The principal objective pursued by the Fund in respect of each cell of the Fund is capital appreciation within the risk profile, timeframe and other parameters established in the investment policy in respect of each cell of the Fund.
The investment strategy of this cell is based on Fixed Income Trading System (FITS) – detailed analysis of short and long term interest rates and it is independent of the development of capital markets. The average return on long-term financial deposits must be higher than the return on short-term deposits so that when it comes to money, supply and demand are in equilibrium. This phenomenon (in economics called the “liquidity preference theory”) could be seen with respect to every world currency, and by trading on financial markets, an investor can use it to his own benefit. The FITS system uses this principle, but via ingenious hedge strategies based on complicated mathematical models it increases the average return while fundamentally reducing the risk of such trading.
The result is that the system’s return is dependent neither on interest rate fluctuations nor capital market developments. (It is only sensitive to the rotation of what is known as the yield curve that shows the relationship between yields and maturity dates at a given point in time.) The system uses Short Term Interest Rate (STIR) future contracts. The contracts traded with respect to the assets and liabilities of this cell are in different currencies (i.e. USD, EUR, GBP, CHF, AUD, CAD, JPY) and for this reason, the returns of the cell under the FITS system are diversified from possible currency risks.
FITS investment strategy is currently suspended due to unfavourable market situation.