The foregoing information has not been provided in receivership under ERISA and is not intended and should not be considered impartial investment advice. If you are a retail investor in pension plans, contact your financial advisor or other non-AIBIT trustee to determine if a particular investment idea, strategy, product or service described in this document is appropriate for your situation. An investment in BXMIX should be considered a speculative investment involving significant risks; You may lose some or all of the investment, or your investment may not work as well as other investments. BXMIX`s investments involve special risks, including, but not limited to, the loss of all or a significant portion of the investment due to leverage, short selling or other speculative practices, lack of liquidity and volatility of returns. The following is a brief description of some additional key risks of an investment in BXMIX: Allocation Risk – Blackstone`s judgment on the attractiveness, value or market trends affecting a particular asset class, investment style, sub-advisor or security may be incorrect and have a negative impact on performance. Derivatives Risk – The use of derivatives carries the risk that their value will not move as expected relative to the value of the relevant underlying assets, interest rates or indices. Derivatives may be subject to counterparty credit risk and may involve an investment risk greater than their nominal amount. Distressed securities risk – Investments in securities of companies involved in turnarounds, liquidations, reorganizations, bankruptcies and similar situations are associated with a high risk of loss, as there is usually significant uncertainty about the outcome of such situations. Event trading risk – implies the risk that the specific event identified will not occur as expected and that this may have a negative impact on the market price of the securities in question. Foreign investment and emerging markets risk – includes specific risks caused by foreign political, social and economic factors, including exposure to currency fluctuations, lower liquidity, less developed and less efficient commercial markets, political instability, and less developed legal and auditing standards. High risk of portfolio turnover – Active trading in securities can increase transaction costs (and thus performance) and taxable distributions. Model and technology risk – involves the risk that model-based strategies, data collection systems, order execution and trade allocation systems, and risk management systems will not be successful on an ongoing basis or will contain errors, omissions, imperfections or malfunctions.
Multi-manager risk – Managers may make investment decisions that conflict with each other and, as a result, the fund could incur transaction costs without generating a net investment result. Leverage risk – Borrowing money or making transactions that create investment leverage can lead to volatility and exaggerate changes in the net asset value of fund units. Risk of Conflicts of Interest: Blackstone and the sub-advisors have conflicts of interest that could affect their management of the Fund. These conflicts disclosed in the Fund`s Supplementary Information Statement include, but are not limited to: HealthCor strives to maintain guaranteed exposure. While the long book is expected to be the main driver of alpha over time, the short side of the portfolio is also positioned to have a positive impact on overall performance. From a risk management perspective, portfolio managers are aware of risk and can be expected to reduce their exposure if they feel uncomfortable with the market environment. Nephila`s strategy for Blackstone`s mutual fund is opportunistic in nature and focuses on reinsurance, particularly catastrophe bonds (”CAT”). The strategy aims to generate an attractive risk-adjusted return that is largely unrelated to other asset classes. Another way to illustrate this concept is to consider what the return on our bond would be in the event of a price change instead of a change in interest rates. For example, if the price goes from $1,000 to $800, the return goes to 12.5%. This happens because you get the same $100 guaranteed for an asset worth $800 ($100/$800).
Conversely, if the bond price rises to $1,200, the yield decreases to 8.33% ($100 / $1,200). The yield to maturity (YTM) of a bond is another way of looking at the price of a bond. YTM is the expected total return on a bond if the bond is held until the end of its term. The yield to maturity is considered a long-term bond yield, but is expressed in annual rates. In other words, it is the internal rate of return of an investment in a bond if the investor holds the bond to maturity and all payments are made as planned. The market evaluates bonds according to their particular characteristics. The price of a bond changes daily, just like that of any other listed security, where supply and demand at a given time determine the observed price. BRESSA (i) seeks to increase returns by optimizing loan selection and the relative value of liquid investments related to real estate debt, (ii) seeks current returns and returns, with a focus on market risk, and (iii) targets zero-interest exposure as an alternative to traditional fixed income securities.
Bonds that are not considered investment grade but are not in default are called ”high yield” or ”junk” bonds. These bonds have a higher risk of default in the future and investors need a higher coupon payment to offset this risk. Bonds payable also have an integrated option, but it is different from what can be found in a convertible bond. A terminable commitment is a commitment that can be ”recalled” by the company before it becomes due. Suppose a company borrows $1 million by issuing bonds with a 10% coupon that mature in 10 years. If interest rates fall in year 5 (or if the company`s creditworthiness improves), if the company can borrow for 8%, it will recall or redeem the bonds of bondholders for the principal amount and issue new bonds at a lower coupon. An investment in the Fund should be considered a speculative investment involving significant risks; You may lose some or all of the investment, or your investment may not work as well as other similar investments. The Fund`s investments involve significant risks, including, but not limited to, the loss of all or a significant portion of the investment due to leverage, short selling or other speculative practices, lack of liquidity and volatility of returns. Other risks include, but are not limited to: allocation risk, conflict of interest risk, market and selection risk, derivatives risk, debt risk, equity risk, mortgage and asset-backed risk, the multi-manager risk of large purchases or risk-taking. A detailed analysis of these and other risks applicable to the Fund can be found under the heading ”Key Investment Risks” of the prospectus.
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