EFTA01457964.pdf

Mee pouilient roc:* The kJ ICIUDS lenvirwere eerie hghts Atlit44/35 prspnctivos b,raeth 1441torencuon Kkel Illiquid_ Private hedge equity Portfolio funds Our view of non-traditional asset classes Alternatives portfolios Infra- Due to their distinct characteristics, we take a structure differentiated look at selected liquid and illiquid alternative investments. Liquid alternatives Illiquid alternatives • Commodity Trading Advisors (DTAs) a Private equity Geopolitical concerns and worries about the ripple effects Private-equity markets continue to perform strongly. European from changing U.S. monetary policy could make life difficult valuations remain slightly lower than U.S. valuations and may for systematic managers with longer-term holdings. For them, also offer greater potential economic upside. Private-equity capturing directional trends across portfolios will be challenging acquisition multiples (the price paid relative to the target given changing relationships between asset classes and they companies' earnings) are above their 10-year average for both could suffer from spikes in volatility. By contrast, the smaller small and largo deals in the United States and Europe. In the number of managers running shorter-term models (with one- United States pricing remains very competitive as both strategic day to one-week holding periods) could well benefit from such buyers and financial investors are extremely active. In the first market gyrations. Some of these managers have already seen a quarter of 2015 deal sourcing has been dominated by the notable pickup in performance this year. public-to-private segment for the U.S. market and by secondary buyouts in Europe. The first quarter also saw considerable ■ Discretionary macro distributions by fund managers to investors. Buoyant Chinese Managers here have proved to be among those better equipped capital markets until recently had enabled private-equity to navigate through recent market volatility and trend reversals managers to sell portfolio companies at a record pace and on in rates and equities. Divergent monetary policies in the United favorable terms However, the recent local-market correction States and Europe should continue to create exploitable trends will potentially make this environment more challenging in the in the most liquid asset classes. U.S.-dollar strengthening could future. gather pace as the Fed starts hiking rates later this year. The normalization in Fed monetary policy should also force emerging markets along a very diverse set of adjustment paths, creating a healthy pipeline of opportunities, both from directional and arbitrage standpoints, in local currencies and rates. Event-driven/ _ Equity relative long/short value Sources; Deutsche Asset & Wealth Management Investment GmbH, Deutsche Bank AG Filktle London, as of 7/21115 This allocation may not be suitable for all investors. In our balanced model portfolio, we currently allocate 10% to alternative investments (see "Portfolio"). Credit Please refer to the following interview for the regulatory requirements for the offer or sale of alternative investments. it Commodity Trading Advisor 14 0 ittrem... CCA1 / -e, I LaxticatEcktionitub,w 20'S 4 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0117701 CONFIDENTIAL SDNY_GM_00263885 EFTA01457964