Principal risk factors

All investments involve some level of risk. Simply defined, risk is the possibility that you will lose money or not make money. Before you invest, please make sure you understand the risks that apply to the  hedge-fund "Eganov Asset Management Stocks & Derivatives Strategies S.P."

EAMPartners gives the list of the possibility risks factors but it may not be a complete.

Business and Regulatory Risks of Investment in hedge-funds

Legal, tax and regulatory changes could occur during the term of the hedge-fund that may adversely affect the hedge-fund.  The regulatory environment for hedge funds is evolving, and changes in the regulation of hedge funds may adversely affect the value of investments held by the  hedge-fund "Eganov Asset Management Stocks & Derivatives Strategies S.P.".  In addition, the securities and futures markets are subject to comprehensive statutes, regulations and margin requirements.   

Risks of Execution of Investment Strategies

The hedge fund "Eganov Asset Management Stocks & Derivatives Strategies S.P." will invest in a number of securities and derivatives that entail substantial inherent risks. Although the EAMPartners will attempt to manage those risks through careful research, on-going monitoring of investments and appropriate hedging techniques, there can be no assurance that the securities and other instruments purchased by the hedge-fund will in fact increase in value or that the hedge-fund will not incur significant losses.

Stock Risk

Stock prices have historically risen and fallen in periodic cycles. U.S. and foreign stock markets have experienced periods of substantial price volatility in the past and may do so again in the future.

Short Sales

Short sales by the hedge fund that are not made “against the box” create opportunities to increase the hedge fund’s return but, at the same time, involve special risk considerations and may be considered a speculative technique. Short sales may be used with the intent of hedging against the risk of declines in the market value of the hedge fund’s long portfolio, but there can be no assurance that such hedging operations will be successful.

Derivatives

The hedge fund "Eganov Asset Management Stocks & Derivatives Strategies S.P." may purchase and sell options or enter into other derivative transactions. These transactions may be used for any purpose, including hedging purposes and to increase the possibility of achieving gains or minimising losses from any level of movement in the price of the underlying securities or group of securities. Derivative instruments may not be liquid in all circumstances, so that in volatile markets a hedge fund may not be able to close out a position without incurring a loss. And so no assurance can be given that the derivatives are used by the hedge fund "Eganov Asset Management Stocks & Derivatives Strategies S.P." will not result in material losses.

Futures and Options Trading is Speculative and Volatile

Futures and option contract prices are highly volatile. Price movements of contracts are influenced by, among other things:

  • changing supply and demand relationships;
  • trade, fiscal, monetary, and exchange control programs and policies of governments;
  • political and economic events and policies;
  • changes in interest rates and rates of inflation;
  • currency devaluations and revaluations;
  • and emotions of the marketplace and currency devaluations and revaluations.  

Trading of Options

Purchasing put and call options, as well as writing such options, are highly specialized activities and entail greater than ordinary investment risks.

Futures and Options Trading is Highly Leveraged

Because of the low margin deposits normally required in futures contract trading (typically between 2% and 15% of the value of the interest purchased or sold), an extremely high degree of leverage is typical of a futures contract trading account. As a result, a relatively small price movement in a futures contract may result in immediate and substantial losses to the hedge fund.

Futures and Options Trading May Be Illiquid

It is not always possible to execute a buy or sell order at the desired price or to close out an open position, due to market illiquidity.  During periods in October 1987, 1988 and 1997, for example, trading in certain stock index futures and options contracts was too illiquid for markets to function efficiently and was for a short time actually suspended.

Market risk

The market value of a security may fluctuate, sometimes rapidly and unpredictably. These fluctuations, which are often referred to as “volatility,” may cause a security to be worth less than it was worth at an earlier time. Market risk may affect a single issuer, industry, commodity, sector of the economy, or the market as a whole. Market risk is common to most investments.

Liquidity risk

Certain fund holdings, such as commodity-linked notes and swaps, may be difficult or impossible to sell at the time and the price that the hedge fund would like. The hedge fund may have to lower the price, sell other holdings instead or forgo an investment opportunity. Any of these could have a negative effect on hedge fund management or performance.

The risk that the hedge fund "Eganov Asset Management Stocks & Derivatives Strategies S.P." may make investments that may be illiquid or that may become less liquid in response to market developments or adverse investor perceptions. Liquidity risk may also refer to the risk that the hedge fund will not be able to pay redemption proceeds within the allowable time period because of unusual market conditions, an unusually high volume of redemption requests, or other reasons. To meet redemption requests, the hedge fund may be forced to sell securities at an unfavourable time and/or under unfavourable conditions.

Counterparty Credit Risk

The hedge fund may be subject to credit risk which is the risk that the issuer or the guarantor of a debt security, or the counterparty to a derivatives contract, will be unable or unwilling to make timely payments of interest or principal, or to otherwise honour its obligations.

Counterparty Creditworthiness

Commodity exchanges provide centralized market facilities for trading in futures contracts relating to specified commodities. Each of the commodity exchanges in the United States has an associated “clearinghouse.” Once trades made between members of an exchange have been confirmed, the clearinghouse becomes substituted for the clearing member acting on behalf of each buyer and each seller of contracts traded on the exchange and in effect becomes the other party to the trade. Thereafter, each clearing member firm party to the trade looks only to the clearinghouse for performance. Clearinghouses do not deal with customers, but only with member firms, and the “guarantee” of performance under open positions provided by the clearinghouse does not run to customers. If the hedge fund’s commodity broker becomes bankrupt or insolvent, or otherwise defaults on such broker’s obligations to the hedge fund, the hedge fund may not receive all amounts owing to it in respect of its trading, despite the clearinghouse fully discharging all of its obligations.

Rehypothecation and Transfer of Ownership of Assets

The Prime Broker(s) and/or their respective group entities may borrow, lend or otherwise use the hedge fund’s money, investments and other assets for its or their own purposes and may take such investments as collateral. Such assets will cease to be the property of the hedge fund "Eganov Asset Management Stocks & Derivatives Strategies S.P." and in the event of an insolvency of that Prime Broker may be available to creditors of that Prime Broker. As a result, the hedge fund may not be able to recover such assets in full.

Absence of Operating History

The hedge fund "Eganov Asset Management Stocks & Derivatives Strategies S.P."  is a newly organized entity and does not have an operating history upon which investors may base an evaluation of its likely performance.

The hedge fund's results will depend upon the availability of suitable investment opportunities for the Sub-Fund and the performance of the hedge-fund's investments.

No Guarantee

There is no guarantee that implementation of the investment objective or strategy with respect to the assets of the Sub-Fund will be successful. Significant or total loss to Participating Shareholders is possible.

Computer Infrastructure

The computer infrastructure of the Fund may be vulnerable to security breaches. Any such problems could jeopardize confidential information transmitted over the Internet, cause interruptions in our operations or give rise to liabilities to third parties. Concerns over the security of Internet transactions and the safeguarding of confidential Sub-Fund information could also inhibit the use of our systems to conduct transactions over the Internet. Sub-Fund control policies may not protect us against all of such losses and liabilities. Any of these events, could have a material adverse effect on the Fund and result in operational losses or lack of functionality to conduct Fund business.

No Independent Counsel

No independent counsel has been selected to represent the interests of the Shareholders and there have been no negotiations between the Investment Advisor and any Shareholder in connection with the terms of the offering of the Shares.

Limited Ability to Liquidate Investment in Shares

There is no public market for the transfer of Shares. An investment in the hedge-fund provides limited liquidity because the Shares are not freely transferable. A Shareholder ordinarily may require the hedge fund to redeem all or a portion of its Shares as of the close of business on the first day of any calendar month at the Net Asset Value per Share. However, the actual redemption value of the Shares may differ significantly from their value when redemption is requested. The hedge fund may suspend the calculation of Net Asset Value and redemptions in certain extraordinary circumstances.

Ability to Suspend Redemption Rights

Under certain circumstances, the Directors may suspend a Shareholder’s right to redeem all or part of its Shares. This may occur if it becomes difficult to value the hedge fund’s investments, if the hedge fund is unable to liquidate its investments or if the Directors determine that the redemption would have an adverse effect on the remaining Shareholders. If redemption rights are suspended, the Shares subject to the redemption request will not be redeemed and will continue to be subject to market and other risks.

Fund Assets Valued in U.S. Dollars

The Sub-Fund primarily trades finance instruments that are denominated, maintains its assets, and calculates it’s Net Asset Value, including for purposes of redemptions, in U.S. Dollars. Consequently, investors in the Sub-Fund are subject to the risk of exchange-rate fluctuations between the value of the U.S. Dollar and of their native currency.

PURCHASE OF THE SHARES OF THE FUND "Eganov Asset Management Stocks & Derivatives Strategies S.P."  INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE MADE ONLY BY THOSE PERSONS WHO CAN AFFORD TO BEAR THE RISK OF A TOTAL LOSS OF THEIR INVESTMENT. 

ABOVE-LISTED RISK FACTORS MAY NOT BE A COMPLETE LIST OF ALL RISK FACTORS ASSOCIATED WITH AN INVESTMENT IN THE FUND "Eganov Asset Management Stocks & Derivatives Strategies S.P.". THERE IS NO GUARANTEE THAT IMPLEMENTATION OF THE INVESTMENT OBJECTIVE OR STRATEGY WITH RESPECT TO THE ASSETS OF THE FUND WILL NOT RESULT IN LOSSES TO HOLDERS OF PARTICIPATING SHARES.

Information for investors

This website is provided by Eganov Asset Management Partners (the “Investment Adviser”) and is for information purposes only. No guarantee, representation, undertaking or warranty, express or implied, is given by the Investment Advisor, Emerging Asset Management Ltd (the “Investment Manager”),  Cayman Emerging Manager Platform SPC (the “Company”), Eganov Asset Management Stocks & Derivatives Strategies S.P. (the "Sub-Fund"), Apex Fund Services Ltd (the “Administrator”) or their respective directors, officers, partners, shareholders or members as to the accuracy or completeness of the information or opinions contained on this website and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.

The Sub-Fund is a Segregated Account constituted as a distinct class of shares in the Company, an exempted segregated portfolio company incorporated in May 2011 for an unlimited duration and is registered as a mutual fund with the Cayman Islands Monetary Authority.

This website does not constitute or form any part of a prospectus, offer, invitation or solicitation for the sale of shares in the Company or the Sub-Fund, nor should it be construed to constitute any investment, legal or tax advice.

It should not be used or considered for the purpose of any offer to sell or solicitation to buy shares in the Company or the Sub-Fund in any jurisdiction or in any circumstances in which such offer or solicitation is unlawful or not authorized. This website is not aimed at persons who are residents of any country in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make any offer to sell or solicitation to buy shares in the Company or the Sub-Fund.

Users of this website who intend to subscribe for shares in the Company or the Sub-Fund are reminded that any subscription for any class of shares in the Company or the Sub-Fund can only be made by completing the subscription agreement for the relevant shares and shall be made solely on the basis of the information contained in the private placement memorandum of the Company and the supplement thereto of the Sub-Fund.  

Persons interested in making a subscription into the shares of the Company or the Sub-Fund should contact the Investment Advisor for the necessary documentation.

In making an investment decision, investors must rely on their own examination of the Company and the Sub-Fund and the terms of the offering, including the merits and risks involved. No assurance can be given that the Company’s or the Sub-Fund’s investment objectives will be achieved.

The shares of the Company or the Sub-Fund have not been filed with or approved or disapproved by any regulatory authority of any country or other jurisdiction, nor has any such regulatory authority passed upon or endorsed the merits of the Company or the Sub-Fund.

The directors of the Company (the "Directors") do not expect that an active secondary market will develop in the Company’s or the Sub-Fund’s shares. No listing or other dealing facility is at present being sought for any part of the Company’s or the Sub-Fund’s shares, although the Directors may reserve the right to seek a listing in the future.

Information for investors in the Russian Federation

Users of this website are reminded that no approval has been sought in relation to the Company or the Sub-Fund from any regulatory body in the Russian Federation. In the RF, the shares of the Company or the Sub-Fund can only be sold after obtaining the approval of the Federal Commission of the Security Market, which has not been obtained, and then only subject to requirements provided in law.

Information for investors in the Republic of Cyprus

Users of this website are reminded that no approval has been sought in relation to the Company or the Sub-Fund from any regulatory body in the Republic of Cyprus. In the Republic of Cyprus, the shares of the Company or the Sub-Fund can only be sold after obtaining the approval of the CySEC, which has not been obtained, and then only subject to requirements provided in law.

Information for investors in the United Arab Emirates

Users of this website are reminded that no approval has been sought in relation to the Company or the Sub-Fund from any regulatory body in the UAE. In the UAE, the shares of the Company or the Sub-Fund can only be sold after obtaining the approval of the Emirates Securities and Commodities Authority, which has not been obtained, and then only subject to requirements provided in law.

Information for investors in the United Kingdom

Users of this website are reminded that the Company or the Sub-Fund is not authorized or regulated under the provisions of the Financial Services and Market Act 2000. Accordingly, the shares of the Company or the Sub-Fund cannot be promoted or sold in the United Kingdom, other than under the exemptions permitted by the Act, in particular, the Financial Services and Market Act 2000 (Participation of Collective Investment Schemes) (Exemptions) Order 2001. In the UK, the shares of the Company or the Sub-Fund can only be sold to professional clients and/or self certified sophisticated high net worth individuals by an FSA Regulated Investment Advisor who has carried out a suitability test, as this is classified as an Unregulated Collective Investment Scheme ("UCIS") and is not regulated or recognized by the FSA in the United Kingdom.

Information for investors in the United States of America

Users of this website are reminded that the shares of the Company or the Sub-Fund may not be offered or sold in the United States or to U.S. persons at any time (as defined in Regulation S under the U.S. Securities Act of 1933 or the U.S. Internal Revenue Code). The shares of the Company or the Sub-Fund have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state in the United States, and is subject to U.S. tax requirements. The shares of the Company or the Sub-Fund may not be offered, sold, transferred or delivered without compliance with all applicable securities laws and regulations.

Information for investors in Cayman Islands

Users of this website are reminded that the Company or the Sub-Fund may not make an invitation to the public in Cayman Islands to subscribe for the shares of the Company or the Sub-Fund.

No investment, legal or tax advice

Nothing contained in this website constitutes investment, legal, tax or other advice, nor is it to be relied upon when making investment or other decisions. The information on this website is available for information purposes only. You should obtain relevant and specific professional and legal advice before making any decision to enter into an investment transaction.

Liability for use of this website

Access to this website is permitted on a temporary basis and the Investment Advisor reserves the right to withdraw or amend the service it provides on this website without notice. The material and information displayed on this website are provided without any guarantees, conditions or warranties as to accuracy or completeness and are not intended to amount to advice on which reliance should be placed. The Investment Advisor, the Investment Manager, the Administrator, the Company and the Sub-Fund disclaim all liability and responsibility arising from any reliance placed on such materials and information contained on this website, or by anyone informed of any of this website's contents.

The internet is not a completely reliable transmission medium and none of the Investment Advisor, the Investment Manager, the Administrator, the Company and the Sub-Fund accept any liability for any data transmission errors such as data loss or damage or alteration of any kind or for the security or confidentiality of information transmitted across the internet to or from the Investment Advisor, the Investment Manager, the Administrator, the Company, the Sub-Fund or their respective directors, officers, partners, shareholders or members. Any such transmission of information is entirely at the website user's own risk.

Intellectual property rights

The Investment Advisor is the owner or the licensee of all intellectual property rights in this website, and in the materials published on it. Those works are protected by laws and treaties around the world. All such rights are reserved. Information found on this website may not be reproduced, distributed, stored in a data retrieval system, linked to modified or transmitted, in any forms or by any means (electronic, mechanical, photocopying, recording, or otherwise) without the prior written consent of the Investment Advisor. Nothing on this website can be construed as granting any license or right in relation to any of the Investment Advisors trademarks or those of a third party.

Law and variation

The terms and use of this website are governed by and shall be construed in accordance with the laws of Cayman Island. The courts of Cayman Island will have jurisdiction over any dispute arising from, or related to this website and by using this website each user agrees that the courts of Cayman Island are the most appropriate and convenient courts to settle disputes. Accordingly, each user agrees not to argue to the contrary or object to proceedings in such courts on the grounds of venue or that the proceedings have been brought in an inconvenient forum. The Investment Advisor retains the right to bring, in its sole discretion, proceedings against any user for any breach of these terms in the user's country of residence or any other relevant country.