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Emerging markets multi-strategy: Investing in developing countries

Value of an initial $1,000 investment

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. The total return of an investment is only one measure of performance. Performance should never be the sole consideration when making an investment decision. There is no guarantee that any investment will achieve its objectives, generate profits or avoid losses. The referenced indices are shown for general market comparisons and are not meant to represent any particular Fund. An investor cannot invest directly in an index. Moreover, indices do not reflect commissions or fees that may be charged to an investment product based on the index, which may materially affect the performance data presented. US stocks represented by the S&P 500 Total Return Index; Emerging Markets represented by the HFRI Emerging Markets (Total) Index. Bull markets: 01/90-08/00, 10/02-09/07, 03/09-present; tech wreck: 09/00-09/02; credit crisis: 10/07-02/09. Source: Altegris.

Emerging markets (EM) multi-strategy invests in countries with developing economies. The potential for rewarding investment opportunities in this category is generally accompanied by a relatively higher risk/reward profile.

Emerging markets multi-strategy vs. traditional asset classes

The charts below show how emerging markets multi-strategy historically stacks up against traditional asset classes.

Calendar Year Performance: Emerging Markets vs US Stocks

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Emerging markets multi-strategy represented by the HFRI Emerging Markets (Total) Index. See index descriptions below.

Performance Statistics:
Emerging Markets Multi-Strategy vs. US Stocks

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Emerging markets multi-strategy represented by the HFRI Emerging Markets (Total) Index. See index descriptions below.

Annualized 10-, 5-, 3- and 1-Year Returns

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Emerging markets multi-strategy represented by the HFRI Emerging Markets (Total) Index. See index descriptions below.

Standard Deviation*

*Standard deviation is a statistical measure of how consistent returns are over time; a lower standard deviation indicates historically less volatility.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Emerging markets multi-strategy represented by the HFRI Emerging Markets (Total) Index. See index descriptions below.

Emerging Markets Multi-Strategy Correlation*

*Correlation is a statistical measure of how two securities move in relation to each other.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Emerging markets multi-strategy represented by the HFRI Emerging Markets (Total) Index. See index descriptions below.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. The referenced indices are shown for general market comparisons and are not meant to represent any particular Fund. An investor cannot invest directly in an index. Moreover, indices do not reflect commissions or fees that may be charged to an investment product based on the index, which may materially affect the performance data presented. US Stocks represented by S&P 500 Total Return Index; US Bonds represented by Barclays Capital US Aggregate Bond Index; International Stocks represented by MSCI EAFE Index; Commodities represented by S&P GSCI Total Return Index; Emerging Markets multi-strategy represented by the HFRI Emerging Markets (Total) Index. Source: Altegris.

Opportunities in emerging or developing economies

Emerging markets multi-strategy managers typically invest long and short in countries with “emerging” or developing economies, the largest of which include Brazil, India and China. Emerging market countries typically have a lower per capita income than developed countries and are transitional societies in the process of adopting domestic and political reforms. Increased liquidity and the presence of multiple asset classes demonstrate how emerging market countries are beginning to more closely resemble the “developed” financial markets in Europe and the United States. The ability to express both positive and negative investment views in these countries by investing long and short allows managers to potentially profit from various economic scenarios.

  • Ability to go long or short across various asset classes (equities, currencies, interest rates, credit)
  • Alpha/manager skill dependent
  • Utilize both top-down and bottom-up research process
  • Focus on economies expected to continue their recent growth

See the Glossary for term definitions.

Tap into the potential for strong risk-adjusted returns

Emerging markets multi-strategy has historically delivered strong risk-adjusted returns. The potential diversification benefits of this strategy allow managers to potentially profit from both positive and negative developments across a variety of emerging markets and their underlying sectors. Of course, there is no guarantee that any investment will achieve its objectives, generate profits or avoid losses.

  • Strong historical risk-adjusted returns: The flexibility of emerging markets multi-strategy has produced a sustained historical track record throughout a number of major market scenarios. Of course, past performance is not indicative of future results.
  • Lower historical volatility: Emerging markets multi-strategy’s historically strong returns have been delivered with lower volatility compared to US stocks and long-only emerging markets strategies.
  • Diverse strategy: Significant manager skill is essential for decisions to go long or short, which geographical region(s) and underlying sector(s) to consider in the investment process. Emerging markets multi-strategy managers typically rely on macroeconomic data and country characteristics.

See the Glossary for term definitions.

Information and education to help you understand emerging markets multi-strategy

As part of the Altegris Academy, Altegris brings you a variety of resource materials that will help you better understand the potential advantages of emerging markets multi-strategy.