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Sophisticated Strategies Made Easy

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Just a few brief years ago, it was next to impossible for the average investor to gain financial exposure to the commodities market. Thanks to the arrival of ETFs, commodities exposure is now just a click away.

The newest buzz is gaining access to sophisticated strategies that were once reserved for Wall Street’s elite.

Capturing spreads and margins, profiting from asset classes that deviate from their historical norms and taking advantage of mispricing, are strategies now introduced to main street via the iShares Diversified Alternatives Trust (ALT). This is the first actively managed, non-index based ETF for iShares.

To accomplish its objective, the trust will seek to take advantage of interest rate and futures contract price differentials by simultaneously entering into long and short positions in various bond, commodity, currency and interest rate futures.

The managers will also take a look at historic performance patterns and their actual returns. Based on the notion that price history may be predictive of asset value, the fund may employ technical strategies to capture such returns.

Additionally, the trust will attempt to identify instances where there are discrepancies between the market and fundamental values of an asset. The employed relative value strategies tend to buy in markets that appear inexpensive on

a relative basis, and sell in markets that appear expensive.

We know today, that all the sophisticated technology and simulation programs relied upon by financial big hitters did not see the 2007 crash coming. It will be interesting to see if and how much value the iShares Diversified Alternatives Trust will add to investors’ portfolios.


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