EFTA01459025.pdf

time pouithant rcost Illiquid alternatives The bTO Pthie Itrontroent viffis i.gilta Asutaiss Napactioos PrAtiolth Illiquid Private .4clivirretuon hedge equity funds Alternatives 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 a Equity long/short a Private equity The performance of equity-long/short strategies year-to-date has U.S. private-equity markets remain active, with valuations at or reflected two market dynamics over this period. Firstly, value near 2007 levels, bolstered by continued interest from strategic has underperformed momentum for the majority of the year buyers as well as financial buyers sitting on large amounts of which has hindered the performance of managers' long book. "dry powder' (capital available for investments). Debt availability Secondly, small caps have marginally underperformed large caps is still strong. Total U.S. investment however dropped slightly ahead of the turning of the rate cycle in the United States and in the third quarter from second-quarter levels. Private-equity equity-long/short managers generically operating with net long markets in Europe have also continued to perform well, with exposure tend to fish in mid and small caps where they believe fundraising for the first three quarters already surpassing the alpha can be more easily captured. Looking forward we believe 2014 total. Price and leverage levels have moved close to their that exposure to low-net-exposure equity strategies particularly 2007 peaks. European exit markets have also been very buoyant in the United States will allow investors to generate uncorrelated with 2015 on track to be a record year. By contrast, economic returns with less volatility and better downside protection. From uncertainty in Asia is expected to significantly slow down a macro perspective we believe that expansionary ECG monetary private-equity activity in this region although recent corrections policy coupled with continued weakness in the euro should in the public equity market may offer some interesting provide support for profit growth within Europe. investment opportunities. Event-driven Event-driven strategies have underperformed year-to-date particularly soft-catalyst approaches where popular long names sold off over the summer. In addition the underperformance of value in markets has hurt the performance of activist strategies. Sources; Deutsche Asset & Wealth Management Investment On the positive side strong corporate balance sheets in the GmbH, Deutsche Bank AC; Filiale London; as of 11/16/2015 United States which are flush with cash and the search for This allocation may not be suitable for all investors. In our growth through acquisition are two of a number of driving balanced model portfolio, we currently allocate 10% to alternative elements behind the near-record U.S.-dollar volume in mergers- investments (see "Portfolio"). and-acquisitions (M&A) activity recorded year-to-date. In light Please refer to the following interview for the regulatory of that, we continue to favor small and agile funds with an M&A requirements for the offer or sale of alternative investments. focus and tight risk-management frameworks. • Commodity Trading Advisor liquid alternatives Past performance is not indicative of future returns. No assurance can be given that any forecast, investment objectives and/or expected returns will be achieved. Allocations Event-driven/ .. are subject to change without notice. Forecasts are based on relative assumptions, estimates, opinions and hypothetical models that value may prove to be incorrect. Offers and sales of alternative investments are subject to regulatory requirements and such investments may be available only to investors who are "Qualified Purchasers" as defined by the U.S. Investment Company Act of 1940 and "Accredited Investors." as defined in Regulation D of the 1933 Securities Act. Alternative investments may be speculative and involve significant risks including illiquidity, heightened potential for loss and €ack of transparency. Credit It. J traltr. CA) VA* Ame,C14. &IN&I Onyjauto 2015 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0119225 CONFIDENTIAL SDNY_GM_00265409 EFTA01459025