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 | Arrow Dynamic Income Fund
Seeks Absolute Returns with Alternative Income | |
Investment Strategy
The fund seeks income, and long-term capital appreciation with an emphasis on absolute returns, low volatility, and low correlation to traditional equity and fixed income markets. | Fund Highlights
Exposure to three alternative fixed income strategiesLow correlation to traditional investmentsCore holding for alternative investment allocationsInvestments that seeks to produce income while
preserving capital | Diversification Across Alternate Strategies
The Arrow Dynamic Income Fund (formerly known as the Arrow Alternative Solutions Fund) is a mutual fund that delivers unique risk and return characteristics. Alternative strategies have historically exhibited relatively low correlation to traditional investments, such as equities & bonds. The fund uses a systematic methodology comprised of three fixed income strategies: Tactical High Yield, Dynamic Credit Default and Dynamic Government Bond.
The fund optimizes the exposure to each of the underlying directional strategies based on the market environment. The fund seeks to provide a balance of managing risk and seeking absolute returns. Below is a description of each strategy:
| Strategy | Exposure | | Tactical High Yield | Seeks to provide long or flat (cash) exposure to global corporate high yield markets. | | Dynamic Credit Default | Seeks to provide long, short, or flat exposure to highly liquid credit default markets. | | Dynamic Government Bond | Seeks to provide long, short, or flat exposure to long-term U.S. Treasury bond markets. |
The directional long, short or flat position are based on a series of proprietary indicators that are customized for each specific market segment. The long/short/flat nature of the fund provides the ability for each of the strategies to act independently from one another, providing an additional layer of potential diversification and the ability to respond to changing market and interest rate environments. | 
Exposure to Multiple Market Segments
The Arrow Dynamic Income Fund's returns are derived from three core portfolio strategies across distinct market segments: high yield, credit default, and long–term bonds. As illustrated below, each of the three market segments presents different investment characteristics from year to year. Also shown is a long–only blend of all three market segments, using index proxies, based on the fund's strategy portfolio weights. The potential benefit of using a blend of all three may provide the opportunity for improved risk/return characteristics over time: versus traditional bonds (U.S. Aggregate Bond Index).
| 2014 | 2015 | 2016 | 2017 | 2018 | 5-Year
Avg. | Standard
Deviation
(5 yrs.) | LT Bond
27.48% | U.S. Agg.
0.55% | High Yield
15.33% | LT Bond
8.98% | Credit Def.
0.85% | LT Bond
6.86% | LT Bond
10.59% | Blend
7.90% | Credit Def.
0.54% | Credit Def.
11.28% | Credit Def.
7.52% | U.S. Agg.
0.01% | Blend
4.52% | High Yield
5.01% | U.S. Agg.
5.97% | LT Bond
-1.59% | Blend
10.92% |
Blend
7.32% | Blend
-0.93% | Credit Def.
4.35% | Credit Def.
4.22% | High Yield
2.13% | Blend
-2.60% |
U.S. Agg.
2.65% | High Yield
6.34% |
High Yield
-1.51% | High Yield
3.45% | Blend
4.19% |
Credit Def.
1.55% | High Yield
-5.03% | LT Bond
1.43% | U.S. Agg.
3.54% | LT Bond
-2.00% | U.S. Agg.
2.54% | U.S. Agg.
2.79% |
Performance displayed represents past performance, which is no guarantee of future results. Index performance assumes reinvestment of dividends, but does not include fees. Indexes are not available for direct investment. Index data is shown for illustrative purposes and is not intended to reflect fund performance. Index proxies: High Yield (IBOXX Liquid HY Index), Credit Default (Markit CDX Index), LT Bond (Barclays UST 20+Yr Index). Blended index portfolio ("Blend") is based on year-end portfolio target weights of the fund (50% IBOXX Liquid HY, 25% CDX, 25% UST 20+Yr), rebalanced monthly. Standard Deviation (a measure of volatility) is based on five year averages through 12/31/2017. Source: Bloomberg, calculated by Arrow. | The Arrow Dynamic Income Fund may not be suitable for all investors. The fund's use of derivatives such as futures, options and swap agreements may expose the fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. Investing in leveraged instruments will magnify any gains or losses on those instruments. The fund's use of short selling involves increased risks and additional costs. The fund may invest in fixed income securities, which are subject to risks including interest rate, credit and inflation. | |
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