The fund seeks capital appreciation with an emphasis on absolute returns, low volatility, and low correlation to traditional equity and fixed income markets.
- 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 similar to the ProfitScore Alternative Income Index (PSAI). The index is comprised of three alternative fixed income strategies: Tactical High Yield, Dynamic Credit Default and Dynamic Government Bond.
Within the framework of modern portfolio theory, the fund optimizes the exposure to each of the underlying directional strategies on a volatility-weighted basis to provide ongoing portfolio diversification. The fund seeks to provide an optimal balance between managing risk and seeking absolute returns. Below is a description of each strategy:
|Strategy ||Exposure |
|Tactical High Yield ||Seeks to provide long or flat (cash) exposure to global corporate high yield markets. |
|Dynamic Credit Default ||Seeks to provide long, short, or flat exposure to highly liquid credit default markets. |
|Dynamic Government Bond ||Seeks to provide long, short or flat exposure to long-term U.S. Treasury bond markets. |
Exposure to Multiple Market Segments
The Arrow Alternative Solutions Fund fund offers the potential for increased diversification, enhanced risk-adjusted returns and reduced volatility. The fund’s returns are derived from three core portfolio strategies across distinct market segments, similar to those used by the ProfitScore Alternative Income Index (PSAI). 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. The directional long, short or flat position are based on a series of proprietary technical indicators that are customized for each specific market. Each of the three market segments presents different investment characteristics and challenges from year to year. The potential benefit of using a tactically managed blend of all three may provide the opportunity for improved risk/return characteristics over time.