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Arvernus Capital (CH) Europe Event Driven Fund

Risk Managment

Emphasis on capital preservation and defensive strategies

  • Focus on announced deals
  • Diversification across a variety of deal structures
  • Portfolio exposure limits and position monitoring
  • Price objective and stop loss

Defensive posture when conditions warrant

  • Increase cash
  • Hedging in order to reduce risk
  • Incremental building of positions

Research and analysis

  • Direct communication with companies, authorities and supervisory bodies
  • Use of network of contract and information sources build over years
  • Careful and continuous "risk/reward" analysis
  • Financial-, legal- and regulatory analysis
  • Ongoing review of scenarios

Deal bias

  • Fully financed
  • Industrial and strategic reason of takeover vs. pure financial engagements
  • Friendly mergers
  • Low regulatory conflicts expected

 

Mgt. of main Risks in Alternative Investments

Leverage

Mostly watched single risk, can be x- times of NAV.

bild_6.png Our prospectus limits the loan facility to 50% and investments may be subject to leverage up to 300% (max. derivatives exposure of 150% )of NAV.

 

Short Sales

A short sale involves a risk of a theoretically unlimited increase in the market price of the underlying.

bild_6.png Short sales via security borrowing, the sum of the risk exposure "short" (after netting) of all investments must not exceed 75% of NAV.

 

Legal

Often unregulated and domiciled offshore

bild_6.png Authorised, domiciled and registered in Switzerland, regulated and under supervision by the Swiss Financial Market Authority FINMA.

 

Liquidity

Fairly illiquid with long redemption and notice periods, soft lock-up and penalty.

bild_6.png Monthly liquidity, 10 days notice period for redemptions, no soft lock-up and no penalty.

 

Market

Many strategies result in one way or the other into direct market exposure.

bild_6.png Direct market exposure is less significant by our main strategy.

 

Illiquid Securities

Certain securities may be or may become illiquid and difficult to price accurately or become restricted and virtually impossible to trade.

bild_6.png A certain amount of our assets may be restricted or blocked for trading during a corporate action period.

 

Diversification

Investments in a limited number of underlying assets may end up in a concentration and may perform differently than a well diversified portfolio.

bild_6.png Our prospectus regulates various maximum exposures, i.e. asset classes, regional aspects, market capitalizations, single positions- and counterparty risks.

 

Emerging Markets

Investments in emerging markets are normally more volatile, as these markets do not offer the same level of organization, transparency and liquidity as their counterparts in more developed countries.

bild_6.png Our internal investment guidelines restrict engagements in emerging markets to a max. of 40% of NAV.

 

Non-exhaustive enumeration.

Comparison of Risks

risiko_2015_en.jpg