Aurelia Managed FX Account

The Aurelia strategy is designed for leveraged investment into the foreign exchange market.

The Aurelia strategy uses a complex and sophisticated combination of complimentary automated trading systems (robots), designed to provide the best value risk/reward. Using this approach ensures that a natural partial hedging is in place allowing us to provide better control over the risks.

Historically, based on our prototype account from July 2017 to August 2018, this combination of system has provided an average of 6.4 trades per day, with each trade open for an average duration of 1 day.  Each trade has an expected profit factor of 1.52, meaning that the Gross Profit, is 1.52 time greater than the loses. The strategy focuses on certain currency pairs including AUDUSD, EURGBP, EURUSD, USDCHF and USDJPY. However, if an opportunity is identified by our trading systems, it may trade other currency pairs.

Each system uniquely manages its risk, via sophisticated money management techniques, grids, martingale or percentage of NAV.  Stop Losses are wide, allowing for the robot’s to manage the position.    

The Aurelia strategy is appropriate for assertive or aggressive investors that are willing to accept a higher amount of risk and volatility offset by potential increases in investment returns.

Suitable Investor Risk ProfileAssertive and Aggressive
LeveragedYes
Investment StructureManaged Discretionary Account
Drawdown Level Notification30% of High Water Mark at which point the account will stop trading until the investor is informed and consent granted to continue.
MDA Investment ManagerBullioo Capital Pty Ltd
MDA ProviderHLK Group Pty Ltd
Executing Broker & CustodianPepperstone Group Limited (“Pepperstone”)
Leverage500:1
Investment UniverseMargin FX Majors, Margin FX Minors
Minimum Investment$7500 USD*

* Unless alternative has been agreed with Bullioo Capital

Fees & Charges – All fees and charges are including GST.

Type of Fees or CostsAmount
Advice Fees:  The fee on any Statement of Advice (SOA) or Record of Advice (ROA)Nil
Ongoing Service Fee:Any ongoing chargesNil
Contribution Fee: The fee on each amount contributed to your investmentNil
Establishment Fee: The fee to open your investmentNil
Administration Fee: The fee charged to administer the accountNil
Exit Fee: The fee to close your investmentNil
Management Costs
Management Fee*: The fee to operate your account2% p.a. calculated and charged monthly
Performance Fee: The fee charged on profits achieved above an agreed benchmark20% calculated and charged monthly
Brokerage/Commission: The remuneration and benefits received from trading to HLK Group, its authorized representatives and contractors as introducing brokersBullioo receives $1.53 USD per standard lot round turn

* Management Fee is payable as a percentage of net asset value applied on a monthly basis.

DID YOU KNOW?

Small differences in both investment performance and fees and costs can have a substantial impact on your long term returns.

For example, total annual fees and costs of 2% of your account balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example reduce it from $100 000 to $80 000).

You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs.

You may be able to negotiate to pay lower contribution fees and management costs where applicable.

Ask the fund or your financial adviser.

TO FIND OUT MORE

If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website (www.moneysmart.gov.au) has a managed funds fee calculator to help you check out different fee options.

How are management fees calculated?

This table gives an example of how the management fees for the MDA service can affect your investment over a 1 year period. You should use this table to compare this product with other MDA services.

EXAMPLEEQUITY OF $50,000 WITH A CONTRIBUTION OF $5,000 DURING YEAR
Contribution FeesNilFor every additional $5,000 you put in, you will not be charged.
PLUSManagement Fee2% p.a. charged monthlyAnd, for every $50,000 equity you have in the investment you will be charged $1,000 each year as a management fee, assuming average equity is $50,000 for the period. Management fee will be charged monthly which is $83.33 per month.

If you had an investment of $50,000 on January 1st and you put in an additional $5,000 on July 1st, you would be charged a total management fee of:$1,050* assuming average equity is $50,000 for the first half year and $55,000 for the second half year. What it costs you will depend on the investment option you choose and the fees you negotiate.

* Additional fees may apply:
Performance fees – see below.

How are performance fees calculated?

  • a deposit or withdrawal is made
  • a performance fee is calculated

If you continue your MDA(s), performance fee is calculated at the end of each month. If you terminate or cease your MDA(s) during the month, performance fee is calculated after your MDA(s) is fully converted back to cash and that should take around 2 business days.

Watermarks and profit levels

The high-water mark can be manually adjusted and set at a higher/lower level if you and Bullioo Capital both agree.

Date1st of Jan1st of Feb1st of Mar1st Apr
Net Asset Value (NAV)$100,000$110,000$105,000$118,000
Profit (Loss)$10,000-$3,000$13,000
Performance Fee$2,000$2,000
NAV After Performance Fee$100,000$108,000$105,000$116,000
High-water Mark$100,000$108,000$108,000$116,000

Above is an example how Bullioo Capitals’ performances fees are calculated and charged. The above example assumes that $100,000 was invested. If the Managed Account had achieved a return of 10% for the month, your account would now be at $110,000. The performance fee for the first month would be calculated on the profit (the performance fee is 20%) therefore $2,000 is charged to the account. This now leaves the high-watermark at $108,000.

If in the second month of trading, the managed account made a net loss of $3,000, there would be no performance fee paid. However, the high-water mark would remain at $108,000 as this remains the highest level after a performance fee has been taken.

In the third month the Managed Account returns to profitability, and returned $13,000 for the month, the equity would now be at $118,000. However, since the high-water mark is at $108,000, the performance fee is only charged on the profit above the high-water mark. i.e. 20% of $10,000 instead of 20% of $13,000.

All fees and charges are including GST. Note management fee will not affect the calculation of high-water mark. If you need further clarification of how the performance fee works, please speak to us for additional clarification.

Commission

Although we do not request additional spread mark-up or commission mark-up, HLK Group, its authorised representative – Bullioo Capital and referrers, the Introducing Broker indicated on your account, earn a part of the commission you are charged by the executing broker(s). Please refer to Remuneration Consent for more details. The commission rate on each MDA is stated clearly.

For instance, the commission is paid by Pepperstone when you invest in an MDA. If Bullioo Capital closes a position that trades a standard lot of AUDUSD (i.e. $100,000) in your account, Bullioo Capital receives $1.53 USD from Pepperstone. The $1.53 USD commission will be split and paid to HLK Group as the licensee, Bullioo Capital as the MDA Investment Manager and your referrer that introduced you to Bullioo Capital.

Fees charged by executing broker

As Bullioo Capital has chosen to partner with Pepperstone to execute trades, all clients are required to open a Razor Account which will be managed by Bullioo Capital. Pepperstone charges fees on Razor Account such as commission and swap. We strongly encourage clients to read Product Disclosure Statement provided by Pepperstone which is available on website https://pepperstone.com/en/ 

Significant Risks

All investments carry risk. Different strategies can carry different levels of risk, depending on the assets that make up that strategy. Assets with the highest long-term returns may also carry the highest level of risk. The value of investments and the level of returns will vary. Future returns may differ from past returns and past performance is not a reliable guide to future performance.

None of the Responsible Entity, HLK Group and Bullioo Capital, their directors, associates nor any of their related bodies corporate (as defined in the Corporations Act) guarantee the success of the MDA, the repayment of capital or any particular rate of capital or income return. Investments in the MDA are not guaranteed by the Responsible Entity, HLK Group and Bullioo Capital or any other person or party and you may lose some or all of your investment.

While the risks described below are not exhaustive, they are some of the most significant risks involved in investing in MDAs. Discussions, as well as the management of these risks, are detailed below:

Market Risk

Market risks refer to the changes in the price (market) of the assets held within the MDA that result in fluctuations in the value of your invested MDA.

Factors that drive price changes in invested assets include economic conditions, business confidence, government fiscal and monetary policies, etc.

Country Risk

When weighing the options to invest in currencies, one must assess the structure and stability of their issuing country.  In many developing and third world countries, exchange rates are fixed to a world leader such as the US dollar. In this circumstance, central banks must sustain adequate reserves to maintain a fixed exchange rate. A currency crisis can occur due to frequent balance of payment deficits and result in devaluation of the currency. This can have substantial effects on forex trading and prices.

Counterparty Risk

Counterparty risk is the risk of losses resulting from a counterparty defaulting on a financial commitment to one’s investment. Counterparties include brokers, banks and fund managers, etc.

Invested assets are segregated in custody accounts designated for the exclusive benefit of the client by Pepperstone.

Strategy Risk

Strategy risks refer to the risk that the investment processes of the MDAs do not successfully reproduce historical or intended results. This may have an adverse effect on the performance of the invested MDAs. The asset allocation process involved in the MDAs is entirely driven by the underlying quantitative model. The investment decisions are implemented via a strict framework of rules and limits, so no arbitrary discretionary investment decisions occur in the process.

The inputs to the model are continually updated and the dynamic nature of the investment strategy prevents any irrelevant or obsolete application of the underlying model.

The asset allocation model remains an intellectual property of the firm. The model is constantly being enhanced and updated.

Liquidity Risk

While the MDA only invests in listed assets, under certain conditions the liquidity of a particular market or security may be restricted, thus affecting the performance of the MDA.

Lack of liquidity or market depth can affect the valuation of the MDA’s assets if it was required to reduce exposure at quoted prices.

If Bullioo Capital trades Margin FX under extreme market conditions, MDA can experience slippage which is the difference in the expected price of the trade, and the price it was executed at. This can either be positive or negative slippage. The difference between prices can occur during high volatility periods, when the market is jumping from one price to the next.

Slippage can happen when there is not enough liquidity at the requested price to fill your order so the liquidity providers fill at the next best available price.

Key Employee Risk

Relevant service providers employ specialist investment personnel who have responsibility for implementing the investment process. If key investment staff were to leave this would be destabilising and could lead to falls in the value of the MDA and in extreme circumstances could lead to the termination of the MDA. We actively develop alternative MDA strategies and are continually seeking new specialist investment personnel to mitigate key employee risk.

Business Continuity

It is a fundamental part of our ability to protect our staff and fulfil our fiduciary responsibilities to clients in protecting against business continuity risk. We maintain Crisis Response and Business Recovery Plans to facilitate the management of any incident which has the potential to harm our staff, damage our premises or disrupt our business.

Currency Risk

The MDAs’ assets are exposed to currencies other than US Dollars. The value of such investments may be affected favourably or unfavourably by fluctuations in exchange currencies.

In all cases, back-testing for quantitative efficiency for each strategy was conducted by normalizing returns for currency fluctuations.

Leverage Risk in relation to Non-Limited Recourse Product

Our MDA involve a high degree of leverage. Our strategy enables clients to outlay a relatively small amount to secure an exposure to the underlying currency or financial product. The use of leverage can lead to large losses as well as large gains.

An adverse movement in the price can not only quickly result in the loss of the entire Margin but may also lead to additional loss and end up a negative account balance.

Bullioo Capital sets a drawdown level notification for our MDA strategy where the account will stop trading until the investor is informed and consent granted to continue if the drawdown level is reached.

You should closely monitor all of your open positions. If the market moves against you and your initial margin deposit is diminished, we may automatically close out your position. Any remaining balance will be returned to you and any resulting liabilities will be your responsibility.

Legal Regulatory & Tax Risk

Change in laws or their interpretations including, but not limited to, taxation and corporate regulatory laws, practice and policy may have a negative impact on the returns to investors.

Inflation risk

The risk that the prices of goods and services will rise faster than the value of the investments.

Investment objective risk

The risk that an investor’s objectives will not be met by the MDA.  Authority may be used to invest in assets which may not suit your objectives, needs and risk level or may be unsuitable from a social or ethical position.

Manager risk

The risk that the manager will not achieve its performance objectives or not produce returns that compare favourably against its peers. Past performance results are not necessarily indicative of future performance.

Product Risk

The risks for clients in utilising the MDA service also include those existents in nondiscretionary dealings in exchange traded and over-the-counter securities and derivatives transactions. These risks are referred to in the Product Disclosure Statement (PDS) of the relevant financial product. The PDS should be carefully read and reviewed before acquiring the product. Derivatives carry a high level of risk to your capital and you should only trade with money you can afford to lose.

Volatility risk

The potential for the price of your portfolio to vary sometimes distinctly over a short period of time. The greater the volatility of the returns the more likely it is the returns will differ from those expected over a given time period.

Risks can be managed but cannot be completely eliminated. It is important to understand that:

  • the value of your investment may go up and down;
  • investment returns may vary and future returns may be different from past returns;
  • returns are not guaranteed and there is always the chance that you may lose money on any investment you make; and
  • laws affecting your investment may change over time, which may impact the value and returns of your investment.

Taxation

WARNING: Investing in a managed investment scheme (e.g. MDA) may have tax consequences. You are strongly advised to seek professional tax advice.

The taxation implications of investing in the MDA can be complex and depend on a number of factors, including whether you are a resident or non-resident of Australia for taxation purposes and other factors.

For more information, please download our Financial Services Guide and Investment Program.

To Apply, please follow the instructions on our Application Page.