Home / Offering Memorandum / RISK FACTORS AND INVESTMENT CONSIDERATIONS / Control and Monitoring of the Use of Derivative Products

18.72. Control and Monitoring of the Use of Derivative Products

Derivative products are highly specialized instruments that require investment techniques and risk analysis different from those associated with equity and fixed income securities. The use of derivative techniques requires an understanding not only of the underlying assets of the derivative but also of the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions. In particular, the use and complexity of derivatives require the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to an Investment Compartment and the ability to forecast the relative price, interest rate or currency rate movements correctly.