1 Anfield Capital Management, LLC “Unconstrained” What it isn’t…and why it really matters right now!

Anfield Capital Management, LLC

“Unconstrained” What it isn’t…and why it really matters right now!

a long time ago….in a galaxy far far

away……All heck broke loose!

And a generation of excess came home to roost in the form of a nasty debt, asset subordination and systemic leverage unwind

It was clear things would take a long time to normalize

And that fixed income investment management needed to adapt…….

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• Investment advisory services offered through Anfield Capital Management, LLC, a registered investment advisor**There is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses.

Fast Forward to the Need

The historic interest rate bull market is coming to an end

Fiduciaries need a solution, a tool, to manage the next 5 years

Hence the birth of “unconstrained” fixed income investing

So there is no need to exit debt markets altogether

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Hot Topic: Alternative Fixed Income


Survey of Advisors and Institutions

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What do you value most in an alternative fixed-income product?

Source: Morningstar

% Respondents

Low Correlation Institutions 35Traditional Fixed Income Advisors 39

Go-Anywhere 21Capabilities 19

Yield 19

12

Interest-Rate Hedging 16

20

Other 8

9

Credit Hedging 2

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“Opportunistic” Bond Fund Ruler


Unconstrained ≠ unpredictable The Goal: unconstrained opportunity set, not unconstrained

risk

In reality there are multiple rulers which should be:

1) Prospectus flexibility = 102) Management philosophy = 7 3) Risk adjusted performance/positioning = Ideally an 8 or 9 with typically ½ the risk of other

funds

Unconstrained and highly aggressive (Hedge Fund like)

1 2 3 4 5 6 7 8 9 10

Not really unconstrained, mostly marketing

Unconstrained yet disciplined

“Opp

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“Swee

t Spo

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“Unc

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ed”

“Str

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ic In

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“Hed

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und

Lite

”

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Bond Fund Flexibility


For all rate environments

Hedge FundsUniversal Bond

FundsStrategic Income

FundsMulti-Sector Bond Funds

Primary Investment Strategy

Allocations to multiple sectors

Long Investments

Go-anywhere flexibility

Active duration management

Yield curve trading

Hedged fixed income

Long/short fixed income

Relative value: pair trading

Credit: event driven

Stressed/distressed debt

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Things Needed to be Truly “Unconstrained”1.The ABILITY to manage the array of security types, sectors, markets

etc.+1 : the AGILITY to use your ability

2.The MINDSET to use all that flexibility

3.The WILL to implement it(without commercial impediments of a product line-up)

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Because You Can, Doesn’t Mean You Should…


Fund A Fund B Fund G Fund J Fund M Fund P Fund JA Fund O Fund LPortfolio Statistics

Duration 1.52 0.90 -5.30 -0.29 1.50 2.07 5.06 1.94 4.43Yield 3.85% 2.35% 2.80% 1.75% 2.30% 1.16% 3.00% 4.30% 4.24%

Quality BBB BBB NA BB BB NA BBB B BBYield/Duration 2.53% 2.61% -0.53% -6.03% 1.53% 0.56% 0.67% 2.22% 0.96%

SectorsUS Govt -9.7% 39.6% 31.7% 0.1% 1.1% 63.9% 22.8% 0.0% 20.6%

IG Corporate 42.0% 6.3% 1.9% 1.0% 3.7% 1.7% 30.1% 13.9% 31.0%HY Corporate 12.7% 1.2% 8.6% 22.4% 3.7% 1.7% 17.4% 60.0% 24.1%

Bank Loan/Alt Credit 13.9% 0.0% 9.7% 0.0% 0.0% 5.0% 1.7% 6.8% 10.6%EM Debt 3.0% 6.0% 6.9% 1.4% 1.0% 1.5% 0.2% 1.0% 3.1%

Mortgage/ABS 19.4% 25.1% 30.1% 6.6% 68.7% 4.8% 24.4% 0.2% 3.1%Short Term/Cash Equiv** 18.6% 21.9% 11.1% 68.8% 21.9% 21.2% 3.1% 18.3% 7.4%

**(< 1 year duration)

12 Months performance 4.34% 6.62% 3.43% 2.02% 4.33% 2.94% 6.59% 6.09% 13.20%Standard Deviation (% Ann) 0.80% 0.94% 2.08% 0.76% 0.87% 1.65% 2.07% 1.25% 3.39%

1 Yr Rank in M* Category 7 10 56 78 48 64 35 91 8

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A Potential Solution

For illustrative purposes.


Overcoming the traditional allocation dilemma

A Versatile Role in A Portfolio

Multiple ways investors can make Anfield Universal Fixed Income Fund part of their overall strategy:

As a core bond complement, with a distinct risk/return profile and absolute return orientation

As an equity diversifier, potentially reducing overall volatility

As a defensive holding, with the ability to pursue positive returns in any environment as well as manage duration amid challenging market conditions

As a single fund alternative to an array of Satellite funds

How the fund fits into a broader portfolio is ultimately a reflection of your individual circumstances.

Illustration of a Typical Comprehensive Fixed Income Allocation Framework:

Non-Traditional Bond

Currencies

Alternative Debt• Event Driven• Long/Short Credit• Debt Arbitrage

Leveraged Loans

Emerging Market Sovereign

High Yield

Emerging Market Corporate

Core Fixed Income 30-50%

ABS/MBS

Satellites15-35%

Alternatives10-20%

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MBS – Mortgage-backed security HY – High YieldABS - Asset-backed security IG - Investment Grade CreditEM – Emerging Market Credit – All grade creditSpread Duration – measures the % price change for a % change in yield spreadRisk Premia – additional yield associated with one or more sources of investment risk

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UFIF’s “Flexible Core”Allows evolution with the market environment

Credit

IG

HYEM

ABS

MBS

High/Moderate Interest Rate Duration

Credit

IG

HYEM

ABS

MBSToolKit:

Sector Quality Long/Short Derivatives Currencies Leveraged Loans Structural

Low/Negative Interest Rate

Duration

Market Interest Rate Risk

Spread Duration / Risk Premia

DefensiveIncreasing Interest Rates

AggressiveDecreasing Interest

Rates

200020002001200220022003200420042005200620062007200820082009201020102011201220122013201420141.00

2.00

3.00

4.00

5.00

6.00

7.00

US 10 Year Treasury Rate

10 y

ear

Tre

asury

Rate

(%

) Anfield believes interest rates are likely to rise from

here and we have positioned the fund accordingly

UFIF’s “Flexible Core”

2.17% as of

12/31/14

Shaded bars indicate economic recessions according to NBER The referenced US 10 Yr Treasury Rate is shown for illustration purposes only and does not reflect any fees, expenses

or sales charges. This illustration is not meant to represent the Fund. There is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses.


Allows evolution with the market environment

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…and why it really matters right now!

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Divergence of the “Dual Economy”


Fed Policy

US Treasuries

Real Estate

Regulatory Reform

Creates asset & systemic bubbles

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Rates Don’t Always Rise During Recovery

2.35% as of

8/31/14


Steadily lower growth rates in last 4 recoveries have induced steadily lower policy rates

Creating faster and a greater number of asset bubbles

These bubbles have been imploding before inflation has a chance to accelerate and central banks can move to tighten

In the last 4 cycles, US bond yields did not rise through the economic expansion

US 10YR yield change during expansions

% cumulative change in the US 10YR yield from the last day of the recession until the last day of the expansion for all expansions since 1953. Expansion dates are based on the NBER business cycle dates. The year next to each line shows the year of the expansion started.

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Size of the Global Financial Economy

For comparison:

$63 trillionValue of all goods and

services produced (GDP)

$955 trillion total volume of foreign currency

transactions

$601trillion off-exchange trading of financial

derivates

$87 trillion volume of shares and bonds

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Source: Bundesbank, 2012

Recovery from the ‘08/09 Recession


Experienced unusually weak real economy expansion

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113.63

113.34

106.37

111.65

97.00

99.00

101.00

103.00

105.00

107.00

109.00

111.00

113.00

115.00

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t-14

Real Economy Performance

Real GDP

Personal Consumption

Employment

Hourly Earnings

Not so for the Financial Economy


…which may be overheating

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218.03

126.79

312.91

167.72

111.71

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

Ap

r-09

Jun-0

9

Aug-0

9

Oct-

09

Dec-0

9

Feb

-10

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r-10

Jun-1

0

Aug-1

0

Oct-

10

Dec-1

0

Feb

-11

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Jun-1

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Oct-

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Dec-1

1

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-12

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Dec-1

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Feb

-13

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Aug-1

3

Oct-

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Dec-1

3

Feb

-14

Ap

r-14

Jun-1

4

Aug-1

4

Oct-

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Financial Economy Performance

S&P 500

Barclay's Agg

Residential RE

Commercial RE

Commodities

Implications

1. The Fed and other central banks are behind and will be forced to raise rates sooner than expected

2. Risk assets can and will rally further

3. If the interest rate environment is normalized in a deliberate step-wise manner it does not have to be disorderly / disruptive to the real economy or capital markets – but the broad bond market will still suffer re-pricing

4. There is still time to adopt a defensive fixed income posture…but time is running short

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Red = zero to negative exposure Yellow = modest allocation Green = attractive exposure, material

allocation

Current Strategy Summary

DURATION 1 - 3 YRS

CURVE POSITIONING Short/ Int.

U.S TREASURIES -10 - 0%

MORTGAGES 20 - 30%

INVESTMENT GRADE CREDIT 20 - 30%

HIGH YIELD 20 - 30%

MUNICIPALS 0 - 5%

NON-U.S. DEVELOPED 0 - 10%

EMERGING MARKETS 0 - 10%

CURRENCY 0 - 5%

Non-U.S.

U.S.

Fixed Income

Appendix

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Core of Fixed Income Market ≠ Core of Fixed Income Allocation Remember - the CORE is the foundational part, NOT a reflection of

fixed income issuance patterns which are driven by many forces

We now have to address the other misconception: “the Core must be generally stable or stationary”

While this makes it easier to define and explain, it also results in our Core being exposed to interest rate, credit and other cycles

To avoid this, we have to continuously adjust our Core as the world unfolds

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A Comprehensive Toolkit

The Fund has broad discretion to apply what Anfield believes to be it’s best investment ideas across the global bond universe

This greater investment discretion allows Anfield to adjust duration exposure, allocate across sectors, and otherwise express active views and tap into Anfield’s global toolkit

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Anfield Universal Fixed Income Fund

Barclays Capital U.S. Aggregate Bond Index

Portfolio Construction Method

Manager discretion, based on Anfield's global economic outlook

Market capitalization-weighted representation of current U.S. bond market

Bond Universe ∙ U.S. Treasuries∙ Yankee bonds and Eurobonds

∙ U.S. Treasuries

∙ U.S. and non-U.S. investment

∙ Asset-backed securities

∙ U.S. investment grade corporates

grade corporates∙ Convertible securities

∙ Agency bonds

∙ High yield bonds ∙ Preferred stock ∙ Mortgage-backed securities

∙ Non-U.S. sovereign debt

∙ Agency bonds ∙ Asset-backed securities

∙ Mortgage-backed securities

∙ Emerging markets bonds

∙ Yankee bonds

∙ Inflation-indexed bonds

∙ Municipal bonds

∙ Bank loans ∙ Foreign currencies

Tools ∙ Duration ∙ Relative value trades

∙ Structural trades ∙ Sector rotation

∙ Yield curve positioning

∙ Currency hedging/allocation

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Red = zero to negative exposure Yellow = modest allocation Green = attractive exposure, material

allocation

Current Strategy Summary

OVERWEIGHT STOCKS 0 - 5%

DIVIDEND YIELD 5 - 10%

MEGA CAP 15 - 20%

LARGE CAP 25 - 35%

SMALL CAP 10 - 15%

NON-U.S. DEVELOPED 10 - 15%

EMERGING MARKETS 10 - 15%

ALTERNATIVES 10 - 15%

Equity

U.S.

Non-U.S./Alts

Benchmarking- 2 Epic Fallacies

1. Started out as a way to measure ex-post performance, then morphed into a way to categorize investment managers becoming the ex-ante paradigm Now ALM drives Required Return, which drives asset allocation, and allocation

drives manager selection because you have to fit into a box to get funded.

2. Desire to define manager risk via benchmark relative guidelines This is in complete contravention to the reality and logic:

Increased concentration of risk factors Reduced manager diversification (all have to operate the same zones) And if you believe the opportunity set is non-stationary, and forced buying

and selling at ranges (guidelines) reduces tail risk; then the only logical conclusion is that stationary rules in a non-stationary world must result in a lower, flatter distribution of returns skewed to the left – and therefore a lower mean return with higher risk over time – the exact anti-thesis of the goal.

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The Result?

A construct of “beat the benchmark” not “make smart investments and earn good risk adjusted returns”

Limitations for managers: their latitude and tools to get out of the way of trouble and capitalize on opportunity have been removed

Concentrating risk factors Many guidelines are in % NAV space Assets, however, operate in risk factor space % NAV space ≠ % risk factor space

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Investment guidelines and parameters are determined using this backwards logic, resulting in:

Disclosures

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Anfield Capital Management, LLC is a registered investment advisor with the SEC. The purpose of this presentation is to provide general information on our products and services only and should not be construed as a solicitation to effect, or attempt to effect, either transactions in securities or the rendering of personalized investment advice. We may change these materials at any time in the future without notice to you. We are not providing you with investment, tax, or legal advice. Past performance is not necessarily indicative of future performance. We are not offering to buy or sell any financial instrument or inviting you to participate in any trading strategy. This material was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under US federal tax laws. Anfield Capital Management, LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has calculated your performance returns in accordance with the Global Investment Performance Standards. To receive a compliant presentation and/or the firm’s list of composite descriptions, please contact us at 949-891-0600. Past performance is not indicative of future results. Presented performance results are total return and include the reinvestment of all income. Net of fee performance was calculated using the highest applicable annual management fee. Valuations and performance is reported in U.S. dollars. The results for individual accounts and for different periods may vary depending on market conditions and other factors. The performance results displayed herein represent the investment performance record for a composite. All performance results prior to the establishment of Anfield in August 2009 were achieved by the portfolio manager prior to the formation of Anfield and have been linked to the performance history of Anfield. These results should not be interpreted as the actual historical performance of Anfield. Anfield has adhered to the performance record portability requirements outlined in the GIPS Guidance Statement on Performance Record Portability in regard to the presentation and linking of this performance track record.

Simulated Backtest Disclosure

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Diversified Liquid Alternatives simulated backtest results were derived from the retroactive application of a model and do not represent actual investment performance or trading. Returns have not been reduced by trading costs which would be charged if the adviser were actually managing client’s money. Returns have been reduced by an annual management fee of 1.25% applied on a quarterly basis. The backtested results have inherent limitations as the results are derived from the retroactive application of a model developed with the benefit of hindsight. Performance may not reflect the impact that certain material economic and market factors might have had on the decision-making process if Anfield Capital Management was actually managing client assets according to the model. The strategy could not have been implemented before Jan 2011as this was the first date that the majority of the securities in the portfolio were available. Beginning May 2014, Anfield Capital Management started managing actual client accounts according to the Diversified Liquid Alternatives strategy

Composite Disclosures

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Our portfolios have assets diversified among equity and equity related instruments, fixed income securities, and cash or cash equivalents. Total Yield Composite includes all discretionary portfolios that seek to generate superior yields over cash investments by blending securities with different sources of premium yield advantage over traditional cash, and to preserve capital by minimizing the risk of loss. The strategy harvests meaningful yield spreads where they naturally occur and blends the primarily "spread duration risks" to achieve an optimum yield vs. liquidity and risk. It is best thought of as substitute to conventional narrow cash management strategies and investments. The portfolio may invest in all sectors of the fixed income market via primarily either ETFs or mutual funds. Prior to January 2012, the Total Yield Composite was called Capital Preservation Composite. Core Fixed Income Composite includes all discretionary portfolios that seek total return through a combination of income and price appreciation. The strategy invests in a wide range of fixed income and related securities spanning all maturities, sectors and credit ratings. Our portfolios have assets diversified among equity and equity related instruments, fixed income securities, and cash or cash equivalents. The target equity allocation of the strategy will vary over time but typically will consist of 100% of portfolio assets. This strategy may be appropriate for investors seeking intermediate to long-term returns with risk similar to the broad U.S. bond market. Income Plus Composite includes all discretionary portfolios that seek to total return through modest growth and a focus on income through investing in a balanced portfolio of fixed income and related securities spanning all maturities, sectors and credit rating and diversified equity. The target equity allocation of the strategy will vary over time but typically consists of 20% of portfolio assets. This strategy may be appropriate for investors seeking intermediate growth of capital combined with partial insulation from the impact of inflation. Real Balanced Growth & Income includes all discretionary portfolios that seek to provide a blend of income and growth of capital through investing in a balanced portfolio of diversified equity and fixed income securities. It emphasizes “real” returns - the growth of purchasing power over time. The strategy also invests in inflation-linked instruments including but not limited to U.S. TIPS, commodities contracts, and REITS. The target equity allocation of the strategy will vary over time but typically consists of 40% of portfolio assets. This portfolio may be appropriate for investors seeking intermediate to long-term growth of capital combined with partial insulation from the impact of inflation. Real Wealth Accumulation Composite includes all discretionary portfolios that emphasize growth of capital by investing in a diversified portfolio of primarily equities. The portfolio’s overall risk is tempered by allocations to fixed income and inflation-linked securities. The target equity allocation of the strategy will vary over time but typically consists of 60% of portfolio assets. This strategy may be appropriate for investors seeking intermediate to long-term growth of capital combined with insulation from the impact of inflation. Aggressive Real Growth Composite includes all discretionary portfolios that seek maximum capital appreciation by investing in a portfolio heavily weighted to equities. The strategy’s overall risk is similar to the broad stock market. The portfolio also holds modest allocations of inflation-linked securities. The target equity allocation of the strategy will vary over time but typically consists of 80% of portfolio assets. This strategy may be appropriate for investors seeking long to very long term growth of capital. Diversified Equity Composite includes all discretionary portfolios that seek maximum capital appreciation by investing in a portfolio consisting primarily of equity securities. The target equity allocation of the strategy will vary over time but typically consists of 100% of portfolio assets. The portfolio’s overall risk is expected to be similar, on average and over time, to the broad stock market. Diversified Liquid Alternatives Composite includes all discretionary portfolios that seek positive return over full market cycles by investing in a broad spectrum of all asset classes. Tactical adjustments are made with the goal of reducing risk and increasing returns. The portfolio may invest in all domestic and international asset classes, including but not limited to equity, debt, commodities, all categories of alternatives, real estate, etc. The portfolio will look to invest in a diverse set of assets classes, typically ten different markets, sectors, and themes with a target of approximately 20 to 30 different positions, dependent on market conditions.

Benchmark Disclosures

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Index returns are presented as additional information. We do not believe that any index return is a proper point of reference to directly compare our strategy and composite performance against; as such, the index returns are provided as general market indicators. U.S. Consumer Price Index (CPI) is a measure estimating the average price of consumer goods and services purchased by households. It is a price index determined by measuring the price of a standard group of goods meant to represent the typical market basket of a typical urban consumerLIBOR (London Interbank Offered Rate) is an average interest rate, determined by the British Bankers Association that banks charge one another for the use of short-term money (one month) in England’s Eurodollar market.Barclays U.S. Aggregate 1-3 Index represents securities that are SEC-registered, taxable, dollar-denominated, and with a remaining term to final maturity of at least one year and less than three years. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.Barclays Intermediate Government/Credit Index measures the performance of the U.S. dollar denominated U.S. Treasuries, government related and investment grade U.S. corporate securities that have a remaining maturity of greater than or equal to 1 year and less than 10 years.Barclays Intermediate U.S. Aggregate Bond Index is an unmanaged index representing domestic taxable investment grade bonds with an average maturity and duration in the intermediate range, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.Barclays U.S. Aggregate 10+ Index represents securities that are SEC-registered, taxable, dollar-denominated, and with a remaining term to final maturity of at least ten years. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.S&P 500 Total Return Index is an index of a basket of 500 stocks designed to provide a broad snapshot of the overall U.S. equity market representing all major industries. Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.MSCI EAFE Index is an unmanaged index of issuers in countries of Europe, Australia, and the Far East. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure emerging market equity performance. The MSCI Emerging Markets Index consists of the following 21 emerging market country indices: Brazil, Chile, China, Columbia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

Documents

1 Anfield Capital Management, LLC “Unconstrained” What it isn’t…and why it really matters right now!