Risks and Controls
ST is a JPF regulated by the JFSC
The Fund operates with defined risk limits designed to control potential losses arising from market movements, leverage and derivative exposures. Exposure limits are established with the objective of maintaining losses within these parameters under normal market conditions. The Fund manages exposure through:
- limits on gross and net portfolio exposure
- position sizing based on volatility and liquidity characteristics
- maximum exposure limits for individual instruments and markets
- leverage controls
- ongoing monitoring of margin utilisation and available liquidity
- periodic stress testing against adverse market scenarios
The Fund recognises that trading in derivatives, including contracts for difference (CFDs), options and other leveraged instruments, involves additional risks including leverage, market volatility, liquidity constraints, counterparty exposure and the potential for losses exceeding those experienced in unleveraged investments.
The Fund seeks to manage these risks through a combination of pre-defined investment limits, portfolio monitoring, diversification, liquidity management, counterparty controls, stress testing and ongoing review of portfolio exposures.
Risk management controls are designed to reduce the likelihood and impact of adverse events; however, they cannot eliminate the possibility of losses arising from extreme market movements or unforeseen events.
The Fund recognises that investments in digital assets, particularly early-stage and microcapitalisation digital assets, involve a range of risks which may be significantly greater than those associated with traditional financial assets. The Fund seeks to mitigate these risks through its investment process, including due diligence procedures, portfolio diversification, position limits, liquidity assessments, counterparty reviews, custody controls and ongoing monitoring of investments.
However, certain risks inherent to digital asset markets cannot be fully eliminated. These include, but are not limited to, extreme price volatility, limited liquidity, market manipulation, regulatory uncertainty, technological failures, cybersecurity risks, smart contract vulnerabilities, protocol changes, governance failures, loss or compromise of digital asset infrastructure, and the potential failure or decline in value of individual digital assets or related platforms.
Investors should be aware that mitigation measures may reduce but cannot remove these risks, and adverse events may result in significant or total loss of capital invested in particular digital assets. The Fund’s investment strategy is designed to manage and control these risks within defined parameters; however, the inherent characteristics of digital asset markets mean that losses remain possible.