SDCIX — Swan Defined Risk U.S. Small Cap Fund
Data updated: 2025-02-28
SDCIX — Swan Defined Risk U.S. Small Cap Fund. United States Multi-Cap / All-Cap Blend / Core Equity. Holdings, fees, performance and SEC filings.
SDCIX Fund Overview
SDCIX — Swan Defined Risk U.S. Small Cap Fund is a US mutual fund managed by Northern Lights Fund Trust III, categorised as United States Multi-Cap / All-Cap Blend / Core Equity. ABC INVEST provides holdings, performance, costs, cashflows, risk data, prospectus documents and SEC filings, sourced from SEC filings.
- Type: US mutual fund
- Manager: Northern Lights Fund Trust III
- Category: United States Multi-Cap / All-Cap Blend / Core Equity
- Assets under management: $25.22M
- 1-year return: 4.8%
- Ticker: SDCIX
- SEC CIK: 0001537140
- SEC series ID: S000051347
- Share class ID: C000161882
SDCIX Investment Objective and Strategy
Swan Defined Risk U.S. Small Cap Fund describes its objective and strategy as follows, from its latest prospectus filed with the SEC by Northern Lights Fund Trust III.
Investment objective
The Fund seeks income and growth of capital.
Principal investment strategy
Using the sub-advisers proprietary Defined Risk Strategy(DRS) to select the Funds investments, the Fund seeks to achieve its investment objective by investing directly, or indirectly through exchange-traded funds (ETFs), in: equity securities of domestic small capitalization companies, exchange-traded long-term put options on U.S. exchanges for hedging purposes, and buying and selling exchange-traded put and call options on various ETFs, securities and equity indices to generate additional returns. The DRS seeks to provide risk-managed growth of capital by matching or exceeding the long-term performance of the stock market while avoiding the traditional losses incurred during bear markets. Under normal market conditions, the Fund will invest at least 80% of its assets (defined as net assets plus any borrowing for investment purposes) in securities of domestic small capitalization (under $3 billion) companies through ETFs.
However, the Fund may have small investments in equity securities of medium and large capitalization companies as well as foreign companies. The sub-adviser anticipates income from dividend payments made by ETFs, as well as income from short term trades and option premiums, although option income is also described as capital appreciation for tax and accounting purposes. The sub-adviser anticipates executing ETF trades through an exchange rather than trading directly with a fund. The DRS philosophy is based upon the sub-advisers research indicating that market timing and/or stock selection is extremely difficult, may produce volatile returns and that asset allocation is limited in its risk reduction.Using DRS, the sub-adviser seeks to define risk by seeking to protect against large losses by hedging the equity securities in the Funds portfolio through investments in protective long-term index or ETF put options.
Additionally, the sub-adviser seeks to increase returns by buying and selling call and put options on several ETFs or indices using hedging strategies. Defined Risk Strategy The DRS was created in 1997 by Randy Swan, President of the sub-adviser. The objective of the DRS is to provide risk-managed growth of capital by offering a strategy that seeks to match or exceed the long-term performance of the stock market without the traditional losses incurred during bear markets. The DRS philosophy is based upon the sub-advisers research indicating that market timing and/or stock selection is extremely difficult and that asset allocation is limited in its risk reduction properties. Hedging Process The sub-adviser applies a protective put hedging strategy to hedge the Funds equity exposure. The Fund invests in long-term put options (referred to as paying a premium) that gives the Fund the right to sell a security or index at a set (strike) price or sell the long-term put option on an option exchange.
The protective put strategy is executed using exchange-traded index and ETF put options to hedge the portfolio and to reduce volatility. The protective put strategy seeks to limit downside loss. Generally, index and ETF put options have an inverse relationship to the applicable underlying index or security. Option Writing To generate additional returns, the sub-adviser buys and sells short-term (generally 1-3 month) (i) put and call options on equity indices, such as the Russell 2000, (ii) ETFs and (iii) futures on a regular basis. Additionally, the sub-adviser will regularly engage in various spread option strategies. Spread option strategies involve, for example, selling a 1-month call option while buying a 2-month call option. Each option strategy includes a hedging element so that the Fund is not exposed to significant losses on written options.
Rebalancing The sub-adviser may rebalance the portfolio to avoid excessive exposure to one economic sector. Long-term protective put options are typically traded annually to protect captal and/or allow for profit potential, by re-establishing a current-market strike price which depends on whether or not the market has increased or decreased. As discussed further below, the sub-adviser intends on having very little portfolio turnover since most of the equity portfolio will be held indefinitely. Written options are bought back when the sub-adviser believes they present an unfavorable risk and reward profile. Purchased options are sold when the sub-adviser believes they present an unfavorable risk and reward profile or when more attractive investments are available.
SDCIX Holdings
Top 2 holdings of Swan Defined Risk U.S. Small Cap Fund by percentage of net assets, from the fund's latest SEC N-PORT filing.
| Holding | % of net assets |
|---|---|
| iShares Trust | 91.99% |
| First American Funds Inc. | 1.52% |
SDCIX Portfolio Allocation
Asset-class allocation of Swan Defined Risk U.S. Small Cap Fund by percentage of net assets, from the latest SEC N-PORT filing.
| Asset class | Allocation |
|---|---|
| Equity | 92.0% |
| Derivatives | 6.6% |
| Cash & Equivalents | 1.5% |
SDCIX Performance
Total returns for SDCIX (as of 2026-10-01), from SEC filings.
| Period | Total return |
|---|---|
| 1 year | 4.8% |
| 3 years (annualised) | -1.1% |
| 5 years (annualised) | 4.0% |
SDCIX Risk Information
Risk metrics for SDCIX, derived from monthly returns in SEC filings.
- 1-year volatility (annualised): 14.3%
SDCIX Costs and Fees
SDCIX costs about $158 per $10,000 invested per year in fund expenses.
- Net expense ratio: 1.58%
- Gross expense ratio: 1.84%
- Portfolio turnover: 15%
- Brokerage commissions: 4.59 bps of average net assets (SEC N-CEN)
SDCIX Cashflows
Over the 12 months to 2024-12, Swan Defined Risk U.S. Small Cap Fund had net outflows of $8.94M, from monthly SEC N-PORT filings.
| Month | Net flow |
|---|---|
| 2024-12 | −$449.02K |
| 2024-11 | −$3.36M |
| 2024-10 | −$1.52M |
| 2024-09 | −$371.89K |
| 2024-08 | −$1.91M |
| 2024-07 | $2.33K |
SDCIX Debt Constituents
No individual debt constituents are reported in Swan Defined Risk U.S. Small Cap Fund's latest SEC N-PORT filing.
SDCIX Prospectus and SEC Filings
Official Swan Defined Risk U.S. Small Cap Fund filings on SEC EDGAR — prospectus, portfolio holdings and annual reports.
- Prospectus (485BPOS) — filed 2024-10-25
- Prospectus (485BPOS) — filed 2023-10-26
- Prospectus (485BPOS) — filed 2022-10-26
- Portfolio holdings (N-PORT) — filed 2025-02-28
- Portfolio holdings (N-PORT) — filed 2024-11-27
- Portfolio holdings (N-PORT) — filed 2024-08-28
- Annual census (N-CEN) — filed 2024-09-13
- Annual census (N-CEN) — filed 2023-09-13
Related Funds
Other United States Multi-Cap / All-Cap Blend / Core Equity funds tracked on ABC INVEST:
Data Sources
ABC INVEST compiles this page from public filings made to the U.S. Securities and Exchange Commission (SEC) through EDGAR: portfolio holdings and monthly cashflows from Form N-PORT, expenses and returns from fund prospectuses (Form 485BPOS) and the SEC DERA Risk/Return Summary data sets, annual data from Form N-CEN, and shareholder reports from Form N-CSR.