This document discusses alternative investment strategies and hedge funds. It provides information on 5 hedge funds that have been selected through a thorough due diligence process. The funds represent different alternative investment strategies - Equity Hedge, Event Driven, Relative Value, Tactical Trading, and non-capital market strategies. For each fund, the document summarizes key details like assets under management, liquidity terms, minimum investment size, historical returns and risk metrics. The document emphasizes the importance of being selective in hedge fund investing due to risks and return dispersion across funds. It describes MC Investments' multi-stage due diligence process for evaluating hedge funds before selecting them for investors.

1. Selective Alternatives
2015 JULY
Marius Čiuželis, Managing Partner
T: +370 698 40 095
E: marius.ciuzelis@mcwealth.lt

2. SELECTIVE
ALTERNATIVES
Alternative strategies generally include anything that isn't plain vanilla investment
Alternative investments comprise hedge funds, life settlements, real
estate, “passion” commodities, art, financial derivative instruments,
private equity deals, etc.
Due to transparency, certainty and retail class accessibility hedge
funds are heading as most attractive and desirable alternatives.
Hedge Fund assets (USD bn.)
Assets Net asset flow Source: Hedge Fund Research, MC Wealth Management
institutional investors
(that in total manage ~ USD13 bn.)
will increase or at least keep the
same investments into alternatives.
87
100
out of
2,9
This year
Source: Prequin

3. SELECTIVE
ALTERNATIVES
Hedge fund strategies
Under “alternative” hedge funds we define
Equity Hedge Fundamental Quantitative
Relative value Fixed income Volatility arbitrage
Event Driven
Yield alternative
Merger arbitrage Opportunistic creditActivist Special situations Asset backed Distressed/high yield
Tactical Trading Discretionary macro
Exclusive
Managed futures Quantitative macro
Life settlements Direct lending Student accommodation
Market neutral
Fund of Funds Diversified Market DefensiveConservative Strategic
SIXhedge fund investing strategies:

4. SELECTIVE
ALTERNATIVES
The secret of benefit – REVEALED
Hedge Funds provide one stop access to:
• Active & skill-based investing
• Long & short investment positions
• Greater portfolio diversification & lower traditional market
correlation
60%
40%
Traditional portfolio
Equities
Bonds
50%
30%
20%
Enhanced portfolio
Equities
Bonds
Alternatives
Return: 9,35 %
Standard deviation: 6,63 %
Return: 10,86 %
Standard deviation: 5,49 %
Return: up by 1,51%
Time period: 2010 12 – 2105 03
Equities: S&P 500; Bonds: Global broad market index (BofA ML)
Alternatives: MCWM Alternative Index
Standard deviation: down by 1,15%
• Multiple investment strategies
• Hardly accessible markets
• Lower portfolio volatility & higher investment return
The benefit of selective alternatives to a traditional portfolio in numbers

5. SELECTIVE
ALTERNATIVES
Investors MUST be selective due to return dispersion
HFRI Fund Weighted
Composite Index return dispersion*
* Source: Hedge Fund Research, Inc.
HFRI Fund Weighted Composite Index
(Include ~ 2 200 Hedge Funds)
41,6%2013:
Total return
9,13%
27,4%2014: 3%
TOP 10 %BOTTOM 10 %
-18,9%
-19,5%
Top 10% average returnBottom 10% average return

6. SELECTIVE
ALTERNATIVES
Investors MUST be selective due to funds‘ overall risks
Management style and limitations, fund strategy and structure,
internal operations, third party collaborations, investor rights, etc. are
core parts investor should feel comfortable with before making an
investment.
Commercial
Market
Liquidity
Valuation
Counterparty
Fraud
Leverage
Expenses
Regulatory
Hedge Fund Risks
Loss of promotion // Inability to attract new clients // Competition
Traditional market correction // Change in market interest rates, currency rates
Increase in redemptions // Extra assets demand
Proprietary methodology // Independency // Non-exchange tradable asset valuation
Third party reliability // Turnover analysis // Transaction transparency
Fraudulent moment analysis
Stress test analysis for limits, possible capital coverage
Tax issues // Possible kickback fees // Fee analysis
Regulatory changes

7. SELECTIVE
ALTERNATIVES
MC Investments gives ONE STOP access to reliable alternatives
We go through a thorough revision, due diligence and selection
procedures until we feel confident, comfortable and prepared to show
them for investors.
We search and review the main fund
information:
• Risk return profile
• Investment field
• Liquidity and fees
• Management company profile, etc.
We collect all available info and examine it
based on the best market practices
• Investment strategy sustainability
• Manager reputation and target achievement
• Fulfilment of supervisory requirements
• Information quality and transparency
• Risk management procedures
• Compensation structure and independency,
etc.
Examine
Select/
Monitor
Review
Once we feel comfortable with a
fund, we:
• Make a personal on site visit
• Analyze future trends
• Update collected info
283 funds reviewed
in 2014 53 funds undergone
the due diligence stage
in 2014
5 funds were selected in 2014

8. SELECTIVE
ALTERNATIVES
Stage I – REVIEW
DUE DILIGENCE
• Performance figures‘ reliability
• Return consistency
• Return volatility
• Benchmark correlation
• Exceptional return rationale
• Fund AUM and its dynamics
• Strategy AUM
• Subscription fees
• Lock up terms and conditions
• Redemption frequency
• Minimum investment
• Management fee
• Performance fee
• Sales/distribution fee
• Currency classes
• Underlying assets of investments
• Investment strategy in common
• Management company profile
Firstly we check:

9. SELECTIVE
ALTERNATIVES DUE DILIGENCE
Stage II - EXAMINE
• Investment target
• Investment selection process
• Investment decision making
• Investment restrictions
• Portfolio diversification rules
• Position concentration policy
• Stop loss rule
• Changes in investment processes
• Market potential
• Competitive edge
• Position and overall fund leverage
• Fund structure
• Fund jurisdiction
• Fund governance
• Fund valuation
• All fund expenses
• Cash flow
• Investment advisors
• Bios of key professionals
• Marketing strength
• Investor breakdown
• Risk profile:
• Commercial risk
• Market risk
• Liquidity risk
• Valuation risk
• Counterparty risk
• Fraud risk
• Currency risk
• Leverage risk
• Expenses risk
• Regulatory risk
• Capacity
• Reporting
• Conflict of interest
• Third parties:
• Price
• Changes
• Contracts
• Supervision
• Certificates
• Employee compensation
We analyze:

10. SELECTIVE
ALTERNATIVES
Stage III - SELECT
DUE DILIGENCE
• Application of best practice
• Strategy sustainability
• Successful target achievement
• Fund manager experience
• Reputation
• Fund manager’s key people competence
• Fulfillment of supervisory requirements
• Risk management
• Transparency
• Limits of contactor parties‘ mandates
• Compensation structure and independency
• Valuation, calculation and audit objectivity
We consider:

11. SELECTIVE
ALTERNATIVES
There are more than 11 000 hedge funds in the world managing
USD3bn of assets.
It takes 2 weeks for an initial due diligence review for one of them. That is
22 000 weeks or 423 years just to review all of them.
Source: 2014 Deutsche Bank Alternative Investment Survey
How about spending all this time on your client
relationships and service excellence while we
take care of your alternative investments
offering?

12. SELECTIVE
ALTERNATIVES
Pipeline Case Studies
The most common reason the fund is being rejected is a lack of
transparency whereas sometimes serious misinformation is captured.
#1
Fund investment field: Real Estate (RE)
Rejection reason: Conflict of interest
Explanation: Fund manager and RE developer are from the same
corporation where fund investors‘ interest might be improperly
represented.
#2
Fund investment field: Forex
Rejection reason: Inappropriate background
Explanation: The director of fund management company was
sentenced for criminal activity and is associated to mafia connections.
#3
Fund investment field: Life Settlements
Rejection reason: Incorrect Valuation
Explanation: Fund Management had the right to evaluate fund value
by themselves or correct the valuation done by a third party.
#4
Fund investment field: Global Macro
Rejection reason: Side pockets
Explanation: Illiquid assets are held in separate “side pocket
accounts” and belong only to those investors that are already invested
not to the new ones.

13. SELECTIVE
ALTERNATIVES
EQUITY HEDGE
Fund #1 is a long/short fund focused
on small / mid-cap biotech and specialty
pharma.
TOP PICKS
AUM USD405M
Liquidity No lock up
Redemption quarterly, 45 d. notice
Minimum USD1M
2015* 39,8%
2014 73,5%
2013 122,4%
2012 20,9%
2011 12,9%
2010 8,1%
Total CAGR: 51,41%
Annualized St Dev: 25,94%
Sharpe ratio: 1,95 **
EVENT DRIVEN
Fund #2 finds attractive opportunities in structured
debt finance.
AUM USD179M
Liquidity 1Y lock up
Redemption quarterly, 60 d. notice
Minimum USD100k
2015* 1,8%
2014 11,4%
2013 17,1%
2012 30,1%
2011 -3,6%
2010 25,1%
2009 7,3%
Total CAGR: 14,62 %
Annualized St Dev: 4,86%
Sharpe ratio: 2,85 **
* 2015 returns are YTD – till the 30th of June, 2015
** Risk free rate – 0,77% (German 10 year bond yield on the 30th of June, 2015)

14. SELECTIVE
ALTERNATIVES
NON CAPITAL MARKET STRATEGIES
Fund #3 invest in carefully selected and diversified life
insurance policies in the US.
AUM USD187M
Liquidity No lock up
Redemption quarterly, 90 d. notice
Minimum EUR125k
2015* 11,5%
2014 22,1%
2013 28,8%
2012 31,0%
2011 22,1%
2010 9,4%
2009 7,5%
Total CAGR: 21,98%
Annualized St Dev: 3,73%
Sharpe ratio: 5,68 **
TOP PICKS
RELATIVE VALUE
Fund #4 seek to capitalize on out-of-
favor, analysis-intensive securities in the
mortgage-backed securities space.
AUM USD184M
Liquidity 1Y lock up
Redemption quarterly, 60 d. notice
Minimum USD500k
2015* 5,1%
2014 13,9%
2013 23,4%
2012 48,9%
2011 14,8%
Total CAGR: 27,24%
Annualized St Dev: 4,52%
Sharpe ratio: 5,85 **
* 2015 returns are YTD – till the 30th of June, 2015
** Risk free rate – 0,77% (German 10 year bond yield on the 30th of June, 2015)

15. SELECTIVE
ALTERNATIVES
TACTICAL TRADING
Fund #5 is an opportunistic, global-
macro fund that takes exposure to liquid
asset markets.
AUM USD395M
Liquidity No lock up
Redemption monthly, 3 d. notice
Minimum USD100k
2015* -7,4%
2014 31,9%
2013 34,9%
2012 4,9%
2011 53,5%
2010 28,1%
2009 13,7%
2008 -6,0%
Total CAGR: 18,68%
Annualized St Dev: 15,92%
Sharpe ratio: 1,12 **
TOP PICKS
* 2015 returns are YTD – till the 30th of June, 2015
** Risk free rate – 0,77% (German 10 year bond yield on the 30th of June, 2015)

16. SELECTIVE
ALTERNATIVES
DISCLAIMER
This publication is for general information only. It is not intended as an offer or solicitation for the purchase
or sale of any financial instrument. Past performance is no guarantee for future results. You should note
that high performance targets can only be achieved through accepting higher risk of the portfolio. Where
included in this document, benchmarks and index data provided are for illustrative purposes only. The
portfolio / strategy mentioned does not formally track any such benchmarks or indices and no
representation is made as to relative future performance or tracking deviation. In some circumstances it
may be difficult for the investor to sell or realise such investments or obtain reliable information about their
value. Where an investment is denominated in a currency other than the investor‘s currency, changes in
rates of exchange may have an adverse effect on the value, price of, or income derived from the
investment. The investments discussed may not be suitable for all investors. Before committing to an
investment, you should seek for the professional investment, legal, tax or accounting advise.
All information provided in this publication is considered reliable. In the event of changing market
circumstances MC Investments will not be held responsible for any damages experienced by investors.