Short-term bond investment strategy

Debt instruments

• Assurance of the issuers’ ability and, more importantly, eagerness to repay at maturity;
• Low systemic risk. Existence of positive systemic factors (even better — those underestimated by the market due to political or liquidity issues) is preferable;
• Yield to maturity is above the general yield curve for the instruments of the same implied risk, providing for an increased probability of the price growth;
• Limited duration of the instrument allowing for limitation of volatility of the portfolio;
• Existence of known information or access asymmetry, generating an attractive price for the instrument;
• Absence of obvious signs of the over-heating of the markets on the whole and material probability of its systematic correction;
• Size limitation, not more than 4-5% of the portfolio per instrument as a rule.

Other instruments

• Presence of at least one of the following:
  Ability to purchase the instrument at a lower than market price due to an OTC nature of the sale;
  Existence of public objective Information, not available to the broad market, confirming an unreasonably low market valuation of the instrument;
• Ability to purchase the instrument at an inadequately low price due to a short-term market inefficiency;
• Existence of a potential upside significantly exceeding potential losses, together with the reasonable belief in the high probability of the positive scenario;
• Presence of an obvious arbitrage opportunity bearing low risks;
• Availability of thorough and constant monitoring of the situation;
• Sufficient liquidity of the instrument, allowing for rapid liquidation of the position in case of the realization of a negative scenario.

Products of third parties

• Simultaneous fulfilment of the following criteria:
  
• The product provides for the cheaper or/and efficient access to the market or/and instruments, attractive for the managers based on criteria stated above;
• Management method is similar to the one the managers would have applied if they were to manage such product, or the product represents a tracker of the market the manager wants to invest anyway;
• The product is managed using the capabilities, expertise, skills and/or information that the manager of ARGO SP does not have;
• The product has sufficient history and historical results correspond to the declared targets; investment decisions correspond to declared strategy and investment process;
• The managers of ARGO can closely monitor the product’s performance;
• It is possible to monitor product management on a continuous basis;
• Costs associated with the purchase and further sale of the product are substantially less than expected marginal benefits from the investment;

Criteria for closing a position

• The position has ceased to be attractive in terms of the criteria described in the previous sections;
• There is an offer to buy (sell for a short position), for a price that realizes the position's potential and makes it not attractive for further holding;
• The share of the position in the portfolio for one reason or another has exceeded the limit set aside for such position, or in connection with the acquisition of another, more profitable, position within a single limit, the aggregate limit is exceeded;
• Market behavior increased the risk of holding a position in the short or medium term to a level unacceptable in the portfolio;
• The market has information that makes the risk of reducing the value of the position in the short term significant regardless of the adequacy of information and its assessment by the market;
• The change in legislation led to a negative change in the value of the position for the fund and/or its investors;
• The liquidity of the position has fallen to a level at which future adequate actions with the position could be jeopardized;