Diversification, Risk Mitigation and Ultimate Return from Alternative Investing: A Wall Street Transcript Interview with Robert J. Murphy, the Chief Investment Officer and a Portfolio Manager for the Hatteras Alternative Mutual Funds

Wall Street Transcript

67 WALL STREET, New York - December 2, 2013 - The Wall Street Transcript has just published its current Investing Strategies Report. This special feature contains expert industry commentary through in-depth interviews with highly experienced Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Investment Risk Management Strategies - High-Quality Blue-Chip Companies - Free Cash Flow Yield - Alternative Investing, Ultimate Returns

Companies include: Hatteras Funds

In the following excerpt from the current Investing Strategies Report, an experienced portfolio manager discusses two out-performing funds from the Hatteras family of investment vehicles:

TWST: Tell us a bit about Hatteras Funds with some history and a snapshot of the firm's business today.

Mr. Murphy: Hatteras has specialized in alternative investments and offering solutions to financial advisers and their clients since 2003. We manage about $2.1 billion in assets, all in alternative strategies, out of our offices in Raleigh, N.C. We offer access to true hedge fund strategies within a daily liquid mutual fund format that uses multiple hedge fund managers and multiple hedge fund strategies. We focus exclusively on alternatives and exclusively on financial advisers.

TWST: Is there anything you would add in terms of your overall investment philosophy?

Mr. Murphy: We believe in alternatives; we believe in the diversification, potential risk mitigation and ultimate return enhancement afforded to financial advisers and their clients by investing in alternative investment solutions.

TWST: Of the alternative mutual funds, is there one in particular that you would like to focus on today?

Mr. Murphy: I would like to focus on two of them. The Long/Short Debt Fund, HFIAX, HFINX, is structured to be an absolute return strategy. We believe that getting that traditional return was going to be challenging as the 30-year bull market in long-only, high-quality bonds comes to an end, and the markets of May and June highlighted this for us.

From May 2013 to the first part of September, the Barclays U.S. Aggregate Index, which represents high-quality, fixed income bonds, was down 4.72%. However, our Long/Short Debt Fund was up 42 basis points, outperforming the index by more than 500 basis points. Our Fund attempts to protect against rising interest rates; the significant volatility this summer, along with the announcements of on-again/off-again taper, allowed us to demonstrate that capability.

The Hatteras Alpha Hedged Strategies Fund, ALPHX, ALPIX, through the end of September is up 6.91% for the year, with volatility at 3.4%, compared to our benchmark, the HFRI Fund of Funds Composite, up only 5.1% with volatility of 3.7%. Our Fund protected capital during the volatility caused by Bernanke's speech from May 2013 to the first part of September and the concerns about tapering. We believe our portfolio construction, our management selection and our ability to achieve our mandate has protected capital and generated returns during times of increased volatility.

TWST: Within these funds, what type of investment strategies are you looking for or most interested in given the current market environment?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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