The investment in the portfolio involves a number of risks; hence investors should be willing to accept a high degree of volatility in the price of the units and the possibility of losses. Investors should consider these risks factors.

Market risk is the risk of losses arising from the movement in interest rates and prices. The changing interest rate could translate to unrealized gain or losses. However, the fund manager uses different strategies to achieve its goal of absolute return to investors; but in general, there is no guarantee that these strategies will not result in losses in a volatile or declining market. However, a portfolio that holds all securities to maturity is immune from market risk.

Credit risk refers to the creditworthiness of the issuers of the securities in the portfolio and their ability to make timely interest payments; and to pay the face value on the maturity date. If the security issuer is unable to repay principal or interest on time, the issuer is said to be in default; and such event could adversely affect the portfolio.

The portfolio is subject to various forms of regulations and may have adverse implications. The Central Bank of Nigeria (CBN) may from time to time, issue new regulations and guidelines which may have direct or indirect impact on foreign currency domiciled securities. The regulations issued by the CBN to defend the currency, manage the country’s external reserves, inflation or spur economic growth may negatively impact the portfolio performance. Additionally, regulators such as Securities and Exchange Commission from time to time, issue circulars that may also impact the portfolio’s performance. These regulations may inadvertently, lead to higher cost impact on the portfolio. This risk may arise from the possible breach of regulatory guidelines or requirements. There is also the risk that possible amendments to the local and foreign legislation (including tax legislation), may cause additional expenses for the fund.

This is the risk that a significant portion of the investment within the fund will not be readily converted to cash when required. The units may not be easily or readily tradable due to the quantum held and/or adverse market conditions. There is also the possibility of not being able to complete redemption request within the stipulated time as a result of the relative liquidity or minimum lot size with the Eurobond market

The performance of the fund may be affected by changes in the economic environment and equity market conditions, political developments or changes in legislation and regulatory requirements. Country risk events may include sovereign defaults, banking or currency crises, social instability and changes in government policies such as expropriation, nationalisation and the confiscation of assets.