• What are the Risks?

ALGONQUIN DEBT STRATEGIES FUND

What are the Risks?

As the saying goes, no risk, no reward. The important thing is to understand the risks and determine if the potential rewards are sufficient for taking them on. With that in mind, below is a brief summary of the main risk factors of our strategy.*

Idiosyncratic Credit Risk

This is the risk that a particular corporation suffers a rapid deterioration in credit quality or a default. While these stories typically play out over time, an event such as corporate fraud could accelerate the process. Aside from continuously monitoring our positions, we have also implemented issuer concentration limits and stop losses to mitigate against this risk.

Systemic Credit Risk

Given the portfolio is typically long credit, the risk is that credit spreads widen sharply and quickly. To protect against this scenario we utilize quantitative risk management processes and qualitative analysis to determine the appropriate exposures based on market conditions.

Liquidity Risk

This is the risk of being unable to exit a position without taking a significant price concession. As former market makers, we have a deep understanding of the underlying liquidity of the securities we trade. Furthermore, we have processes to assist in determining the appropriate size of a position and to ensure that a sufficient portion of the portfolio is invested in highly liquid bonds.

* Please note that this is intended as a summary of the main market risk factors of the Fund. It is not a comprehensive nor complete list of all the risks associated with an investment in the Algonquin Debt Strategies Fund. For more information please refer to our Offering Memorandum.