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American Century Launches New Fund And New Alternatives Brand

By DailyAlts Staff Although American Century launched its initial alternative mutual fund more than a decade ago, the firm is best known for its traditional strategies involving stocks, bonds, and cash. But American Century has been making more of a push into liquid alts, with the hiring of Cleo Chang as Head of Alternative Investments, and the recent launch of the AC Alternatives Income Fund (MUTF: ALNNX ). The new fund is the first of several to be launched as part of American Century’s new AC Alternatives brand, and the firm’s other alternative products have been re-branded as part of the AC Alternatives line, as well. AC Alternatives Income The newly launched AC Alternatives Income Fund is managed by Perella Weinberg Partners Capital Management, a leading global institutional asset manager with over $9 billion in assets under management. The firm’s sub-advisory team is headed by Chris Bittman, chief investment officer of Perella Weinberg’s outsourced CIO service unit Agility, and rounded out by his Agility colleagues Kent Muckel and Darren Myers. “We’re excited to be collaborating with Perella Weinberg to bring our clients a range of alternative investment solutions,” said Ms. Chang, in a recent statement. “Perella Weinberg’s experience managing both traditional and non-traditional asset classes serves as a nice complement to American Century’s own expertise as a multi-boutique, risk-aware, institutional-quality asset manager.” “For the new AC Alternatives Income Fund, we’ve assembled a team of portfolio managers and subadvisors with deep experience investing across a range of asset classes under varying market conditions,” said Mr. Bittman. “Like American Century, our asset management business is predicated upon the principle that, over time, a client’s success ultimately translates into the success of the firm.” Mr. Bittman and the rest of the Perella Weinberg sub-advisory team seek to provide the fund’s shareholders with “diverse sources of income” by using a “flexible and opportunistic investment strategy” that allocates assets among various underlying subadvisors, each pursuing different investment strategies. Currently, the fund’s sub-sub-advisors include Arrowpoint Asset Management, Sankaty Advisors, Third Avenue Management, and Good Hill Partners. American Century Investments provides additional oversight. ACAlternatives.com In addition to the re-branding of American Century’s two previously existing alternative funds with the AC Alternatives moniker – the AC Alternatives Equity Market Neutral Fund (MUTF: ALHIX ) and the AC Alternatives Market Neutral Value Fund (MUTF: ACVVX ) – American Century has also launched ACAlternatives.com as an alts-education website. A section at the site titled ” What are Alternatives? ” lists 6 reasons to own alts, the evolution of alts, types of liquid alts, and liquid alts versus private structures; another section on ” Using Liquid Alternatives ” provides links to pages on allocating, special goals, and risks. ACAlternatives.com is optimized for tablet users and also features insights from investment professionals, videos, and “other tools designed to help investors make informed decisions when considering alternative investments.” AC’s Other Alts The fund now known as the AC Alternatives Equity Market Neutral Fund was originally launched back in 2005. For the three years ending July 31, the fund’s 2.23% returns ranked in the top one-third of funds in its category, earning it a four-star rating from Morningstar. American Century’s Market Neutral Value Fund was launched in 2011. Its three-year returns of 3.00% through July 31 ranked in the top 22% of funds in its category, earning a matching four-star rating. The AC Alternatives Income Fund, which launched on July 31, is just the first of three Perella Weinberg-advised funds American Century plans to launch this year. The others will include the AC Alternatives Equity and AC Alternatives Multi-Strategy funds. The former will combine several equity-oriented strategies in pursuit of attractive returns with low correlation to the stock market; while the latter will employ several sub-strategies, including long-only equity, long/short equity, and event-driven, in pursuit of the attractive returns with low correlation to the stock and bond markets.

New Half Hedged ETFs Hedge The Currency Hedging Decision For Investors

By DailyAlts Staff To hedge or not to hedge? Historically, the answer to that question has been a binary outcome for most U.S. retail investors seeking exposure to non-U.S. stocks – either fully hedged or not hedged at all. But on July 22, IndexIQ announced the launch of three new 50% currency-hedged ETFs, the first of their kind: IQ 50 Percent Hedged FTSE International ETF (NYSEARCA: HFXI ), IQ 50 Percent Hedged FTSE Europe ETF (NYSEARCA: HFXE ), and IQ 50 Percent Hedged FTSE Japan ETF (NYSEARCA: HFXJ ). Each of the new ETFs offer investors exposure to the selected universe of equities – international, Europe, or Japan – without making a binary directional bet on the U.S. dollar. “Our research has shown that 50% hedged portfolios have the potential to capture up to 80% of the risk reduction benefits of a fully hedged approach, while potentially securing steadier performance, regardless of exchange rate fluctuations,” said IndexIQ CEO and co-founder Adam Patti, in a recent statement. “With the launch of these new funds, investors can now easily add tax-efficient, neutral positioning at the core of their international equity portfolios that is neither actively bullish nor bearish on the direction of the U.S. dollar or foreign currencies.” Until the launch of these new ETFs, investors had been faced with choosing between unhedged (0%) and hedged (100%) exposure to foreign equities. Unhedged exposure could include direct ownership of foreign stocks or foreign stocks held in unhedged ETFs, and amounts to a bearish bet on the U.S. dollar. Hedged exposure, which can be gained through 100% hedged ETF products or through direct ownership of foreign stocks paired with a short currency position, amounts to a bullish bet on the dollar. But IndexIQ’s 50% hedged products effectively help investors hedge the hedging decision. Each of the new ETFs is designed to track a 50% currency-hedged index designed and maintained by FTSE: IQ 50 Percent Hedged FTSE International ETF (HFXI) seeks to track the FTSE Developed ex-North America 50% Hedged to USD Index, which is made up primarily of large- and mid-cap companies in Europe, Australasia and the Far East, IQ 50 Percent Hedged FTSE Europe ETF (HFXE) seeks to track the TSE Developed Europe 50% Hedged to USD Index, which is made up of stocks from 17 developed European countries, and IQ 50 Percent Hedged FTSE Japan ETF (HFXJ) seeks to track the FTSE Japan 50% Hedged to USD Index, which is made up of Japanese equities. “In recent years, currency has become an increasingly important factor in global equity portfolios and our clients are asking for currency hedged benchmarks that go beyond the 100% hedge ratio available today,” said FTSE Russell’s Ron Bundy, the firm’s head of North American benchmarks. “The FTSE 50% Hedged Index Series is designed to assist our clients in gaining a more complete understanding of the impact of currency on their international equity portfolios and we are excited that IndexIQ has chosen FTSE Russell as they offer 50% currency hedged ETFs to their clients.” For more information, visit the Currency Hedged Equity page at indexiq.com . Share this article with a colleague

Apollo Joins Competitors With New Funds And Plans For Push Into The Retail Market

By DailyAlts Staff Like many of its peers, Apollo Global Management (NYSE: APO ) is focusing on attracting capital from smaller investors. To this end, the firm is teaming with Ivy Investment Management to launch a pair of alternative income mutual funds: The Ivy Apollo Strategic Income Fund and the Ivy Apollo Multi-Asset Income Fund. Both funds will allocate around 20% of their assets to a total return strategy run by Apollo, according to a July 17 SEC filing . The Funds The Ivy Apollo Strategic Income Fund will divide its assets between three strategies: In addition to its total return strategy overseen by Apollo, the fund’s global bond and high-income allocations will be overseen by Ivy, a unit of Waddell & Reed Financial, in the following weights: Total Return Strategy (Apollo): 20% Target Allocation Global Bond Strategy (Ivy): 10%-70% Flexible Allocation High Income Strategy (Ivy): 10%-70% Flexible Allocation The Ivy Apollo Multi-Asset Income Fund, by comparison, is more structured in its allocation and will pursue four distinct investment strategies: Total Return Strategy (Apollo): 20% High Income Strategy (Ivy): 30% Global Equity Income Strategy (Ivy): 40% Global Real Estate Strategy (LaSalle): 10% Apollo’s total return strategy, common to both funds, focuses on high-yield credit. This category leverages Apollo’s skills in the credit markets and includes traditional “junk” bonds, as well as floating-rate bank loans, and mortgage-backed securities. The Strategic Income Fund will carry a management fee of 0.68% while the Multi-Asset Income Fund will charge 0.70% for management fees. Industry Trends Apollo Global Management joins other big money managers, including Blackstone, Carlyle and KKR in making a push into the market for retail alternatives. As quoted in a Bloomberg article , Luke Montgomery, an analyst at Sanford C. Bernstein & Co. in New York, said, “All the firms are focused on the opportunity in liquid alternatives,” and “You hear there is a lot of demand, but the uptake is a little bit slower.” Apollo is picking up the pace. The company’s co-founder Joshua Harris said during its February earnings call that Apollo had established its first sub-advisory relationship with a registered mutual fund: The $6.1 billion Oppenheimer Global Strategic Income Fund. Mr. Harris’s fellow co-founder Leon Black said he’s focusing “more and more” on individual investors, since they have about 1% of their assets allocated to alternatives, compared to as much as 30% for endowments and foundations.