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Investment Strategy
The fund seeks capital appreciation with an emphasis on absolute returns, low volatility, and low correlation to traditional equity and fixed income markets.



Hypothetical image. Weightings are subject to change.

Fund Highlights

  • Exposure to three alternative fixed income strategies
  • Low correlation to traditional investments
  • Core holding for alternative investment allocations
  • Investments that seeks to produce income while preserving capital

Diversification Across Alternative Strategies
Arrow Alternative Solutions Fund is a mutual fund that delivers unique risk and return characteristics. Alternative strategies have historically exhibited relatively low correlation to traditional investments, such as equities & bonds. The fund uses a systematic methodology that follows the research of three ProfitScore alternative fixed income strategies: Tactical High Yield, Dynamic Credit Default and Dynamic Government Bond.

The fund optimizes the exposure to each of the underlying directional strategies based on the market environment. The fund seeks to provide a balance of managing risk and seeking absolute returns. Below is a description of each strategy:

StrategyExposure
Tactical High YieldSeeks to provide long or flat (cash) exposure to global
corporate high yield markets.
Dynamic Credit DefaultSeeks to provide long, short, or flat exposure to highly
liquid credit default markets.
Dynamic Government BondSeeks to provide long, short, or flat exposure to
long-term U.S. Treasury bond markets.


The directional long, short or flat position are based on a series of proprietary indicators that are customized for each specific market segment. The long/short/flat nature of the fund provides the ability for each of the strategies to act independently from one another, providing an additional layer of potential diversification and the ability to respond to changing market and interest rate environments.

Exposure to Multiple Market Segments
The Arrow Alternative Solutions Fund’s returns are derived from three core portfolio strategies across distinct market segments: high yield, credit default, and long-term bonds. As illustrated below, each of the three market segments presents different investment characteristics from year to year. Also shown is a long-only blend of all three market segments, using index proxies, based on the fund’s strategy portfolio weights. The potential benefit of using a blend of all three may provide the opportunity for improved risk/return characteristics over time: versus traditional bonds (U.S. Aggregate Bond Index).

2011 2012 2013 2014 2015 5-Year
Avg.
Standard
Deviation

(5 yrs.)
LT Bond
22.84%
High Yield
14.15%
Credit Def.
15.91%
LT Bond
27.48%
U.S. Agg.
0.55%
LT Bond
8.37%
U.S. Agg.
2.68%
Blend
8.85%
Credit Def
11.24%
High Yield
5.93%
Blend
7.16%
Credit Def.
0.54%
Blend
5.59%
Blend
5.16%
U.S. Agg.
7.84%
Blend
11.12%
Blend
3.91%
U.S. Agg.
5.97%
LT Bond
-1.59%
Credit Def.
4.58%
High Yield
6.91%
High Yield
5.94%
U.S. Agg.
4.21%
U.S. Agg.
-2.02%
High Yield
2.13%
Blend
-2.55%
High Yield
4.44%
Credit Def.
7.39%
Credit Def.
-4.98%
LT Bond
3.36%
LT Bond
-13.88%
Credit Def.
1.55%
High Yield
-5.03%
U.S. Agg.
3.25%
LT Bond
13.01%

Performance displayed represents past performance, which is no guarantee of future results. Index performance assumes reinvestment of dividends, but does not include fees. Indexes are not available for direct investment. Index data is shown for illustrative purposes and is not intended to reflect fund performance. Index proxies: High Yield (IBOXX Liquid HY Index), Credit Default (Markit CDX Index), LT Bond (Barclays UST 20+Yr Index). Blended index portfolio (“Blend”) is based on year-end portfolio target weights of the fund (50% IBOXX Liquid HY, 28% CDX, 22% UST 20+Yr), rebalanced monthly. Standard Deviation (a measure of volatility) is based on five year averages through 12/31/2015. Source: Bloomberg/FactSet, calculated by Arrow.