Arrow EC Income Advantage Alternative Fund RATE

Overview

The fund operates as an actively managed exchange traded fund (ETF) with a unique investment approach focused on the United States Treasury market. It aims to meet its investment objectives by employing a strategy that primarily involves taking long positions in put options on ETFs that are heavily invested in U.S. Treasuries, as well as put options on U.S. Treasury futures. Additionally, the fund invests in long interest rate payer swap options, also known as "swaptions." The fund is characterized by its non-diversified status, meaning it concentrates its investments more than a diversified fund would, potentially increasing its risk and return volatility.

Products and Services

• Long Put Options on ETFs:

  The fund strategically invests in long put options on exchange-traded funds that are primarily invested in U.S. Treasuries. This approach allows the fund to speculate on the decline of U.S. Treasury prices, aiming to profit from downward movements in the market. It's a defensive strategy that can protect or profit from market downturns.

• Long Put Options on U.S. Treasury Futures:

  Similar to its strategy on ETFs, the fund also takes positions in long put options on U.S. Treasury futures. This method provides a means to bet against the future prices of U.S. Treasuries, potentially gaining from decreases in bond prices. This serves as a hedge against interest rate risks or as a speculative position on the direction of U.S. interest rates.

• Long Interest Rate Payer Swaptions:

  Investment in long interest rate payer swaptions gives the fund the right, but not the obligation, to enter into an interest rate swap where the fund would pay a fixed rate and receive a floating rate. This strategy can be used to hedge against rising interest rates or to speculate on future movements in interest rates, thereby adding another layer of diversification and risk management to the fund's portfolio.