Fixed Income Hedge Account

Fixed Income Hedge Account


Within HFCM this strategy is made possible, available, and easy to implement due to partnerships with trusted securities dealers/ brokers who enjoy high liquidity, high capital reserves, diversified STP model and the high efficiency of its high-end liquidity providers that allows routing different market transaction to different LP's where deals has been struck and made available for this purpose!

How does it Work?  Swaps and Arbitrage

Forex swaps refer to the simultaneously buying of one currency while selling another to take advantage of the interest rate differential of the two currencies involved. In a swap transaction, when one buys or sells a forex pair, one is actually borrowing a currency in order to lend a different currency, and the difference between the interest rates of the countries results in positive or negative value for the swap. When the value is positive, a trader’s account is credited or in other words he is borrowing a low interest currency and lending a high interest rate one. But if the value is negative, the trader’s account is debited, or he is borrowing a higher interest rate currency while lending a lower interest rate one.


Now the opportunity for arbitrage arises when a trader can take forex positions without having to pay or paying less swap rates. But, how does this happen? This is made possible in cases where brokers allow customers to open swap free trading accounts. In these situations, a trader can take a positive swap position with a broker that pays swap and the opposite position with a broker that does not credit or debit swap, thus allowing the trader to cancel the market risk involved. (Hedge)

In this scenario, a retail trader’s swap paying account accumulates a net market loss, while his swap free account will have an accumulated net profit. In case the trader wants to reopen positions, he will need to transfer money between the two accounts and incur transfer costs. This cost however, can be avoided by maintaining a good margin on both accounts to withstand the draw downs. This type of strategy works when the volatility of a currency pair is not high, resulting in long term positions with moderate drawdowns on one account and profits on a second, plus the daily swaps.


Within HFCM this strategy is made possible, available and easy to implement due to its strategic partnerships with securities dealers/ brokers with high liquidity, high capital reserves, diversified STP model and the efficiency their high-end liquidity providers engaged that allows routing different market transaction to different LP's where deals have been struck and made available for this purpose!

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Products FX, Indices, Energies, Futures, Bonds
Income flow Daily Injections
Liquidity Unlimited
Liquidity Sources Tier1 Banks + Prime brokerages
Annual income Up to 30%
Detailed Reports Daily (Systemized)
Strategy Swap arbitrage
Transparency 100%
Access to investment account 24 Hours a day
Term Quarter, Semiannual, Annual
Maturity 100%
Required margin Variable
Leverage 1-100
Access to funds Full access
Account maintenance fees 20% of income+ (see prospectus)
Risk Virtually (Risk Free) **Hedge!
Redemptions Upon request
Controller HFCM Treasury
Minimum investment USD 100,000
Minimum redemption No minimum


Important Information: Capital at Risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.


Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund. Currency Risk: The Fund invests in other currencies. Changes in exchange rates will therefore affect the value of the investment. The value of equities and equity-related securities can be affected by daily stock market movements. Other influential factors include political, economic news, company earnings and significant corporate events. Due to the criteria applied during stock selection to meet the definition of Circular Economy, the range of investments the Collective investment scheme can invest in may be less diversified than a typical fund. Circular Economy companies may be subject to environmental concerns, taxes, government regulation, price, supply and competition. Investors should consider this collective investment as part of a broader investment strategy.



Performance









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The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Benchmark performance is displayed in USD. Performance is shown on a Net Asset Value (NAV) basis, with gross income reinvested where applicable. The return of your investment may increase or decrease as a result of currency fluctuations if your investment is made in a currency other than that used in the past performance calculation.

What are Fixed Income Securities?

Fixed income securities are financial instrument that provides returns in the form of regular, or fixed, interest payments and repayments of the principal when the security reaches maturity. The instruments are issued by exchanges, governments, corporations, market makers and other entities to finance their operations.


How Does Fixed Income Work?

The term fixed income refers to the interest payments that an investor receives, which are based on the creditworthiness of the borrower and current interest rates. The borrower is willing to pay more interest in return for being able to borrow the money for a longer period of time. At the end of the security’s term or maturity, the borrower returns the borrowed money, known as the principal or “par value.”


Examples of Fixed Income Securities

Many examples of fixed income securities exist, such as bonds (both corporate and government), Treasury Bills, money market instruments, and asset-backed securities, and they operate as follows:


Bonds

Considered the safest short-term debt instrument, Treasury bills are issued by the US federal government. With maturities ranging from one to 12 months, these securities most commonly involve 28, 91, and 182-day (one month, three months, and six months) maturities. These instruments offer no regular coupon, or interest, payments.


Instead, they are sold at a discount to their face value, with the difference between their market price and face value representing the interest rate they offer investors. As a simple example, if a Treasury bill with a face value, or par value, of $100 sells for $90, then it is offering roughly 10% interest.

Treasury Bills

The topic of bonds is, by itself, a whole area of financial or investing study. In general terms, they can be defined as loans made by investors to an issuer, with the promise of repayment of the principal amount at the established maturity date, as well as regular coupon payments (generally occurring every six months), which represent the interest paid on the loan. The purpose of such loans ranges widely. Bonds are typically issued by governments or corporations that are looking for ways to finance projects or operations.


Money Market Instruments

Money market instruments include securities such as commercial paper, banker’s acceptances, certificates of deposit (CD), and repurchase agreements (“repo”). Treasury bills are technically included in this category, but due to the fact that they are traded in such high volume, they have their own category here.


Asset-Backed Securities (ABS)

Asset-backed Securities (ABS) are fixed income securities backed by financial assets that have been “securitized,” such as credit card receivables, auto loans, or home-equity loans. ABS represents a collection of such assets that have been packaged together in the form of a single fixed-income security. For investors, asset-backed securities are usually an alternative to investing in corporate debt.


Examples of Fixed Income Securities

Many examples of fixed income securities exist, such as bonds (both corporate and government), Treasury Bills, money market instruments, and asset-backed securities, and they operate as follows:


Risks of Investing in Fixed Income Securities

Principal risks associated with fixed-income securities concern the borrower’s vulnerability to defaulting on its debt. Such risks are incorporated in the interest or coupon that the security offers, with securities with a higher risk of default offering higher interest rates to investors. Additional risks include exchange rate risk for securities denominated in a currency other than the US dollar (such as foreign government bonds) and interest rate risk – the risk that changes in interest rates may reduce the market value of a fixed-income security that an investor holds. For example, if an investor holds a 10-year bond that pays 3% interest, but then later on interest rates rise and new 10-year bonds being issued offer 4% interest, then the bond the investor holds that pays only 3% interest becomes less valuable.


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