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General FAQ

Q What is a CFD?

A A CFD is a Contract for Difference.
A Contract for Difference (CFD) is an agreement between a buyer and a seller to exchange the difference in price of an underlying instrument over a period of time. CFDs provide clients with an opportunity to get geared exposure to the performance of a share in a simple and cost efficient format. CFDs allow investors to position themselves in relation to the rise or fall of JSE-listed securities, without the need for ownership of such securities. CFDs are leveraged products that require an investor to deposit cash as margin rather than the payment of the full value of the underlying position. Depending on the position taken by such an investor, the investor may be either the long or the short holder of the CFD. Effectively cash is being borrowed by the long holder and lent by the short holder in respect of the underlying security. The initial margin deposit will vary depending on the stock traded.

Q What is Beta?

A Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. A Beta of 1.5 means that the expected return of the fund is 1.5 times higher than that of the market. For example, if the market has a return of 20% in a particular period, a fund or strategy that has a Beta of 1.5 means that it should generate a profitability of 30% (20% x1,5) in the same period. Beta is both a performance and risk measure as it predicts both upside and downside moves against the selected benchmark. The higher the Beta, the greater is the risk of a fund or strategy relative to the market when the market moves downwards, but the higher the reward when the market moves upwards. The Beta levels of individual portfolios within the fund or strategy are designed to be between 1.0 and 1.8, depending on the client's risk preferences.

Q What is Alpha?

A Alpha is a measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a fund or strategy and compares its risk-adjusted performance to a benchmark index. The excess return of the fund or strategy relative to the return of the benchmark index is a fund's alpha. A positive alpha of 1.0% means the fund or strategy has outperformed its benchmark index by 1% per month. Correspondingly, a similar negative alpha would indicate an under performance of 1% per month.

Q What is margin?

A Trading in CFDs requires the holder to maintain a certain amount of margin to fund the position in the underlying product. A key advantage of not having to put up as collateral the full notional value is that a given quantity of capital can control a much larger position than having to pay the full purchase price of the underlying share.

Q Is the strategy diversified and what sectors?

A The strategy looks at the TOP 140 most Liquid Stocks on the JSE and out of those stocks picks a balanced portfolio between the following three types of shares (1) 50% Momentum/Growth – Stocks selected quantitatively based on momentum (buy high, sell high) and earnings/dividend growth criteria. (2) 30% High Dividend and/or Earnings yield stocks selected quantitatively (EPS/DPS averaged over a 2-5 year period) and (3) 20% Blue Chip companies using a handicap system with the handicaps determined partly quantitatively (14 criteria) and partly subjectively. There is also a strong cash underpin, as the CFD portfolios historic margining has been 20% of the funds under management with 80% of the funds being retained in cash earning a SAFEY rate which is detailed in your m2m statements daily. A balanced sector exposure is maintained, using 9 broad sectors (Consumers, Food & Health, Industrials, Financials, Property, Services, Telecom/Media/Technology, Resources and Gold/Platinum), with overweight exposure in those sectors with high momentum and underweight exposure in those sectors with low momentum.

Q What is Leverage/Gearing?

A Investors gain access to larger exposures of underlying securities by means of leverage/gearing. This means that investors outlay a relatively small amount of capital (in the form of a margin) to secure an exposure to the underlying security.

Q Have you been audited? If so, by who?

A Yes - Statutory audit by BDO amd our investment strategy and performance is audited by PWC.

Q Can I have access to the audit report?

A The audit reports are available on written request. Please e-mail info@emperor.co.za if you require a copy.

Q Do your Private Brokers add on additional commissions?

A Private Brokers are mandated by Emperor Asset Management to grow the various investment strategies with clients. They are rewarded and remunerated outside of the annual management fee and performance fee charges. In certain cases and where the Private Broker or introducing agent has the relevant regulatory license in place additional charges may be included. These will be fully disclosed to you in the mandate and will require justification and sign off by you before being implemented by Emperor Asset Management.

Q What is the difference of going through a Private Broker or direct to Emperor?

A In certain cases and where the Private Broker or introducing agent has the relevant regulatory licence in place additional charges may be included. These will be fully disclosed to you in the mandate and will require justification and sign off by you before being implemented by Emperor Asset Management.

Q What is the difference between Emperor and GT247.com?

A EAM is managed and GT247.com is for self-investing... EAM executes its strategy via GT247's low cost OTC platform which is a more cost efficient entry into the market with the added benefit of leverage.

Q What is the link with Purple Group?

A Purple Group is the listed holding company that Emperor Asset Management falls under, giving added transparency from being in the public domain.

Q How do I know that you are not a Pyramid scheme?

A Emperor Asset Management is an Authorised Financial services provider. Guided by the rules of the Financial Services Board.

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