All investments carry risk. Different investments carry different levels of risk, depending on the investment strategy and the underlying assets. Generally, the higher the potential return of an investment, the greater the risk. The risks of investing in this Fund include:
Strategy, model and research risk: The Investment Manager’s strategy is implemented through a proprietary model that has an emphasis on statistical research. However, research is based on what has occurred in the past. To the extent that a market deviates from its accustomed response to an event or the event itself is unusual, extreme or never before experienced by the market, the value of a research-based methodology will lessen. Mathematical models are representations of reality but they may be incomplete and/or flawed and there is an inherent risk that any forecasts derived from them may be inaccurate, particularly if the research or models are based on, or incorporate, inaccurate assumptions or data. Assumptions or data may be inaccurate from the outset or may become inaccurate as a result of many factors such as, changes in market structure or increased government intervention in markets. As a result, the Investment Manager’s investment approach may not successfully identify statistical advantages leading to profits over time or may result in the Fund investing in positions that lead to losses. This may have an adverse effect on the performance of the Fund.
Investment risk: The risk of an investment in the Fund is significantly higher than an investment in a typical bank account or fixed income investment. While the Fund’s benchmark is the RBA Cash Rate, the Fund is not a cash fund and is not expected to behave like a cash investment. Amounts distributed to unitholders may fluctuate, as may the Fund’s unit price. Changes in the prices of futures positions held by the Fund may result in loss of principal or large movements in the unit price of the Fund within short or long periods of time, including during the period between a redemption request or application for units being made and the time the redemption unit price or application unit price is calculated. Different factors may affect the price of individual futures positions, particular asset classes (such as currencies) or futures positions generally at different times. Due to market risk and the potential short term volatility of the Fund, investors should have a medium to long-term investment horizon.
Leverage risk: Leverage arises in the Fund through taking both long and short futures positions which are larger in size than the net asset value of the Fund. The Fund will take leveraged positions with the aim of increasing returns but these leveraged positions can also lead to increased losses. While this process forms a key part of the investment strategy, it may mean that gains and losses in the Fund may be significantly greater than those in funds that are not leveraged.
More information on the risks of investing in the Fund is contained in the Product Disclosure Statement, which should be considered before deciding to invest in the Fund.