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 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 on a volatility weighted basis to provide ongoing portfolio diversification. The fund seeks to provide a balance of managing risk and seeking absolute returns. Below is a description of each strategy:
|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.
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).