Hedge Funds. Hedge funds are available for purchase in the program by clients meeting certain qualification standards. Investing in hedge funds involves additional risks including, but not limited to, the risk of investment loss due to the use of leveraging and other speculative investment practices and the lack of liquidity. In addition, hedge funds are not required to provide periodic pricing or valuation information to investors and may involve complex tax structures and delays in distributing important tax information. Client should be aware that hedge funds are not liquid as there is no secondary trading market available. At the absolute discretion of the issuer of the hedge fund, there may be certain repurchase offers made from time to time. However, there is no guarantee that client will be able to redeem the hedge fund during the repurchase offer. Managed Futures Funds. Managed futures are available for purchase in the program by clients meeting certain qualification standards. Investing in managed futures involves additional risks including, but not limited to, the risk of investment loss due to the use of leveraging and other speculative investment practices, the lack of liquidity and performance volatility. Client should be aware that managed futures are not liquid as there is no secondary trading market available. At the absolute discretion of the issuer of the managed futures fund, there may be certain repurchase offers made from time to time. However, there is no guarantee that client will be able to redeem the managed futures during the repurchase offer. Variable Annuities. If client purchases a variable annuity that is part of the program, client will receive a prospectus and should rely solely on the disclosure contained in the prospectus with respect to the terms and conditions of the variable annuity. Client should also be aware that certain riders purchased with a variable annuity may limit the investment options and the ability to manage the subaccounts. FEE SCHEDULE The annual management fee (“Account Fee”) schedule for the XXX XX account is described below. ACCOUNT VALUE MAXIMUM FEE $25,000 + 3.00% The Account Fee is negotiable, is based on the value of the assets in the account, including cash holdings, and is payable quarterly in advance. The Account Fee may be structured on a tiered basis, with a reduced percentage rate based on reaching certain thresholds, or may be a straight percentage based on all assets in the account. For purposes of cal...
Hedge Funds. Hedge Funds are a type of investment funds, which use specialised investment strategies (such as short selling, use of margin / leverage and use of derivatives) with the aim to maximise returns and control the risk in case of market downturn. Hedge funds are considered a riskier investment than traditional funds and are suitable for more experienced investors, since they are not regulated and lack transparency. They usually invest in risky or illiquid securities and although they target absolute returns, if they fail to manage risk, they may realise significant losses. Beyond the liquidity risk, Hedge Funds have the ability to leverage which means that a relative small fluctuation in the price of the underlying security may lead to a disproportionately larger fluctuation, favourable or unfavourable, to the value of the investment. Exchange Traded Funds - ETFs Exchange Traded Funds (ETFs) are a form of Collective Investment Schemes which track an index of a country, sector, or a specific geographical region. ETFs trade in organised and non-organised secondary markets just like shares but with the following major differences: ETFs represent an investment in a basket of financial instruments and their purchase/sale bears lower transaction costs. Investment in ETFs exposes the investor to the same risks as the underlying securities (shares, bonds etc) but to a significantly lower degree due to the diversification of investments. Medium Term Notes Medium Term Notes are a form of debt capital. They are usually issued within the framework of a financing programme, registered to a supervisory authority, which allows the issuers (subject to the parameters of the programme as registered) to change the nominal return or the term in response to the issuer's needs or the market demand. Medium Term Notes usually offer coupon payments and have various maturities. There is a secondary market for Medium Term Notes which is supported by the underwriters of the issue. Given that Medium Term Notes entail credit risk, they are rated just like corporate bonds. They are also subject to interest rate risk and all the other major risks mentioned in Part 1. Money Markets
Hedge Funds. Hedge funds are designed to yield a positive return on investment regardless of market developments or with a low sensitivity to them, via particularly complex high risk investment strategies intended to capitalize on the return-to-risk ratio. These investments include the use of arbitrage and/or derivative products to make a profit and not to offset risk, the use of short selling and the leverage of managed funds through loans. Hedge funds provide limited scope for liquidation of the investment on a monthly, quarterly or even yearly basis, and the period of an investor’s “holding requirement” is determined accordingly. Moreover, hedge funds may include investments that are hard to liquidate or hard to value. Hedge funds are exposed mainly to market risk, under regulation risk, concentration risk, as well as leverage risk resulting from the derivatives included in the fund.
Hedge Funds. If deemed an appropriate addition to the asset allocation, hedge funds are bought in a limited partnership format. The goal of an absolute return hedge fund is to maintain a risk level slightly higher than that of an intermediate bond while producing added value over the Xxxxxxx Xxxxx 3 - 5 year U.S. Treasury Index. The fund invests in both global stock and bond markets as well as incorporating currency management. The goal of a global hedge fund is to outperform global equities, as represented by the MSCI World Index, by 4 - 6% per annum, after all costs. The fund is a long/short strategy which utilizes leverage, investments in futures and options and the technique of selling securities short. DRAFT The goal of a multi-strategy hedge fund is to outperform short-term money market rates, as measured by the 3-Month LIBOR, by 6 — 9 % per annum. The fund invests primarily in high-quality fixed income assets but may employ other instruments, including credit default swaps, baskets of corporate bonds and interest-rate swaps. Dynamic Asset Allocation Within the investments described above under "Long Term Strategic Asset Allocation Targets", investments are permitted on an account-by-account basis in overlay portfolios, which are regulated mutual funds (the "Overlay Portfolios") to complement the long-term strategic asset allocation. This is known as the Dynamic Asset Allocation ("DAA") portfolio overlay strategy, which is designed to manage short-term portfolio risk and mitigate the effect of extreme outcomes by varying the asset allocation of a portfolio through investment in the Overlay Portfolios. The investments in the DAA Overlay Portfolios may cause the portfolio's overall exposure to equities, fixed income, REITs and other asset classes to vary significantly from the target allocations specified above under "Long-Term Strategic Asset Allocation Targets". Another effect of investing in the Overlay Portfolios is that the portfolio will gain exposure to asset classes, through the holdings of the Overlay Portfolios, other than those contemplated above under "Long Term Strategic Asset Allocation Targets". The holdings of the Overlay Portfolios are limited only as provided in the prospectus then in effect for the Overlay Portfolios.
Hedge Funds. Hedge Funds are alternative investments that seek to derive a return other than just buying and holding equity or fixed income positions) but rather use a number of different strategies in order to earn active return, or alpha, for their investors. Hedge funds may be aggressively managed or make use of derivatives and leverage in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark). Hedge funds may have low correlations with a traditional portfolio of stocks and bonds, and thus allocating an exposure to hedge funds may help diversify a portfolio. Hedge funds may be in the form of private placements (see private placements) or as a registered 1940 Act mutual fund. Risks of hedge funds may include high expense ratios, manager risk, liquidity risk, counterparty risk, as well as the risks of any underlying investments utilized in the strategy (such as options, futures, equities, fixed income, foreign securities, short selling, private placement risk, and others). Business Development Companies are entities that lend to young, thinly-traded, distressed, or firms with lower credit ratings that may not be able to access capital through other sources. The holdings within a business development company may involve credit/default risk, market risk, and liquidity risk. Business development companies may assess higher fees which can eat into potential returns. Business development companies may experience higher volatility than traditional investments. In addition, the publicly-traded shares of business development companies may trade at a discount or premium to the underlying asset value of its holdings. Options are contracts to purchase a security at a given price, risking that an option may expire out of the money resulting in minimal or no value. An uncovered option is a type of options contract that is not backed by an offsetting position that would help mitigate risk. The risk for a “naked” or uncovered put is not unlimited, whereas the potential loss for an uncovered call option is limitless. Spread option positions entail buying and selling multiple options on the same underlying security, but with different strike prices or expiration dates, which helps limit the risk of other option trading strategies. Option writing also involves risks including but not limited to economic risk, market risk, sector risk, idiosyncratic risk, political/regulatory risk, inflation (p...
