HYKE

HYKE aims to deliver positive returns from rising 2-year interest rates by investing in interest rate swaptions to create downside limits to losses and upside caps to gains. The 2-year rate broadly measures the cost of borrowing cash overnight, collateralized by Treasury securities compounded over two years. As the fund anticipates losses when the 2-year rate falls, the fund buys and sells interest rate payer or receiver swaptions every quarter to limit downside losses. The fund hedges against increases in the 2-year rate by investing in various derivatives including futures, options, interest rate swaps, and swaptions. It may also take long positions in interest rate swaps to benefit from rising interest rates. It could also hold ETFs investing in US T-bills or related options. The fund generally intends to hold swaptions maturing in three months for more predictable returns. It seeks to limit losses of up to 20% over a quarter, with the potential upside capped between 5-35%. Through these positions, the fund may forego some upside potential. There is no assurance that the fund will succeed in limiting losses.