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How does the Fund fit into a portfolio? The Macro Allocation Fund is designed to fit
into a portfolio as a complement to existing top-down investment capabilities. Most portfolios
or the typical portfolio has a number of bottom-up managers. What that means is there are a number
of managers picking individual securities and vetting individual bonds and individual
stocks for inclusion in a portfolio. That has a lot of diversification embedded in it,
but only from a bottom up perspective. Most portfolios have a limited amount of diversification
on a top down basis. Most portfolios have a small team doing asset allocation across
very course asset classes, U.S. equities, non-U.S. equities, U.S. bonds, for example.
The Macro Allocation Fund, however, introduces some important characteristics. First, it
invests in about 100 different markets and currencies around the world. It is more granular.
When we implement our strategies in the Macro Allocation Fund, we don’t invest in the
stocks or bonds of individual companies. Rather, we invest in securities that are broader index
exposures or currency exposures. Second, it has a significant amount of risk coming from
active currency management. Often currency management is something that is left aside
in portfolios. The Macro Allocation Fund has about half of its active risk in currency
management. That’s important because it augments the
opportunity set to enhance return, but currency management is very diversifying to the portfolio
and it introduces something that not only has the potential to increase return, but
has a tremendous diversifying contribution to the overall portfolio. Finally, we’re
fundamental in our investment style, but we have a unique way of looking at the world
that is geopolitical. When we augment our fundamental analysis with the geopolitical
analysis, it creates a powerful complement to most portfolios where those types of macro-considerations
aren’t taken into account.
DISCLOSURE The opinions and forecasts expressed in the
following interview are those of Brian Singer as of February 3, 2014, and may not actually
come to pass. This information is subject to change at any time based on market and
other conditions and should not be construed as investment advice or a recommendation of
any specific security. Not all securities held in any William Blair strategy portfolio
performed as favorably as those discussed, and there is no guarantee that these or other
securities will perform favorably in the future. Investments are subject to market risk.
The Fund involves a high level of risk and may not be appropriate for everyone. You could
lose money by investing in the Fund. There can be no assurance that the Fund’s investment
objective will be achieved. The Fund is not a complete investment program and you should
only consider the Fund for the alternative portion of your portfolio. Separate accounts
managed by the Advisor may invest in the Fund and, therefore, the Advisor at times may have
discretionary authority over a significant portion of the assets invested in the Fund.
In such instances, the Advisor’s decision to make changes to or rebalance its clients’
allocations in the separate accounts may substantially impact the Fund’s performance. The Fund
is designed for long-term investors. The Fund may use investment techniques and
financial instruments that may be considered aggressive—including but not limited to
the use of futures contracts, options on futures
contracts, securities and indices, forward contracts, swap agreements and similar instruments.
Such techniques may also include short sales or other techniques that are intended to provide
inverse exposure to a particular market or other asset class, as well as leverage. These
techniques may expose the Fund to potentially dramatic changes (losses) in the value of
certain of its portfolio holdings. Investments are subject to a number of other
different types of risk, including market risk, asset allocation risk credit risk, commodity
risk, counterparty and contractual default risk, currency risk, and derivatives risk.
For a more detailed explanation and discussion of these risks, please read the Fund’s Prospectus.
Please carefully consider the Fund’s investment objective, risks, charges, and expenses before
investing. This and other information is contained in the Fund’s prospectus, which you may
obtain by calling +1 800 742 7272. Read it carefully before you invest or send money.
© William Blair & Company, L.L.C., distributor.