market overview & outlook - athena capital · please see important disclosures and disclaimers...

Integrity. Independence. Insight.

Market Overview & Outlook

First Quarter 2018

Executive Summary

After building throughout 2017, investors’ bullish sentiment reached a crescendo in January with solid performance across asset classes, in particular in US equity markets with the S&P 500 +5.6% and the NASDAQ +8.8% in January alone.

This all changed on February 2nd when investor euphoria turned abruptly in response to the January US Labor Department report which showed solid job growth and firming hourly wage increases. These data raised concerns that firming inflation would lead to faster rate increases by the Federal Reserve. As a result, bonds and equities sold off in tandem and market volatility spiked. This event was followed shortly by the US tariffs on steel, then the news of Facebook’s data mishandling, then threatened additional tariffs by the US on Chinese goods, and the developing trade dispute between the US and China.

The final two months of the quarter culminated in the overturning of many of the prevailing market themes of the previous 12-18 months. For example:

• Market volatility spiked and has remained at elevated levels relative to the exceptionally low volatility of 2017

• US stocks and bonds correlated, with each ending lower on the quarter

• Hedge funds outperformed and posted a positive quarter as they benefited from the rise in volatility and interest rates

As we shared in our interim market overview, we believe the driving factors of markets have shifted. The features of the new environment include global growth which is positive but less synchronous, tightening/less accommodative monetary policy, including the unwind of quantitative easing (QE), fiscally-driven late-cycle economic growth in the US, increases in market volatility, and the prospect for rising inflation.

In this environment our view is to stay diversified and neutral to strategic target allocations. We continue to recommend low duration in fixed income portfolios and to hold extra cash as a means of hedging against, as well as capitalizing on, the expected sustained rise in market volatility. We also continue to favor foreign equities over US equities on the margin.

Cont’d on next page…..

Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

2

Executive Summary

Our view to remain invested near targets is supported by the following:

Global growth, though less robust and synchronous, remains in expansion

The outlook for earnings growth remains positive

The recent volatility has reset valuations for equities to levels closer to historical averages

Against this backdrop, we are closely monitoring:

The development of trade talks with China and NAFTA

The potential for rising US inflation due to the tight labor market and late-cycle fiscal stimulus in US

The potential impact on markets that the end of quantitative easing (QE) in the US, and potentially in Europe, may have

The evolution of corporate earnings growth

With the world full of potential surprises, we continue to recommend keeping the overall risk budget of portfolios close to target while seeking out opportunities that can perform in market melt-up or melt-down scenarios.

Please contact your Portfolio Manager with any questions or feedback.

– Athena Investment Team


3

Table of Contents


Global Macro Update Page 5

Special Section: US/China Trade Page 10

Cash & Enhanced Cash Page 16

Fixed Income Page 19

US Equities Page 27

Foreign Equities Page 32

Commodities Page 36

Hedge Funds 0

Private Equity & Real Estate Page 43

Appendix Page 53

4


Investors’ bullish sentiment hit a crescendo in January but quickly retreated on concerns building inflation pressures in the US would lead to faster Federal Reserve rate hikes.

Volatility spiked from the lows experienced during 2017 and reached levels last seen at the start of 2016.

The forward valuation of US equity markets reset closer to historical averages as the market correction coincided with a favorable outlook for corporate earnings.

Real yields across asset classes have evolved in light of rising interest rates and levels of inflation.

Global Macro

5

Irrational Exuberance


Investors’ bullish sentiment hit a crescendo in January as shown below by the American Association of Individual Investors survey. The bullish sentiment then retreated in early February on concerns of building inflation pressures in the US and the prospect of faster Federal Reserve rate hikes. The initial data point that drove these concerns was stronger than expected wage growth reported by the January jobs report from the US Labor Department.

Source: FactSet

'08 '09 '10 '11 '12 '13 '14 '15 '16 '170

0.5

1

1.5

2

2.5

3

3.5

4

4.5 American Association Of Individual Investors, Sentiment Survey, Bullish, Percent - United States / American Association Of Individual Investors, Sentiment Survey, Bearish, Percent - United States

| ► 6

Inflation Pressures Building


While the reaction of market participants to the January jobs report was likely overdone given the history of subsequent sizeable revisions to that report, there have been other data that indicate the potential for higher inflation. For example, the top chart below shows the steady increase in the Producer Price Index (PPI). As a reflection of this trend in PPI, General Mills and several similar consumer companies noted on their earnings calls a compression in margins due to rising input costs. It’s expected that at some point these companies will feel compelled to pass on the additional costs to consumers. Additionally, it is expected that the tight labor market, reflected in the chart at bottom, will lead to wage increases and ultimately to higher levels of inflation.

Source: Capital Economics | ► 7

Volatility Comes Back

The CBOE Market Volatility Index (VIX) – the market’s collective “fear gauge” – traded near its all time low in January, after dropping more than 20% over the course of 2017. This extended period of market calm reversed in early February, when the VIX jumped to levels last seen in August 2015. While the VIX has trended lower as we have entered 2Q18 – trading activity in 2018 reflects a stark contrast relative to last year. For example, as of market close on April 10th, the S&P 500 had moved +/- 1% in 28 trading sessions thus far year-to-date, which is already 20 times more than investors experienced in 2017.

Source: JPM Guide to the Markets 8 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

Real Yields Across Asset Classes


Real yields across asset classes have evolved in light of rising interest rates and levels of inflation. The chart below shows the real yield of various asset classes, with real yield defined as current nominal yield minus the annualized Core Personal Consumption Expenditures Index, excluding Food and Energy.

From the below we note that the real yield on six month Treasury bills has turned positive for the first time since 2008. On a relative basis, the real yields of foreign equities and US high yield look better than that offered by US equities.

Source: FactSet, Athena Capital Advisors | ► 9

Special Section: US/China Trade


In the following section we share a few of the key points and data from a presentation and blog on the US/China trade dispute which we shared in late March.

We believe the actions by the US mark a shift in the trade relationship between the US and China from one of

tolerance to one of engagement.

Tariffs are widely considered to be an ineffective solution to establishing trade parity.

Thus far, the tariffs have mostly been announcements rather than policy actions, and the timeline for execution is also quite drawn out.

10

China WTO and Permissive Trade


OECD economies increased economic ties with China following its WTO membership in 2001 and global trade rose significantly since that time. The US accepted globalization and the exchange of manufacturing jobs for imported consumer goods (Econ 101 guns and butter). US companies learned to be strategic re: IP sharing and JV agreements with China to gain market access. US used outdated or loosely enforced trade agreements.

Source: JP Morgan, BCA | ► 11

Current US/China Trade Profile


Consumer electronics are responsible for the majority of the US trade deficit with China (top chart), while the US primarily exports soybeans ($13 billion), planes ($11 billion), and autos ($9 billion) to China (bottom chart).

Source: JP Morgan, Harvard | ► 12

The Pendulum Swings Too Far


Whereas the US largely turned a blind eye to trade policy in the past, it is re-engaging due to: “Unfair” practices: lack of tariff reciprocity and IP theft ($250-600 billion annual losses to the US per IP Commission) China’s increasing economic ambitions to move up the value chain, e.g. “Made in China 2025” vision President Xi Jinping’s consolidation of power and military build-up challenge the widely-held idea that China’s economic

growth would evolve into democratic reforms. Politicians re-frame China as presenting an alternative to liberal democracy (freeelections, separation of powers, human rights, etc.)

Populism/“America First” agenda

Source: JP Morgan | ► 13

Tariffs in History


Historically, US tariffs that allowed for exemptions for certain countries have failed as competitor suppliers have substituted or exceeded the tariffed country’s import supply. Additionally, exemptions are against WTO Most Favored Nation rules and encourage rent-seeking.

Reagan: Launched tariffs on Japanese electronics and motorcycles and limited imports of cars, steel, apparel, lumber, and sugar. Impact on autos: US automakers lowered production (job losses), auto prices rose, and consumers suffered.Bush I: In 1989, the US imposed steep tariffs on Japan and Brazil for dumping steel in US markets. Growth of Japanese exports to the US fell from +4.5% in 1989 to -4.1% in 1990.Clinton: In 1995, the US threatened a 100% tariff on luxury Japanese cars.Bush II: Enacted 2002 steel tariffs with exemptions for Canada, Mexico, Israel and Jordan. Value of exempted countries’ exports to

America surged by 53%. Obama: US imposed anti-dumping tariffs on Chinese steel imports. As a result, US consumption of Chinese steel fell but it was

replaced by supply from Vietnam.

Source: FactSet, Bloomberg, The Economist | ► 14

Tariff Path to Policy


Thus far, the tariffs have mostly been announcements rather than policy actions, and the timeline for execution is also quite drawn out. A public hearing on trade is scheduled in Washington, DC for May 15; US companies have a comment period until May 22; and the US government then has at least 180 days to decide policy, which leaves a lengthy window for talks and the possibility of many revisions along the way. Timeline: Late Feb: China’s Vice Premier Liu He has economic talks in DC with Steven Mnuchin, Gary Cohn, US Trade Rep. Robert

Lighthizer, and corporate leaders March 1: US places 25% & 10% tariffs on imports of steel & aluminum (~2% US imports & <0.3% US GDP) with later

exemptions for EU, Canada, Mexico, Brazil, Argentina, Australia, and S. Korea March 13: US blocks Broadcom’s (ties to Huawei) hostile takeover bid for Qualcomm, citing national security grounds March 22: US Trade Representative Office finishes a Section 301 investigation into China’s IP practices and announces:

25% tariff on ~$50 billion of Chinese exports of machinery, telecom, aerospace, technology and consumer goods (equivalent to 10% of US imports from China and 2.1% of total US imports)

Intention to make formal complaint to WTO regarding China’s “discriminatory licensing practices” Plan to consider ways to limit Chinese investment in US (recommendations due in 60 days)

March 23: China’s Commerce Ministry announces plans to retaliate to steel & aluminum tariff with tariffs on $3 billion of US imports (25% on pork and recycled aluminum, 15% on steel pipes, fruit, and wine)

March 26: Steven Mnuchin leads talks with Liu He and Robert Lighthizer seeking lower Chinese tariffs on US autos, higher consumption of US semiconductors, and financial sector access

April 8: Boao Forum – Asian regional conference where President Xi Jinping offers pledges for a more open China economy. The key will be follow through and actions.

Source: Wall Street Journal, GaveKal | ► 15

Cash and Enhanced Cash: Overweight

Athena remains overweight cash and enhanced cash as dry powder for future investment opportunities. Rising short-term bond yields and a relatively flat yield curve also support enhanced cash holdings. We continue to recommend that clients with significant cash holdings diversify across both traditional and higher yielding enhanced cash vehicles.


16

Rising Rates Boost Enhanced Cash Yield

Short-term US bonds are offering higher yields as the Federal Reserve normalizes interest rates. In 1Q18, the yield on the 2 Year Treasury rose to 2.3%, the highest level in almost a decade. Enhanced cash strategies are also passing through higher yields and are attractive given the current flatness of the yield curve.


Source: Federal Reserve Bank of St. Louis 17

Widening LIBOR-OIS Spread is Anomaly

In 2018 the spread has widened between overnight index swaps (OIS), a corollary for expectations of the US fed funds rate, and the London Interbank Offered Rate (LIBOR), the cost of USD interbank borrowing. The LIBOR-OIS spread has historically been an indicator of credit risk, but the recent levels have been driven primarily by technical factors of higher T-bill issuance and corporate cash repatriation, which decrease supply and increase demand for US dollars.


Source: BCA 18

Fixed Income:

Neutral

Athena maintains a neutral tactical view on fixed income. Compensation for credit risk remains historically lowamid potential downside risks including rising volatility, tightening global monetary policy, and policy/geopoliticalrisks. We recommend clients hold current allocations steady until the opportunity set improves.

The Federal Reserve increased interest rates in 1Q18. The market reaction has been orderly thus far butvolatility could increase as global central banks follow the US to taper extraordinary monetary policy. Thegrowing budget deficit could increase US fiscal risk and make Treasuries seem less attractive in the long-term.Athena continues to have less interest rate exposure than the benchmark.

The municipal market has absorbed tax changes well thus far. Munis have also been supported by highdemand paired with falling supply.

Investment grade corporate bonds have traditionally been considered low risk, but the combination of interestrate risk, lower credit quality, and high valuations warrants caution.

The overturning of risk retention rules will likely increase CLO issuance and support floating rate loan prices inthe short-term, but may be a risk in the future as the sector may loosen its standards.


19

Federal Reserve Trimming its Holdings

The Federal Reserve has gradually been trimming its balanced sheet. The Fed ended asset purchases in 2014 but reinvested its maturing holdings until 4Q17, when it telegraphed plans to taper reinvestment based on a pre-set schedule. The Fed announced $10 billion in monthly balance sheet runoff in 4Q17, which would increase by $10 billion each quarter until reaching $50 billion. The Fed has avoided a significant disruption akin to the 2013 Taper Tantrum thus far, though such quantitative tightening is unprecedented and rising Treasury issuance due to a growing deficit could push interest rates higher.


Source: Federal Reserve Bank of St. Louis 20

Yield Curve Resumes Flattening

The Treasury yield curve has flattened materially as of 1Q18 from a year ago as the Federal Reserve has been increasing short-end interest rates. While an inverted yield curve has historically been a harbinger of a recession, analysts posit that global quantitative easing has distorted the usefulness of this signal.

Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation. Source: Bloomberg 21

Growing Deficit is Potential Bond Headwind

The US deficit is anticipated to rise as a result of the passage of a $1.3 trillion spending bill and $1.5 trillion tax bill. A weaker fiscal position can put pressure on interest rates and reduce the government’s firepower to deploy counter-cyclical measures.

Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation. Source: Athena Capital Advisors 22

Global QE Tailwinds Subsiding

The European Central Bank (ECB) has announced plans to stop asset purchases in September 2018 and raise rates in the future. If the ECB follows the Fed’s path, it could pressure global bonds as the ECB has been a prolific buyer of government and corporate bonds. The relative value of US bonds could also decline. Athena has no direct exposure to developed global bonds due to these risks.

Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation. Source: TCW 23

Strong Technicals Propel Munis Higher

Thus far, tax reform has not had a significant impact or sparked meaningful change in the municipal market, which continues to trade at low spreads. While tax reform may be net negative for credit quality in the long-term, strong demand and low issuance have caused the market to grind tighter. Analysts expect approximately $330 billion of new supply in 2018, down significantly from the $439 billion of issuance in 2017.


Source: Athena Capital Advisors 24

Higher Caution on Investment Grade

While investment grade corporate debt has a de minimis historical default rate, the sub-sector may require more scrutiny than in past cycles as credit quality metrics have declined. Leverage has climbed to pre-crisis peaks and the portion of the market rated BBB has climbed from 33% to 49% over the past decade. Athena is investigating active management options in IG credit.


Source: Athena Capital Advisors 25

CLO Risk Retention Repealed

Dodd-Frank Collateralized Loan Obligation (CLO) risk retention rules, which stipulated that managers must hold 5% of their CLO risk as of 2017, were repealed in 1Q18. Risk retention sought to curtail the ability of managers to buy low quality loans and securitize the exposure away to investors, akin to subprime mortgages. The regulations did not impede CLO issuance or dent valuations and the repeal may encourage even higher CLO issuance, but increases the risk of dislocation in the future. In our opinion, this may become a potential distressed opportunity for Athena’s hedge funds.


Source: JP Morgan 26

US Equities:

Neutral

Athena upholds our current neutral positioning in US equities, as a wide distribution of market outcomes leaves us inclined to stay invested at these levels. We remain positive on the overall fundamental environment for the asset class, but given the late-cycle positioning, we continue to forecast muted returns and heightened volatility.

On the heels of tax reform, investors adopted an “animal spirts” mentality in January as the S&P 500 rose +7.6% during the month. This sentiment quickly reversed in early February, as the index experienced its first -10% correction in two years. Since then, market volatility has remained at elevated levels relative to the exceptionally low volatility of 2017.

Upward revisions to EPS estimates have been primarily driven by the stimulus from tax cuts, an improved global economy, and a weaker USD. These factors have laid the groundwork for potential increases in business spending and wage inflation – which would contribute to the robustness of the US economy, but could accelerate the Fed’s path of interest rate normalization. Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission.

Please see important disclosures and disclaimers at the end of this presentation. 27

S&P 500 Hovers Near 200 Daily Moving Average

Given the drawdowns in February and March, the S&P 500 crossed its 200 Daily Moving Average (DMA) for the first time in almost two years. While many investors use this technical indicator as a signal to reduce equity exposure, Athena agrees with the assessment that “the 200 DMA works much better as an indicator of the market environment we are in, as opposed to a perfect signal” (Bloomberg). Additionally, while an investor using this signal would have missed the market corrections from 2000-2002 and 2007-2009, the S&P 500 has crossed its 200 DMA 150 times since 1997, implying that there have been many false positives along the way.

Source: Bloomberg 28 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

Earnings Forecasts Bounce on Tax Reform

Per Factset, the aggregated 1Q18 earnings growth rate for the S&P 500 is expected to be +17.1% year-over-year (YOY). If materialized, this would represent the highest quarterly EPS growth since 1Q11 when the index reported +19.5% YOY. The sharp upward revision in forecasted operating earnings (red line) was primary driven by the US corporate tax rate reduction – as all ten S&P 500 sectors increased earnings expectations when the Tax Cuts and Jobs Act became law. These forecasts for stronger underlying fundamentals were largely responsible for the “animal spirits” mentality in January.

Source: Yardeni 29 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

S&P 500 P/E Dips to 25-Year Average

Given the material increase to earnings expectations, the S&P 500’s forward price-to-earnings (P/E) ratio declined by -12% in the quarter, and is now roughly in line with its 25-year average of 16.1x. While select indicators such as the CAPE (Shiller P/E) shows the index trading one standard deviation elevated to its historical average (i.e. expensive), others such as the Earnings-Yield spread show the index trading below historical levels (i.e. cheap). With regards to valuation, Athena believes that US equities trade within a range of fair value – and thus, a valuation argument in isolation does not provide a strong enough rationale to trim exposure.

Source: JPM Guide to the Markets

Note: The Cyclically Adjusted Price-to-Earnings (CAPE) ratio is a valuation measure which divides the current index price by the trailing ten-year average earnings, adjusted for inflation.

30 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

Current Multiples Indicate Wide Dispersion of Forward Returns

Since 1990, a forward P/E multiple around 16x has brought a wide dispersion of forward returns – ranging from nearly +25% to slightly negative (annualized). As indicated in Athena’s recently published 2018 Strategic Asset Allocation memo, our return forecast for US Large Cap equities is closer to the lower end of this range (+5.7%).

Source: Athena Capital 31 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission.

Please see important disclosures and disclaimers at the end of this presentation.

Foreign Equities:

Neutral

Athena recommended client’s move toward strategic targets for foreign equities in March 2017 as we developed a positive view on the asset class given the strong, global-synchronous growth story that began emerging in the middle of 2016. While recent economic releases have shown signs of this theme slowing, Athena believes the global economy continues to exhibit strength, and should continue to support risk-assets on a tactical horizon.

Athena is cognizant that the risk premium for international equities could widen due to a resurgence of a

stronger USD, a China hard landing, renewed political uncertainty in Europe, and/or the possibility of monetary policy missteps as the European Central Bank winds down its quantitative easing programs. Being said, we believe most of these markets continue to retain a relative valuation discount versus US equities, and thus continue to warrant representation in client portfolios.


32

Global Growth No Longer Accelerating

Towards the end of 1Q18, investors began questioning the sustainability of the “synchronized global recovery” as data points such as Purchasing Manager Index (PMI) surveys came in lower than expected. These economic releases resulted in increased market volatility as the strong pace of global growth has been a key driver of risk outperformance since early 2017. In agreement with BCA Research, Athena does not believe there is imminent danger of a significant deterioration in global growth, as the pace of growth has simply moderated off of years-long highs. Investors often tend to extrapolate marginal change into future weakness – which for now appears to be overdone.

Source: Athena Capital 33 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

Japanese Equities and Yen Decouple For Now

Since 2007, the Japanese Yen (USD/JPY) and the Nikkei 225 price level have exhibited a +0.87 correlation (e.g. falling yen leads to higher stock prices and vice versa), which conforms with the conventional wisdom that a weaker yen is positive for Japan’s economy as it pushes up exporters’ earnings and contributes to wage inflation. Interestingly, this relationship has become negative (-0.15) since the beginning of 2017, as Japan’s eight consecutive quarters of positive GDP growth – the longest since 1989 – have contributed to the strength of domestically exposed sectors such as construction services, chemicals, and the services industry. On a forward looking basis, profit growth for Japanese equites looks more challenging than the year prior – as these companies face tougher year-over-year comparables, higher fuel costs, and the overhang of a stronger currency.

Source: Athena Capital 34 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission.


Relative Value Argument Persists for EM

As of April 20th, the MSCI Emerging Markets Index is +74% (cumulative) from its January 2016 lows, outpacing the S&P 500 by +28% over this period. Even with this period of outperformance, the relative valuation argument for EM equities persists, as they continue to look undervalued relative to US equities on a CAPE basis. As of quarter end, the S&P 500 CAPE traded at a +50% premium to its 2007 high, whereas the MSCI EM Index traded at a -40% discount.

Source: DoubleLine

Note: The Cyclically Adjusted Price-to-Earnings (CAPE) ratio is a valuation measure which divides the current index price by the trailing ten-year average earnings, adjusted for inflation.


Commodities:

Neutral

Athena continues to recommend an allocation to TIPS and gold in the current environment as we believe they remain an improved way to hedge the portfolio against unexpected increases in inflation. Should a period of rising inflation materialize, Athena would most likely increase clients’ underlying exposure to the Real Assets sub-asset class via direct commodities, as they tend to outperform during higher inflationary environments.

Athena continues to believe Master Limited Partnerships (MLPs) provide an attractive capital appreciation opportunity in a low return world. These assets have been generally “unloved” for multiple years given the “noise” associated with distribution cuts, restructurings, moderating distribution growth, and (most recently) adverse regulatory events. Athena believes that by contrasting improved fundamentals – such as record domestic oil and gas volumes – against current price levels present a favorable skew to the upside, which is enhanced by a margin of safety via an attractive yield (~8%).


36

Core CPI Crosses 2%

Consistent with the Federal Reserve’s inflation forecast in March, the Core CPI YoY Index moved higher (to 2.1%) in 1Q18 as transient factors (such as mobile phone service costs) moved out of the data set. This print provides support for the forecasted jump in Personal Consumption Expenditures (PCE) release on April 30th – the Fed’s preferred inflation gauge – which is expected to reach a six year high of 1.96%, and rounds up to the Fed’s 2% target.

Source: Bloomberg 37 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

Gold Price Steady Among Rising Interest Rates

As a non-yielding asset, gold should theoretically have an inverse correlation with rising interest rates; however, this relationship decoupled about a year ago, suggesting that countervailing forces (e.g. geopolitical risks, weaker USD) have outweighed the fundamentals associated with the cost-of-carry.

Source: WSJ Daily Shot 38 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

MLP’s Erase Gains, Experience More Volatility

After appreciating +20% from November 2017 to January 2018, the Alerian MLP Index erased all gains amidst the increased market volatility and adverse headlines associated with the Federal Energy Regulatory Commission’s (FERC) decision to eliminate a favorable accounting treatment of income tax allowance. Although the entire asset class sold off on the news, the FERC decision only applied to a limited number of companies that operate interstate pipelines. From Athena’s review of sell-side research and through discussions with MLP managers, we believe the broad-based selling was likely an over-reaction. Athena continues to have a positive fundamental outlook for this unloved sector, but is consistently underwriting our thesis on an ongoing basis in an attempt to avoid a potential “value trap”.

Source: Bloomberg 39 Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission.


Hedge funds, as measured by the HFRI Fund of Funds Composite Index, returned 0.9% for the quarter. The topperforming strategy is Equity Long/Short (HFRI Equity Hedge +0.7%). Macro is the lone detractor, (HFRI MacroIndex -1.0%). The Macro Index performance was driven by quantitative/systematic strategies which struggled onthe quarter (HFRI Macro Systematic Diversified Index -2.3%).

Rising short-term interest rates and the increase in market volatility across asset classes helped drive hedgefund’s positive performance for the quarter.


Hedge Funds:

Neutral

40

Hedge Fund Performance


Hedge funds, as measured by the HFRI Fund of Funds Composite Index, returned 0.9% for the quarter. The top performing strategy is Equity Long/Short (HFRI Equity Hedge +0.7%). Macro is the lone detractor, (HFRI Macro Index -1.0%). The Macro Index performance was driven by quantitative/systematic strategies which struggled on the quarter (HFRI Macro Systematic Diversified Index -2.3%).

Source: HFRI

2018 YTD 36 Months (Annualized) 60 Months (Annualized)

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

Hedge Fund Returns through March 2018

HFRI Fund of Funds Composite Index HFRI ED- Distressed-Restructuring Index

HFRI Equity Hedge (Total) Index HFRI Event-Driven (Total) Index

HFRI Macro (Total) Index

41

Stocks and Bond Correlate in 1Q18

Rising short-term interest rates and the increase in market volatility across asset classes helped drive hedge fund’s positive performance for the quarter. The positive contribution from hedge funds was particularly beneficial as US stocks and bonds correlated during 1Q18 (chart below) with both asset classes finishing in the red.


Source: FactSet, Athena Capital Advisors

| ► 42

Notwithstanding the difficult dealmaking environment, global private equity activity slightly increased in 2017on a year-over-year basis, driven primarily by Asia, which experienced a record level of deal activity. Exits alsorose in 2017 and strong public market performance helped to cap off another solid year for private equity.

The industry has raised $3 trillion over the past five years, compared to $2 trillion the previous five years. Thereemergence of mega funds is the main driver of the increased fundraising environment. Dry powder also seta new record in 2017. While investment dollars are on the rise, deal count has actually dropped substantiallysince 2014. Why? One reason is that multiples are at all-time highs, with approximately half of all companiesacquired priced in excess of 11x EBITDA. Due to these market dynamics, Athena expects to make a lowerthan average number of private equity recommendations during the year.

While valuations in most markets appear frothy, real estate and real assets in particular remain an importantpiece of a balanced portfolio. In particular, Farmland stands out as a strong diversifier. Athena is currentlyreviewing an open-ended Farmland fund as a potential recommendation, given rising inflation concerns.


Private Equity:

Neutral

Number of Firms and Fundraising Continue to Climb

44

Private Equity firms raised $701 billion globally over the course of the 2017 and capped an unprecedented five-year stretch during which private equity raised more than $3 trillion in capital from investors. The previous five years raised $2 trillion. Private equity funds have attracted significantly more capital since 2013 than during any other five-year period in history - including the frothy five years preceding the global financial crisis.

The number of active private equity firms has risen steadily each year for decades and now totals 7,775. Perhaps we will finally see these numbers flatten or decrease as more LPs seek to consolidate relationships and simplify portfolios and potentially focus more on direct investing. Coincidentally, Pitchbook has reported that that fundraising decelerated sharply in the 1Q18, with 55 US vehicles totaling just $36.6 billion. This compares to 2017’s record-setting pace when 267 US funds collected $242 billion during the year.

Source: Preqin, Bain Capital

Global PE Capital Raised (by fund type) Number of Private Equity Firms


US Buyout Mega Funds Driving Fundraising

45

Mega funds (defined as greater than $5 billion) continue to surge, especially in the US, and particularly in buyouts. As shown below, mega buyout funds now account for 15% of total fundraising, up from 7% in 2016 and exceeding their previous peak of 14% in 2007.

These funds have again become more common, in part as LPs have witnessed that scale has not imposed a penalty on performance during the current bull market fueled by cheap, accessible debt markets.

Source: McKinsey, Preqin Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

Dry Powder Sets New Record in 2017

46

Private equity dry powder has been on the rise since 2012 and hit a record high of $1.7 trillion in 2017. Direct Lending (36%), Growth Equity (33%) and Buyout (23%) saw the largest year-over-year increase. How much dry powder is too much? Comparing dry powder to other measures including funds raised and total assets under management, “stocks” of capital available for investment have changed little over the past few years in relation to the size of the industry. Likewise, analyzing years of private equity inventory on hand, dry powder still seems adequate relative to deal flow. According to analysis by McKinsey and Pitchbook, dividing dry powder by deal volume on a seven-year trailing basis, the industry has cycled through its capital in a stable way for the past several years. However, deal flow has begun to soften a bit and a continuation of this trend could be troubling, especially when taking leverage into account. That being said, early indications for 1H18 point to increased deal activity.

From a vintage year standpoint, over 85% of dry powder is in post-2014 vintage funds as of 2H17, according to Pitchbook, indicating there is a noteworthy overhang of aging capital that remains to be deployed in pre-2014 funds.

Source: Preqin, Pitchbook, McKinsey Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

Significant Increase in LP Co-investment

47

As mentioned earlier, LPs have growing interest in building co-investment and direct investing capabilities, as a way to reduce fees, deploy capital, and enhance portfolio performance.

The value of co-investment deals has more than doubled since 2012 (totaling $104 billion in 2017), but direct investment has remained essentially flat, at around $10 billion. A recent survey from McKinsey finds something similar: the number of LPs making co-investments in private equity rose from 42% to 55% over the past five years, while the proportion of direct-investing LPs barely grew, from 30 to 31%.

Source: McKinsey, Pitchbook Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

US Buyout Purchase Price Multiples Rise to New High

48

Average purchase price multiples for US leveraged buyouts rose to historic highs, reaching 11.2x in 2017. According to the Cambridge Associates, the percentage of global companies valued at more than 11x EBITDA has steadily risen since 2012 and reached 54% of the total market in 2016, the latest data available.

Remaining disciplined, utilizing differentiated industry networks and relationships, and operating and add-on execution remain keys to navigating the current pricing environment.

Source: Bain Capital, S&P Capital IQ LCD, Cambridge Associates

Avg. EBITDA Purchase Price Multiple for US LBO Transactions Distribution of Companies by EBITDA Price Multiple


More Corporate VC Deals = Middle Market Competition

49

The value of corporate venture capital deals globally has increased sharply over the past several years, to $51 billion in 2017, and the average deal size has expanded steadily. The number of corporate venture capital investors remains relatively small, but it has doubled in the past four years.

For GPs, these trends have made for increased competition from cash-backed corporate buyers for targets of all sizes. That competition is boosting multiples in the middle part of the market, such that buyers are paying almost as much per dollar of EBITDA for midsize companies, in many situations, as they are for large ones.

Source: Bain Capital, Pitchbook Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

European Deal Flow Maintains Trend Higher

50

An improving economy has helped provide a tailwind for private equity dealmaking in Europe. Deal flow totaled €363.0 billion across 3,015 transactions, representing a 14% increase and 11% decrease, respectively, from the prior year.

Outside capital is also flowing into the continent as acquisitions are an efficient way for companies to expand their global footprint. Additionally, large US private equity firms, which long ago established operations in Europe, are now deploying larger funds on the continent. Private equity investors headquartered outside of Europe were involved in 718 deals totaling just over €150 billion in value - the second-highest year on record in terms of value, according to Pitchbook. As a result, deals with at least one non-European investor accounted for 25% of all transactions in 2017, compared to just 22% in the prior year.

Source: PitchBook Athena Capital Advisors LLC Proprietary and Confidential. Not to be copied or distributed without express written permission. Please see important disclosures and disclaimers at the end of this presentation.

The Diversification Benefits of Real Assets

51 Source: Nuveen

According to analysis completed by Nuveen, while each category of real assets increases returns, with similar or lower levels of risk, resulting in higher Sharpe Ratios, Farmland stands out as a strong diversifier. Left unconstrained, the Nuveen optimization, based on historical data allocates more to Farmland than either Timber or Commercial Real Estate when each was added to a stock/bond portfolio.

Several factors account for farmland’s record of higher returns and lower risk, compared with timberland and real estate. Farmland is the least liquid of the three categories, with relatively few institutional investors, most transactions occurring between individual farmers, and generally long holding periods of 20 years or more. Population growth, rising middle classes, farm productivity gains, and ethanol demand have supported steadily rising land values, while barriers to entry and lack of institutional trading have reduced volatility. Plus, the asset class is relatively small, creating supply/demand issues given the rise of interest in the space.

Overall, results support the case for diversifying traditional portfolios with multiple categories of real assets even when constrained within realistic limits.


Current Investment Opportunity in Farmland

52 Source: Ceres, USDA

The US is currently working through the excess corn and soybean acreage brought online through 2012.

The USDA projects that global corn production in 2018 will fall short of demand for the first time since 2012, and soybean production will essentially equal demand. There will still be comfortable ending stocks (buffer inventory) but the stocks will start to be reduced. Absent significant additional acreage the trend would be expected to accelerate.

The uncertainty around trade remains a concern; however, most experts believe that soybeans will not be used to retaliate, despite recent tariff threats, as China needs to continue to feed its ever growing population and the US remains, by far, the low cost provider.


Appendix: Supporting Data

53 53

Asset Returns QTD 2018 (as of 04/20/18)

8.7%

7.0%

5.3%

3.7%

2.8% 2.5%

2.3%

1.8% 1.7% 1.6% 1.3% 1.3% 1.3% 1.2% 1.2% 1.2% 1.1% 1.0%

0.8% 0.8% 0.7% 0.6%

-0.1% -0.1% -0.1% -0.3% -0.4% -0.4% -0.9% -1.2% -1.4% -2.7% -4.2%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Ener

gy S

ecto

r

Ale

rian

MLP

TR

WTI

Cru

de O

il

Mat

eria

ls S

ecto

r

Blo

ombe

rg C

omm

odity

TR

MSC

I EA

FE T

R (

USD

)

Rus

sell

2000

TR

MSC

I AC

Wor

ld e

x U

S TR

(U

SD)

Indu

stria

l Sec

tor

Con

sum

er D

iscr

etio

nary

Sec

tor

Rus

sell

3000

Val

ue T

R

Rus

sell

3000

TR

Rus

sell

3000

Gro

wth

TR

Fina

ncia

ls S

ecto

r

S&P

500

TR

Tech

nolo

gy S

ecto

r

Hea

lthca

re S

ecto

r

Bar

clay

s H

igh

Yiel

d TR

Gol

d

DJ

Div

iden

d Se

lect

TR

Hed

ge F

und

of F

unds

60%

AC

WI /

40%

B. A

gg

Bar

clay

s M

uni B

ond

TR

US

Trad

e-W

eigh

ted

Dol

lar*

*

MSC

I Em

ergi

ng M

arke

ts T

R (

USD

)

FTSE

EP

RA

/NA

REI

T G

loba

l TR

Bar

clay

s TI

PS

TR

Util

ities

Sec

tor

Bar

clay

s A

ggre

gate

Bon

d TR

Blo

ombe

rg A

gric

ultu

re T

R

Bar

clay

s 7-

10 U

S Tr

easu

ry T

R

Rea

l Est

ate

Sect

or

Con

sum

er S

tapl

es S

ecto

r

54

Asset Returns YTD 2018 (as of 04/20/18)

13.2%

4.8% 4.8%

2.8% 2.5% 2.4% 2.3% 2.2% 2.0% 1.3% 1.2% 1.1%

0.7% 0.6% 0.4% 0.3% 0.2% 0.2% -0.2% -0.5% -1.2% -1.2% -1.4% -1.6% -1.8% -2.0% -2.3% -3.2% -3.7% -3.7% -4.9%

-7.6%

-11.0%

-15%

-10%

-5%

0%

5%

10%

15%

WTI

Cru

de O

il

Tech

nolo

gy S

ecto

r

Con

sum

er D

iscr

etio

nary

Sec

tor

Rus

sell

3000

Gro

wth

TR

Gol

d

Blo

ombe

rg C

omm

odity

TR

Ener

gy S

ecto

r

Rus

sell

2000

TR

Blo

ombe

rg A

gric

ultu

re T

R

Hed

ge F

und

of F

unds

MSC

I Em

ergi

ng M

arke

ts T

R (

USD

)

MSC

I EA

FE T

R (

USD

)

MSC

I AC

Wor

ld e

x U

S TR

(U

SD)

Rus

sell

3000

TR

S&P

500

TR

Fina

ncia

ls S

ecto

r

Bar

clay

s H

igh

Yiel

d TR

Indu

stria

l Sec

tor

Hea

lthca

re S

ecto

r

60%

AC

WI /

40%

B. A

gg

Bar

clay

s TI

PS

TR

Bar

clay

s M

uni B

ond

TR

US

Trad

e-W

eigh

ted

Dol

lar*

*

Rus

sell

3000

Val

ue T

R

DJ

Div

iden

d Se

lect

TR

Mat

eria

ls S

ecto

r

Bar

clay

s A

ggre

gate

Bon

d TR

Bar

clay

s 7-

10 U

S Tr

easu

ry T

R

FTSE

EP

RA

/NA

REI

T G

loba

l TR

Util

ities

Sec

tor

Ale

rian

MLP

TR

Rea

l Est

ate

Sect

or

Con

sum

er S

tapl

es S

ecto

r

55

Asset Returns 1Q18

7.5%

3.5% 3.1% 3.1%

1.7% 1.5% 1.4%

0.0% -0.1% -0.4% -0.6% -0.8% -0.8% -0.9% -1.0% -1.1% -1.1% -1.1% -1.2% -1.4% -1.4% -1.5% -1.6% -1.9% -2.5% -2.8% -3.3% -3.3%

-5.0% -5.5%

-5.9%

-7.1%

-11.1%

-15%

-10%

-5%

0%

5%

10%

WTI

Cru

de O

il

Tech

nolo

gy S

ecto

r

Blo

ombe

rg A

gric

ultu

re T

R

Con

sum

er D

iscr

etio

nary

Sec

tor

Gol

d

Rus

sell

3000

Gro

wth

TR

MSC

I Em

ergi

ng M

arke

ts T

R (

USD

)

US

Trad

e-W

eigh

ted

Dol

lar*

*

Rus

sell

2000

TR

Blo

ombe

rg C

omm

odity

TR

Rus

sell

3000

TR

S&P

500

TR

Bar

clay

s TI

PS

TR

Bar

clay

s H

igh

Yiel

d TR

Fina

ncia

ls S

ecto

r

60%

AC

WI /

40%

B. A

gg

MSC

I AC

Wor

ld e

x U

S TR

(U

SD)

Bar

clay

s M

uni B

ond

TR

Hea

lthca

re S

ecto

r

Hed

ge F

und

of F

unds

MSC

I EA

FE T

R (

USD

)

Bar

clay

s A

ggre

gate

Bon

d TR

Indu

stria

l Sec

tor

Bar

clay

s 7-

10 U

S Tr

easu

ry T

R

DJ

Div

iden

d Se

lect

TR

Rus

sell

3000

Val

ue T

R

Util

ities

Sec

tor

FTSE

EP

RA

/NA

REI

T G

loba

l TR

Rea

l Est

ate

Sect

or

Mat

eria

ls S

ecto

r

Ener

gy S

ecto

r

Con

sum

er S

tapl

es S

ecto

r

Ale

rian

MLP

TR

56

Asset Returns 2017

38.8% 37.5%

29.6% 27.8%

25.7% 23.8%

23.0% 22.1% 22.1% 21.8% 21.1% 21.0%

16.2% 15.4% 15.0% 14.6% 13.5% 13.2% 13.1% 12.5% 12.1%

10.8%

7.7% 7.5%

5.4% 3.5% 3.0% 2.6%

1.7% -1.0% -6.5% -7.0%

-11.0%

-20%

-10%

0%

10%

20%

30%

40%

50%

Tech

nolo

gy S

ecto

r

MSC

I Em

ergi

ng M

arke

ts T

R (

USD

)

Rus

sell

3000

Gro

wth

TR

MSC

I AC

Wor

ld e

x U

S TR

(U

SD)

MSC

I EA

FE T

R (

USD

)

Mat

eria

ls S

ecto

r

Con

sum

er D

iscr

etio

nary

Sec

tor

Fina

ncia

ls S

ecto

r

Hea

lthca

re S

ecto

r

S&P

500

TR

Rus

sell

3000

TR

Indu

stria

l Sec

tor

60%

AC

WI /

40%

B. A

gg

DJ

Div

iden

d Se

lect

TR

FTSE

EP

RA

/NA

REI

T G

loba

l TR

Rus

sell

2000

TR

Con

sum

er S

tapl

es S

ecto

r

Rus

sell

3000

Val

ue T

R

Gol

d

WTI

Cru

de O

il

Util

ities

Sec

tor

Rea

l Est

ate

Sect

or

Hed

ge F

und

of F

unds

Bar

clay

s H

igh

Yiel

d TR

Bar

clay

s M

uni B

ond

TR

Bar

clay

s A

ggre

gate

Bon

d TR

Bar

clay

s TI

PS

TR

Bar

clay

s 7-

10 U

S Tr

easu

ry T

R

Blo

ombe

rg C

omm

odity

TR

Ener

gy S

ecto

r

Ale

rian

MLP

TR

US

Trad

e-W

eigh

ted

Dol

lar*

*

Blo

ombe

rg A

gric

ultu

re T

R

57

Asset Returns Table Lite

*Case/Shiller returns through 01/31/2018 due to data lag. **US Trade-Weighted Dollar returns as of 04/20/18.

Data Source: Bloomberg Equity and bond indices are total returns; commodities and currencies are price return. All time periods >1 year are annualized

^Hedge Fund Indexes Source: Credit Suisse Index (CS; reported monthly). For intra-month periods, best fit HFRX Indexes are used as an estimate (reported daily with 2-day lag). Hedge Fund of Funds Source: HFRI Index (reported monthly). For intra-month periods, best fit HFRX Indexes are used as an estimate (reported daily with 2-day lag).

US Equities 4/20/18 MTD

4/20/18 YTD 1Q18 1-YR 3-YR 5-YR International Equities 4/20/18

MTD4/20/18

YTD 1Q18 1-YR 3-YR 5-YR

S&P 500 TR 1.2% 0.4% -0.8% 15.6% 10.6% 13.7% MSCI AC World TR (USD) 1.5% 0.7% -0.9% 17.5% 8.3% 10.3%

Nasdaq TR 1.2% 3.8% 2.6% 22.2% 14.1% 18.9% MSCI AC World ex US TR (USD) 1.8% 0.7% -1.1% 19.5% 6.0% 7.0%

Russell 3000 TR 1.3% 0.6% -0.6% 15.4% 10.1% 13.6% MSCI EAFE TR (USD) 2.5% 1.1% -1.4% 18.7% 6.0% 7.6%

Russell 3000 Growth TR 1.3% 2.8% 1.5% 22.1% 12.5% 15.9% MSCI Europe TR (USD) 3.2% 1.4% -1.7% 19.3% 5.6% 7.9%

Russell 3000 Value TR 1.3% -1.6% -2.8% 8.9% 7.8% 11.3% MSCI Japan TR (USD) 0.8% 1.7% 0.9% 21.9% 7.9% 8.7%

Russell 2000 TR 2.3% 2.2% -0.1% 14.5% 8.8% 12.9% MSCI AC Asia Ex Japan TR (USD) 0.3% 0.9% 0.6% 26.8% 7.5% 8.8%

Russell Microcap TR 2.8% 3.6% 0.8% 17.5% 8.3% 13.2% MSCI Emerging Markets TR (USD) -0.1% 1.2% 1.4% 25.0% 7.0% 5.8%

DJ Dividend Select TR 0.8% -1.8% -2.5% 8.9% 10.6% 12.5% MSCI Frontier Markets TR (USD) -2.1% 2.9% 5.1% 24.0% 6.1% 7.9%

S&P 500 Equity Sectors 4/20/18 MTD

4/20/18 YTD 1Q18 1-YR 3-YR 5-YR Bonds 4/20/18

MTD4/20/18

YTD 1Q18 1-YR 3-YR 5-YR

Consumer Staples Sector -4.2% -11.0% -7.1% -5.9% 3.6% 7.0% Barclays Aggregate Bond TR -0.9% -2.3% -1.5% -0.5% 0.8% 1.5%

Healthcare Sector 1.1% -0.2% -1.2% 12.9% 5.5% 13.4% Barclays US T-Bills TR 0.1% 0.4% 0.3% 1.1% 0.6% 0.4%

Consumer Discretionary Sector 1.6% 4.8% 3.1% 18.1% 12.4% 15.9% Barclays TIPS TR -0.4% -1.2% -0.8% 0.2% 0.7% -0.1%

Utilities Sector -0.4% -3.7% -3.3% 1.1% 7.7% 8.2% Barclays Muni Bond TR -0.1% -1.2% -1.1% 1.4% 2.2% 2.5%Technology Sector 1.2% 4.8% 3.5% 29.3% 19.7% 22.1% Barclays 1-10 Muni Blend TR -0.1% -0.8% -0.7% 0.2% 1.3% 1.6%

Industrial Sector 1.7% 0.2% -1.6% 15.4% 11.7% 15.1% Barclays 1-3 US Treasury TR -0.2% -0.4% -0.2% -0.4% 0.3% 0.5%

Materials Sector 3.7% -2.0% -5.5% 15.0% 7.9% 11.6% Barclays 7-10 US Treasury TR -1.4% -3.2% -1.9% -3.0% -0.4% 0.6%

Energy Sector 8.7% 2.3% -5.9% 11.4% -0.5% 2.4% Barclays 25+ US Treasury TR -2.9% -6.3% -3.5% -1.6% -0.7% 2.0%

Financials Sector 1.2% 0.3% -1.0% 21.3% 14.5% 15.9% Barclays MBS TR -0.6% -1.8% -1.2% -0.6% 0.8% 1.6%

Real Estate Sector -2.7% -7.6% -5.0% -3.7% 1.2% 3.3% Barclays High Yield TR 1.0% 0.2% -0.9% 4.4% 5.1% 5.1%

Real Assets & Currencies 4/20/18 MTD

4/20/18 YTD 1Q18 1-YR 3-YR 5-YR

Hedge Fund Indexes^ /Blended Benchmarks

4/20/18 MTD

4/20/18 YTD 1Q18 1-YR 3-YR 5-YR

Bloomberg Commodity TR 2.8% 2.4% -1.2% 7.7% -3.3% -7.0% Hedge Fund of Funds 0.7% 1.3% 0.6% 6.5% 2.0% 3.6%Bloomberg Agriculture TR -1.2% 2.0% 0.9% -4.9% -5.2% -8.6% Long/Short Equity 0.7% 1.7% 1.0% 10.9% 4.3% 6.5%WTI Crude Oil 5.3% 13.2% 6.6% 36.0% 6.6% -4.9% Event-Driven 1.2% 0.9% -0.2% 4.5% 0.1% 2.9%Gold 0.8% 2.5% 1.7% 4.2% 3.8% -1.0% Event Driven: Distressed 0.5% 0.8% 0.4% 4.8% 2.7% 4.1%Copper 4.3% -4.4% -9.0% 23.4% 4.9% 0.0% Global Macro 1.3% 1.8% 0.6% 4.6% 0.6% 2.2%

US Trade-Weighted Dollar** -0.1% -1.4% -1.3% -5.4% 0.8% 3.2% Fixed Income Arbitrage 0.6% 2.4% 1.8% 6.3% 4.4% 4.0%

Japanese Yen (% chg vs. USD) -1.3% 4.7% 6.0% 1.6% 3.5% -1.6% 50% B. Agg / 50% 1-10Yr Muni (FI Taxable) -0.5% -1.6% -1.1% -0.2% 1.1% 1.6%Euro (% chg vs. USD) -0.3% 2.4% 2.7% 14.7% 4.6% -1.2% 60% ACWI / 40% FI Blend (GBB) 0.7% -0.2% -0.9% 10.4% 5.4% 6.8%

Chinese Yuan (% chg vs. USD) -0.1% 3.4% 3.5% 9.2% -0.5% -0.4% 60% Russell 3000 / 40% FI Blend (DBB) 0.6% -0.2% -0.8% 9.2% 6.5% 8.8%Alerian MLP TR 7.0% -4.9% -11.1% -13.3% -10.3% -4.6% 60% ACWI / 40% B. Agg (GBB TE) 0.6% -0.5% -1.1% 10.3% 5.3% 6.8%

FTSE EPRA/NAREIT Global TR -0.3% -3.7% -3.3% 3.9% 3.4% 4.1% 60% Russell 3000 / 40% B. Agg (DBB TE) 0.4% -0.5% -1.0% 9.0% 6.4% 8.7%

58

Disclosures and Disclaimers

59

Athena Capital Advisors LLC (“Athena”) prepared this document solely for informational purposes only.

Athena reserves the right at any time to amend or change the contents of this document without notice. The information and opinions herein reflect the views and

opinions of Athena as of the date hereof and not as of any future date. All forecasts are speculative, subject to change at any time and may not come to pass due

to economic and market conditions.

This document and the information contained shall not constitute an offer, solicitation or recommendation to sell or an offer to purchase any securities, investment

products or investment advisory services. The material contained herein has not been based on a consideration of any individual client circumstances and is not

investment advice, or should it be construed in any way as tax, accounting, legal or regulatory advice. An investment with Athena involves substantial risks and there

can be no assurance that the investment objectives described herein will be achieved. Athena believes that the research used in this presentation is based on

accurate sources (including but not limited to economic and market data from various government and private sources and reputable external databases), but we

have not independently verified those sources, and we therefore do not guarantee their accuracy. The opinions, projections and estimates contained herein reflect

the views of Athena only and should not be construed as absolute statements and are subject to change without notice.

Historical index performance results for all historical benchmark indices do not reflect the deduction of transaction and custodial charges, or the deduction of an

investment manager fee, the incurrence of which would have the effect of decreasing indicated historical performance results. The historical performance results for

all indices are provided exclusively for comparison purposes only, so as to provide general comparative information to assist in determining whether Athena’s

performance meets, or continues to meet, your investment objective(s). Comparative indices may be more or less volatile than Athena portfolios. Athena

performance results reflect the reinvestment of dividends and other account earnings, and are net of applicable account transaction charges. It should not be

assumed that Athena account holdings will correspond directly to any such comparative benchmark index.

Any description of tax consequences set forth herein is not intended as a substitute for careful tax planning. Recipients of this material are advised to consult tax

counsel for advice specifically related to any and all tax consequences of an investment made with or through Athena. The information provided herein is not

intended to, nor does it specifically advise on, tax matters pertaining to federal, state, estate, local, foreign or other tax consequences of an investment. The

recipient is solely responsible for all tax consequences with respect to any investment made with or through Athena.

Massachusetts 55 Old Bedford Road Suite 302 Lincoln, MA 01773 781.274.9300

New York 150 East 52nd Street Suite 21001 New York, NY 10022

California One Ferry Building Suite 255 San Francisco, CA 94111

60

athenacapital.com

www.athenacapital.com

market overview & outlook - athena capital · please see important disclosures and disclaimers...

Documents