Strategy Outlook

As we enter Q4, AI continues to drive economic growth, market leadership and political debate. While productivity gains from AI are widely anticipated, their scale and timing remain difficult to quantify. The near-term impact on labor appears broadly positive for now, with skilled engineers and IT developers in high demand as companies build infrastructure and integrate AI into their operations.

At the same time, the US–Iran standoff shows no clear sign of resolution, keeping pressure on energy markets and adding to inflation risks. Looking ahead, we believe AI is once again the largest source of both opportunity and risk. The security-led slowdown in frontier-model development could shift the focus towards adoption and inference, leaving the broader investment thesis intact (the recent Meta personal AI agent release is an example). However, the bar is exceptionally high: market valuations already embed trillions of dollars of prospective revenues over the next decade, leaving little room for disappointment.

Interest rates took center stage over last three months as curves backed up broadly across the board. While inflation remains above target mainly due to geopolitical conflicts, real rates have also climbed higher. Record capital expenditures combined with large government deficits require formidable amounts of funding, ultimately requiring a higher clearing price. While most macro managers failed to anticipate the transition to a higher-rate regime in 2026, we recognize that maintaining a structural short-duration position is increasingly difficult at current yield levels. This is especially the case in regions that have derived limited benefit from AI-driven growth and remain exposed to Middle East-related trade disruptions, particularly Europe and the UK. Nevertheless, with bond yields exceeding dividend yields and cyclically adjusted valuations at record level (post 1999-00), investors will inevitably grow more sensitive to any disappointing news concerning AI.

Equity Hedged

We observed Equity Hedged and Multi-strategy managers trimming exposures to AI infrastructure during the volatile summer months, and as a result, we feel less compelled to make incremental changes to our portfolios at this point. We prefer to have our AI exposure expressed in tightly managed market-neutral constructs or via funds with flexible net exposures (US- and Asia-focused). We continue to diversify our portfolios with allocations to generalists, and specialists in biotech, financials and Europe.

Looking ahead, we expect AI applications to broaden along with the alpha opportunity set (e.g., one theme is consumer-focused AI agents and their disruption to several e-commerce sectors). Our financials and biotech specialists have underperformed so far this year, despite relatively benign industry dynamics. Ironically, most of the negative alpha has come from the short side, driven by the very themes we have highlighted throughout the year: M&A activity and perceived AI beneficiaries. We expect long / short spreads across both sectors to improve as earnings season approaches, while continuing to provide valuable diversification away from core AI-driven exposures. Similarly, Europe should provide a diversification benefit as the market is much less exposed to AI growth and momentum relative to value and quality factors. Given more reasonable valuations, any good news on the geopolitical front could also offer meaningful upside in Europe.

Shift in US Market Leadership YTD

Source: Morgan Stanley Prime Brokerage; data as of September 2, 2026. Data illustrates a broadening of the market in recent months. Please see end notes for index descriptions. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

Trading

In Trading, we maintain conviction in discretionary global macro strategies. Recent underperformance has typically been a function of back-footed positioning rather than lack of opportunities. As real rates become more attractive, correlation between equities and bonds could become negative again, and may facilitate changes to portfolio construction. Commodities offer one of the strongest opportunity sets, and we maintain our core allocations across metals, materials, power and natural gas. We are currently considering adding a tactical allocation to agriculture. Systematic macro (trend followers) have performed reasonably well this year, mainly thanks to long equities, short rates and long metals positions.

We maintain a neutral outlook but are increasing our target weight to systematic trading to reflect its growth within our multi-strategy managers’ allocations. Note that our systematic trading allocation has been relatively small with respect to our historical range and remains focused on differentiated approaches and / or alternative markets. We continue to expect systematic and discretionary macro to correlate positively over time and strive to maintain balance between the two.

North West European Underground Gas Storage

Source: Lattis Management (UK) LLP, L.P. Data as of September 16, 2026. This chart illustrates Lattis Management's North West European Underground Gas Storage (NWE UGS) data from 2025 as well as future projection. Forward-looking statements and forecasts are based on current expectations, estimates, and assumptions that involve risks and uncertainties. Actual results may differ materially from those expressed or implied. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

Credit / Income

In Credit, our corporate long / short exposure continues to rebalance towards more tactical long / short managers. While we do not expect a major widening in credit spreads, the recent decoupling of CCC points to increasing credit quality differentiation at times of record-level corporate issuance. While overall yields are improving, most spread products are trading at extremely low levels; therefore, we remain very selective in ABS and Other Income strategies.

US CCC vs. BB Spread Differential

Source: Bank of America Merrill Lynch, Bloomberg; Daily data; January 31, 2021–August 31, 2026. Please see end notes for index descriptions. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

Relative Value

In Relative Value, we favor quantitative equity and merger arbitrage, especially on a liquidity-adjusted basis. Quantitative equity continues to face persistent crowding and factor-volatility headwinds, but we have observed managers progressively adapting. Higher cost of capital can further reduce cross-sectional correlation, providing a tailwind to the strategy. Merger and event arbitrage also remain attractive as healthy deal flow, supportive financing and differentiated regulatory risk sustain elevated spread dispersion.

We are further reducing our allocations to fixed income relative value (FIRV). The recent increase in rates volatility has not produced wider spreads due to an abundance of balance sheet from banks and dealers. As such, we are mindful of rates RV specialists incrementally seeking return via more directional opportunities.

US M&A Deal Volume (# of deals > USD 400mn)

Source: UBS Investment Bank, Bloomberg; Daily data; September 1, 2020–September 25, 2026. Data illustrates deal value in excess of USD 400mn involving publicly-traded targe. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

The views expressed are as of July 2026 and are a general guide to the views of Unified Global Alternatives - Hedge Funds (“UGA - HF” or “UGA - Hedge Funds”). This document does not replace portfolio and fund-specific materials. Commentary is at a macro or strategy level. This publication encompasses UGA - HF's views based on our internal manager universe and are subject to change. The universe includes managers that are either invested in or followed by UGA - HF and does not represent all hedge fund managers and strategies available in the industry. These views are subject to change.

The strategies described herein are speculative and entail substantial risks which may place your capital at risk. An investment in these strategies includes the risks inherent in an investment in securities, as well as specific risks associated with limited liquidity, the use of leverage, short sales, options, futures, derivative instruments, investments in non-US securities and illiquid investments. The strategy invests largely in other unregulated hedge funds. Such a strategy of hedge funds may increase an investor's volatility for potential losses or gains.

A particular manager of any strategy, from time to time, may invest a substantial portion of the assets managed in an industry sector. As a result, the manager's investment portfolio may be subject to greater risk and volatility than if investments had been made in the securities of a broader range of issues. There can be no assurances that any particular strategy (hedging or otherwise) will be successful or that it will employ such strategies with respect to all or any portion of its portfolio. These strategies can be highly illiquid, are not required to provide periodic pricing or valuation to investors and may involve complex tax strategies.

The strategies may be highly leveraged and the volatility of the price of its interests may be great. The fees and expenses charged by any individual manager of a strategy may substantially offset any trading profit.

Index descriptions

The use of indices is for illustrative purposes only.

ICE BoA US High Yield Index

The ICE BofA US High Yield Index tracks the performance of US dollar denominated below investment grade corporate debt publicly issued in the US domestic market.

ICE BoA CCC & Lower US High Yield Index

The ICE BoA CCC & Lower US High Yield Index tracks the performance of US dollar denominated below investment grade corporate debt publicly issued in the US Domestic Market.

ICE BoA BB US High Yield Index

The ICE BoA BB US High Yield Index tracks the performance of US dollar denominated BB rated corporate debt publicly issued in the US Domestic Market.

S&P500 Index

The Standard and Poor's 500 Index (S&P500) is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

S&P500 EW Index

The S&P 500 Equal Weight Index (EWI) is the equal-weight version of the widely-used S&P 500. The index includes the same constituents as the capitalization weighted S&P 500, but each company in the S&P 500 EWI is allocated a fixed weight - or 0.2% of the index total at each quarterly rebalance.

Code: M-007347 10/2026