TAILIEUCHUNG - Alternative Asset Class Mutual Funds Are Helping Defined Contribution Plans and Smaller Foundations Diversify Portfolios & Lower Volatility

The maturity decision will reflect your view of the direction of short- term interest rates over the coming weeks or months. You’ll want a longer average maturity or duration when interest rates are falling and a shorter one when they’re rising. A working knowledge of economics will help you sort through the market drivers that determine the direction of interest rates. Once you’ve made the maturity decision, determining the optimal mix among . Treasuries, agencies, commercial paper, CDs, and repos is still in front of you. If credit risk is too much of a concern, you can avoid it altogether by investing your general purpose fund entirely in. | BIDART ROSS Solutions to the Investment Puzzle Alternative Asset Class Mutual Funds Are Helping Defined Contribution Plans and Smaller Foundations Diversify Portfolios Lower Volatility By ANNETTE BIDART Investment Committees overseeing defined contribution plans and Trustees of smaller foundations and endowments have been seeking prudent alternative investments that offer low correlation to their current holdings of traditional stocks and bonds. The purpose of adding alternative investments to their existing portfolios and line-ups is to offer greater diversification lower portfolio risk and provide for potentially higher Alternatives can be defined by their investment strategies which invest in traditional asset classes but use derivatives to achieve their objective. long-term returns. The challenge for plan sponsors and trustees managing these portfolios has been to identify investment vehicles that offer liquidity transparency and daily pricing with accounting and administrative ease that can be clearly articulated to the end investor. Based upon growing client and industry demand for these types of products there are more open-end mutual funds carrying the alternative asset label available for consideration by these entities. Alternatives Alternatives to traditional asset classes such as stocks and bonds can be defined as public and private real estate private equity currencies infrastructure and commodities such as energy land livestock and precious metals. These alternative strategy funds typically incorporate unconstrained investment mandates which seek high excess returns with lower correlation to traditional markets. Another characteristic is the flexible investment processes that can adjust to changing economic conditions. These alternatives can employ leverage and use options swaps futures private placements and REITs Real Estate Investment Trusts to meet objectives. These strategies can invest in hard assets like private real estate oil infrastructure .

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