Global Markets And Risk Management - Rina Hicks & Ian Kahangara - Oak Special Fund

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In a recent discussion between Rina Hicks, Operations Director at Faida Investment Bank, and Ian Kahangara, Director of Global Markets and Chief Investment Officer, they explored the differences between traditional markets and the more flexible opportunities available in global markets. Kahangara highlighted the limitations of one-way investments, such as real estate, where investors can only profit if asset values rise. In contrast, global markets offer advanced tools like derivatives that allow traders to benefit from both rising and falling markets. By utilizing strategies such as short-selling, investors can navigate market volatility more effectively, seizing opportunities in both directions.

Kahangara explained that at Oak Fund, although they engage in sophisticated instruments like Contracts for Difference (CFDs), these represent only a small portion of a well-diversified portfolio. The bulk of their investments are allocated to safer, interest-bearing assets, such as treasury bills, bonds, and cash equivalents, which are currently yielding high returns due to favorable interest rates. Oak Fund also invests in local equities and derivatives, blending riskier, leveraged instruments with stable, low-risk assets to ensure balanced and secure portfolio growth.

Addressing the inherent risks of highly leveraged instruments like CFDs, Kahangara emphasized that risk management is a priority. By limiting the allocation of these high-risk assets to a small fraction of the portfolio, they protect clients from significant losses. In the event of a downturn, the majority of the portfolio, composed of stable, interest-bearing investments, serves as a buffer, ensuring that overall performance remains strong and any potential losses are minimized.

To ensure the highest level of oversight and protection, Oak Fund operates under a robust risk management framework. Kahangara noted that regulatory guidelines limit daily portfolio losses to no more than 10%, with a maximum loss of 25%. Internally, an investment committee monitors asset allocation and individual traders operate within strict exposure limits. This system is further reinforced by regular internal audits and periodic external reviews, providing comprehensive oversight and ensuring compliance with both regulatory and internal controls to safeguard client investments.