Investment objective
The Fund seeks to provide total return.
Investment strategy
The Fund is designed to provide investors with exposure to several categories of alternative investments with investment performance that may have a low correlation to the performance of more traditional investments (i.e., stocks of U.S. and international developed country issuers and investment-grade bonds issued in the U.S.). These alternative investment asset classes currently consist of:
- Treasury Inflation Protected Securities
- International bonds
- High-yield bonds
- Emerging market bonds
- Emerging market stocks
- Commodities
- Global real estate stocks
International bonds and emerging-market bonds
International bonds and emerging-market bonds are issued in countries outside of the United States and are in the issuing country’s currency. Like domestic bonds, they pay interest at specific intervals and pay the principal amount back to the bond’s buyer at maturity. Foreign securities may be more volatile, difficult to price and less liquid than U.S. securities. Emerging markets may expose investors to rapid inflation and currency devaluations, sharp and frequent price changes, political unrest and war. These risks may adversely affect investment returns.
High-yield bonds
High-yield bonds are debt securities typically with greater risk/return potential, but rated below investment-grade corporate bonds by one of the leading credit-rating agencies at the time of purchase. The prices of high-yield bonds tend to be more sensitive to adverse economic and business conditions, including interest rate changes, than are higher-rated corporate bonds. Increased volatility may reduce the market value of high-yield bonds.
Emerging-market stocks
Developing countries such as those in Eastern Europe, Africa, the Middle East, Latin America, the Far East and Asia are classified as “emerging markets.” Some investors believe these emerging markets have more potential for profit. However, there may also be more risks to consider. Emerging markets may expose investors to rapid inflation and currency devaluations, sharp and frequent price changes, political unrest and war. These factors may adversely affect investment returns.
Treasury Inflation Protected Securities
Treasury Inflation Protected Securities (TIPS) are income-generating securities with interest and principal payments adjusted for inflation. TIPS typically have lower yields than conventional fixed-rate bonds.
Global real estate
The Fund invests in real estate investment trusts (REITs) and real estate operating companies (REOCs) that manage investment portfolios worldwide. Their holdings might include shopping centers, medical facilities, office buildings, industrial warehouses and other types of real estate. There are special risks associated with real-estate investments originating outside of the United States. These include possible declines in real estate values, scarcity of funding for mortgages, unexpected vacancies and lack of property liquidity.
Commodities
Typically traded on an exchange, commodities are real, tangible goods, such as wheat, corn and rice (grains), copper and silver (metals) and oil. Specific uncertainties associated with commodities investing include changes in supply-and-demand relationships due to environmental, economic and political factors, which may cause increased volatility and decreased liquidity.
The Fund seeks to achieve its objective by investing in a professionally selected mix of these different alternative investment asset classes that the Fund’s investment adviser believes offer the risk and return characteristics that may provide a complement to an investor’s investments in more traditional asset classes.
The Fund is a nondiversified fund, which means that a relatively high percentage of the Fund’s assets may be invested in a limited number of issuers.
Portfolio management
Subadviser, Goldman Sachs Asset Management, L.P. (“GSAM”)
Matthew Hoehm, Donald Mulvihill and Amna Qaiser are responsible for the day-to-day management of the Fund.
Nationwide Fund Distributors LLC is not an affiliate of GSAM.
