MAN AHL DIVERSIFIED I LP - A Plain-English Guide

I wrote this guide to help you understand how MAN AHL DIVERSIFIED I LP works. My goal is to cut through the jargon so you can see how this automated trading machine operates and what you are paying for.

1. What does this fund do?

Think of this fund as a high-tech, automated trading machine. Instead of buying stocks and hoping they rise, the fund uses computer models to bet on global trends across 150 markets. It trades everything from currencies and interest rates to metals, energy, and crops.

The goal is to generate returns that do not move in sync with the stock market. The fund aims to make money whether the market is booming or crashing. You are investing in a "feeder" fund that pools your money and sends it to the AHL Diversified Programme. This program uses algorithms to analyze historical prices and spot momentum-based trends.

2. How they make money (and what it costs)

The fund sells performance, not products. Because this is a complex, active strategy, it comes with a premium price tag:

• Management & Admin Fees: You pay roughly 3% annually. This includes a 2% management fee and a 1% administrative fee. You pay these regardless of whether the fund makes a profit or a loss.
• Incentive Fee: This is a performance bonus. If the fund hits new profit highs, the manager takes 20% of those new gains.
• Servicing Fees: Depending on your unit class, you may pay an extra 0.75% to 1% annually to the placement agent for support.
• Upfront Costs: Some units charge an upfront sales commission of up to 3%. This is taken from your initial investment before it is traded.

3. Financial health and safety

The fund keeps its cash in safe, liquid assets like U.S. Treasury Bills. This ensures they have collateral ready for trading. They work with major firms like J.P. Morgan, HSBC, and Goldman Sachs to handle trades and hold assets. Keep in mind that they trade in foreign markets. These markets may have less oversight than U.S. markets, which exposes the fund to local political and economic risks.

4. Key risks to keep in mind

• The "Whip-saw" Effect: The computer models follow trends. If the market moves one way, the computer buys in. If the market suddenly reverses, the model loses money and must pay to exit the position.
• High Leverage: The fund uses borrowed money to increase its market exposure. This can amplify gains, but it also means a small market dip can cause a large loss.
• Liquidity Risk: If markets become chaotic, price limits might prevent the fund from selling. You could find yourself unable to exit your investment.
• Model Risk: The fund relies entirely on its computer models. If an unprecedented event occurs that the models haven't seen before, the algorithms may fail.

5. The bottom line

This is a speculative tool. You are betting on the manager’s ability to catch global price trends. This is not a "buy and hold" investment. It is a high-stakes strategy where you could lose your entire investment. View this as a small portfolio diversifier, typically allocating no more than 5% to 10% of your assets.

Before you invest: Ask yourself if you are comfortable with the high fee structure and the reality that this fund can lose money even when the broader market is performing well. If you decide to move forward, ensure this allocation fits within your broader risk tolerance.