Frequently Asked Questions

Do your strategies have daily liquidity?

Yes, our strategies have high daily liquidity which is possible due to the high liquidity in the underlying investments.

Do the performance numbers include fees for managing the strategy?

Yes, the performance numbers include fees for managing the strategy.

Who is the counterparty on these strategies?

The counterparty on these strategies is a clearinghouse like CME Clearing or OCC. These are Systematically Important Financial Market Utilities (SIFMUs) whose failure could threaten the stability of the US financial system. To date, 8 US entities have been designated SIFMUs.

Do I need to transfer my assets? Where will my assets be custodied?

No, you do not need to transfer your assets. We run our strategies in Separately Managed Accounts, which means that your assets remain custodied in your own account at your existing broker-dealer or FCM. We will have a Limited Power of Attorney which gives us access to invest your assets into our strategies. We are already managing client accounts at several FCMs and broker-dealers. Even if your custodian is not part of our current list, we are happy to get onboarded with them which is a routine process.

What kind of clients do you have?

Our strategies have a wide variety of use cases. Any holder of traditional cash equivalents like T-bills or money market funds would find our offering of interest, as would users of margin borrowing. Our clients hence include hedge funds, futures investors, family offices, trusts, pensions, endowments, foundations, insurance companies, and high net worth individuals.

How much in assets can these strategies absorb? Won’t the spread collapse if there are sufficient investors in these strategies?

Based on current trading volumes, we believe the Optimized Collateral strategy can absorb $5B (more if not limited to CME products), and the S&P 500 Futures Basis strategy can absorb $100B. As we get close to those thresholds, we will keep a close eye on any impact to spreads and change in volumes based on the incremental increase in demand.

Aren’t treasuries the de facto risk-free rate?

Analysis by the Federal Reserve Bank of New York views box yields as the risk-free rates, with T-bills trading at a discount (called “convenience yield”) to the risk-free rate.

What other comparable products exist in the market?

We believe we are the only ones who have packaged the equity financing rate into investable products for institutional investors. That said, products like the BOXX ETF and SyntheticFi are bringing this concept to the retail market.

What are the margin implications of these strategies? Can I lever them up?

The Optimized Collateral strategy is fully funded, analogous to T-bills in that regard. Like T-bills, it needs 100% cash outlay upfront which is not available till either maturity or liquidation of the position. There are no other margin requirements in the interim. On the other hand, the S&P 500 Futures Basis strategy can be levered up a few times.

Is there operational risk of slippage due to “legging” into your trades?

No, there is no risk of slippage since we do not leg into our trades. While we trade spread strategies, the trade leg executions are always linked together or traded as a package.

How will you survive as a business with such a thin margin product?

We believe that high volumes will enable us to run a thriving business. The core concept of equity financing monetization has applicability to various asset managers like hedge funds, insurance companies, pension funds, endowments, foundations, family offices, corporate treasuries, etc who have given us positive feedback and who we are working with to customize the strategy based on their needs.

Why should I engage Museum Mile Funds LLC to run these strategies?

We have two decades of immersion in revenue generating equity financing roles at some of the largest banks, managing portfolios in the hundreds of billions of dollars. We bring that depth of experience and expertise to the asset management community and use it to optimize cash and margin management for an ultralow fee, freeing up the asset manager to focus on their core investment strategies and portfolio growth. In addition, our sole focus on just these strategies enables us to glean alpha that may escape those doing it as one of several responsibilities.

How do the strategies fare during periods of market turmoil?

Empirically, equity financing rates tend to decline with a sharp decline in equity markets. Hence we expect our investment strategies to outperform on a mark-to-market basis during periods of market turmoil, as has been the case during past instances.

If this could be done, why has it not already been done?

This could probably be said for any innovative product. That said, we believe the thin margins in productizing this strategy are a natural deterrent to entrants. We also believe that there is massive potential for this strategy, and that we will see enough volumes to make this a viable business despite the thin margins. Our AUM growth within a short period of time and a robust deal pipeline give us added optimism about our prospects.