Graham Alternative Fund II Navigates Derivatives for Capital Growth

TL;DR

**GAIF II is a complex derivatives-focused fund for sophisticated investors, betting on global macro strategies to deliver long-term capital appreciation through systematic and discretionary trading.**

AI Summary

GRAHAM ALTERNATIVE INVESTMENT FUND II LLC (GAIF II) operates as a Delaware Series Limited Liability Company, established to provide long-term capital appreciation through professionally managed trading in U.S. and foreign markets, primarily utilizing futures, forward currency, metals, spot currency contracts, and associated derivatives. As of December 31, 2025, the Core Macro Portfolio, GAIF II's sole series, had an aggregate value of $36,220,218 in Units held by non-affiliates as of June 30, 2025, and 157,893.710 Units outstanding as of March 1, 2026. The fund employs both systematic and discretionary trading programs, aiming for diversified investment exposure and reduced volatility. GAIF II invests in Graham Alternative Investment Ltd. (Offshore Feeder), which in turn invests in Graham Alternative Investment Trading LLC (GAIT), forming a master-feeder structure managed by Graham Capital Management, L.P. The Manager, with over $20 billion in assets under management and 252 personnel as of March 1, 2026, continuously develops and modifies its trading systems and strategies, including the addition of Class 3-A and Class 3-B Units effective March 19, 2024. The minimum initial investment for all Unit classes is $10,000, with additional investments of $5,000, primarily targeting accredited investors and wrap fee programs.

Why It Matters

GAIF II's focus on a multi-strategy, derivatives-heavy approach offers investors a sophisticated avenue for capital appreciation, potentially diversifying their portfolios beyond traditional equities and bonds. The fund's structure, involving an Offshore Feeder and master funds, is designed to optimize tax efficiency for specific investor types, making it particularly relevant for U.S. tax-exempt and non-U.S. investors. For employees of Graham Capital Management, L.P., the continuous development of trading systems and strategies underscores a commitment to innovation and growth, potentially fostering job stability and expansion. In the broader market, GAIF II's activities in global financial markets, including interest rates, foreign exchange, and commodities, contribute to market liquidity and price discovery, while its competitive edge lies in its proprietary software and diverse trading strategies managed by a seasoned Investment Committee.

Risk Assessment

Risk Level: high — The fund's primary investment strategy involves significant exposure to derivatives, including futures, forwards, spot currency contracts, options, and swaps, which inherently carry substantial risk of loss. The filing explicitly states that derivatives will present the Fund's primary risk of loss. Furthermore, the Manager has sole discretion to change trading programs, leverage, and asset allocations without prior notice to investors, increasing operational and market risk.

Analyst Insight

Investors should thoroughly assess their risk tolerance and investment objectives before considering GAIF II, given its high exposure to complex derivatives and the Manager's broad discretion over trading strategies. Due diligence should focus on the historical performance of Graham Capital Management's Core Macro Portfolio and the specific fee structures of Class 0, Class 2, Class 3-A, and Class 3-B Units.

Financial Highlights

debt To Equity

N/A

revenue

$36,220,218

operating Margin

N/A

total Assets

$36,253,376

total Debt

N/A

net Income

N/A

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

N/A

Key Numbers

• $36,220,218 — Aggregate value of Units held by non-affiliates (as of June 30, 2025, indicating the fund's size for non-affiliated investors)
• 157,893.710 — Units of Core Macro Portfolio outstanding (as of March 1, 2026, representing total investor interests)
• $36,253,376 — Aggregate Net Asset Value of Units in GAIF II (as of February 28, 2025, reflecting the total value of the fund's assets minus liabilities)
• $10,000 — Minimum initial investment (for each Class of Units, setting the entry barrier for new investors)
• $5,000 — Minimum additional investment (for each Class of Units, facilitating further capital contributions)
• $20 billion — Assets under management by Graham Capital Management, L.P. (as of March 1, 2026, demonstrating the Manager's significant scale)
• 252 — Personnel at Graham Capital Management, L.P. (as of March 1, 2026, indicating the firm's operational capacity)
• 2050 — GAIF II's term end date (December 31, 2050, defining the fund's operational lifespan unless dissolved earlier)
• 2013 — Effective date of GAIF II's amendment to certificate of formation (March 28, 2013, establishing its current legal structure as a Series LLC)
• 2024 — Effective date for Class 3-A and Class 3-B Units (March 19, 2024, indicating recent expansion of investment options)

Key Players & Entities

• GRAHAM ALTERNATIVE INVESTMENT FUND II LLC (company) — registrant
• Graham Capital Management, L.P. (company) — Fund's manager and sole investment advisor
• Kenneth G. Tropin (person) — Chairman and founder of Graham Capital Management, L.P.
• Pablo Calderini (person) — Vice Chairman and Co-Chief Investment Officer of Graham Capital Management, L.P.
• Jens Foehrenbach (person) — President and Co-Chief Investment Officer of Graham Capital Management, L.P.
• Brian Douglas (person) — Chief Executive Officer of Graham Capital Management, L.P.
• Commodity Futures Trading Commission (regulator) — regulates Graham Capital Management, L.P. as a CPO and CTA
• Securities and Exchange Commission (regulator) — regulates Graham Capital Management, L.P. as an investment adviser
• National Futures Association (regulator) — Graham Capital Management, L.P. is a member
• Proskauer Rose LLP (company) — legal counsel

FAQ

Risk Factors

• Market Volatility and Trading Strategy Risk [high — market]: GAIF II's investment objective is long-term capital appreciation through trading in U.S. and foreign markets, primarily futures, forward currency, metals, spot currency contracts, and associated derivatives. The success of the Core Macro Portfolio is heavily dependent on the Manager's ability to develop and modify trading systems and strategies, which are subject to market volatility and the inherent risks of derivative instruments. The fund employs both systematic and discretionary trading programs, increasing exposure to potential strategy-specific risks.
• Master-Feeder Structure Complexity [medium — operational]: GAIF II utilizes a master-feeder structure, investing in Graham Alternative Investment Ltd. (Offshore Feeder), which in turn invests in Graham Alternative Investment Trading LLC (GAIT). This multi-layered structure introduces operational complexities and potential risks related to the management and oversight of each entity, as well as the performance of the underlying master funds managed by Graham Capital Management, L.P.
• Regulatory Compliance and Investor Suitability [medium — regulatory]: The Units of GAIF II are registered under the Securities Exchange Act of 1934. The fund primarily targets accredited investors and wrap fee programs, implying a need for strict adherence to investor suitability rules and ongoing regulatory compliance. Changes in regulations governing alternative investment funds or derivatives could impact the fund's operations and investment strategies.
• Dependence on Manager's Expertise and Scale [high — financial]: The fund's performance is directly tied to the expertise and operational capacity of Graham Capital Management, L.P., which managed over $20 billion in assets with 252 personnel as of March 1, 2026. Any disruption to the Manager's operations, loss of key personnel, or failure to adapt trading strategies could significantly impact the fund's ability to achieve its investment objective.

Industry Context

The alternative investment fund industry, particularly those focused on managed futures and global macro strategies, operates in a dynamic and competitive landscape. Funds like GAIF II leverage sophisticated trading systems and derivative instruments to seek capital appreciation across diverse global markets. Key trends include the increasing use of systematic and quantitative trading approaches, the demand for diversification benefits, and the ongoing need for robust risk management frameworks.

Regulatory Implications

GAIF II operates within a framework governed by securities regulations, particularly the Securities Exchange Act of 1934. Compliance with investor suitability rules for accredited investors and potential evolving regulations on derivatives and alternative investments are critical. The master-feeder structure also necessitates careful oversight to ensure regulatory adherence across all involved entities.

What Investors Should Do

1. Review Manager's Track Record and Strategy Evolution
2. Understand the Master-Feeder Structure Risks
3. Evaluate Fees and Expenses Associated with Unit Classes
4. Assess Liquidity and Redemption Terms

Key Dates

• 2006-05-16: Formation of Graham Alternative Investment Fund II LLC — Established the legal entity that would later evolve into the current Series LLC structure.
• 2006-08-01: Commencement of GAIF II Operations — Marks the beginning of the fund's investment activities and trading.
• 2013-03-28: Amendment to Certificate of Formation (Effective Date) — GAIF II was established as a Delaware Series Limited Liability Company, defining its current operational and legal structure.
• 2024-03-19: Effective Date for Class 3-A and Class 3-B Units — Indicates an expansion of the fund's unit classes, potentially offering new investment options or fee structures.
• 2025-06-30: Aggregate value of Units held by non-affiliates reported — $36,220,218 provides a snapshot of the fund's size for external investors at a specific point in time.
• 2026-03-01: Units outstanding and Manager's AUM/Personnel reported — 157,893.710 Units outstanding and $20 billion AUM for the Manager highlight the fund's scale and the Manager's capacity.

Glossary

Series Limited Liability Company

A type of LLC where a single entity can establish separate 'series,' each with its own assets, liabilities, business purposes, and investors, offering segregation and protection between series. (GAIF II is structured as a Series LLC, with the Core Macro Portfolio being its sole series, allowing for distinct operational and financial management.)

Master-Feeder Structure

An investment structure where multiple 'feeder' funds (like GAIF II and its offshore counterpart) invest all their assets into a single 'master' fund, which holds the actual portfolio of securities. This consolidates trading and management. (GAIF II utilizes this structure, investing through Graham Alternative Investment Ltd. and GAIT into master funds managed by Graham Capital Management, L.P.)

Futures Contracts

A standardized legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future. (These are a primary instrument used by GAIF II for trading and achieving capital appreciation in U.S. and foreign markets.)

Forward Currency Contracts

A customized contract between two parties to buy or sell a currency at a specified rate on a future date. (Another key derivative instrument employed by GAIF II for its trading strategies.)

Accredited Investors

Individuals or entities that meet certain income or net worth thresholds, as defined by regulatory bodies like the SEC, allowing them to invest in more complex or speculative securities. (GAIF II primarily targets accredited investors, indicating the nature of its investment offerings and risk profile.)

Year-Over-Year Comparison

Specific comparative data to a prior filing is not available in the provided text. However, the introduction of Class 3-A and Class 3-B Units effective March 19, 2024, indicates recent structural or offering changes. The reported aggregate value of Units held by non-affiliates as of June 30, 2025 ($36,220,218) and Units outstanding as of March 1, 2026 (157,893.710) provide current scale metrics, but without prior year figures, year-over-year growth or changes in these metrics cannot be determined.

Key Financial Figures

• $36,253,376 — and Loss") of the Units in GAIF II was $36,253,376. GAIF II operates on a calendar fiscal
• $10,000 — l investment for each Class of Units is $10,000 and the minimum additional investment i
• $5,000 — nd the minimum additional investment is $5,000. Class 0 and Class 3-A are primarily fo
• $20 billion — 52 personnel and manages assets of over $20 billion. The Manager's principal office is loca

Filing Documents

• ef20060624_10k.htm (10-K) — 3579KB
• ef20060624_ex4-1.htm (EX-4.1) — 12KB
• ef20060624_ex31-1.htm (EX-31.1) — 9KB
• ef20060624_ex31-2.htm (EX-31.2) — 9KB
• ef20060624_ex32-1.htm (EX-32.1) — 4KB
• image00001.jpg (GRAPHIC) — 86KB
• ef20060624_ex10-10b.htm (EX-10.10B) — 51KB
• ef20060624_ex10-10c.htm (EX-10.10C) — 471KB
• image00002.jpg (GRAPHIC) — 34KB
• image00003.jpg (GRAPHIC) — 2KB
• 0001140361-26-011404.txt ( ) — 6892KB
• gaifb-20251231.xsd (EX-101.SCH) — 24KB
• gaifb-20251231_def.xml (EX-101.DEF) — 81KB
• gaifb-20251231_lab.xml (EX-101.LAB) — 179KB
• gaifb-20251231_pre.xml (EX-101.PRE) — 102KB
• gaifb-20251231_cal.xml (EX-101.CAL) — 19KB
• ef20060624_10k_htm.xml (XML) — 404KB

BUSINESS

BUSINESS GRAHAM ALTERNATIVE INVESTMENT FUND II LLC General Development of Business Graham Alternative Investment Fund II LLC ("GAIF II") is a Delaware Series Limited Liability Company established through an amendment to the certificate of formation, effective March 28, 2013. Prior to March 28, 2013, GAIF II was organized as a Delaware Limited Liability Company which was formed on May 16, 2006. GAIF II was formed to enable U.S. tax-exempt investors and investors who are neither citizens nor residents of the United States to achieve long-term capital appreciation through professionally managed trading in both U.S. and foreign markets, primarily in futures contracts, forward currency and metals contracts, spot currency contracts and associated derivative instruments such as options and swaps. GAIF II commenced operations on August 1, 2006. The Core Macro Portfolio, the sole series of GAIF II, uses a systematic trading program and a discretionary trading program. The Core Macro Portfolio units of interest (the "Units") of GAIF II are registered under the Securities Exchange Act of 1934, as amended, (the "Exchange Act") and the financial information and statements contained herein are solely with respect to that Portfolio. GAIF II invests in Graham Alternative Investment Ltd., a British Virgin Islands business company (the "Offshore Feeder"). The Offshore Feeder is designed to prevent investors in the Fund that are not subject to U.S. federal income tax from realizing "unrelated debt-financed income" or "unrelated business taxable income," as each term is defined in the Internal Revenue Code of 1986, as amended, with respect to the investor's investment in the Fund. Assets invested in the Core Macro Portfolio will be invested by the Offshore Feeder in Graham Alternative Investment Trading LLC ("GAIT"), which is a Delaware limited liability company ("the Feeder Fund"). Trading on behalf of the Fund (as defined below) will be conducted in separate master funds (in a

View Full Filing

View this 10-K filing on SEC EDGAR