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Alt Talk

"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."

- Warren Buffett
In this Edition
Direxion in Focus
The Direxion Indexed Managed Futures Strategy Fund

Web Event Replay: The "Next Generation" in Managed Futures Investing

QQQE: New Equal Weighted Index ETF by Direxion

Web Event Replay: Volatility, Strategies for Diversification and Risk Management

Food for Thought for Quarterly Client Reviews

"The time to build an ark is when the sun is shining.” – God.

If you understand the purpose of including alternatives in your investment portfolio — improving risk-adjusted returns — you almost certainly understand that your chances of predicting when markets will move up or down is slim to none. Indeed, the past six months has seen the stock market climb steadily as investors execute a risk-on trade fed by continued encouragement from Fed policy, contained European debt crisis (for now), and tired acquiescence of extremely slow growth in the U.S.

S&P Price change from 10/1/2011 through 3/29/12
Bloomberg

But once you step back and take a look at the bigger picture, your perspective on where the equity market is, and what direction it’s heading in next, may change. The S&P 500 Index is hovering around levels we haven’t seen since May of 2008.

S&P Price change from 03/31/1997 through 3/29/12

Bloomberg
Alt Talk

Of course there are dozens of arguments, both technical and fundamental, for how long this trend will continue. And likewise, there are dozens of arguments for when the trend will reverse. But one thing’s for sure. Though many will make a living pondering WHEN the next down market will occur, no one will argue IF it will occur.

So as your quarterly portfolio-review conversations with your clients give rise to talk of positive returns, and inevitably how to protect them, ask them to consider this:

Over time, alternative asset classes like commodities, currencies, and managed futures deliver a significant degree of non-correlation to the both domestic and international equities markets. When used to complement a portfolio of stocks and bonds, they may be just the right solution for improving their risk-adjusted returns.

Alternative asset class investments offer true diversification away from equities. That non-correlation, and independent return stream can potentially act as buffer for weathering the next market storm.

Now is the time to consider alternatives for your clients with substantial assets to protect.

Index Description	Index Name
Currencies	Barclays Currency Traders Index
Fixed Income	Barclays Capital U.S. Aggregate
Emerging Markets	MSCI EM (EMERGING MARKETS)
International Equity	MSCI EAFE Index
REITs	FTSE Nareit All Equity REITs
Managed Futures	Barclays CTA BTOP 50 Index
Commodities	Dow UBS Commodity Index
Hedge Funds	HFRI Fund Weighted Hedge Fund Index
U.S. Equities	S&P 500® Index

Diversification does not ensure a profit or protect against a loss.

An investor should consider the investment objectives, risks, charges, and expenses of the Direxion funds carefully before investing. The prospectus contains this and other information about Direxion Funds. To obtain a prospectus, please visit www.direxionfunds.com or contact Direxion Funds at 800.851.0511. The prospectus should be read carefully before investing. Investing in funds that invest in specific industries or geographic regions may be more volatile than investing in broadly diversified funds.

The principal risks of investing in the Direxion Indexed Managed Futures Strategy Fund are Active and Frequent Trading Risk, Adverse Market Conditions Risk, Agriculture Investment Risk, Commodity Linked Derivatives Risk, Counterparty Risk, Credit Risk, Currency Exchange Rate Risk, Currency Investment Risk, Debt Instrument Risk, Derivatives Risk, Emerging Markets Risk, Energy Investment Risk, Foreign Securities Risk, Futures Contracts Risk, Interest Rate Risk, Leverage Risk, Market Risk, Non-Diversification Risk, Other Investment Companies (including Exchange-Traded Funds) Risk, Precious Metals Investment Risk, Regulatory Risk, Sector Risk, Shorting Securities Risk, Subsidiary Investment Risk, Tax Risk, Tracking Error Risk, and Volatility Risk. Auspice Capital Advisors Ltd. is a registered Portfolio Manager/Investment Fund Manager in Canada and a registered Commodity Trading Advisor (CTA/CPO) and National Futures Association (NFA) member in the US.

Date of First Use: March 30, 2012. Distributed by: Rafferty Capital Markets, LLC.