Investment Risks

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  1. Third Party Risk
    • The Investment Advisor shall not be liable for any loss or damage caused by reason of failure or delay by the issuers of the Securities to deliver Securities of issuers purchased even though payment have been made for the same or failure or delay in making payment in respect of any units of Securities of issuers sold though they may have been delivered and the Client shall hold the Investment Advisor harmless and free from any claim in respect thereof.
    • The Investment Advisor shall also not be liable for any delay, failure or refusal of the issuers in registering or transferring of Securities to the Client’s name or for any interest, dividend or other loss caused to the Client arising therefrom.
  2. Risk Acknowledgment
    • The Investment Advisor does not guarantee the future performance of any of the Securities purchased or any specific level of performance, the success of any investment decisions or strategy that the Investment Advisor may use. The Client understands that investment decisions made for the Client’s account by the Investment Advisor are subject to various market, currency, economic, political and business risks, and that those investment decisions will not always be profitable.
    • Except as may otherwise be provided by law, the Investment Advisor will not be liable to Client for (a) any loss that Client may suffer by reason of any investment decision made or other action taken or omitted in good faith by the Investment Advisor with that degree of care, skill, prudence, and diligence under the circumstance that a prudent person acting in a fiduciary capacity would use (b) any loss arising from the Investment Advisor’s adherence to Client’s written or oral instructions; or (c) any act or failure to act by any broker or dealer who the Investment Advisor directs transactions for the Client, or by any other third party.
  3. Market and Other Related Risks

The Client expressly agrees and acknowledges that all investments are subject to market and other related risks and there is no assurance or guarantee, whether directly or indirectly, that the value of or return on investments will always be accretive, and that it could depreciate to an unpredictable extent. The Client further agrees and acknowledges that the details of risk foreseen by the Investment Advisor and risk relating to the Securities recommended by the Investment Advisor for investment or disinvestments includes but is not restricted to the following:

  • Investment in equities, derivatives and mutual funds are subject to market risks and there is no assurance or guarantee that the objective of the schemes will be achieved.
  • With any investment in Securities, the net asset value of the Portfolio can go up or down depending upon the factors and forces affecting the capital market.
  • The performance may be affected by changes in Government policies, general levels of interest rates and risk associated with trading volumes, liquidity and settlement systems in equity and debt markets.
  • Investments in debt instruments are subject to default risk and interest rate. Interest rate risk results from changes in demand and supply for money and other macro-economic factors and creates price changes in the value of the debt instruments. Consequently, the net asset value of the Portfolio may be subject to fluctuation.
  • Investments in debt instruments are subject to reinvestment risks as interest rates prevailing on interest or maturity due dates may differ from the original coupon of the board, which might result in the proceeds being invested at a lower rate.
  • Engaging in Securities lending is subject to risks related to fluctuations in collateral value/settlement/liquidity/counter party.
  • Use of derivatives instruments like index, futures, stock futures and options contracts, warrants, convertible, Securities, swap agreements or any other derivative instruments, including but not restricted to, for the purpose of hedging and Portfolio balancing, as permitted under the Regulations and guidelines will expose to certain risk inherent to such derivatives. The Client is aware that the derivatives are highly leveraged instruments and even a small price movement in the underlying security could have a large impact on their value.

The Client understands that the following specific risks may arise in the context of Investment in Derivatives:

  • Investment in futures involves daily settlement of all positions. Every day the open positions are marked to market based on the closing level of the Index. The Index may move against the position that may have been assumed leading to Marked to Market losses; sometimes these may be substantial.
  • Under certain market conditions, it may be difficult or impossible to execute transactions. There may be insufficient liquidity owing to factors including insufficient bids or offers or suspension of trading owing to other reasons. The Client acknowledges this liquidity risk.
  • Buying an option carries a risk of losing the entire premium that is paid upfront on it, if the market in the security moves in a contrary direction to the position assumed.
  • The Exchange may impose restrictions and have absolute authority to restrict the exercise of options in specified circumstances in specified times. This reflects that there is liquidity risk involved in Investment in options.
  • The Option writer who sells the options runs the risk of losing substantial amount if the underlying asset does not move in the anticipated direction.
  • Investment in Derivatives for the purposes of hedging is subject to Basis risk. Basis risk is the risk that the Instrument of the hedge is not a perfect match for the Underlying. The Client acknowledges this Basis risk.
  • The Client expressly acknowledges that the aforementioned risks are strictly indicative and that other risks may arise in the context of investment in derivatives, particularly when positions are assumed synthetically, including for the purposes of generating returns.
  • The Client expressly agrees and undertakes not to hold the Investment Advisor liable, financially or otherwise, in respect of the aforesaid under any circumstances whatsoever.