General
- Securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the investments will be achieved.
- Past performance of the Portfolio Manager does not indicate the future performance of the Portfolio Manager.
- Investors are not being offered any guaranteed or assured return/s i.e. either of Principal or appreciation on the portfolio.
- Investors may note that Portfolio Manager’s investment decisions may not be always profitable, as actual market movements may be at variance with anticipated trends.
- The liquidity of the Portfolio’s investments is inherently restricted by trading volumes in the securities in which it invests.
- The valuation of the Portfolio’s investments, may be affected generally by factors affecting securities markets, such as price and volume volatility in the capital markets, interest rates, currency exchange rates, changes in policies of the Government, taxation laws or any other appropriate authority policies and other political and economic developments which may have an adverse bearing on individual securities, a specific sector or all sectors including equity and debt markets. There will be no prior intimation or prior indication given to the Clients when the composition/ asset allocation pattern changes.
- Trading volumes, settlement periods and transfer procedures may restrict the liquidity of the investments made by the Portfolio. Different segments of theIndian financial markets have different settlement periods and such periods may be extended significantly by unforeseen circumstances. The inability of the Portfolio to make intended securities purchases due to settlement problems could cause the Portfolio to miss certain investment opportunities.By the same rationale, the inability to sell securities held in the portfolio due to the absence of a well-developed and liquid secondary market for debt securities would result, at times, in potential losses to the Portfolio, in case of a subsequent decline in the value of securities held in the Portfolio.
- The Portfolio Manager may, considering the overall level of risk of the portfolio, invest in lower rated/ unrated securities offering higher yields. This may increase the risk of the portfolio. Such investments shall be subject to the scope of investments as laid down in the Agreement.
- Envision Capital Services Pvt Ltd and/or its affiliates, subsidiaries, associates, directors and employees may have a vested interest in the portfolio, recommendation and/or securities held in the portfolio.
- Securities, which are not quoted on the stock exchanges, are inherently illiquid in nature and carry a larger amount of liquidity risk, in comparison to securities that are listed on the exchanges or offer other exit options to the investor, including a put option. The Portfolio Manager may choose to invest in unlisted securities, which may, however, increase the risk of the portfolio.Such investments shall be subject to the scope of investments as laid down in the Agreement.
- While securities that are listed on the stock exchange carry lower liquidity risk, the ability to sell these investments is limited by the overall trading volume on the stock exchanges. Money market securities, while fairly liquid, lack a well-developed secondary market, which may restrict the selling ability of the Portfolio(s) and may lead to the investments incurring losses till the security is finally sold.
- Where for any reason beyond its control including nationalisation, currency restrictions, fire, acts of God, acts of any authority, requirements of any laws or regulations, change in laws or regulations, postal or other strikes, boycott, civil commotion, acts of terrorism, or failure or bankruptcy or disruption of any relevant stock exchange, depository, bank, broker or market, Envision is delayed in performing or unable to perform its obligations, Envision shall not be responsible for any losses or damage whatsoever that may result therefrom to any party whatsoever, and there shall be no liability on Envision whatsoever to perform or discharge those obligations, provided Envision has not by its acts or omissions, contributed to the occurrence of such events, and/or provided that the Envision could not have reasonably anticipated the happening of such events and taken suitable action to avoid any risk of loss or damage to the Clients there from.
The following is an indicative list of some of the risks associated with the Securities
- Interest Rate Risk: As with all debt securities, changes in interest rates may affect valuation of the Portfolios, as the prices of securities generally increase as interest rates decline and generally decrease as interest rates rise. Prices of long-term securities generally fluctuate more in response to interest rate changes than prices of short-term securities. Indian debt markets can be volatile leading to the possibility of price movements up or down in fixed income securities and thereby to possible movements in the valuations ofPortfolios.
- Liquidity or Marketability Risk: This refers to the ease with which a security can be sold at or near to its valuation yield-to-maturity (YTM). The primary measure of liquidity risk is the spread between the bid price and the offer price quoted by a dealer. Liquidity risk is today characteristic of the Indian fixed income market.
- Credit Risk: Credit risk or default risk refers to the risk that an issuer of a fixed income security may default (i.e., will be unable to make timely principal and interest payments on the security). Because of this risk corporate debentures are sold at a higher yield above those offered on Government Securities which are sovereign obligations and free of credit risk. Normally, the value of a fixed income security will fluctuate depending upon the changes in the perceived level of credit risk as well as any actual event of default. The greater the credit risk, the greater the yield required for someone to be compensated for the increased risk.
- Reinvestment Risk: This risk refers to the interest rate levels at which cashflows received from the securities under a particular Portfolio are authorities in India. To the extent that the portfolio of the Strategy will be invested insecurities/ instruments denominated in foreign currencies, the Indian Rupee equivalent of the net assets, distributions and income may be adversely affected by changes/fluctuation in the value of certain foreign currencies relative to the Indian Rupee. The repatriation of capital to India may also be hampered by changes in regulations concerning exchange controls or political circumstances as well as the application to it of other restrictions on investment.
Risks arising out of Non Diversification
Diversification of portfolio across asset classes, investment themes, sectors and securities is normally construed to be less risky for investors. It is to be noted that the portfolio is likely to be more focused on a single asset class, i.e. equities which inherently is very volatile. Further the portfolio could be subject to more risk on account of its concentration of investments into a few sectors or a limited number of securities. In addition to limited/inadequate diversification across asset classes, themes and sectors, the portfolio could be prone to higher risk on account of non-diversification across capitalizations, particularly if the portfolio has a bias to wardsmid-cap and small-cap companies
Specific Risk factors pertaining to Unlisted Securities
The Portfolio Manager seeks to make investment in private equity or pre IPO related transactions i.e. unlisted securities/ instruments (private equity). Many of such investment made by the Portfolio Manager may be illiquid or subject to SEBI,Regulatory lock-in, and there can be no assurance that the Portfolio Manager will be able to realize profits on such investments in a timely manner. Since such investment may involve a high degree of risk, poor performance by any of these investments could lead to adverse effects on the returns received by investors.
Voluntary Withdrawal, Exit Load and Liquidity
Investors and Envision Capital Services may be allowed to voluntarily terminate the contract and withdraw or transfer the funds or securities subject to exit load as mentioned in the agreement. In addition during the continuance of the agreement,Clients may not be able to pledge, create lien or offer portfolio as collateral and margin, any security, interest, rights, or obligations with regard to the Portfolio.
In addition to the above risk factors, Investors are advised to read carefully risk factors mentioned in detail, in the Agreement to be executed with PortfolioManager, before making investment.