Market Update

The Multi Currency Hybrid Managed Account

Introduction

The Multi Currency Hybrid Managed Account provides a leveraged investment in the major currency markets. The investments are controlled by Arbiter Fund Managers Limited, a London-based hedge fund.

The foreign exchange market is the largest and most liquid market in the world with an estimated US$2 trillion traded in London on a daily basis. Returns on many currency trading strategies have low correlation to traditional asset classes such as bonds, equities, property and cash, and as such offer the investor an innovative way to diversify their investment portfolio risk.

Hybrid Trading System

The Multi Currency Hybrid Managed Account utilises the well-established MCM trading system to facilitate investments on the client’s behalf. The MCM Hybrid Trading System seeks to identify and profit from medium-term trends in the world’s major currencies: US$, GBP, EUR and Yen. When the system identifies a trend, currencies are traded. All trading points are market dependent: there is no human influence involved.

The targeted return on the leveraged amount traded is circa 2-4%. The leverage employed has the effect of amplifying the return on the margin amount by 20 times this number. It should be noted that whilst leverage presents the opportunity for increased returns, it may also result in larger losses in adverse market conditions.

Individual accounts are available in two structures:

Individual Managed Accounts
Self Invested Personal Pension (SIPP)

Managed Currency Accounts

Managed accounts are available to both individual and corporate investors, allowing direct access to the currency markets utilising one of our proprietary trading systems.

Individual Managed Accounts require a minimum investment of £25,000 as collateral (initial margin); this represents 5% of the total traded value. The client opens an account with an FSA regulated UK broker and deposits funds into the account.Leverage of up to twenty times may be applied to the initial margin amount. No physical borrowing is required. The account will facilitate trades advised by Arbiter Fund Managers.

SIPP Accounts

A SIPP account is operated and trading in the same way as a standard individual managed account. Accounts are set up directly with the broker, in the client’s name with the authorization of the SIPP administrator/trustee. In addition the SIPP trustee will require a ‘master’ account with the broker.

How It Works

• Minimum investment is £25,000 as initial margin.
• Minimum investment period is 36 months.
• Client opens a currency trading account with an FSA regulated UK broker & deposits funds into the account.
• Leverage of up to 20 times may be applied to the initial margin amount giving £500,000 as a trading value.
• No physical borrowing is required.
• The account will facilitate trades advised by Arbiter Fund Managers via a Power of Attorney.
• Risk is capped at 5% (equivalent to the initial margin amount).
• No tax to pay on any profits (subject to own advice).
• Investment can be made through a SIPP (Self Invested Pension Plan).

Fees

Typically these are made up of a 1% p.a. Management fee and a 15% Performance fee (net new profits on a high
watermark basis). Fees are charged monthly in arrears only if there are sufficient profits to do so. No rebates are
offered.