Morgan Stanley Wealth Management
Global Tactical Portfolios
The Pangaea Group Global Tactical Portfolios
Diversification and Asset allocation are the building blocks of a Nobel Prize winning investment theory. The idea
is to expose a portfolio to numerous markets allowing for some markets to go down while others go up. By
properly spreading exposure to different markets, volatility and risk of a portfolio may be reduced. Over a long
investment period, properly allocated portfolios tend to outperform standard equity benchmarks.
The Global Tactical Portfolios utilize this theory with an additional benefit. Our portfolios follow Morgan
Stanley’s Global Investment Committee’s asset allocation recommendations then enhance the allocation with
tactical positioning as well as tactical managers. The idea behind this method is to take advantage of current
market conditions while maintaining long term investing allocation.
 Global Tactical Conservative
With a primary emphasis on risk reduction, this portfolio is more heavily weighted with bonds and bond-like
instruments. Numerous tactical fixed income managers are employed to combat the risk of rising interest rates,
inflationary environments and poor equity markets. The equity component consists mostly of large
capitalization stocks with a high exposure to tactical equity managers.
This portfolio is designed for investors who are primarily concerned with protection versus growth while
ensuring their portfolio has the potential to outpace cost of living increases over time.
 Global Tactical Balanced
This portfolio has a dynamic mix of equities, fixed income, tactical investments and alternatives. By combining a
tactical overlay with several tactical equity and fixed income managers, the balanced portfolio is designed to
increase in risk when market trends indicate strong equity markets and decrease in risk when market trends
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point to poor equity markets. The portfolio includes hedged strategies, real estate, alternatives and at times
directed market investments (i.e. Japan).
This portfolio is ideally suited for the client who wants to take advantage of bull markets while hedging
potential risks and maintaining an overall balanced approach. The client should ideally be looking for
capital appreciation with a secondary objective of capital preservation.
 Global Tactical Growth
The Growth portfolio is designed to maximize returns across the global equity markets. The portfolio employs
numerous investment including; Equities, Hedged Strategies, Alternative Investments and Real Estate. With an
emphasis on maximizing equity-like returns, the Growth portfolio carries no direct exposure to fixed income
markets. The tactical nature of the portfolio allows for cash to be raised when market corrections are looming
then deployed once a correction occurs.
Clients who invest in the Growth portfolio should have a high risk tolerance with a primary focus on
maximizing returns while maintaining an asset allocated portfolio. This portfolio is designed to take
advantage of long term market trends along with seeking short term opportunities.
Our portfolios are designed for use on the Morgan Stanley UMA (Unified Managed Account) platform. For
accounts over $500,000 in assets, the option of adding SMA’s (Separately Managed Accounts) to the portfolio
becomes available. SMA’s allow investors to have direct exposure to the underlying investment while creating
an individual cost basis for each of the underlying components. Accounts over $500,000 also have the option to
add a tax loss harvesting overlay. This overlay allows a tax mandate to be set on the account in order to help
prevent large tax gains created from trading in the account.
 Alternative Investments
Qualified clients will be granted access to additional investments through fund of funds, hedge funds and private
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equity. These investments can serve as additional diversification to a portfolio by typically being non-correlated
to the equity and fixed income markets. Minimum net worth requirements and additional qualifications may be
necessary. See your Financial Advisor for more information.
Important Information and Qualifications
An investment in alternative investments can be highly illiquid, is speculative and not suitable for all investors. Investing in
alternative investments is only intended for experienced and sophisticated investors who are willing to bear the high economic risks
associated with such an investment. Investors should carefully review and consider potential risks before investing. Some of these
risks may include:
•
loss of all or a substantial portion of the investment due to leveraging, short-selling, or other speculative practices;
•
lack of liquidity in that there may be no secondary market for the fund and none is expected to develop;
•
volatility of returns;
•
restrictions on transferring interests;
•
potential lack of diversification and resulting higher risk due to concentration of trading authority when a single advisor is
utilized;
•
absence of information regarding valuations and pricing;
•
complex tax structures and delays in tax reporting;
•
less regulation and higher fees than mutual funds; and
•
manager risk.
Individual funds will have specific risks related to their investment programs that will vary from fund to fund.
This material is intended only for clients and prospective clients of the Portfolio Management program. It has been prepared solely
for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other
financial instrument, or to participate in any trading strategy.
The individuals mentioned as the Portfolio Management Team are Financial Advisors with Morgan Stanley participating in the
Morgan Stanley Portfolio Management program. The Portfolio Management program is an investment advisory program in which
the client’s Financial Advisor invests the client’s assets on a discretionary basis in a range of securities. The Portfolio Management
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program is described in the applicable Morgan Stanley ADV Part 2, available at www.morgan stanley.com/ADV or from your
Financial Advisor.
Past performance of any security is not a guarantee of future performance. There is no guarantee that this investment strategy will
work under all market conditions.
The performance, holdings, sector weightings, portfolio traits and other data for an actual account may differ from that in this
material due to various factors including the size of an account, cash flows within an account, and restrictions on an account.
The views expressed herein are those of the author and do not necessarily reflect the views of Morgan Stanley Wealth
Management or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion
expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
Diversification does not guarantee a profit or protect against a loss.
Bonds are subject to interest rate risk. When interest rates rise, bond prices fall; generally the longer a bond's maturity, the more
sensitive it is to this risk. Bonds may also be subject to call risk, which is the risk that the issuer will redeem the debt at its option,
fully or partially, before the scheduled maturity date. The market value of debt instruments may fluctuate, and proceeds from sales
prior to maturity may be more or less than the amount originally invested or the maturity value due to changes in market
conditions or changes in the credit quality of the issuer. Bonds are subject to the credit risk of the issuer. This is the risk that the
issuer might be unable to make interest and/or principal payments on a timely basis. Bonds are also subject to reinvestment risk,
which is the risk that principal and/or interest payments from a given investment may be reinvested at a lower interest rate. Bonds
rated below investment grade may have speculative characteristics and present significant risks beyond those of other securities,
including greater credit risk and price volatility in the secondary market. Investors should be careful to consider these risks
alongside their individual circumstances, objectives and risk tolerance before investing in high-yield bonds. High yield bonds should
comprise only a limited portion of a balanced portfolio.
Preferred securities can be called prior to maturity, which may reduce yield if purchased at a premium. Preferred securities may be
subject to other call features or corporate restrictions that may have an effect similar to a call. Prices may fluctuate reflecting
market interest rates and the issuer’s credit status.
REITs are subject to special risk considerations similar to those associated with the direct ownership of real estate. Real estate
valuations may be subject to factors such as changing general and local economic, financial, competitive, and environmental
conditions. REITs may not be suitable for every investor. Dividend income from REITs will generally not be treated as qualified
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dividend income and therefore will not be eligible for reduced rates of taxation.
Morgan Stanley Smith Barney LLC (“Morgan Stanley”) and its affiliates and financial advisors do not provide tax or legal advice. To
the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a
taxpayer for the purpose of avoiding penalties that may be imposed by law. Any such taxpayer should seek advice based on the
taxpayer's particular circumstances from an independent tax advisor.
Investing in smaller companies involves greater risks than those associated with investing in more established companies, including
significant stock price fluctuations and illiquidity.
International investing may not be suitable for every investor and is subject to additional risks, including currency fluctuations,
political factors, withholding, lack of liquidity, the absence of adequate financial information, and exchange control restrictions
impacting foreign issuers. These risks may be magnified in emerging markets.
Individual funds will have specific risks related to their investment programs that will vary from fund to fund.
Growth investing does not guarantee a profit or eliminate risk. The stocks of these companies can have relatively high valuations.
Because of these high valuations, an investment in a growth stock can be more risky than an investment in a company with more
modest growth expectations.
This material does not provide individually tailored investment advice. It has been prepared without regard to the individual
financial circumstances and objectives of persons who receive it. The strategies and/or investments discussed in this material may
not be suitable for all investors. Morgan Stanley Wealth Management recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor. The appropriateness of a
particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Equity securities may fluctuate in response to news on companies, industries, market conditions and general economic
environment. Companies cannot assure or guarantee a certain rate of return or dividend yield; they can increase, decrease or
totally eliminate their dividends without notice.
Holdings are subject to change daily, so any securities discussed in this profile may or may not be included in your account if you
invest in this investment strategy. Do not assume that any holdings mentioned were, or will be, profitable.
The Pangaea Group
“Consolidating a World of Opportunities”
Morgan Stanley Wealth Management
The Pangaea Group
Global Tactical Portfolios
“Consolidating a World of Opportunities”