Alternative Investment Opportunities Through a Slowing Economy

Glossary ASSET CLASS DEFINITIONS Cash is represented by US 3-month Government BondTR, measuring the US dollar-denominated active 3-Month, fixed-rate, nominal debt issues by the US Treasury. Commodities asset class contains the index composites – GSCI PreciousMetals Index, GSCI Energy Index,GSCI Industrial Metals Index, and GSCI Agricultural Index – measuring investment performance in different markets, namely precious metals (e.g., gold, silver), energy commodity (e.g., oil, coal), industrial metals (e.g., copper, iron ore), and agricultural commodity (i.e., soy, coffee) respectively. Reuters/Jeffries CRBSpot Price Index, theTR/CC CRBExcess Return Index,an arithmetic average of commodity futures prices with monthly rebalancing, is used for supplemental historical data. Developed Market Corporate Fixed Income is composed ofBloombergBarclays indices capturing investment debt from seven different local currency markets. The composite includes investment grade rated corporate bonds from the developed-market issuers. Developed Market Equity is composed of MSCI indices capturing large-, mid- and small-cap representation across 23 individual developed- market countries, as weighted by the market capitalization of thesecountries. Thecomposite covers approximately 95%of the free float-adjusted market capitalization in eachcountry. Developed Investment Grade Fixed Income is composed of Barclays indices capturing investment-grade debt from twenty different local currencymarkets. The composite includes fixed-rate treasury, government-related, and investment grade rated corporate andsecuritized bonds from thedeveloped-marketissuers. Local market indices for US, UK and Japan areused forsupplemental historical data. Emerging Market Fixed Income is composed of Barclays indices measuring performanceof fixed-rate localcurrency emerging markets government debt for 19 different markets across Latin America, EMEA and Asia regions. iBoxx ABFChinaGovt. Bond, theMarkit iBoxx ABF Index comprising local currency debt fromChina, is used for supplemental historical data. Emerging Markets (EM) Hard Currency Fixed Income is represented by theFTSEEmerging Market Sovereign Bond Index (ESBI), covering hard currency emerging market sovereign debt. Equity Market Neutral is an investment strategy in which theportfolio manager attempts to exploit differences in stockprices by being long andshort an equal amount in closely related stocks. Hedge Funds are composed of investment managers employing different investment styles as characterized bydifferent sub categories –HFRI Equity Long/Short: Positions both long and short in primarily equity and equity derivative securities; HFRI Credit: Positions in corporate fixed income securities; HFRI Event Driven: Positions in companies currently or prospectively involved in wide variety of corporate transactions; HFRI Relative value: Positions based on a valuation discrepancy between multiple securities; HFRI Multi Strategy: Positions based on realization of a spread between related yield instruments; HFRIMacro: Positions based on movements in underlying economic variables and their impact ondifferent markets; Barclays Trader CTA Index:Thecomposite performance ofestablished programs (Commodity Trading Advisors) with more than four years of performancehistory. High Yield Bank Loans are debt financingobligations issued by a bank orother financial institution to a companyor individual that holds legal claim to theborrower’s assets in the event of a corporate bankruptcy. These loans areusually secured by acompany’s assets, and often pay ahighcoupon due to acompany’s poor (non- investment grade) credit worthiness. High Yield Fixed Income is composed ofBarclays indices measuring the non-investment grade, fixed-rate corporate bonds denominated inUS dollars, British pounds and euros. Securities are classified as highyield if the middle rating of Moody’s, Fitch, andS&P is Ba1/BB+/BB+or below, excluding emerging market debt. Ibbotson High Yield Index, a broadhigh yield index including bonds across the maturity spectrum, within the BB-B rated credit quality spectrum, included inthe below- investment-grade universe, is used for supplemental historical data. Multi-Strategy Hedge Funds combine different singlehedge fund strategies in oneportfolio and differentiateconsiderably from eachother. Most often, such portfolios include a variety of long-short, relative value andevent-driven strategies. Private Credit is debt financing provided by non-bank lenders suchas hedge funds, private debt funds, business development companies (BDCs) andspecialty finance companies. Private credit can take onvarious forms, including direct loans, mezzanine financingor private debt funds. Small- and medium-sized companies most commonly take on private credit. Private Equity is an alternative investment class which atits most basic form is the capital or ownership of shares not publicly tradedor listed on a stock exchange. Its characteristics are often driven by those for DevelopedMarket Small-Cap Equities, adjusted for illiquidity, sector concentration andgreater leverage. Real Estate Investment Trust or REIT is acorporateentity that either has bulkorall its assetbase, incomeandinvestments relatedto realestate. In theUS underSecurity and ExchangeCommission (SEC) guidelines, for an entity toqualifyas anREIT, at least 90%of its taxableannual income toshareholders inthe formofdividends must be from real estate. While typically REITs arepublicly traded, notallare, asPublicNon-Listed REITs(PNLRs) canregister with SECasREITs, butdo nottradeonmajor stock exchanges. StructuredCredit is an investment strategy which involves poolingsimilardebt obligations and selling off the resulting cash flows. Structured credit products arecreated through a securitization process, in which financialassets such as loans and mortgages arepackaged into interest-bearingsecurities backedby thoseassets, and issuedto investors. This, in effect, re-allocates the risks and return potential involvedin theunderlyingdebt. INDEX DEFINITIONS Bloomberg Barclays Global Aggregate Bond Index is a flagship measure ofglobal investment grade debt from twenty-four local currency markets. This multi- currency benchmark includes treasury, government-related, corporateand securitized fixed-rate bonds from both developed and emerging markets issuers. HFRI ED Distressed/Restructuring Index tracks distressed/restructuring strategies which employ an investment process focused oncorporate fixedincome instruments, primarily on corporate credit instruments of companies trading at significant discounts to their valueat issuanceorobliged (par value) at maturity as a result of either formal bankruptcy proceeding or financial market perception of near-term proceedings. Managers are typically actively involved with the management of these companies, frequently involved on creditors’ committees in negotiating the exchange of securities for alternative obligations, either swaps of debt, equity or hybrid securities. Managers employ fundamental credit processes focused onvaluation and asset coverageofsecurities of distressed firms; in most cases portfolio exposures are concentrated in instruments whicharepublicly traded, in some cases actively and inothers under reduced liquidity but in general for which a reasonable public market exists. In contrast to Special Situations, Distressed Strategies employ primarily debt (greater than 60%) but also may maintain related equity exposure. WEALTH OUTLOOK 2023 | MID-YEAR EDITION │ ALTERNATIVE INVESTMENTS | 32