Peritus HYLD ETF-BUY

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Peritus HYLD ETF-BUY
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HYLD ETF

• HYLD is actively managed value oriented high
  yield ETF-avoids LBO originated debt
• Employs risk management strategy
• Less focus on credit ratings-either AAA or D
• Disciplined investment process-does business
  provide a service, generate free cash flow, etc.
• Managed by Tim Gramatovich CFA and Ron Heller

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HYLD attributes

• Income-buys on secondary market at discount to
  par providing potential capital appreciation
• Coupon-investing in non-investment grade has
  higher coupon cash flow yield
• Issuers-more focused and concentrated than
  industry norm
• Duration/Maturity Profile-low duration (3.2 years
  vs. 4.07 index)

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FUND BASICS

• HYLD
• NYSE Arca
• Inception Date 11/30/2010
• CUSIP 00768Y503
• Current price 51.25
• AUM 210,072,166.70
• Premium/Discount .02
• Net Expense Ratio 1.35

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• YTD ETF price

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TOP 10 HOLDINGS as of 3/27/13

• Blackrock Liquidity Temp Fund 3.16
• Accrued Income
  2.72
• Rotech Healthcare 100.50, 10.75 2.34
• Dyncorp Intl 99.75, 10.375
  2.28
• Air Canada 109.88 12.00
  2.26
• Exide Technologies 86.38 8.625 2.25
• Arch Coal 103 9.875
  2.24
• Kinetic Concepts 99.88 12.5
  2.22
• Affinion Group 79.25 7.875
  2.04
• Energy Solutions 105.25 10.75 2.03
  

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Fixed Income Trends

• Possible Bond Bubble?
• Bond Outflow, Equity Inflow?
• High Yield Market still 700bp spread
• Steady demand for new issuance
• Leveraged loan market overheated-no covenants,
  low coupon, etc.

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HYLD vs Ten Year Treasury
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SWOT Analysis
Strengths Low Yield Environment Strong Corporate Balance Sheets Lower Default Rates Short Duration Greater Liquidity Weaknesses Later in cycle (less potential for returns in mid teens) Management Fee
Opportunities Heavy Demand for Issuance 3 trillion in pent up PE demand Threats Disorderly rate increase Recession produces defaults
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Investment Thesis

• Current low yield environment demands allocation
  to high yield debt. Active/value style unlocks
  value in the 1.4 trillion high yield market.
• Buy 200 shares at market
• price.