Monthly Fund Industry Review: January 2011 NEW STRATEGIC INSIGHT US MUTUAL FUND OBJECTIVES ROLLOUT IN SIMFUND MF Introducing 42 New Investment Objectives covering Alternative, Commodities, Balanced and Target-Date Funds December 2012 Strategic Insight an Asset International Company 805 Third Avenue, 21st Floor, New York, New York 10022 www.sionline.com / (212) 944-4455
Table of Contents Alternative : Alt- Market Neutral pg. 4 Alt- Long Short-Opportunistic pg. 4 Alt - US Eq Long-Short - Long-Biased pg. 4 Alt- Event-Driven pg. 4 Alt-US Multistrategy pg. 4 Alt- Option Hedge Strategy pg. 4 Alt- Diversified Long-Leveraged pg. 4 Alt- Sector Long-Leveraged pg. 4 Alt- Diversified Inverse/Bear pg. 4 Alt- Sector Inverse/Bear pg. 5 Alt- Volatility pg. 5 Alt-Us Equity- Other pg. 5 Alternative International Equity: Alt-International Equity-Global Macro pg. 7 Alt-International Equity- Managed Futures pg. 7 Alt-International Equity Long-Leveraged pg. 7 Alt-International Equity Inverse/Bear pg. 7 Alt-International Equity-Other pg. 7 Alternative Bond: Alternative Bond Long-Short pg. 9 Alternative Bond Long-Leveraged pg. 9 Alternative Bond Inverse/Bear pg. 9 Currency pg. 9 Commodities: Commodities Broad-Based pg.11 Commodities Long-Short pg. 11 Commodities Agriculutre pg. 11 1
Table of Contents Commodities (Cont.): Commodities Energy pg. 11 Commodities Industrial Metals pg. 11 Commodities Gold pg. 11 Commodities Precious Metals Exc. Gold pg. 11 Commodities Long-Leveraged pg. 11 Commodities Inverse/Bear pg. 11 US Hybrid: Balanced-Equity-Biased pg. 13 Balanced (New Definition) pg. 13 Balanced-Bond- Biased pg. 13 Target-Date-In Retirement pg. 13 Target-Date 2000-2010 pg. 13 Target-Date 2011-2015 pg. 13 Target-Date 2016-2020 pg. 13 Target-Date 2021-2025 pg. 13 Target-Date 2026-2030 pg. 14 Target-Date 2031-2035 pg. 14 Target-Date 2036-2040 pg. 14 Target-Date 2041-2045 pg. 14 Target-Date 2046-2050 pg. 14 Target-Date 2050+ pg. 14 2
Alt New Investment Objectives 3
US Alternative Equity SI Objective Name Objective Definition Fund Type Fund Category Alt - US Eq Market Neutral These funds attempt to reduce systematic market risk by matching short positions against long positions. Market neutrality can imply dollar neutrality (targeting equal dollar value of long and short exposures), sector neutrality, style/cap neutrality, and/or beta neutrality (equal beta of the long and short exposures to result in a zero-beta portfolio). Equity Market Neutral Strategies typically maintain net equity exposure of between -20% and 20%. They typically have low beta exposures (< 0.3 in absolute value) to stock market indexes. Alt - Alt - US Eq Long Short - Opportunistic Funds buying long securities that are expected to increase in value and selling short securities that are expected to decrease in value, with net exposure adjusted opportunistically. Such funds may be net-long or net-short at any given time. Alt - Alt - US Eq Long-Short - Lng-Biased Alt - US Eq - Event- Driven Long-biased long-short funds (unlikely to have a net short position.) Funds which invest primarily in the equity, debt and derivative instruments of companies which are currently engaged in a corporate transactions, including but not limited to mergers, acquisitions, restructurings, reorganizations, recapitalization, bankruptcy, corporate distress, tender offers, shareholder buybacks, debt exchanges, security issuance or other capital structure adjustments. Event-driven opportunities may include merger arbitrage, capital structure arbitrage, convertible arbitrage, or distressed investing. Alt - Alt - Funds that allocate to multiple alternative strategies simultaneously. The strategies they implement may include investing across the capital structure Alt - US Multistrategy of a company, investing both long and short, employing leverage and using Alt - various hedging and arbitrage strategies. They may invest extensively in derivatives. Alt - US Eq Option Hedge Strategy Equity funds that implement an options strategy to try to manage volatility and provide downside protection. Alt - Alt - US Eq Divrsfd Long- Leveraged Funds aiming to deliver a positive multiple of the short-term returns of a diversified US equity index. Alt - Alt - US Eq Sector Long- Leveraged Funds aiming to deliver a positive multiple of the short-term returns of a US equity sector index. Alt - Alt - US Eq Divrsfd Inverse/Bear Funds aiming to deliver a negative multiple of the short-term returns of a broad US equity index, or diversified US equity funds specifically designed to benefit from a steep decline in the stock market through consistent holding of more "short" positions than "long" positions, or exclusively holding short positions. Alt - 4
US Alternative Equity (Cont.) SI Objective Name Objective Definition Fund Type Fund Category Alt - US Eq Sector Inverse/Bear Funds aiming to deliver a negative multiple of the short-term returns of a US equity sector index or equity sector funds specifically designed to benefit from a steep decline in the stock market sector through consistent holding of more "short" positions than "long" positions, or exclusively holding short positions. Alt - Funds that trade the implied volatility embedded in equity index derivatives, Alt - US Eq Volatility using directional, arbitrage, market neutral or a mix of types of strategies, and include exposures that can be long, short, neutral or variable to the Alt - direction of implied volatility. US equity/hybrid funds implementing alternative strategies where no other Alt - US Eq - Other Alt - classification is appropriate. 5
Alt International Equity New Investment Objectives 6
Alternative International Equity SI Objective Name Objective Definition Fund Type Fund Category Alt - Intl Eq - Global Macro Intl/Global Funds that primarily use top-down, fundamental analysis on stock markets, interest rates, foreign exchange rates and commodities, and make leveraged bets on price movements they expect in these markets. They invest across all types of financial instruments. International Equity Alt - Int'l Equity Alt - Intl Eq - Managed Futures Funds positioned as "managed futures" that seek market-independent returns through long and short exposure to one or more asset classes primarily through futures and other derivative instruments, and using mainly trendfollowing or price-momentum strategies, although they may use other approaches as well. International Equity Alt - Int'l Equity Alt - Intl Eq - Long- Leveraged Funds aiming to deliver a positive multiple of the short-term returns of a diversified international/global equity index. International Equity Alt - Int'l Equity Alt - Intl Eq - Inverse/Bear Funds aiming to deliver a negative multiple of the short-term returns of an international/global equity index, or funds specifically designed to benefit from a steep decline in the stock market / sector through consistent holding of more "short" positions than "long" positions, or exclusively holding short positions. International Equity Alt - Int'l Equity Alt - Intl Eq - Other International/global equity/hybrid funds implementing alternative strategies where no other classification is appropriate. International Equity Alt - Int'l Equity 7
Alternative Bond New Investment Objectives 8
Alternative Bond SI Objective Name Objective Definition Fund Type Fund Category Funds that primarily take long and short positions in debt. The majority of Alt - Bond Long-Short the funds assets are invested in debt investments, but the fund manager may Taxable Bond Alt - Bond also include other instruments. Alt - Bond Long- Leveraged Funds aiming to deliver a positive multiple of the short-term returns of a bond index. Taxable Bond Alt - Bond Funds aiming to deliver a negative multiple of the short-term returns of a Alt Bond - Inverse / Bear bond index, or bond funds specifically designed to benefit from rising interest rates through consistent holding of more "short" positions than "long" Taxable Bond Alt - Bond positions, or exclusively holding short positions. Currency funds are funds that primarily invest in global currencies through Currency the use of short-term money market instruments, derivatives, and/or cash Taxable Bond Alt - Bond deposits. 9
Commodities New Investment Objectives 10
Commodities Objective Name Objective Definition Fund Type Fund Category Commodities - Broad- Based "Commodities Broad-Based" funds invest in a blended basket of commodities, primarily by using one or both of these approaches - holding the physical commodity or investing in commodity-linked derivatives. Commodities Commodities - Long- Short "Commodities Long/Short" funds invest long and short in commodities, primarily by using one or both of these approaches - holding the physical commodity or investing in commodity-linked derivatives. Commodities Commodities - Agriculture "Commodities - Agriculture" funds invest primarily in agricultural commodities, using one or both of these approaches - holding the physical commodity or investing in commodity-linked derivatives. Commodities "Commodities - Energy" funds invest primarily in energy commodities, using Commodities - Energy one or both of these approaches - holding the physical commodity or investing Commodities in commodity-linked derivatives. Commodities - Industrial Metals "Commodities - Industrial Metals" funds invest primarily in industrial metals, using one or both of these approaches - holding the physical commodity or investing in commodity-linked derivatives. Commodities "Commodities - Gold" funds invest primarily in Gold, using one or both of Commodities - Gold these approaches - holding the physical commodity or investing in commoditylinked Commodities derivatives. Commodities - Precious Metals Exc. Gold "Commodities - Precious Metals Exc Gold" funds invest primarily in precious metals other than Gold, using one or both of these approaches - holding the physical commodity or investing in commodity-linked derivatives. Commodities Commodities - Long- Leveraged "Commodities - Long Leveraged" funds seek to generate returns equal to a fixed multiple of short-term returns of an index. Many of these funds seek to generate a multiple of the daily, weekly, or monthly returns of the reference index. Commodities Commodities - Inverse / Bear "Commodities - Inverse / Bear" funds seek to generate returns equal to a negative multiple of the short-term returns of an index. Commodities 11
Balanced and Target-Date Funds New Investment Objectives 12
Balanced& Target Date SI Objective Name Objective Definition Fund Type Fund Category "Balanced - Equity-Biased" funds are hybrid portfolios which generally invest Balanced - Equity-biased 70%-90% of their assets in equities, with the balance in bonds and cash or US Hybrid cash equivalents. Balanced (New Definition for this Existing Objective) "Balanced" funds are hybrid portfolios which generally invest 50%-70% of their assets in equities with the balance in bonds and cash or cash equivalents. US Hybrid "Balanced - Bond-Biased" funds are hybrid portfolios which generally invest Balanced - Bond-biased 20%-50% of their assets in equities, with the balance in bonds and cash or US Hybrid cash equivalents. Target-Date -In- Retirement Target-Date In-Retirement funds are hybrid portfolios intended for those investors currently in or approaching retirement. These funds generally have a conservative asset-allocation. A target-date fund is part of a series of funds offering multiple dates to investors. They are generally structured as funds-offunds. US Hybrid Target-Date 2000-2010 funds are hybrid portfolios intended for investors that have a 2000-2010 time frame for retirement or other purposes. The funds Target-Date 2000-2010 US Hybrid Target-Date 2011-2015 funds are hybrid portfolios intended for investors that have a 2011-2015 time frame for retirement or other purposes. The funds Target-Date 2011-2015 US Hybrid Target-Date 2016-2020 funds are hybrid portfolios intended for investors that have a 2016-2020 time frame for retirement or other purposes. The funds Target-Date 2016-2020 US Hybrid Target-Date 2021-2025 funds are hybrid portfolios intended for investors that have a 2021-2025 time frame for retirement or other purposes. The funds Target-Date 2021-2025 US Hybrid 13
Balanced & Target Date (Cont.) SI Objective Name Objective Definition Fund Type Fund Category Target-Date 2026-2030 funds are hybrid portfolios intended for investors that have a 2026-2030 time frame for retirement or other purposes. The funds Target-Date 2026-2030 US Hybrid Target-Date 2031-2035 funds are hybrid portfolios intended for investors that have a 2031-2035 time frame for retirement or other purposes. The funds Target-Date 2031-2035 US Hybrid Target-Date 2036-2040 funds are hybrid portfolios intended for investors that have a 2036-2040 time frame for retirement or other purposes. The funds Target-Date 2036-2040 US Hybrid Target-Date 2041-2045 funds are hybrid portfolios intended for investors that have a 2041-2045 time frame for retirement or other purposes. The funds Target-Date 2041-2045 US Hybrid Target-Date 2046-2050 funds are hybrid portfolios intended for investors that have a 2046-2050 time frame for retirement or other purposes. The funds Target-Date 2046-2050 US Hybrid Target-Date 2050+ funds are hybrid portfolios intended for investors that have a 2050+ time frame for retirement or other purposes. The funds follow a Target-Date 2050+ preset "glide path" to shift their asset-class mix to become more conservative US Hybrid as the target date nears. A target-date fund is part of a series of funds offering multiple dates to investors. They are generally structured as 14
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