overview

Risk Management & Considerations

There are risks associated with an investment in the FXAIS Capital MDA such as loss of income or principal amount invested. Investment in the MDA should be regarded as speculative. Neither Baya Nest Pty Ltd, nor any of its related bodies corporate, associates, officers or affiliates, guarantee the performance of the MDA or the repayment of capital from the MDA.

You should consider all of the risk factors that could affect the performance and other information concerning the investment considering your own particular investment objectives, financial circumstances and particular needs (including financial and taxation issues) before deciding whether to invest in the MDA. Wholesale investors should obtain their own legal, tax, accounting or commercial advice.

Risk Types:

Strategy Risk

Strategy risk refers to a situation where the investment strategies of the MDAs fail to produce the intended results. This could have an adverse effect on the performance of the invested MDAs. Investment strategies are constantly being reviewed and adjusted to reduce risk and enhance profit potential.

Market Risk

Market risk refers to changes in the price of assets held by the MDAs, which result in fluctuations of the value of the MDAs. Many factors can affect market prices, including economic data, government policies, monetary policies and changes in volatility. Asset classes may experience isolated impacts by certain risk factors. FXAIS Capital MDA aims to utilise diversification across assets and asset classes to reduce risk and volatility.

Counterparty Risk

Counterparty risk is the risk of losses resulting from a counterparty defaulting on a financial obligation to one’s investment. Counterparties include brokers, banks and fund managers. Invested assets are segregated in custody accounts designated for the exclusive benefit of the client.

Leverage Risk In Relation To Non-limited Recourse Products

FXAIS Capital MDA may apply a high degree of leverage in circumstances where risk is low. These strategies enable clients to outlay a relatively small amount to secure an exposure to the underlying currency or financial product. The use of leverage can lead to large losses as well as large gains. An adverse movement in the price can not only quickly result in the loss of the entire Margin but may also lead to additional loss and end up a negative account balance. FXAIS Capital MDA sets a drawdown level notification for the MDA where the account will stop trading until the investor is informed and consent granted to continue if the drawdown level is reached. You should closely monitor all of your open positions. If the market moves against you and your initial margin deposit is diminished, we may automatically close out your position. Any remaining balance will be returned to you and any resulting liabilities will be your responsibility.

Legal & Regulatory Risk

A change in laws or their interpretations including but not limited to taxation and corporate regulatory laws, practice and policy may have a negative impact on the returns to investors.

Liquidity Risk

The FXAIS Capital MDA eschews illiquid and opaque securities in order to avoid liquidity traps present in similar structures. While the MDA only invests in liquid OTC markets such as Foreign Exchange, under certain conditions the liquidity of a particular market or security may be restricted, thus affecting the performance of the MDA. Lack of liquidity or market depth can affect the valuation of the MDA’s assets if it was required to reduce exposure at quoted prices.

Key Employee Risk

FXAIS Capital MDA employs specialist investment personnel who have responsibility for implementing the investment process. If key investment staff were to leave this would be destabilising to FXAIS Capital MDA and could lead to falls in the value of the MDA and in extreme circumstances could lead to the termination of the MDA. FXAIS Capital MDA actively mitigates key employee risk – primarily through digitisation, automation, process documentation, and training.

Business Continuity

FXAIS Capital MDA views Business Continuity Management (BCM) as a fundamental part of its ability to protect its staff and fulfil its fiduciary responsibilities to clients. FXAIS Capital MDA maintains Crisis Response and Business Recovery Plans to facilitate the management of any incident which has the potential to harm our staff, damage our premises or disrupt our business.

Investment Objective Risk

The risk that an investor’s objectives will not be met by the MDA. Authority may be used to invest in assets which may not suit your objectives, needs and risk level or may be unsuitable from a social or ethical position.

Manager Risk

The risk that the manager will not achieve its performance objectives or not produce returns that compare favourably against its peers. Past performance results are not necessarily indicative of future performance.

Currency Risk

The MDA is exposed to currencies other than the Australian dollar. The value of such investments may be affected favourably or unfavourably by fluctuations in exchange currencies.

Concentration Risk

The reliance on a group of securities, instruments or asset class that may significantly affect the performance of your portfolio.

Volatility Risk

The potential for the price of your portfolio to vary sometimes distinctly over a short period of time. The greater the volatility of the returns the more likely it is the returns will differ from those expected over a given time period.