Candour Alternative Income Fund

The fund is an open-ended unit trust that is not currently registered with ASIC as a managed investment scheme.

The fund is only available to “wholesale clients” as defined in the Corporations Act 2001.

6 months (from the first business day on which Fund allocates units to the respective unitholders)

RBA Cash Rate + 4% p.a.

Initial - $100,00. Additional investments - $50,000

Monthly with 10 business days’ notice prior to dealing day

* The final day of each calendar month.

The fund will seek to make income distribution to unitholders, as deemed appropriate by the trustee and subject to the income of the fund, on a monthly basis.

The purpose of this section is to inform you of the types of significant risks that may apply to an investment in the Fund and is a summary only. It does not purport to be a comprehensive statement of all the risks. The significant risks of the investment structure as well as those associated with the structure of this Fund are considered.

All investments carry risk including the potential for loss of income or capital, a less than expected rate of return or a delay in payment. Different investment strategies may carry different risk, depending on the assets that make up the investment strategy.

  • Investment risk
  • Credit risk
  • Market and economic risk
  • No guarantee of performance
  • Fund risk
  • Manager risk
  • Limited operating history
  • Short Selling risk
  • Derivatives risk
  • Liquidity risk
  • Counterparty risk
  • Leverage risk
  • Regulatory risk
  • General risk 
Risk mitigation strategy

Investment in the Fund carries certain risks. All investments have an inherent level of risk. Generally, there is a trade-off between higher expected returns for higher expected risk (usually represented by
the variability of fund returns).

As risks cannot be entirely avoided when investing, the Fund aims to identify and manage risk as far as
is practicable. The Manager intends to apply its risk management systems to mitigate risks to the Fund
(these will be applied at the Investment Strategy level and the portfolio level).

The Manager will seek to mitigate risks by undertaking various approaches including but not limited to:

  • Investments will be primarily focused within industries with strong or stable growth outlooks.
  • Use of liquid securities as the de-risking vehicle
  • Focus on mitigating catastrophic losses
  • Protect the portfolio gains as they occur
  • Apply an understandable and consistent rules-based approach to risk management decisions

The application of any risk management approach involves numerous judgements and qualitative assessments. No risk management system is fail-safe, and no assurance can be given that the Fund’s risk control framework will achieve its objectives. From time to time, without notice to the investors, the Manager may modify or change the Fund’s risk management system and procedures.

You should consult with your financial adviser to properly understand the risks associated with the Fund and your attitude to investment risk.

Neither the Trustee or the Fund Manager guarantees the repayment of money invested, the payment of income or the Fund’s investment performance.

The Fund will deploy a quantitative strategy intended to capture the persistence of positive carry and arbitrage opportunities observed in global financial markets. The Fund's investment methodology represents a strategy to exploit market inefficiency, particularly in the forward curve of the futures market.

Within the strategy's allocations, contracts are positioned either long or short based on various characteristics related to their prices & macroeconomic factors. When making allocation decisions for the strategy, the Investment Manager considers various qualitative and quantitative factors relating to the global economy, securities, volatility & commodities markets.

Candour’s quantitative process identifies market opportunities while the in-house model and proprietary statistical tools exploit market inefficiency. The strategy relies on a systematic, rules-based process that is automated by AI to identify trends as they develop. In doing so, the strategy eliminates human emotion from the decision-making process. Through sophisticated quantitative research and a
disciplined approach, predictable behaviour, and idiosyncrasies can be successfully identified and exploited for investment profit.

Management Fee

2.0% (plus GST) per annum of the gross asset value of the Fund as at the end of each month. Management Fee will be paid monthly in arrears

Performance Fee

The Fund Manager is entitled to a Performance Fee of 25% (plus GST) based on the rate of return. The Performance Fee is calculated and paid monthly and is intended to create an incentive for the Investment Manager to achieve a higher return on a risk adjusted basis.

The formula for the Performance Fee is outlined below:
PF = 25% * ((CUP – (PUP+HR)) * NB)

PF: the amount of the Performance Fee
CUP: the Unit Price (after all fees but before any distributions) on the last business day of the relevant month
HR: the hurdle rate (the benchmark’s return for the period)
PUP: the Unit Price (all fees and any distributions) on the last business day of the previous month
NB: the aggregate number of outstanding units on issue on the last business day of the relevant month.

If PF is a negative number, no Performance Fee is payable.

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