ITEM 7 – TYPES OF CLIENTS and managing a portfolio of these securities, we
apply a disciplined set of analytical techniques and
We offer investment advisory services to Private criteria, including evaluating each security on an
Funds, Registered Funds and institutional clients individual basis and as a component of the overall
through SMAs. portfolio. Our process for integrating top-down market
analysis, bottom-up credit analysis and on-going risk
Any applicable investment minimums for a Private management surveillance is illustrated below.
Fund or Registered Fund are described in the
corresponding governing documents for the client.
Collateralized Loan Obligations
We apply a similar set of analytic techniques and
criteria in evaluating CLOs, as illustrated below.
Risk of Loss program will be successful, and investment results
may vary substantially over time.
Investing in securities involves risk of loss that
investors should be prepared to bear. Investors Management and Strategy Risk. The value of your
should give careful consideration to the following investment depends on the judgment of Braddock
summary risks. The following does not purport to be about the quality, relative yield, value or market
a comprehensive summary of all of the risks trends affecting a particular security, issuer, sector or
associated with an investment. region, which may prove to be incorrect. Investment
strategies employed by Braddock in selecting
The following is a summary of certain risks involved investments for clients may not result in an increase
with Braddock’s investment strategy. More detailed in the value of your investment or in overall
descriptions of the investment strategies, performance equal to that of other investments.
methods of analysis and risks of a specific
Private Fund or Registered Fund are included in Sector Focus Risk: Sector focus risk results from
the applicable fund’s offering documents. maintaining exposure to the performance of the
asset-backed debt securities, including mortgage-
Investment & Trading Risks in General. All related securities, in which the client invests. The
investments risk the loss of capital. No guarantee or focus of the client’s portfolio on a specific sector,
representation is made that a client’s investment such as in mortgage-related securities, may present
more risks than if the portfolio were broadly
diversified over numerous sectors. At times the borrowing, reverse repurchase agreements provide a
performance of the client’s investments may lag the client with cash for investment purposes, which
performance of other sectors or the broader market creates leverage and subjects the client to the risks
as a whole. Such underperformance may continue of leverage. Reverse repurchase agreements also
for extended periods of time. involve the risk that the other party may fail to return
the securities in a timely manner or at all. A client
Non-Diversification. Investment in securities of a could lose money if it is unable to recover the
limited number of issuers exposes a client to greater securities and the value of collateral held by the
market risk and potential losses than if its assets client, including the value of the investments made
were diversified among the securities of a greater with cash collateral, is less than the value of
number of issuers. securities.
Illiquidity. Some investments made by a client will be Hedging Transactions. We may utilize financial
illiquid or thinly traded, and consequently a client may instruments including U.S. treasuries, swaps, caps
not be able to sell such investments at prices that and floors on interest rates, currencies, residential or
reflect Braddock’s assessment of their value or the credit default rates or the credit of one or more
amount paid for such investments by a client. In the issuers of MBS, ABS, CLO or other risks associated
event a client makes distributions of securities in with MBS, ABS, CLO futures and forward contracts
kind, such securities could be illiquid or subject to (including Eurodollar futures), security warehouse
legal, contractual and other restrictions on transfer. and repurchase agreements, other secured debt
facilities, securitizations and resecuritizations, MBS
Leverage. Subject to applicable margin and other pass-throughs and MBS derivatives, and options on
limitations, a client may borrow funds in order to any of the foregoing, for risk management purposes.
make additional investments and thereby increase
While a client may enter into hedging transactions to
both the possibility of gain and risk of loss.
seek to reduce risk, such transactions may result in a
Consequently, the effect of fluctuations in the market
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