You should be aware of and carefully consider the information in this risk disclosure before determining whether alternative investments with Hedonova are appropriate for you. An investment with Hedonova includes, but is not limited to, investments in hedge funds, fund of funds, equities, mutual funds, real estate, bonds, income sharing arrangement, crypto currencies, investment partnerships and managed account platforms, and more.
Your use of Hedonova's website and it's other digital assets and its entire contents, including but not limited to, content, articles, analysis, research tools, emails, notifications, text, data, visuals, information, materials, software, and graphics contained or provided through it in any form or media and all services that may be provided in conjunction with it is subject to the terms and conditions of risk disclosure statement. By using the website, registering as a member with the company either an investor otherwise or accepting any related services from the company, you agree that you have
Investments with Hedonova are speculative and are highly risky. Investing in alternative investments, is highly speculative and is suitable only for those who (a) understand and are willing to assume the economic, legal and other risks involved, and (b) are financially able to assume significant losses. Alternative investments are not an appropriate investment for retirement funds. You represent, warrant and agree that you understand these risks; that you are willing and able, financially and otherwise, to assume the risks of alternative investments and that loss of your entire account balance will not change your lifestyle. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with investments, and seek advice from an independent financial advisor.
Investments with Hedonova are not regulated. Hedonova is an unregistered private investment partnership (and can also be called a fund or pool) that may invest and trade in many different market strategies, and instruments (including securities, non-securities and derivatives) and that employ different investment, hedging, leverage and arbitrage methodologies. Investments are not subject to the same regulatory requirements as mutual funds, including mutual fund requirements to provide certain periodic and standardised pricing and valuation information to investors. Investment documents are not reviewed or approved by regulators of any jurisdiction. Hedonova is not required to provide periodic pricing or valuation information to investors and it may be our practice to not provide such information.
Hedonova may employ speculative and risky investment strategies. Alternative investments may employ a distinctive strategy which may not have a readily ascertainable comparative benchmark or index. Alternative investments may be leveraged (including highly leveraged) and a hedge fund performance may be volatile. Alternative investments may use benchmarks or targets for measurement purposes. There is no guarantee that alternative investment goals, objectives, benchmarks or targeted returns will be achieved or reached. Strategies intended to hedge risk may be partly or wholly unsuccessful. Some alternative investments may use a single advisor or employ a single strategy, which could mean a lack of diversification and higher risk. Some alternative investments execute a portion, and in some cases a substantial portion, of trades on foreign exchanges or over the counter markets. Such trades could involve a higher degree of risk.
Investments with Hedonova may have limited liquidity and carry high management fees. Alternative investments may have limited liquidity or may be illiquid and there may be significant restrictions on transferring interests when there is no secondary market and none is expected to develop. Fees and expenses, which may be substantial regardless of any positive return, will offset the profits earner. Alternative investments may involve a complex tax structure (which should be reviewed carefully) and delays in distributing important tax information.
Hedonova may have little or no operating or performance history. We may have little or no operating history or performance and may use hypothetical or pro forma performance which may not reflect actual trading done by the manager or advisor and such history or performance should be reviewed carefully. Investors should not place undue reliance on pro forma or hypothetical performance. Alternative investments and their managers/advisors may rely on the expertise and experience of third-party managers or advisors; the identity of which may not be disclosed to investors.
Past performance not indicative of future results. The past performance of any investment, including those with Hedonova, cannot guarantee the performance or effectiveness of such investment in the future. Users of the website must exercise independent judgment when making investment decisions and expressly assume all of the risk of any losses. Past performance cannot guarantee or indicate future results.
No guarantees of profit. There are no guarantees of profits, dividends or freedom from loss in investments. You have received no such guarantees from Hedonova or from any of its agents, employees or affiliates. You are aware of the risks inherent in alternative investment and are financially able to bear such risks and withstand any losses incurred.
Use of website is informational only. Hedonova is not, and does not intend to register as, an investment adviser as defined in the Investment Advisers Act of 1940. Company is therefore not an adviser or fiduciary to you or any other user of the website. Neither the website nor any data offered on the website constitutes an offer to buy or sell, or the solicitation of an offer to buy or sell, any security or to make an investment. Each and every decision to purchase or sell any security and each decision whether any security is appropriate or proper for you is an independent decision made by you. You agree that company has no fiduciary duty to you and no liability in connection with and is not responsible for any liabilities, claims, damages, costs and expenses, including attorneys’ fees, incurred in connection with you using the website or any data contained therein.
The above summary is not a complete list of the risks and other important disclosures involved in investing in alternative investments and, with respect to any particular alternative investment, is subject to the more complete and specific disclosures contained in such documents.
Before making any investment, an investor should thoroughly review all our offering documents with the investor’s financial, legal and tax advisor to determine whether an investment in the alternative investment is suitable for the investor in light of the investor’s investment objectives, financial circumstances and tax situation. This brief statement cannot, of course, disclose all the risks and other aspects of alternative investments. By using the website or the data contained therein in any way, you hereby acknowledge that you have received, read, understood and agree to be bound by this risk disclosure statement.
Market conditions (e.g. illiquidity) and/or the operation of the rules of certain markets (e.g. market hours, dealing hours, suspension of trading) may increase the risk of loss by making it difficult or impossible to effect transactions or enter or exit investments.
Government policy and wider political, social and environmental issues have the potential
to significantly affect the value of investments. For example, regulation can constrict
industry, just as favourable tax breaks can benefit it.
Political decisions, instability and changes to public sentiment create uncertainties for
business and therefore represent a risk to the profitability of investments.
Transactions on markets in foreign jurisdictions,
including markets formally linked to a domestic
market, may expose you to additional risk. Such
markets may be subject to regulation which may
offer different or diminished investor protection. Your local
regulatory authority may be unable to compel the
enforcement of the rules of regulatory authorities
or markets in other jurisdictions.
The profit or loss for transactions in foreign currency
denominated contracts (whether they are traded in
your own or another jurisdiction) will be affected by
fluctuations in currency rates where there is a need
to convert from the currency denomination of the
contract to another currency.
Most open-outcry and electronic trading facilities
are supported by computer-based component
systems for the order-routing execution, matching,
registration or clearing of trades. As with all facilities
and systems, they are vulnerable to temporary
disruption or failure. Our ability to recover certain
losses may be subject to limits on liability imposed
by the system provider, the market, the clearing
house and/or member firms; such limits may vary.
Trading on an electronic trading system may
differ not only from trading in an open-outcry
market but also from trading on other electronic
trading systems. If Hedonova undertakes transactions on
an electronic trading system, we will be exposed to
risks associated with the system including the failure
of hardware and software. The result of any system
failure may be that our order is either not executed
according to instructions or is not
executed at all leading to potential financial loss.
In some jurisdictions, and only then in restricted
circumstances, firms are permitted to deal otherwise
than on a regulated exchange i.e. to effect off-exchange transactions. The firm with which we deal may be acting as our counter-party to the
transaction. It may be difficult or impossible to
liquidate an existing position; to assess value or
determine a fair price; or to assess your exposure
to risk. For these reasons, these transactions may
involve increased risks. Off-exchange transactions
may be less regulated or subject to a separate
Foreign markets will involve different risks to Irish
markets. In some cases, the risks will be greater. On
request, you may be provided with an explanation of
protections that will operate in any relevant foreign
markets; including the extent to which we accept
liability for the default of a foreign broker through
whom we deal. The potential for profit or loss
from transactions on foreign markets or in foreign
currency denominated contracts will be affected by
fluctuations in foreign exchange rates.
Changes in interest rates can have an effect on the value of securities. The value of securities, especially bonds, can fall with a rise in interest rates as other investments reflecting the new higher interest rate offer greater returns. This risk can be offset by diversifying the durations of fixed-income investments held. Alternatively if interest rates fall, then the value of bonds and other securities may rise.
It is important that you obtain a clear explanation of all transaction, dealing, third party and ancillary charges and other fees for which you will be liable. These charges will affect your net profit (if any) or may increase your loss. You should also ensure that you understand the extent of your exposure to potential loss.
We recommend that you take independent tax advice before entering into any investment to ensure that you
understand the potential tax implications (including the implications of any applicable income tax, goods and
services or value added taxes, stamp duties and other taxes) of acquiring, entering into, holding and disposing of the relevant investment or transaction. Different transactions may have different tax implications and
the tax consequences of any transaction is dependent upon your individual circumstances and may be subject
to change in the future. Hedonova does not offer tax advice and any tax-related information provided to you by
us from time to time should not be relied on as tax advice or as a tax recommendation.
The manager of a fund typically has the authority to alter its investment policy within certain parameters (set
out in its constitutional document) by amending the fund’s prospectus. This could represent a fairly significant change in the nature and risk profile of the fund from the one in which you originally invested.
The manager of a fund typically has the authority to alter its investment policy within certain parameters (set out in its constitutional document) by amending the fund’s prospectus. This could represent a fairly significant change in the nature and risk profile of the fund from the one in which you originally invested.
There are risks involved in dealing with the custodians or brokers who hold the investments or settle the
trades. It is possible that, in the event of the insolvency or bankruptcy of a custodian or broker, the Portfolio
would be delayed or prevented from recovering its assets from the custodian or broker, or its estate, and may
have only a general unsecured claim against the custodian or broker for those assets. In recent insolvencies
of brokers or other financial institutions, the ability of investors to sometimes recover their assets from the
insolvent’s estate has been delayed, limited, or prevented, often unpredictably, and there is no assurance that
any assets held by the Hedonova with a custodian or broker will be readily recoverable by us.
The fund may be particularly susceptible to economic, political, regulatory or other events or conditions
affecting companies and countries within the geographic regions in which the portfolio invests. Currency
devaluations could occur in countries that have not yet experienced currency devaluation to date, or could
continue to occur in countries that have already experienced such devaluations. As a result, the fund may
be more volatile than a more geographically diversified portfolio.
Because growth securities typically trade at a higher multiple of earnings than other types of securities, the market values of growth securities may be more sensitive to changes in current or expected earnings than the market values of other types of securities. In addition, growth securities, at times, may not perform as well as value securities or the stock market in general, and may be out of favour with investors for varying periods of time.
Investments in emerging markets entail additional risks associated with political and economic uncertainty,
adverse government policies, restrictions on foreign investment and currency convertibility, currency exchange rate fluctuation, higher volatility, inadequate liquidity, possible lower levels of disclosure and regulation, and uncertainties as to the status, interpretation and application of laws, including those relating to
private ownership of assets, expropriation, nationalisation and confiscation.
To the extent a large proportion of the blocks of Hedonova are held by a small number of investors, the
fund is subject to the risk that these investors will purchase or redeem units in large
amounts frequently or unexpectedly. These transactions could adversely affect the ability of the portfolio to
conduct its investment program. For example, they could force us to sell portfolio securities or
purchase portfolio securities unexpectedly and incur substantial transaction costs. We may also
tend to hold a larger proportion of its assets in cash in anticipation of large redemptions and may hold large
amounts in cash pending investment in securities, diluting returns.
Value securities involve the risk that such securities may never reach what the investment managers believe is
their full market value either because the market fails to recognise the stock’s intrinsic worth or the portfolio
managers misgauged that worth. They also may decline in price, even though in theory they are already
undervalued. Because different types of stocks tend to shift in and out of favour depending on market and
economic conditions, the portfolio’s performance may sometimes be lower or higher than that of other types
of portfolios (such as those emphasising growth stocks).
A significant withdrawal of capital from the fund may affect the portfolio and its investors adversely. For example, Hedonova may be required to sell its more liquid portfolio investments to meet a large redemption; the portfolio’s remaining assets may be less liquid, more volatile, and more difficult to price. Hedonova may limit redemptions from the fund (potentially for an extended period of time) and also determine whether to make any such redemptions in cash, in kind, or partly in cash and partly in kind. Any limitation on redemptions may be imposed in response to market factors or actual or anticipated redemption activity, which may occur suddenly or unpredictably; investors in the fund may not receive prior notice of any such limitations (and may not receive notice of the imposition of any such limitation for some time after its imposition). As a result, you may not be able to redeem your investment at any particular time or on the terms you might otherwise expect.
Investments in small and medium sized companies often involve greater risks than investments in larger, more established companies because small and medium companies may lack the management experience, financial resources, product diversification, experience and competitive strengths of larger companies. Securities of small and medium companies may trade on the over-the-counter market or on regional securities exchanges and the frequency and volume of their trading may be substantially less and may be more volatile than is typical of larger companies.
Securities of companies that are involved in an initial public offering or a major corporate event, such as a
business consolidation or restructuring, may present special risk because of the high degree of uncertainty
that can be associated with such events. Securities issued in initial public offerings often are issued by
companies that are in the early stages of development, have a history of little or no revenues and may operate
at a loss following the offering. It is possible that there will be no active trading market for the securities after
the offering, and that the market price of the securities may be subject to significant and unpredictable
fluctuations. Investing in special situations may have a magnified effect on the performance of portfolios
with small amounts of assets.
Recent market events are likely to result in significant regulatory reform, which could impact the way the portfolio manager operates their business or pursue client objectives. For example, from September 19 – October 3, 2008, due to market events, the US Securities and Exchange Commission took temporary emergency action to prohibit short selling in over 800 financial services companies. Similar action was taken by regulators in other countries. This short sale ban imposed temporary limitations on their ability to fully implement certain investment strategies. There is no guarantee that similar limitations or other regulatory constraints will not be imposed in the future.
Hedonova may engage in securities lending arrangements in order to enhance its returns. This entails
lending securities from the fund portfolio to counter-parties for a period of time in exchange for the
deposit of collateral that the fund may invest with the objective of earning additional returns. Such
arrangements would expose you to additional credit risk of the counter-parties to the securities lending
contracts. In the event that a counter-party defaults on its obligations and/or the value of the collateral
deposited falls below the value of the securities lent to such counter-party, this will negatively impact the
net asset value of the fund.
If the Hedonova invests in another fund, it is exposed to the risk that the underlying fund will not perform as expected. The Hedonova is exposed indirectly to all of the risks applicable to an investment in the underlying fund. The investment policies and limitations of the underlying fund may not be the same as those of the Hedonova; as a result, the Hedonova may be subject to additional or different risks, or may achieve a reduced investment return, as a result of its investment in an underlying fund. The Hedonova bears its proportionate risk of the expenses of an underlying fund pool in which it invests.
Owning equities (shares or stocks) in a company provides an opportunity to participate in the company’s profit and performance, in the form of dividends and capital growth. Individual shares and stock markets can be volatile, especially in the short-term. Some shares are likely to be more volatile than others. This will be based, among other things, on the business, geographic location and size of the company. Equity investments are at a greater risk of significant loss if there is a lack of diversity i.e. an over-reliance on stocks in one particular company, industry sector or country.
The liquidity of shares is a critical factor, this refers to our ability to realise shares when we so wish. Shares in companies that are not traded frequently can be very difficult to sell. Many shares that are traded on stock exchanges are bought and sold infrequently and finding a buyer may not always be easy.
In positive market conditions equities will tend to be one of the best performing asset classes, while in negative environments there is the potential to lose much of our initial capital.
A note based product is a hybrid security that typically consists of a debt security combined with a derivative linked to an underlying instrument. Performance will be contingent on the performance of the underlying instrument and the coupon available on the debt security. Investors should also be aware that there is a default risk associated with the debt security that means they can lose some or all of their invested capital.
When we attempt to redeem deposit based
products before their maturity dates, we may be forced
to sell at a discount to face value due to illiquidity.
Investors should note that Hedonova bears the credit risk
of the financial
institution where the capital is on the deposit during
the life of the investment. This means that, even
where the investment performs well, we could
lose all or some of their invested principal and any
returns in the event that the issuer or guarantor
Derivatives are financial instruments that have a value which depends upon, or is derived from, the value of something else, such as one or more underlying securities, pools of securities, options, futures, indexes or currencies. Losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, currency or index may result in a substantial loss for the portfolio. In addition to the potential for increased losses, the use of derivative instruments may lead to increased volatility within the portfolio. Derivative instruments in which the portfolio invests will typically increase the portfolio’s exposure to material risks to which it is otherwise exposed, and may expose the portfolio to additional risks, including correlation risk, counter-party credit risk, hedging risk, leverage risk, and liquidity risk.
Correlation risk is related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses.
Counter-party credit risk is the risk that a counter-party to the derivative instrument becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, and the portfolio may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed.
Hedging risk is the risk that derivative instruments used to hedge against an opposite position may offset losses, but they may also offset gains. There is no guarantee that a hedging strategy will eliminate the risk which the hedging strategy is intended to offset, which may lead to losses within the portfolio.
Leverage risk is the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument.
Liquidity risk is the risk that the derivative instrument may be difficult or impossible to sell or terminate,
which may cause the portfolio to be in a position to do something the portfolio managers would not otherwise
choose, including accepting a lower price for the derivative instrument, selling other investments or foregoing
another, more appealing investment opportunity. Derivative instruments which are not traded on an
exchange, including, but not limited to, forward contracts, swaps and over-the-counter options, may have
increased liquidity risk. Certain derivatives have the potential for unlimited losses, regardless of the size of
the initial investment.
Hedonova may enter into forward foreign currency contracts, which are types of derivative contracts, whereby the portfolio may buy or sell a country’s currency at a specific price on a specific date, usually 30, 60, or 90 days in the future. The contract guarantees an exchange rate on a given date. These contracts, however, would not prevent the portfolio’s securities from falling in value during foreign market downswings. The portfolio may enter into forward foreign currency contracts for risk management (hedging) or investment purposes. The inability of the portfolio to precisely match forward contract amounts and the value of securities involved may reduce the effectiveness of the portfolio’s hedging strategy. Forward foreign currency contracts used for hedging may also limit any potential gain that might result from an increase in the value of the currency. When entering into forward foreign currency contracts for investment purposes, unanticipated changes in the currency markets could result in poorer performance for the portfolio.
Hedonova may designate cash or securities in an amount equal to the value of the portfolio’s forward foreign currency contracts which may limit the portfolio’s investment flexibility. If the value of the securities declines, additional cash or securities will be so designated. At maturity of a forward contract, the portfolio may enter into an offsetting contract. The portfolio may engage in an offsetting transaction at maturity of a forward foreign currency contract and may incur a loss to the extent there has been movement in forward contract prices. When the portfolio converts its foreign currencies into Canadian dollars it may incur currency conversion costs due to the spread between the prices at which they are buying and selling various currencies.
The market for trading in commodities is speculative and is highly volatile. Prices for commodities are
affected by a variety of factors, including changes in supply and demand relationships, governmental programmes and policies, national and international political and economic events, wars and acts of terror,
changes in interest and exchange rates, trading activities in commodities and related contracts, weather and
agricultural harvest, trade, fiscal, monetary and exchange control policies. The price volatility of each commodity also affects the value of the futures and forward contracts related to that commodity and therefore its
price at any such time. The volatility of commodity prices is significant and often higher than for equity portfolios. The commodities markets are in most cases less liquid as compared to the markets of equity, interest
or currency-related products. Due to market movements, investors may suffer a substantial or even a total loss of
Direct property investments seek to benefit from
capital appreciation and rental increases to derive
returns for investors. These investments will perform
well when the economic environment is strong but
in periods of recession capital values will tend to fall. If we wish to dispose of the property when market
values fall we may be forced to sell at a significant
discount to the original value.
Investing in direct properties involves more
concentration risk than investing in a diversified
property fund, and performance may be negatively
affected by specific geographic factors or tenants
defaulting. The use of leverage will also affect
Hedonova invests in securities of companies operating in the real estate industry and REITs; these portfolios are more susceptible to risks associated with the ownership of real estate and the real estate industry in general.
These risks can include fluctuations in the value of the underlying properties, defaults by borrowers or
tenants, market saturation, decreases in market rates for rents, and other economic, political, or regulatory
occurrences affecting the real estate industry, including REITs. REITs depend upon specialised management
skills, may have limited financial resources, may have less trading volume, and may be subject to more abrupt
or erratic price movements than the overall securities markets. REITs are also subject to the risk of failing to
qualify for tax-free pass-through of income. Some REITs (especially mortgage REITs) are affected by risks
similar to those associated with investments in debt securities including changes in interest rates and the
quality of credit extended.
Digital asset technology is fast-moving and highly interdependent, with market intermediaries quickly evolving and frequently updating core business functions. Offering documents quickly become outdated due to technological advancement. Digital assets on a distributed ledger present unique cybersecurity risks relating to the physical security of the asset. Unlike equity, debt, and futures instruments, which are representatives of an underlying asset and typically cannot be “stolen,” digital ownership of assets is based on encryption techniques that generate units independent of a centralised repository of ownership, represented by access codes, which can be misappropriated or lost in ways that can be unrecoverable. Exchanges, custodians, and various hardware and computer programs have made strides towards mitigating the risk of loss, but the fundamental cybersecurity risk of trading and holding digital assets remains a critical risk facing funds and their investors.
Hedonova relies heavily on custodians to execute trades and safely hold custody of assets on behalf of the fund. For a traditional hedge fund, the custodian holds fund assets through all stages of the investment cycle in an unbroken chain, from trading to liquidation, with a strong structure in place, built on decades of precedent and industry evolution. For digital asset funds, holding custody of investor assets presents significant risks for investors, as well as regulatory concerns with the satisfaction of the SEC’s custodial provisions required by registered investment advisers. Unlike traditional liquid markets, there are no prime brokers for virtual assets, a role generally played by an investment bank, to facilitate the trading and safeguarding of crypto assets.
Regulatory uncertainties surrounding blockchain and distributed ledger technologies are abound. Because global and national standards are far from being fully established, Hedonova faces heavy disclosure obligation to not only disclose existing regulatory considerations but the potential outcome of various regulatory issues that have yet to be decided. The comprehensive regulation needed to facilitate institutional investment will require the coordination of global standards, particularly for the exchanges. For U.S. governance, regulatory standards will likely be set not by a single authority, but by a combination of state, national, international and industry bodies, judicial precedent, international agreements, and industry associations. Moreover, digital assets investments are inherently global. Even for fund managers drawing on an investor base solely located within its home country, regulatory issues across the world can have direct and indirect impacts on the investment portfolio. Crypto exchange platforms, custodians, counter-parties, and (for centralised exchanges) token issuers are rarely all located within a single jurisdiction.
Hedonova is open to both US and non-US investors. We use a Delaware LLC structure that allows profits to be taxed in your country.