Optimize Your Portfolio
with Non-Traditional Solutions
MainStay Investments offers a number of funds that employ non-traditional strategies as part of their overall investment process, ranging from long/short equity strategies to hedge fund of funds. These funds are managed by MainStay’s diverse roster of boutique investment managers.
Key Benefits of Non-Traditional Investments
Past performance is no guarantee of future results, which will vary. It is not possible to invest directly in an index. Diversification does not guarantee a profit or protect against a loss.
All mutual funds are subject to market risk and fluctuate in value.
Alternative investments are speculative and entail substantial risk. If a security sold short increases in price, an investor may have to cover its short position at a higher price than the short sale price, resulting in a loss. Because the loss on a short sale arises from increases in the value of the security sold short, such loss is theoretically unlimited. When borrowing a security for delivery to a buyer, an investor also may be required to pay a premium and other transaction costs, which would increase the cost of the security sold short.
Options and futures contracts have the risks of unlimited losses of the underlying holdings, due to unanticipated market movements and failure to correctly predict the direction of securities prices, interest rates, and currency exchange rates. An investment in options is not suitable for all investors.
Investments in absolute-return strategies are not intended to outperform stocks and bonds during strong market rallies. Investments in derivatives often involve leverage, which may increase the volatility of the investment and may result in a loss.
High-yield securities (commonly referred to as “junk bonds”) are generally considered speculative because they present a greater risk of loss than higher-quality debt securities and may be subject to greater price volatility.
Foreign securities may be subject to greater risks than U.S. investments, including currency fluctuations, less liquid trading markets, greater price volatility, political and economic instability, less publicly available information, and changes in tax or currency laws or monetary policy. These risks are likely to be greater for emerging markets than for developed markets.
Funds that invest in bonds are subject to interest-rate risk and can lose principal value when interest rates rise.
Unconstrained bonds funds generally have higher fees than standard core bond funds.
Barclays U.S. Aggregate Bond Index is a broad-based index used to represent investment-grade bonds being traded in the U.S.
A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types stable income streams, diversification and long-term capital appreciation.
A MPL stands for Master Limited Partnership. Congress created today’s MLP structure in the 1980s to encourage investment in U.S. natural resources and energy infrastructure. There are strict requirements governing which types of companies may qualify to be a MLP. For example, a publicly traded MLP is required to derive at least 90% of its income and gains from the exploration, development, mining or production, processing, refining, transportation, or marketing of any mineral or natural resource.
A derivative is a security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage. Counterparty Risk is the risk to each party of a contract that the counterparty will not live up to its contractual obligations. Counterparty risk as a risk to both parties and should be considered when evaluating a contract. In most financial contracts, counterparty risk is also known as "default risk".
Liquid alternatives are essentially alternative strategies accessed through traditional vehicles, such as mutual funds.
Market Neutral Strategy is represented by the HFRI Equity Hedge: Equity Market Neutral Index, an index focused on Equity Market Neutral strategies that employ sophisticated quantitative techniques of analyzing price data to ascertain information about future price movement and relationships between securities.
A Hedge Fund is an aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).
Commodity funds are funds which basically invest in commodities, such as gold, oil or livestock. They also invest in commodity futures and options. Some commodity funds invest in the stocks of companies, like gold funds which invest in the stocks of gold mining companies.
Downside Protection is the use of an option or other hedging instrument in order to limit or reduce losses in the case of a decline in the value of the underlying security. Downside protection often involves the purchase of an option to hedge a long position. Other methods of downside protection include using stop losses or purchasing assets that are negatively correlated to the asset you are trying to hedge.