The LJM Preservation and Growth Fund, which trades under the symbols LJMIX, LJMAX, LJMCX, lost approximately $700 million, or approximately 80% of its value in the first week of February, 2018 leaving investors to wonder how a fund that calls itself “preservation and growth” could lose so much money so quickly. In this article, we will explore how this happened, what LJMIX may have done wrong and what legal recourse investors may have against the fund.
False and Misleading Statements by LJM Preservation and Growth Fund
Before we discuss how the LJM Preservation and Growth Fund (LJMIX) lost 80% of its value in a week, it is important to understand how the fund marketed itself. The prospectus for the LJM Preservation and Growth Fund represented the following to investors, “the LJM Preservation and Growth Fund seeks capital appreciation and capital preservation with low correlation to the broader U.S. equity market…[t]he Fund aims to preserve capital, particularly in down markets (including major market drawdowns), through using put option spreads as a form of mitigation risk.” We believe that these statements may have been materially false and/or intentionally misleading.