• An Exchange Traded Fund (ETF) is a fund that tracks an index but can be traded like a stock. These funds bundle together the securities that are in an index but they never track actively managed mutual fund portfolios. Investors can do with an ETF almost everything they can do with normal stocks including short selling. ETFs are traded on stock exchanges and can be bought and sold at any time during trading hours unlike most mutual funds. ETFs are more tax-efficient than normal mutual funds, and since they track indexes they have very low operating and transaction costs associated with them. There are no sales loads or investment minimums required to purchase an ETF.
• Exchange Traded Funds are exposed to the same risks of the index they track and its components. Generally, because of diversification exchange traded funds are less risky than the individual holdings involved.

A Hedge Fund is a fund, which can use aggressive strategies that are unavailable to mutual funds including short selling, leverage, program trading, swaps, arbitrage, and derivatives. Hedge Funds can accomplish aggressive investment goals because they are exempt from many of the regulations governing other Mutual Funds. Hedge Funds are considered riskier investments than traditional funds primarily because they are unregulated entities and lack transparency. They are more likely to invest in riskier or illiquid assets and while their strategies aim to maximize returns, if they are not properly hedged they can also lead to considerable losses.

Currency Risk is the risk that the investment with direct or indirect exposure in foreign currencies will lose value as a result of a possible decline of those currencies relative the domestic currency or the investor’s base currency.

Foreign Currency rate may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rate and imposition of currency controls or other political developments.

In addition, funds may incur transaction costs in connection with conversions between various currencies. Funds may also engage in currency hedging transactions, which generally involve buying currency forward, options or futures contracts. However, not all currency risk may be effectively hedged, and in some cases the costs of hedging techniques may outweigh expected benefits.

Some funds and other investment vehicles may hold a percentage of assets in derivatives, such as futures and options contracts, in pursuance of their investment objectives. The use of such derivatives may expose the fund to additional risks that is would not be subject to if it invested directly in the securities underlying those derivatives.

A fund may use futures contracts and related options for hedging purposes to offset changes in the value of securities held. A fund may also use such derivative instruments to gain exposure to a particular market or instrument, to create a synthetic money market position, and for certain other tax-related purposes. There are various risks associated with the use of futures and options contracts.

There may be an imperfect correlation between the changes in market value of the securities held by the Fund and the prices of futures and options on futures. Due to market conditions there may not always be a liquid secondary market for a futures contract making and it may not be possible to close out futures contracts at an advantageous time.

Trading restrictions or limitations may be imposed by an exchange, and government regulations may restrict trading in futures contracts and options. Because option premiums paid or received are small in relation to the market value of the investment underlying the options buying and selling put and call options can be more speculative than investing directly in securities.

Investments in commodity currency and financial linked structured notes entail specific risks. Commodity-linked structured notes provide exposure, which may include long and/or short exposure, to the investment returns of “real assets” (i.e. assets that have tangible properties such as oil, gold and silver) that trade in the commodities markets without investing directly in physical commodities. The price movement of the commodities underlying the note determines the performance of these notes.

Currency and financial-linked structured notes provide exposure to the investment returns of currencies and financial instruments. A highly liquid secondary market may not always exist for structured notes.

The Market value of fixed income investments, and financial instruments related to those fixed income investments, will change in response to interest rate changes and other factors, such as changes in the effective maturities and credit ratings of fixed income investments.

During period of falling interest rates, the values of outstanding fixed income securities and related financial instruments generally rise. Conversely, during periods of rising interest rates, the values of such securities and related financial instruments generally decline.

In addition, while securities with longer maturities generally tend to produce higher yields, the prices of longer maturity securities are also subject to greater market fluctuations as a result of changes in interest rates.

Fixed income investments are also subject to credit risk, which is the possibility that the credit strength of an issuer will weaken, and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default.

Liquidity Risk refers to the difficulty purchasing and selling particular investments within a reasonable time at a fair price. To the extent that these are not an established retail market for specific instruments, trading in such instruments may be relatively inactive.

In addition, during periods of reduced market liquidity or in the absence of readily available market quotations for particular investments, the ability to assign an accurate daily value to their investments may be difficult.

Investments in securities and derivatives in general are subject to market risks that may cause their prices to fluctuate over time. Such investments may decline in value due to factors affecting securities markets generally, or particular countries, segments, economic sectors, industries or companies within those markets.

The value of a security may decline due to general economic conditions which are not specifically related to a particular issuer, such as real or perceived adverse economic conditions or changes in interest or currency rates.

Where the funds and other investment instruments are non-diversified they can invest in the securities of a limited number of issuers. To the extent that a fund invests a significant percentage of its assets in a limited number of issuers, the fund is subject to the risks of investing in those few issuers and may be more susceptible to a single adverse economic or regulatory fund’s shares than would occur in a diversified fund.

• Short Sales are transactions involving the sale of borrowed securities, which must later be purchased back to replace those borrowed. The market price of those securities at the time of replacement may be higher or lower than the price at which the securities were initially sold. If the underlying security goes down in price between the time a fund sells the security and buys it back, the fund will realize a gain on the transaction. Conversely, the underlying security goes up in price during the period, the fund will realize a loss on the transaction. Any such loss is increased by the amount of premium or interest that must be paid to the lender of the security.
• Likewise, any gain will be decreased by the amount of premium or interest that must be paid to the lender of the security. Where a fund is also required to segregate other assets on its books to cover its obligation to return the security to the lender it would mean that those other assets may not be available to meet the fund’s needs for immediate cash or other liquidity. The fund’s investment performance may also suffer if the fund is required to close out a short position earlier than it had intended. This would occur if the securities lender required the fund to deliver the securities the fund borrowed at the commencement of the short sale and the fund was unable to borrow the securities from other securities lenders or otherwise obtain the security by other means. In addition, the fund may be subject to expenses related to short sales that are not typically associated with investing in securities directly, such as costs of borrowing and margin account maintenance costs associated with the fund’s open short positions. These expenses negatively impact the performance of the fund.

Tracking error is the divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark. This is often in the context of a hedge fund, mutual fund or exchange-traded fund (ETF) that did not work as effectively as intended, creating instead an unexpected profit or loss.
Tracking error is reported as a standard deviation percentage difference, which reports the difference between the return an investor receives and that of the benchmark they were attempting to imitate.

Other risks that may impact the price of a financial instrument include;

• Legal Risk, the regulatory environment.
• Political Risk is the risk an investment’s returns could suffer as a result of political changes or instability in a country. Instability affecting investment returns could stem from a change in government, legislative bodies, other foreign policy makers or military control.
• Operational Risk is the risk of business operations failing due to breakdowns or malfunctions of essential systems and controls, including IT systems and human Operational risk changes from industry to industry and is an important consideration to make when looking at potential investment decisions for example industries with lower human interaction are likely to have lower operational risk.

Some of the financial instruments’ underlying assets may not become immediately liquid as a result of reduced demand for the underlying instrument and clients may not be able to obtain the information on the value of these or the extent of the associated risks.

Clients acknowledge, understand and accept that the Company cannot be held responsible for the risks of possible financial losses caused as a result of failure, malfunction, interruption, disconnection or malicious actions related to information, communication, electronic and other systems and that Clients bear all responsibility for any such failure.

Clients acknowledge, understand and accept that costs and charges that may influence and affect their profitability. The costs and charges will be either provided by the Company or the product provider/asset that they are interested in.
Trading in financial instruments there are different types of costs that are related and linked to such transactions that may affect the profitability of clients. Such costs amongst others include commissions charged by the Company, bid-offer spreads, daily and overnight financing costs, account management fees etc. These costs can be complex to calculate and may be significant and outweigh the gross profits from a given trade.
The Company does not warrant and/or guarantee that clients’ trades in financial instruments are not or may not become subject to tax and/or any other duty for instance because of changes in legislation or because of the client’s personal circumstances. It is the responsibility of clients to arrange for settlement of any taxes and/or any other duty which may accrue in respect of their trades.

Clients acknowledge, understand and accept that Companies may transfer clients’ money to a third party (e.g. a bank) to hold or control in order to affect a transaction through or with that person in respect of a transaction. The Company bears no responsibility for any acts or omissions of any third party.

Information based on previous or past performance of a Financial Instrument it is not a guarantee for its current and/or future performance. The use of historical data does not constitute a binding or safe forecast as to the corresponding future performance of the Financial Instruments to which the said Information refers.
The value of CFDs and other derivative financial instruments may decrease and clients acknowledge that they may receive less money than invested/deposited or the value may be subject to high fluctuations and this may result to the invested/deposited capital to become of no value.
When financial instruments are traded in a currency other than the currency of clients’ country of residence, any changes in the exchange rates may have a negative effect on its value, price and performance.