Investment Outlook

• It is important to note that the capital value of, and income from, any investment may go down as well as up and you may not get back the full amount invested
• The investment is subject to normal market fluctuations and there can be no assurance that an investment will return its value or that appreciation will occur
• Liquidity constraints where subscriptions and redemptions are not available daily, or where lockups apply, mean that investors are subject to market risk during interim pricing periods and may not be able to access funds on short notice
• There is a greater risk associated with emerging markets. Liquidity may be less reliable and price volatility may be higher than that experienced in more developed economies. This may result in the fund suffering sudden and large falls in value
• Funds with a single sector focus will typically be more volatile than funds which invest broadly across markets
• Funds with a single country focus will typically be more volatile than funds which invest broadly across markets and geographies
• Region-specific funds have a limited investment scope and are susceptible to a decline in the region in which they invest. Therefore, these funds may be more risky than those which invest more broadly across markets and geographies
• Countries where political leadership is either unstable or where it exerts a very strong influence on markets and business practices may be subject to greater volatility. Political risk may include potential for currency controls which would disrupt efficient financial markets
• Limited transparency is typically a feature of both hedge funds and funds of funds. Funds of funds rely on underlying managers’ allocations and holdings may be less transparent than in single manager long-only funds. Furthermore, hedge funds in particular may have highly tactical investments along with less frequent and less stringent reporting requirements which does not provide investors with a picture of holdings on any given day
• Currency may have either a direct or indirect effect on individuals’ investments. Where the reference currency is different from the reporting currency, foreign exchange movements will directly impact the value of the holdings. Currency will indirectly impact the value of the underlying investments as foreign exchange movements strongly influence the market economy and the competitiveness of both domestic and international companies. Funds which try to hedge to a reference currency can mitigate the direct impact of currency movements but cannot completely isolate the indirect effects of foreign exchange movements
• Where investment decisions are made by an individual or a very small team, the potential loss of any one individual represents a significant risk to the ongoing viability of the fund
• Passive Index funds are designed to track the reference index before fees and expenses. However, these funds may deviate from the index depending on several factors including: how fully the fund replicates the index, if the makeup of the index changes and if dividends are not fully captured
• Smaller Company Risk – Small companies may be less liquid than larger companies and therefore price movements in securities of smaller companies may be more volatile and involve greater risk

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