upon a percentage of each portfolio’s average daily net assets, computed daily
and payable monthly. The fee schedule with respect to fees paid by AMF to AAAMCO
is as follows:
Assets Annual Rate AMF Large Cap Equity Fund Up to $250 million 0.650% Over $250 million 0.550%
Up to $3 billion 0.45%
AMF Ultra Short Mortgage Fund $3 billion to $5 billion
0.35%
Over $5 billion 0.25%
AAAMCO Ultrashort Financing Fund
0.30%
The total fees for the Ultrashort Financing Fund charged by AAAMCO are capped at
0.30% per the Fund’s Investment Advisory Agreement. AAAMCO currently has voluntary
fee waivers in place for the AMF Ultra Short Mortgage Fund and AAAMCO Ultrashort
Financing Fund but may eliminate those waivers at any time.
Consulting Clients
AAAMCO provides credit analysis, consulting and investment accounting services to
institutional clients on a contractual basis. Consulting services generally are provided
with respect to mortgage-related securities. Fees and terms are negotiated on a
case-by-case basis for such services. In addition to AAAMCO ’s consulting fees,
clients will pay custody fees, brokerage and other transaction costs.
Cash Management Clients
AAAMCO’s basic fee schedule for clients in relation to its cash management program is
generally 0.10% - 0.20% of assets invested through the Master Repo Program,
calculated and paid monthly in arrears. AAAMCO may negotiate or waive fees. Either
AAAMCO or the client may terminate the contract upon written notice. In addition to
AAAMCO’s fee, clients may pay custody fees and other transaction fees set forth in the
Master Repo Program documentation.
please register to get more info
AAAMCO generally provides investment advice to institutional investors, including
banks, thrift institutions, credit unions, investment companies, family offices,
endowments, insurance companies, and pension plan sponsors. With respect to non-
investment company accounts, AAAMCO generally imposes a $50 million-dollar account
minimum for the provision of investment supervisory services. The account minimum is
a general guideline and may vary depending on style considerations at the sole discretion
of AAAMCO.
please register to get more info
AAAMCO’s fixed income securities analysis methods include fundamental analysis as well
as quantitative and computational models to analyze investment relative value and risk.
AAAMCO sub-advises the AMF Large Cap Equity fund to System Two Advisors and relies
on their blended quantitative and fundamental investment process for all security selection
decisions. AAAMCO currently offers large cap equity and fixed-income investment
strategies, each of which, along with the material risks involved, is described below.
Investing in securities involves risk of loss that clients should be prepared to bear. For the
Ultrashort Financing Fund, AAAMCO uses a sub-advisor, Treesdale Partners, to develop
risk analytics that assist in the manager in quantifying market and securities risks.
The material risks set forth below are qualified in their entirety by the more detailed risk
disclosure in the applicable product’s offering materials.
Large Cap Blend Investment Strategy
Market Risk – Market prices of securities held by a client may fall rapidly or
unpredictably due to a variety of factors, including changing economic, political or
market conditions.
Large-Capitalization Stock Risk – The stocks of large-capitalization companies
may trail the returns of investments in stocks of smaller companies.
Stock Risk – Individual stocks may perform differently from the market as a whole
and may be undervalued by the market for a long period of time.
Analytical Risk- the investment process relies on a number of statistical and
quantitative models; which may not adequately identify attractive investments, or the
investment process may not function as intended due to programming or user input
errors.
Fixed-Income Investment Strategy
The Firm’s fixed income strategies generally seek to minimize capital risk by focusing
on short duration investment products and services. The Firm emphasizes U.S.
government, mortgage- related securities, and other highly rated fixed income
securities repurchase agreements collateralized by these securities.
The material risks involved in the fixed-income investment strategies include but are not limited
to:
Market Risk – Market prices of securities held by a client may fall rapidly or unpredictably
due to a variety of factors, including changing economic, political or market conditions.
Interest Rate Risk – Generally, the market value of fixed-income securities moves
inversely with interest rate movements. In other words, if interest rates rise, the prices
of fixed -income securities tend to decline. If interest rates decline, the prices of fixed-
income securities tend to increase. This inverse relationship may cause the net asset
value of fixed income funds to decline/rise when interest rates rise/fall.
Credit Risk – Fixed-income securities carry the risk of default, which means that the
issuer is unable to make additional income and principal payments. Currently, none of
our fixed income mutual funds may own non-government backed securities, thereby
limiting potential losses to the premium above par. However, counterparties that provide
transactional services to the fund, such as broker-dealers, and counterparties to whom
the funds may provide repurchase agreement financings, do carry credit risk. The Credit
Committee of the Firm provides a review and approval process for all such
counterparties.
Call and Prepayment Risk – Some fixed-income securities include a provision that allows
the issuer to call, or repay, the outstanding debt early. Residential mortgages, which back
the securities held by the funds, are a form of debt that can be called and prepaid by the
mortgagor before the stated maturity. If interest rates drop low enough, the issuer of the
fixed-income security and/or mortgagor can save money by repaying its callable debt and
issuing new debt at lower interest rates. Improving borrower credit, or rising home prices,
may also lead to faster prepayments. In these situations, your interest payments cease,
and principal may be paid early. Securities values at a premium to par will experience a
capital loss when prepayments increase. The re-investment of proceeds into newly issued
fixed-income securities may include a lower coupon rate, more consistent with prevailing
interest rates. This will lower monthly interest payments.
Liquidity Risk – Regulatory changes since 2008 have reduced the liquidity in the
secondary, over the-counter markets for many forms of fixed income securities,
including mortgage-backed securities. These manifests itself in wider bid-ask spreads
for trading securities, which may increase trading costs.
Repurchase Agreement Risk - Repurchase agreements expose the Fund to the
risk that the counterparty to the Fund defaults on its obligation to repurchase the
underlying instruments collateralizing the repurchase agreement or is unable to
provide additional eligible securities as margin when required by the Fund. In this
circumstance, the Fund could lose money if it cannot sell the underlying instruments
above the purchase price
Valuation - The Fund will obtain third party market valuations for all securities
owned by the Fund or used as collateral in repurchase agreements. Fair value
pricing, if used, is inherently a process of estimates and judgments. Fair value prices
established by the Fund may fluctuate to a greater degree than securities for which
market quotes are readily available and may differ materially from the value that
might be realized upon the sale of the security. There can be no assurance that the
Fund could purchase or sell a portfolio of investments at the market or fair value
price used to calculate the Fund’s net asset value, or that the market or fair value
price used to value the collateral held in a repurchase agreement represents the
price at which the collateral can be liquidated.
please register to get more info
There are no legal or disciplinary events that are material to
the evaluation of our advisory business or the integrity of our
management.
please register to get more info
AAAMCO is under common control with a registered broker-dealer, Austin
Atlantic Capital Inc. (“AACI”). AACI is the distributor of the AMF funds managed
by the Firm and shares of the Fund are sold primarily to clients of AACI, which
consist of institutional clients including banking and financial institutions. AACI
also refers its clients to AAAMCO for the cash management program. The
majority owners of AAAMCO also own and control a national savings bank,
Anthem Bank & Trust (“Anthem”). Advisory clients, other than the AMF Funds,
may also be clients of the bank with respect to separate products offered by
Anthem. Anthem does not serve as custodian to AAAMCO’s advisory business.
As discussed above, the Austin Atlantic Inc. entities have material business
arrangements with the Banes entities.
Sean Kelleher, the firm’s President and Chief Strategist is associated with Austin
Atlantic Capital Inc. as a Registered Representative qualified by Series 7 and 24.
We do not believe this represents a conflict of interest because Mr. Kelleher
performs certain operations related management tasks and is qualified to meet
with institutional investors as he is actively registered to discuss the funds.
Kevin A. Rowe, the firm’s Chief Compliance Officer and another contractor, serve
as outsourced Compliance Officers. We do not believe that the relationship creates
a conflict with AAAMCO because Rowe is neither are control persons or manage
investments with any FINRA registered Broker-Dealers or State and SEC
Registered Investment Advisors. Mr. Rowe is founder and President of LibScor
Associates, Inc., which provides Compliance, Anti-Money Laundering, and
Financial Operations consulting services.
AAAMCO is not registered with the U.S. Commodity Futures Trading Commission
or National Futures Association.
please register to get more info
Client Transactions and Personal Trading AAAMCO has adopted a Code of Ethics in accordance with Rule 204A-1
under the Investment Advisors Act of 1940, as amended, and Rule 17j-1
under the Investment Company Act of 1940, as amended. The Code of Ethics
sets forth standards of business conduct applicable to AAAMCO ’s
supervised persons and requires the reporting and review of personal
securities transactions of access persons.
AAAMCO’s Code of Ethics includes various reporting and pre-approval
requirements and certain trading restrictions in order to prevent actual or
potential conflicts of interest with transactions recommended to clients. The
Code of Ethics applies not only to transactions by the individual, but also to
transactions for accounts in which such person has a beneficial interest.
Compliance with the Code of Ethics is a condition of employment. In addition,
AAAMCO has adopted certain policies and procedures concerning the
misuse of material non-public information that are designed to prevent insider
trading by employees of the Firm. A copy of the Code will be made available
to any client or prospective client upon request by calling AAAMCO ’s Chief
Compliance Officer at (305) 507-1536.
AACI or its representatives may refer its broker-dealer clients to AAAMCO for
advisory services. Likewise, AAMCO may recommend the services of AACI
to its’ clients for whom it provides services. Consulting and administrative
services do not include investment supervisory services and AAMCO does
not have investment discretion or trading authority over referrals, who may
request services offered that generates referral fees to AACI.
AAAMCO does not affect transactions for its own account.
Brokerage Practices Best Execution and Trade Allocation
In placing orders, AAAMCO generally seeks to obtain the best combination of
price and trading services and uses its best judgment in allocating
transactions. In selecting broker-dealers to effect securities transactions for
clients, AAAMCO selects broker-dealers that it believes are financially
responsible, will effectively and efficiently execute, report, clear and settle the
order, provide valuable research, timely and accurately communicate with
AAAMCO ’s trading desk and operations team and will charge commission
rates which, when combined with these services, will produce the most
favorable total cost or proceeds for each transaction under these
circumstances.
Competitive spreads and commissions are significant considerations in placing
transactions with broker-dealers. However, this does not mean that execution
decisions must be based solely on whether the lowest possible price or
commission costs may be obtained. Best execution means the best overall
qualitative execution, not necessarily the lowest possible commission cost.
Fixed-income securities are usually purchased directly from the issuer, from an
underwriter or from a dealer that makes a market in such securities. Purchases
from dealers serving as market makers may include the spread between the bid
and asked prices. Usually, there is no brokerage commission paid in such
transactions. The primary considerations are availability and prompt execution of
orders in an effective manner at the best price.
With respect to equity securities, the primary aim in the allocation of portfolio
transactions is the attainment of the best combination of price and efficient
service. Given the limited amount of AAAMCO’s trading volume and focus on
large cap, liquid, and exchange-traded securities, we believe that consistently
using only one or two dealers to execute transactions provides the best
combination of efficient transactions and low-cost commissions. We regularly
compare our execution levels and commission rates with to affirm the efficacy of
this policy. Portfolio transactions in unlisted securities are executed in the over-
the-counter market through principal market makers.
When securities are purchased, the portfolio management team allocates the
securities based on the investment requirements and objectives of each fund
and/or separately management account that is eligible to purchase the security.
These requirements and objectives include relative cash available to invest, the
risk posture of each fund relative to its stated and/or targeted levels, and the
portfolio management team's expectation concerning future liquidity needs of
each fund as well as other variables.
Brokerage Selection, Research and Other Soft Dollar Benefits
AAAMCO may direct brokerage commissions on client account portfolio
transactions to certain broker-dealers consistent with Section 28(e) of the
Securities Exchange Act of 1934, in recognition of the value of efficient execution
and research and statistical information provided by the selected broker-dealer
and/or other third-party providers.
As a general matter, the research and statistical information provided may consist
of written reports and presentations analyzing specific companies, analytical and
quantitative tools, industry sectors, the financial markets and the economy. Such
information may also include reports accessed by computers or terminals,
statistical collations and appraisals. The research provided can be either
proprietary (created and provided by the broker-dealer, including tangible research
products as well as, for example, access to company management or
broker/dealer generated research reports) or third- party (created by the third-
party, but provided by the broker-dealers). This may cause clients to pay a broker-
dealer a commission rate higher than that which the broker- dealer would have
charged for execution only. This is known as paying up for soft dollar benefits.
These products and services may include advice, either directly or through
publications or writings, as to the value of securities, the advisability of investing
in, purchasing, or selling securities, and the availability of securities or purchasers
or sellers of securities, and analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and the performance of
accounts.
In the allocation of brokerage business, AAAMCO may have an incentive to
give preference to those brokers that provide research products and services,
either directly or indirectly. However, AAAMCO will only do so to the extent the
Firm believes that the selection of a particular broker is not inconsistent with its
duty to seek best execution. To the extent that AAAMCO is able to obtain
products and services through the use of clients’ commission dollars, it reduces
the need to produce the same research internally or through outside providers
for hard dollars and thus provides an economic benefit to AAAMCO. On an
ongoing basis, AAAMCO monitors the research services received to ensure
that the services received are reasonable in relation to the brokerage allocated.
If AAAMCO receives a product or service that both aids it in carrying out its
investment decision making responsibilities (i.e., a “research use”) and
provides non-research related uses, AAAMCO will make a good faith
determination as to the allocation of the cost of these “mixed-use items”
between the research and non-research uses and will only use soft dollars to
pay for the portion of the cost related to its research use.
The research products/services provided by brokers through its soft dollar
arrangements benefit AAAMCO’s investment process for client accounts and
are used in formulating investment advice for clients of the Firm including
accounts other than those that paid commissions to the brokers on a particular
transaction. As a result, not all research generated by a client’s trade will
benefit that particular client’s account. In some instances, the other accounts
benefited will include accounts that clients have directed a portion of their
brokerage commissions to go to particular brokers other than those providing
the research products/services. AAAMCO does not attempt to allocate the
relative costs or benefits of research among client accounts because it believes
that, in the aggregate, the research it receives benefits clients and assists
AAAMCO in fulfilling its overall duty to its clients.
Last fiscal year, AAAMCO did not engage in any transactions tied to
third- party soft dollar arrangements.
Brokerage for Client Referrals
In selecting broker-dealers, AAAMCO does not consider whether it
receives client referrals from a broker-dealer or third-party firms.
Aggregation of Client Orders
Certain investments recommended for an investment company client by
AAAMCO may also be appropriate for other clients. Investment decisions are
made by AAAMCO on the basis of the investment objectives and needs of the
particular client. If transactions are affected for two or more client’s investment
company or other clients on the same day, such transactions will be allocated
between or among the clients in a manner that AAAMCO deems fair and
equitable and, to the extent appropriate, will be aggregated.
please register to get more info
The assigned portfolio manager reviews discretionary accounts on a periodic
basis with primary responsibility for that account. The form and frequency of
reporting is determined on a case-by- case basis in consultation with the client.
please register to get more info
AAAMCO utilizes solicitors who maybe employees and/or contractors of AACI.
These solicitors may be compensated through salaries, bonuses, commissions
or a flat fee.
AAAMCO may pay cash referral fees to unaffiliated third parties. In such
instances, the referral agreement and the related activities of AAAMCO will be in
compliance with Rule 206(4)-3 under the Investment Advisers Act of 1940, which
specifies certain standards that must be met by an investment adviser and any
person who solicits any client for, or refers any client to, an investment adviser
prior to the payment of a cash fee, directly or indirectly, for client solicitation or
referral.
please register to get more info
Mutual Fund Services- AAAMCO may accept discretionary authority to manage
securities accounts on behalf of investment company clients pursuant to an
investment advisory agreement. AAAMCO may purchase for the portfolios of its
investment company clients only securities permitted by the investment policies
applicable to a particular portfolio.
Consulting Services- AAAMCO does not have investment discretion when it
provides consulting services.
please register to get more info
AAAMCO has the authority to vote proxies for client fixed income securities.
S2 has the authority to vote proxies for client equity securities. The following
is a summary of AAACMO ’s and S2’s proxy voting policy and procedures.
Clients wishing to receive a copy of the entire policies and procedures or
information on how AAAMCO and S2 voted securities in their account should
contact AAAMCO ’s Compliance Department at (305) 507-1536.
It is the policy of AAAMCO and S2 to vote proxies for client securities in the
manner most economically beneficial to the client. In general, AAAMCO and
S2 will vote against anti-takeover provisions and other actions by management
that has the effect of diluting shareholders’ interests (both economic and
voting). AAAMCO and S2 will vote in favor of dilutive provisions if it deems that
such provisions are nonetheless in the best interest the stockholders, such as
when the provisions improve the shareholders’ negotiating positions with
potential acquirers.
With respect to situations that pose a potential conflict of interest, AAAMCO’s
Executive Committee will determine the vote.
please register to get more info
AAAMCO does not believe there is any financial condition that is reasonably likely to
impair its ability to meet contractual commitments to clients.
THIS BROCHURE PROVIDES INFORMATION ABOUT THE QUALIFICATIONS AND
BUSINESS PRACTICES OF AUSTIN ATLANTIC ASSET MANAGEMENT CO.
AUSTIN ATLANTIC ASSET MANAGEMENT CO. ADV PART 2A
please register to get more info
Open Brochure from SEC website