Risk and Asset Management

FII Combines Solid Practices with Your Needs

Due to the volatile nature of trading securities and alternative investment instruments, we follow strict money management principals.  A balance between targeting trading profits with acceptable pre-determined possible losses is applied prior to entering into new positions.  Position exposures and potential losses that the managed futures account may incur in unfavorable market movements are continuously monitored.

Volatility models are used to determine position size adjustments in order to maintain the program’s maximum
position exposure limits:

• Position exposure limits are the total equity risked in any one market, and are generally between 1.5% and 5% of total equity.
• Our active risk and asset management practices have a goal of not having any one investment incur a drawdown of more than 5% to 10% in any given month**

**Some exceptions apply based on investor’s portfolio

Option buying risk is limited to the full purchase price of the contract. An option seller has unlimited risk due to the possibility of the underlying asset price changing as a result of significant adverse market movements that results in increasing the margin requirements to maintain this position. A small premium collected from the sale of the option is exposed to increased margin requirements based on the price movement of the underlying asset and the leverage resulting from the the scale of price move, units per contract and contracts held.