Dif Broker implemented an internal control system which aims to mitigate the risk of most common biases in portfolio management.
The reflective level of risk in the portfolios is defined in a risk scale of 1 to 6, where 1 represents the lowest risk and 6 the highest risk.
Portfolios reflect only the decisions of the managers, based on the discretion of their professional judgment and public strategy.
To allow assessment by the investor, information is fully transparent with clear performance and risk reporting,
The client should always be aware that past performance is no guarantee of future results.
II. Style drift of the portfolio
The style drift occurs whenever the portfolio manager differs from his profile and stated investment style, particularly regarding the investment process, geography or investment discipline and risk policy that are beyond the ones set forth and declared.
To ensure that the portfolio manager follows the investment strategy declared, Dif Broker has established a critical control where critical limits are monitored, the strategy is verified and appropriate corrective actions are taken.
III. Risk of churning
The risk of churning is the risk of abuse which consists of, on behalf of the customer, improper transactions, quantitatively unjustified for the purpose of charging fees, resulting in excessive trading.
To avoid the risk of churning, portfolio managers do not receive trading commissions. The only commissions that portfolio managers may receive are the performance fee and/or a fixed fee.
IV. Preventions ("Disclaimer")
The information provided is informative and disclosed only to users.
The information provided is only informative and disclosed to users, as a tool in forming a judgment about the appropriateness (or not) of a particular portfolio to the investor profile and investment objectives.
Portfolio with bonds or ETF from bonds. This portfolio does not have derivatives, and can only be long or in cash.
Portfolio with shares or ETF which allow a better distribution of risk. This portfolio can only be long the market or in cash and never includes derivatives or futures.
Portfolio with shares and CFD or Forex and eventually also futures. However the use of derivatives or futures in this portfolio is only with the intention to hedge positions and never to speculate.
Portfolio with derivatives or futures with a flexible leverage limited to 40%, and a concentration limit of 20% per line in the portfolio. This portfolio may include shares, ETF or ADR.
Portfolio with derivatives or futures with a significant higher leverage but limited to 70% and a concentration limit of 50% per line in the portfolio. This portfolio may also include shares, ETF, or ADR.
Speculative portfolio with derivatives and futures with a leverage limited to 70% and a concentration limit of 50% per line of the portfolio. This portfolio includes only derivatives or futures and cash.
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