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Aston Hill has cultivated a diverse suite of products spanning sectors, geographies and asset classes in order to deliver funds that meet the varying needs of our investors.

Nearly four in five investors globally would take safety over performance if forced to choose. It’s time to look beyond the traditional 60—40 allocation to stocks and bonds and incorporate investments that can improve the outcome of your portfolio. 
Explore Your Alternatives

Mutual Funds

Nearly four in five investors globally would take safety over performance if forced to choose. It’s time to look beyond the traditional 60—40 allocation to stocks and bonds and incorporate investments that can improve the outcome of your portfolio. 
Explore Your Alternatives

Please correct the following errors:

Minimum Investment Requirements

The Aston Hill Credit Opportunities Fund is generally available to investors that can meet a certain minimum amount of money to invest. The minimum initial investment for residents in any province or territory in accordance with applicable securities laws is set out below:

All provinces and territories $125,000 or $25,000(1)
BC, NB, NS and NL Only: $5,000(2)

Notes:

(1) A minimum purchase of $25,000 is available to residents who meet certain requirements.
(2) A minimum purchase of $5,000 is available to residents who meet certain requirements and reside in BC, NB, NS and NL by way of the prescribed OM.
Investors should contact their investment dealer or Financial Advisor for more information.

If you can comfortably invest the minimum dollar amount required in your province or territory, please accept the disclaimer below to learn more about the AHF Credit Opportunities Fund.


Disclaimer: Information pertaining to AHF Credit Opportunities Fund is not to be construed as a public offering of securities in any jurisdiction of Canada. The offering of units in the AHF Credit Opportunities Fund is made pursuant to its offering memorandum only to those investors in jurisdictions of Canada who meet certain eligibility requirements. Please read the offering memorandum carefully before investing.

Minimum Investment Requirements

The Aston Hill Opportunities Fund is generally available to investors that can meet a certain minimum amount of money to invest. The minimum initial investment for residents in any province or territory in accordance with applicable securities laws is set out below:

All provinces and territories $150,000 or $5,000(1)

Notes:

(1) A minimum purchase of $5,000 is available to residents who meet certain requirements. Investors should contact their investment dealer or Financial Advisor for more information.

If you can comfortably invest the minimum dollar amount required in your province or territory, please accept the disclaimer below to learn more about the Aston Hill Opportunities Fund.


Disclaimer: Information pertaining to Aston Hill Opportunities Fund is not to be construed as a public offering of securities in any jurisdiction of Canada. The offering of units in the Aston Hill Opportunities Fund is made pursuant to its offering memorandum only to those investors in jurisdictions of Canada who meet certain eligibility requirements. Please read the offering memorandum carefully before investing.

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Markets

Nov 23, 2014 16:04 EST

AHF-T 0.06 icon-arrow-up-green-small-dark.png 0.90
S&P/TSX 36.28 icon-arrow-up-green-small-dark.png 15,111.46
S&P 500 10.75 icon-arrow-up-green-small-dark.png 2,063.50
Dow Jones 91.06 icon-arrow-up-green-small-dark.png 17,810.06
NASDAQ 11.10 icon-arrow-up-green-small-dark.png 4,712.97
CAD/USD -0.00 icon-arrow-down-red-small.png 0.89
Oil (NY) 0.87 icon-arrow-up-green-small-dark.png 76.72
Gold 10.60 icon-arrow-up-green-small-dark.png 1,201.50
Natural Gas -0.25 icon-arrow-down-red-small.png 4.24
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Liquid Alternatives Education Centre

Liquid 
Alternatives: 
Improving Portfolio
Risk Management

What are 
Liquid
Alternatives?

Liquid alternatives offer traditional alternative investment strategies in a mutual fund structure. Given past market conditions and worries over future shocks, the importance of risk management and capital preservation has been made abundantly clear. Liquid alternatives offer a potentially powerful way to pursue these goals.

Global Growth of Alternatives 

The move toward investing in traditional alternative investments has been one of the farthest-reaching developments globally in institutional investing over the last 25 years. We are now in a new wave of growth, as alternatives migrate from institutional to retail markets. With this migration, the term liquid alternatives was born.  The term marries the alternative strategies used by traditional hedge funds, with the liquidity and transparency of retail mutual funds. The resulting product can provide several benefits, most importantly of which are enhanced risk reduction and the potential to improve the risk-adjusted performance of a traditional portfolio.

Liquid alternatives currently make up the fastest growing category in the U.S., with inflows of more than US$40 billion in 2013. Inflows in 2014 appear set to surpass that number. A McKinsey & Company study noted that "Alternatives are rapidly moving into the mainstream retail market….as retail investors, confronted with volatile financial markets and the underfunding of their own retirements, follow the path blazed by institutional investors".1

Portfolio
Management
Tools

In terms of investment strategy, liquid alternatives go beyond traditional long-only portfolio management strategies to use additional tools such as short-selling, derivative strategies including options (puts/calls) and forward contracts, and investing in private securities.

They use these techniques in moderation, in keeping with regulatory limits on their use. These additions to traditional portfolio management offer the potential for enhanced risk management and capital preservation, similar to traditional alternatives. Their goal is to help investors protect their assets and decrease the overall risk of a portfolio while still participating in market gains.

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Structure

Packaged for the mainstream retail investor, the structure of liquid alternatives offers many advantages over hedge funds.

These include decreased fees, daily liquidity, little to no paperwork, and a small purchase minimum.

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Benefits of
Liquid
Alternatives

If you seek enhanced risk reduction and the potential to improve the risk-adjusted performance of a traditional portfolio, liquid alternatives may be the answer.

While liquid alternatives are a relatively new category, the benefits of the underlying strategies – traditional alternatives – have been tested over time. These investments have proven their ability to add diversification, improve risk-adjusted returns, reduce downside, and lower sensitivity to both market and interest rate moves.                    

To fully appreciate the value of alternatives, you must see their impact over time on a portfolio. The graph below shows the impact of alternatives on a traditional 60-40 portfolio of stocks and bonds over an almost 15-year period ended September 30, 2014, which includes the sharp drop in asset prices related to the savings and loan crisis, the dot-com bubble, the 2008 financial crisis and the summer sell-off in 2011.

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The above returns are back-tested returns based on the following parameters, and are presented for illustrative purposes only. In all the above hypothetical examples, the Equity allocation is represented by a 50% allocation to the S&P 500 Index and a 50% allocation to the S&P/TSX Composite Index. The Bond allocation is represented by a 100% allocation to the Barclays Aggregate Bond Index. The Alternative allocation is represented by a 100% allocation to HFRI Fund Weighted Composite Index.  Data is for the period from December 31, 1999 to September 30, 2014. Source: Bloomberg, PerTrac, Aston Hill.

Higher
Risk-Adjusted 
Returns

Including an allocation to alternatives can help you achieve better risk-adjusted returns. Looking at the hypothetical portfolio that includes an allocation to alternatives, it achieved higher returns, lower volatility (as measured by annualized standard deviation) and a higher Sharpe ratio. These are all highly desirable results.

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The above returns are back-tested returns based on the following parameters, and are presented for illustrative purposes only. In all the above hypothetical examples, the Equity allocation is represented by a 50% allocation to the S&P 500 Index and a 50% allocation to the S&P/TSX Composite Index. The Bond allocation is represented by a 100% allocation to the Barclays Aggregate Bond Index. The Alternative allocation is represented by a 100% allocation to HFRI Fund Weighted Composite Index.  Data is for the period from December 31, 1999 to September 30, 2014. Source: Bloomberg, PerTrac, Aston Hill.

Downside 
Protection 

Historically, alternatives have performed best during market downturns, providing an element of downside protection to investors’ portfolios.

Looking at the hypothetical portfolio that includes an allocation to alternatives, this portfolio produced a smaller loss at its lowest point. While liquid alternatives also allow investors to participate in market appreciation, they're not likely to keep up in bull markets. 

However, many investors care more about avoiding catastrophic losses than capturing every penny of market gains. To that point, nearly four in five investors globally would take safety over performance if forced to choose, according to the 2014 Global Survey of Individual Investors, conducted by Natixis Global Asset Management.  

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The above returns are back-tested returns based on the following parameters, and are presented for illustrative purposes only. In all the above hypothetical examples, the Equity allocation is represented by a 50% allocation to the S&P 500 Index and a 50% allocation to the S&P/TSX Composite  Index. The Bond allocation is represented by a 100% allocation to the Barclays Aggregate Bond Index. The Alternative allocation is represented by a 100% allocation to HFRI Fund Weighted Composite Index.  Data is for the period from December 31, 1999 to September 30, 2014. Source: Bloomberg, PerTrac, Aston Hill.

Case Study: 
Long/Short
Equity Strategy

A Long/Short Equity Strategy Can Reduce Drawdowns

Investors are searching for strategies that can help protect their portfolio from capturing all of the downside during a market drawdown. What matters most is reducing the losses suffered from an equity market peak through to the bottom. One option to achieve this outcome is an allocation to a long/short equity strategy. A long/short equity strategy seeks to limit overall market exposure by its ability to take both long and short positions.

Compared to a long-only equity strategy, long/short equity strategies have proven their ability to reduce losses when compared with the broader stock market during historical drawdowns. If an investor is concerned about equity volatility and risk, but still wants exposure to stocks, adding an allocation to a long/short equity strategy may help achieve this outcome. 

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Past performance does not guarantee future results.
Through September 30, 2014
U.S. Stocks are represented by S&P 500 Total Return Index; Long/Short Equity by HFRI Equity Hedge.
Source: HFR, Bloomberg, PerTrac, Aston Hill

Risks

Like any investment vehicle, there are risks associated with liquid alternatives and it is critical for advisors and investors alike to educate themselves on these risks in conjunction with understanding the benefits.

Morningstar succinctly summarized the primary disadvantage of liquid alternatives: “The biggest risk is underperformance."1 On average, alternatives haven’t returned as much as stocks in bull markets. But they also haven’t been down as much as stocks in bear markets. It’s important to remember the role liquid alternatives play within a portfolio, which is that of providing risk-reduction and decreasing the volatility of the overall portfolio. By design, liquid alternatives shouldn’t be the primary contributor to capital appreciation.

Why
Invest Now?

Looking forward, we see the potential for increased volatility and corrections in both equity and bond markets.

Experts agree: In an article titled The Future of Asset Management published by the CFA Institute in 2013, almost two-thirds (66%) of asset managers, pension consultants, and other industry professionals globally said they expect two or more systemic crises over the next decade. While we remain optimistic about U.S. and Canadian markets generally, future corrections of varying magnitudes are a reality. A little advance preparation by incorporating liquid alternatives holds the potential to ease the sting when stock or bond prices fall. It's important to act early. By the time the market declines, investors may have missed their best opportunity to add downside protection to their portfolio. 

Think of it this way:  You already want to have bought home insurance before your house catches fire.

NOTE TO ALL READERS:

Figure on global investors is sourced from the 2014 Global Survey of Individual Investors published by Natixis Global Asset Management.

The information contained here reflects the views of Aston Hill Asset Management Inc. (“Aston Hill”) or its affiliates and sources it believes are reliable as of the date of this publication. Aston Hill makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. Aston Hill does not provide tax, legal or accounting advice. It does not take an investor’s personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by Aston Hill or its affiliates.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments and the use of an asset allocation service. Please read the prospectus of the mutual funds in which investment may be made under the asset allocation service before investing. The indicated rates of return are the historical annual compounded total returns assuming the investment strategy recommended by the asset allocation service is used and after deduction of the fees and charges in respect of the service. The returns are based on the historical annual compounded total returns of the specified allocation strategy including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder in respect of a specified allocation strategy that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.