Frequently Asked Questions

Yes, that's normal. Orders are always expressed in number of shares (or notes), so when you specify a dollar quantity, it will be converted to a number of notes right away. From the time between clicking "submit" and execution, the price can already change, so you will be buying for a slightly different dollar amount.

There's nothing to worry, you receive less value if the cost basis turns out to be different, you are just trading a quantity that at the most recent prices doesn't exactly equate to the dollar amount you initially entered anymore.

To sign up to Lati Capital's QIS platform, create an account at https://portal.lati-capital.com

The steps are:

1. create a login. You'll be asked basic info like email address, name, and phone number. You will need to verify your email address and once done, you can log in
2. create an account. This can be either a paper trading account if you want to try our system, or you can start the onboarding process for a live trading account

When these two steps are complete, you are ready to select the strategies you'd like to invest in.

Your Swiss AHV number (13 digits) serves as Switzerland's official Tax Identification Number (TIN) for individuals.

We need it primarily for:

1. International tax reporting (CRS): Under the Common Reporting Standard, financial institutions identify the tax residence of account holders and report relevant financial account information to tax authorities.
2. Tax residency verification: The AHV number helps identify you as a Swiss taxpayer.
3. US tax compliance (FATCA): Lati Capital and Alpaca need to establish whether you are a US taxpayer or a foreign investor.
4. Tax treaty benefits: If applicable, your Swiss tax residency can affect the withholding tax applied to US dividends.

As with any information you provide, the AHV number is treated with utmost confidentiality.

The formula is simply

Net Worth = Total Assets - Total Liabilities

Total net worth represents everything you own, minus everything you owe.

Assets to include:

• Cash in bank accounts
• Savings accounts
• Stocks, ETFs, bonds and investment portfolios
• Cryptocurrency
• Real estate (current estimated market value)
• Vehicles and other valuable assets
• Pension assets, where relevant

Liabilities to subtract:

• Mortgage
• Personal loans
• Car loans
• Credit card balances
• Other outstanding debts

Liquid net worth measures how much wealth you can access relatively quickly without selling illiquid assets.

Typically include:

• Cash
• Savings accounts
• Stocks and ETFs
• Bonds
• Money market funds

Exclude:

• Real estate
• Cars
• Furniture and personal belongings
• Pension assets that cannot readily be withdrawn

As rough guidance, this is how investments for different tiers look like:

Use your annual gross income, meaning income before taxes and social security deductions. You can include bonus and tips, investment income, and any other sources. A good estimate is sufficient; if you earn your income in a different currency, please convert it to USD using an appropriate exchange rate.

The purpose is to determine which products are suitable for you and to give you the best possible advice. In general, the income level does not impact eligibility to open an account.

If you don't feel comfortable disclosing your full income, you are welcome to provide a lower number. As a rough guidance, refer to this table to understand what type of investments are appropriate given an income level:

No. We don't run a credit check, and opening an account has no effect on your credit score. We ask for your SSN because it's your U.S. taxpayer ID. We need it to report your investment income to the IRS (for example on Form 1099) and to verify your identity when your account is opened. Your SSN is transmitted and stored securely and used only for these purposes.

Yes. You can update your details at any time in the client portal. Please keep them current, especially if your address, residency status, employment, financial situation or investment goals change, so that our advice stays suited to you.

Sometimes we or our custodian can't verify your details automatically. This can happen if a name doesn't match your ID exactly, an address is new or the ID image is unclear. In that case, we'll email you to ask for a document such as a proof of address or a clearer photo of your ID. Disclosed affiliations can also add a short review step. Once we have what we need, your application usually moves forward quickly.

If you spot a mistake before submitting, go back to the relevant step and correct it. If you've already submitted, email us at info@lati-capital.com with the details and we'll help you fix it. Please don't include your full ID number or account numbers in your email. We'll contact you securely if we need them.

You'll get an email confirming that we've received your application. Most applications are reviewed and approved within 24 hours, and usually no further documents are needed. Once your account is approved, we'll email you so you can fund it. As soon as your funds arrive, you can start investing.

Yes. Checking the boxes and submitting the application has the same legal effect as signing on paper. We'll email you copies of the key agreements for your records. All of the documents linked on this page are also available on our website at any time.

These are the disclosure documents every SEC-registered investment adviser must give its clients. Form CRS is a short, plain-language summary of our services, fees and conflicts of interest, and it's a good place to start. Form ADV Part 2A is our full brochure, covering our business, fees, investment approach and conflicts in detail. Form ADV Part 2B gives background on the people who advise you, including their experience and any disciplinary history.

Many of the products and strategies we use, including structured products, are built from options. Before an account can be approved for options, every client has to receive "Characteristics and Risks of Standardized Options," a document published by the Options Clearing Corporation. It explains how options work and the risks involved. Accepting it confirms you've received it. It doesn't mean you'll be trading options yourself.

Alpaca's Customer Agreement says that any dispute with Alpaca will be settled through arbitration, usually FINRA arbitration, rather than in court. This is standard in brokerage agreements across the U.S. In practice, you give up the right to sue Alpaca in court, including the right to a jury trial, and arbitration decisions can only be appealed in limited circumstances. The full terms are in Section 46 of the Alpaca Customer Agreement.

Alpaca Securities LLC is a FINRA-registered broker-dealer and SIPC member. It holds your account and carries out your trades. Lati Capital is your investment adviser: we give you advice, but we never hold your money. Your assets sit in an account in your name at Alpaca. Keeping the adviser and the custodian separate is an important protection for you, which is why each firm has its own agreement with you.

Your ID lets us confirm that you are who you say you are, which protects your account from identity theft and fraud. Before an account can be opened, we and our custodian check your identity against the details you've given us and against sanctions lists, as every regulated financial firm does. A passport, driver’s license or national ID card works. Make sure it's valid and that the name and date of birth match what you entered. Your document is transmitted and stored securely and used only for verification.

Yes. You can select several account types now, for example a margin account and a Roth IRA, and each will be opened as a separate account. You can also add an account type later from your profile without repeating the full onboarding.

Yes. You can't borrow money in an IRA, and options strategies are generally limited to ones with defined risk. As a result, some products or strategies available in a margin account may not be offered in your IRA. You can fund an IRA with new contributions, or by transferring or rolling over assets from another IRA or employer plan such as a 401(k). Rollovers have specific rules, so check with your tax adviser before moving retirement money.

IRAs are U.S. retirement accounts and are only available to U.S. taxpayers. If you're not shown the IRA options, it's because your residency or tax status makes you ineligible for them. You can still open a margin account and access the same products we offer. Non-U.S. retirement accounts, such as Swiss pillar 3a, aren't currently available through Lati Capital.

Both are U.S. tax-advantaged retirement accounts. The difference is when you pay tax. With a Traditional IRA, contributions may be tax-deductible now and withdrawals are taxed in retirement. With a Roth IRA, you contribute money that has already been taxed, and qualified withdrawals in retirement are tax-free. Both have annual contribution limits set by the IRS, and Roth eligibility depends on your income. If you're unsure which suits you, talk to your tax adviser.

A margin account is a standard brokerage account that lets you borrow against your investments if you choose to. It's also needed for certain strategies, such as some options positions used in structured products. Opening one doesn't mean you'll use leverage. Unless you decide to borrow, your account works just like a cash account. If you do borrow, losses can exceed the amount you invested, and you may be asked to add funds if your account value falls.

Disclosing an affiliation won't stop you from opening an account. It usually just adds a short step. Depending on your situation, we may ask for:

• your employer's name and contact details for its compliance department, and sometimes a letter approving your account
• the name and ticker of the public company you're connected to
• details of the public role you or your family member holds

Our team will review this information, and we'll let you know if anything else is needed before your account is opened. If your situation changes later, such as a new job, an increased stake in a company or a new public role, please update your profile so we can keep your account compliant.

This covers people who hold, or recently held, a senior public role in any country. Examples include heads of state, ministers, members of parliament or congress, senior judges, high-ranking military officers, senior officials of political parties and executives of state-owned companies. Local or junior roles typically don't count.

Family members include your spouse or partner, parents, children and their spouses. Close business associates can also count. People in these roles are subject to additional review under international anti-money-laundering standards. This doesn't mean anything is wrong. It's a standard extra check that financial firms apply worldwide.

You count as an insider if you're a director or senior executive of a publicly traded company, or if you own 10% or more of its shares. Shares held through a trust, a family member or a company you control count toward that 10%.

Insiders often face restrictions on when and how they can trade their company's stock, such as blackout periods and reporting obligations. Knowing this lets us make sure we never recommend a product linked to your company's stock in a way that could cause problems for you. This includes, for example, structured notes that use your company's stock as an underlying.

You're affiliated if you currently work for, or are registered with, a FINRA-member broker-dealer, a securities or commodities exchange, or FINRA itself. This also usually applies if your spouse or a dependent living with you is affiliated. Past employment doesn't count.

Lati Capital is an investment adviser, not a broker-dealer. Your account is held and your trades are executed by a FINRA-member firm, and FINRA's rules apply there. Those rules exist so that employers can monitor their employees' outside accounts and prevent conflicts of interest. As a result, your employer may need to approve your account or receive copies of your statements.

Most of our clients have none of these affiliations. If none of the three descriptions clearly fits you, select "None of the below apply to me" and continue. The other FAQs in this section explain each category in more detail if you want to double-check. If you later realize one applies, or your situation changes, you can update your profile at any time.

Most notes here on Lati Capital have some form of market exposure. Take for example autocallable notes: They pay a yield if the underlying stock doesn't fall below a certain threshold at maturity. And that feature is what generates the returns when we replicate that payoff.

The market exposure via that buffer means is that we need to establish an initial position in the underlying stock (or stocks, if there are multiple); in derivative terms, establish the delta. As the share price moves up, we'll sell some of it and as it moves down, we buy some more.

Unlike traditional structured products where you only see the final payoff, at Lati Capital, the hedging engine is trading the product for you and you see the mark to market value in your portfolio. Assuming the stock's volatility continues on the expected path and the share price stays above the buffer, you should see (i) PnL generated from trading and (ii) the delta position to decrease to zero - unless you chose to retain upside.

No. We use your employment details only to understand your financial situation and to check whether any investing restrictions apply to you. We don’t call your employer to verify your job or share your account information with them.

The one exception is if you work for a broker-dealer or another regulated financial firm. Your employer may then need to approve your account or receive copies of your statements, and depending on how your account is held, our custodian may have to notify them. If this applies to you, we’ll tell you before anything is sent, and in many cases you’ll handle the approval yourself through your firm’s compliance department.

Your job helps us understand your finances and spot any special rules that apply to you. Your occupation and employer tell us how steady your income is, which shapes the advice we give you, and they help confirm where your funds come from.

Some jobs also come with investing restrictions. If you work for a broker-dealer or another financial firm, your employer may need to approve your account or receive copies of your statements. If you’re a director, officer or major shareholder of a public company, there may be limits on trading or holding products linked to that company’s stock, such as blackout periods. If you hold a senior government or public role, extra review steps may apply. Knowing this upfront means we can steer you away from anything that would put you in a difficult position.

Everything you share is kept confidential and used only for these purposes. If your job changes, let us know so we can update your profile.

We ask how long you’ve invested in stocks, options and crypto (none, 1 to 5 years, or more than 5 years) so we can match you with products you’re comfortable with and understand. Many structured products are built from options, and some are linked to crypto assets, so experience in those areas matters most. Products with more complex payoffs or higher risk may only be offered to investors with relevant experience. For example, crypto-linked notes may require some prior crypto investing. Simpler products are available to everyone.

Having no experience in an area doesn’t shut you out for good. Our educational materials explain how each product works, and as your experience grows you can update your profile to unlock more products.

Your investment horizon is how long you plan to keep your money invested. It decides which maturities make sense and how much short-term ups and downs your portfolio can absorb. If you may need the money in a year or two, we’ll favor shorter, more liquid investments. A longer horizon gives market dips time to recover and opens up products with longer terms.

Your investment style is how you weigh safety, income and growth. If you put protecting your capital first, we’ll lean toward more defensive choices, such as notes with full or partial capital protection. If you’re focused on income or growth, we may suggest products with higher coupons or more market exposure, which also carry more risk.

These choices don’t lock you in and don' affect the account opening process. If your plans or preferences change, let us know and we’ll adjust our recommendations to match.

Knowing where your money comes from, such as salary, a business sale, an inheritance or investment gains, lets us confirm that the assets in your account are legitimate and protects you, us and our custodian from fraud and money laundering. Banks and custodians routinely ask for this, and having it on file upfront usually makes transfers and account opening go more smoothly, especially for large deposits or money coming in from abroad. It also gives us a fuller picture of your finances, which helps us keep our advice suitable for you. In some cases we or our custodian may ask for supporting documents. Everything you share is kept confidential and used only for these purposes.

It helps us recommend what actually fits you. Your income, net worth and liquid assets show how much risk you can take and how much of your wealth a given investment should make up. They also show how long you could hold a position without needing the money. As your adviser, we use this to keep our recommendations suitable for your situation and in your best interest. Some products, including certain structured products, are only open to investors who meet minimum income or net-worth thresholds, so this information also tells us what you qualify for.

Everything you share is kept confidential and used only for these purposes. If your finances change significantly, let us know or update your profile in the portal so we can continue to offer tailored advice.

We use address lookup services from Google and Swiss Post. These are only to simplify data entry, you can always write down your own address. If your address doesn't use anything for "Street Address", you can type n/a

Use your primary residence address, i.e. the address you use also for tax purposes. If you have multiple tax residences, use the one you spent the most time at. While all our communication is electronic, we will also print this address on statements that we provide to you.

Where you live and what kind of residence status you hold (for example a U.S. green card or a Swiss B or C permit) affect how your investments are taxed and reported. A green card holder counts as a U.S. person for tax purposes, just like a citizen. A Swiss B-permit holder may be taxed differently from a C-permit holder. Knowing your status lets us collect the right tax forms, report correctly under rules like FATCA and CRS, and offer only the products and services available to someone in your situation. It also helps us verify your identity when we open your account. Everything you share is kept confidential and used only for these purposes. If your status changes, for example from a B to a C permit or when you get a green card, let us know so we can update your account.

We’re starting with the markets we know best and can serve properly. Every country has its own rules for offering investment advice and products, and we want to meet them fully rather than cut corners. That means getting the right licenses, tax reporting and local setup in place before we welcome clients from a new country. We plan to expand over time. If you’d like to see Lati Capital in your country, email us at info@lati-capital.com. Hearing where the demand is helps us decide where to go next.

We ask for your marital status mainly to build a picture of your financial circumstances and obligations.

There are several reasons:

1. Household finances: Being married may mean shared income, expenses, assets, and financial responsibilities.
2. Investment suitability: Your household situation can influence your liquidity needs and ability to take investment risk.
3. Regulatory profiling: Financial institutions collect personal information as part of customer identification and financial profiling.
4. Estate and beneficiary considerations: Marital status can be relevant to inheritance rights and spousal protections, depending on the jurisdiction.

The selection will not impact eligibility to open an account and the information is not used for tax purposes, nor is it forwarded to any authority or anyone else outside Lati Capital and Alpaca Securities.

There are a few reasons, all of them relate to understanding your overall financial situation and investment suitability:

1. Financial obligations: Dependents affect how much of your income is available for investing.
2. Risk assessment: Someone supporting several dependents may have different liquidity needs and risk tolerance than someone with no dependents.
3. Know Your Customer (KYC): Brokerages collect personal and financial information to build an investor profile and meet regulatory obligations.

Importantly, it's not a tax calculation and it does not affect your eligibility to open the account. If nobody financially depends on you, enter 0.

Form W-8BEN is a standard US tax form that confirms you are not a US taxpayer and states your country of tax residence. Every non-US client of a US broker completes one.

• It does not make you a US taxpayer or require you to file a US tax return.
• It doesn’t add any tax. It gives you the Swiss–US treaty rate of 15% on US dividends instead of 30%, and you can credit that 15% on your Swiss tax return.
• The form stays with our custodian, Alpaca Securities. Each year, Alpaca reports the US dividends paid to you and the tax withheld to the IRS on Form 1042-S, and sends you a copy.
• It’s valid until the end of the third calendar year after you sign it.
• The IRS isn’t told about your Swiss bank accounts, other assets or wider finances.

US law requires your broker to know whether you’re a US person before it can apply the right tax treatment to your account. Without a valid W-8BEN, it has to treat you as a US person, which means:

• Higher withholding: up to 24% backup withholding on dividends and even on the proceeds when you sell investments.
• US tax reporting in your name, even though you have no US tax obligations.

With a valid W-8BEN:

• Lower tax on dividends. If your country has a tax treaty with the US, you get the reduced rate on US dividends. For Swiss residents, that’s 15% instead of 30%, and you can generally claim it back against your Swiss taxes.
• No US tax on capital gains. Non-US investors generally don’t pay US tax when they sell US stocks at a profit.
• No US tax reporting. Your account isn’t reported as a US person’s account.

In short, it takes a few minutes and makes sure you’re taxed correctly as a non-US investor. Our onboarding process automatically fills out the form and you only need to sign. If you’re a US citizen or green-card holder, you’ll complete Form W-9 instead.

This information is general and isn’t tax advice. Please consult a tax adviser about your own situation.

GLRUSSC1 is the ticker for the US Sector Climber index. The ticker can be broken down as follows:

GLR = name of technology firm providing the index
US = focused on US market
SC = sector climber

In other contexts, these strategies are called sector rotators, but the idea is the same: allocate dynamically to the best performing sectors.

The Old vs. New Strategy (GLRNDX1) is a risk parity strategy that dynamically allocates capital between two thematic opposites: GLD (physical gold, representing the timeless "old" economy store of value) and QQQ (the Nasdaq-100, representing technology and the "new" economy growth engine). Rather than holding equal dollar amounts, the strategy employs equal risk contribution, each asset contributes equally to portfolio volatility, meaning the more volatile QQQ is held in smaller size than the more stable GLD. The strategy operates intraday, checking market conditions every 10 minutes and rebalancing when triggered by scheduled windows, significant weight drift, or emergency volatility breaches. It targets 10% annualized portfolio volatility and scales exposure up or down to maintain this target: cutting risk when markets become turbulent and increasing exposure when calm. With a hard 1.0x leverage cap (no leverage), the strategy prioritizes capital preservation while capturing the thematic tension between traditional stores of value and modern growth. Expected returns are estimated using dual-speed momentum tracking (fast and slow) combined via precision-weighting, while covariance is maintained through exponentially-weighted moving averages. The result is a disciplined, systematic approach that balances the defensive characteristics of gold with the growth potential of technology, all within a rigorous risk management framework.

All estimation is driven by 10-minute VWAP (Volume-Weighted Average Price) observations of the underlying assets sampled during market hours. This intraday frequency allows the strategy to respond quickly to changing market conditions.

The strategy uses asymmetric rebalancing thresholds: it de-risks aggressively (2% threshold) when volatility is rising, but re-risks conservatively (3% threshold) when volatility is falling. This helps protect capital during stress while avoiding excessive trading in calm markets.

The strategy has an emergency override that forces immediate rebalancing if portfolio volatility exceeds 115% of target. This ensures sudden volatility spikes are addressed immediately, rather than waiting for the next scheduled window.

The Old vs. New strategy uses risk parity (equal risk contribution) rather than equal capital allocation. Each asset's weight is proportional to the inverse of its volatility, so the more volatile leg (typically QQQ) is held in smaller size to equalize each asset's contribution to portfolio risk.

Three conditions can trigger rebalancing in the Old vs. New strategy:

1. Scheduled rebalancing at 10:00, 13:00, 14:00, and 15:00 ET
2. Significant drift: when any asset's weight deviates by more than 5% from target
3. Emergency volatility breach: when portfolio volatility exceeds 115% of the target.

The strategy deliberately uses a minimal tradable universe of two assets on opposite sides of a thematic divide. This simplicity allows for focused risk management and clear thematic expression: gold as an inflation- and crisis-sensitive store of value versus technology as a growth engine.

The Lati bank is one of the oldest family-owned banks in Lebanon and a cornerstone in the history of the banking system of the Middle-East.

Established in 1924 by Joseph Lati (originally Lati Maison de Banque and then Banque Joseph Lati & Fils), the Lati family was deeply embedded in the Beirut business elite, located on Allenby Street, next to the Zilkha Bank and Jacob E. Safra bank. In 2009, the bank was merged with BLC Bank.

The Legacy continues internationally through the Joseph Isaac Lati's daughters and Lati Capital. Their international network runs from New York to Dubai, passing through Switzerland.

No - returns are never guaranteed. That’s a fundamental rule of investing. If a product offers higher returns in some scenarios, it must deliver lower returns in others.

With traditional bank-issued structured notes, this tradeoff is fixed upfront. The bank designs a payoff profile: strong returns in certain scenarios, weaker outcomes in others; and then prices it conservatively. In practice, that means you’re giving up some upside (and sometimes taking more downside risk) so the bank can build in a margin for itself.

With Lati Capital, you still have that same core tradeoff between outcomes across scenarios. But there’s an additional layer: the payoff is dynamically hedged rather than contractually fixed.

That means:

• We target a specific payoff profile and aim to replicate it as closely as possible
• In most cases, results are close to target
• But outcomes can be slightly better or worse depending on market conditions and hedge performance

So unlike a bank note, even the "target" payoff isn’t guaranteed.

Why do it this way? Because we don’t charge the embedded fees that banks do. Instead of the bank taking a margin and delivering a smoothed, conservative outcome, you keep that value, but take on the variability that comes with it.

A simple way to think about it:

• Bank structured note: more certainty, but lower expected return (fees baked in)
• Lati Capital: higher expected value, but some variability around the target payoff

On average, we aim to deliver the payoff you designed, without the bank’s margin.

A structured product is a pre-packaged, customized investment strategy, typically issued by an investment bank, that combines a debt instrument (bond) with one or more derivatives (like options).

Its returns are not driven by fixed interest, but are instead linked to the performance of an underlying asset, such as a stock index (e.g., S&P 500), a single stock, a basket of securities, or commodities.

Core Characteristics:

• Tailored Payoffs: Designed to meet specific goals, such as providing partial downside protection ("buffers") or enhanced income, in exchange for capping potential gains.
• Two Main Parts: A "bond piece" (often a zero-coupon bond) provides the principal protection, while the "options piece" provides exposure to the upside potential.
• Buy-and-Hold: Designed to be held until maturity, which is typically 1–10 years.
• Not Liquid: Limited secondary market exists; selling before maturity may result in significant losses.

Finding consistent yield in traditional markets is difficult, but there is one asset class that has historically been a persistent source of return: volatility - the rate and magnitude at which a stock’s price moves up or down over time.

In most cases, volatility is something investors try to avoid. Human behavior amplifies this preference: due to biases like loss aversion, people tend to dislike uncertainty and short-term price swings, even if those swings don’t affect long-term value.

However, volatility itself can be systematically harvested as a source of return when managed correctly. One way to think about it is as a disciplined version of “buy low, sell high,” where quantitative strategies dynamically adjust exposure as prices move, effectively monetizing the ups and downs rather than fearing them.

This creates an important distinction in financial products. When you buy a structured product from a bank, you are typically selling volatility, the bank is taking the other side and earning returns from the price movements you’re giving up. In contrast, when investing with Lati Capital, the strategy is designed to buy volatility, aiming to capture the returns generated by those same market fluctuations.

Each structure generates target quantities continuously, depending on tock prices, index rebalance events, or volatility triggers.

However, whether we actually trade to the new target quantity depends on a few factors:

1. Is the change meaningful? We don't trade tiny fractions of shares, although you can configure what the minimum threshold for trading is in your account settings
2. We don't immediately reverse trades: If we bought a stock 1 hour ago due to changes in volatility, but now the rebalance dictates a sale, we may not do it to avoid churn. Note though that volatility induced rebalances always occur
3. We net positions across strategies and may see rounding errors
4. there may be leverage constraints on the portfolio level that restrict us from fully allocating

A Fixed Index Annuity (FIA) is an insurance product that provides principal protection while offering returns linked to the performance of a market index, like the S&P 500.

Instead of directly investing in the market, your money is held by an insurance company. You typically earn:

• A minimum guaranteed return of 0% (no loss of principal, excluding fees/surrender charges)
• Upside participation in an index, subject to caps, spreads, or participation rates

The tradeoff is that you give up some upside in strong markets in exchange for downside protection and tax-deferred growth.

Bank-issued structured products typically include multiple layers of embedded costs.

First, there are explicit distribution fees, which are disclosed in the prospectus. These include underwriting discounts, dealer concessions, and selling fees. In most cases, these amount to roughly 3-5% of the investment upfront.

Second, there are implicit costs that are not directly disclosed. Banks price the underlying components, such as options and funding, using conservative assumptions that work in their favor. For example, they may use higher implied volatility when selling options to clients than what they expect to hedge at in the market. This creates additional economic margin beyond the stated fees.

As a result, the true cost of a bank-issued structured product is typically higher than the headline 3-5%, even though only part of that is explicitly visible.

As with any investment, your capital is at risk of price fluctuations. Stocks can go up or down, dynamics can change due to effects outside of our control. There is no guarantee of future performance from past returns.

Aside from that, there are other risks clients should be aware of, and at Lati Capital we do everything possible to mitigate them:

• Cyber security risk: Like any technology forward company, we are under constant attack from hackers trying to gain access to our systems. We use the best tools available to defend our infrastructure and have not had an issues in the past
• Hindsight risk: This is human bias similar to buyer's remorse. When you invest your money with Lati Capital, you can't invest the same money elsewhere, for example, in Bitcoin. If Bitcoin has an amazing run, you missed out and would have been better off investing in Bitcoin
• Operational risk: While we have a full, proprietary tech stack and go through rigorous testing via various stages, sometimes technology fails. In a worst case scenario this could mean that access to your portfolio is not possible. In an extreme scenario we would need to manually process any orders / transfer requests. While possible, it would be much slower. It is important to know though that it's virtually impossible that assets are "lost" in the sense that they disappear from your portfolio (but they can loose value).

For full disclosure of risks, please also refer to our Form ADV pt 2. brochure.

Traditional structured products have the following risks:

• Issuer/Credit Risk: If the bank that issued the note goes bankrupt, you could lose your entire investment, regardless of the underlying asset's performance
• Complexity: Difficult to price and understand the exact payoff formula
• Limited Gains: If the market surges, your return is often capped.
• No Dividends or interest: You generally do not receive dividends if the underlying asset is a stock, although you are paid a yield which is in part generated by the fact that your investment should return via interest or dividends

At Lati Capital, many of these risks don't exist, in particular, there is no credit risk towards a bank, or Lati Capital. We help you manage your money in a way that produces the return profile you want.

Some characteristics are the same:

• You also define your "payoff", i.e. you set the goals that you would like to meet, such as an 8% return over a 6 month period
• The products can reference single stocks, or a basket of stocks, and these baskets are professionally curated and managed

But there are key differences:

• You are not committing to a fixed duration and you can change your investment at any time, at no cost
• Because of that, your payoff is not guaranteed; instead, our algorithms work exactly the way the risk management and hedging strategies at the bank work: hedging the payoff so that your goals are achieved (or exceeded).
• In the traditional version, any extra profit made by the bank is kept by the bank; at Lati Capital, extra return is yours
• There are no hidden fees: you pay a flat management fee on the size of your investment
• There is no counterparty risk. Unlike structured notes, you are not facing a financial institution. Your assets are yours, held in your name, at a trusted, regulated brokerage and even in case of failure of any party involved, the cash and shares will not be lost (see important details below)

The US Sector Climber is a sector rotation strategy. Its core objective is to dynamically allocate capital toward sectors expected to outperform, while reducing exposure to sectors expected to underperform.

Rather than focusing on individual stocks, it groups the market into broad economic sectors (for example Technology, Healthcare, Energy, and Utilities) and evaluates their relative attractiveness, often using signals such as momentum and trend dynamics. Based on these signals, the strategy systematically overweights sectors with stronger expected performance and underweights or avoids weaker ones.

This is meaningfully different from traditional market-cap weighted indices like the S&P 500. In those indices, sector weights change only gradually as companies grow or shrink in market capitalization. As a result, exposure is relatively sticky and does not actively respond to changing market regimes.

The Sector Climber, by contrast, is explicitly dynamic: it can meaningfully shift exposure across sectors as conditions change, leading to potentially large deviations from static benchmark allocations.

A key design goal is not just return maximization, but risk-adjusted performance. The strategy seeks to allocate risk efficiently across sectors, avoiding excessive concentration in high-volatility areas (such as Technology when it becomes overheated), and instead balancing exposure across multiple sectors in a way that targets higher returns per unit of risk. In practice, this means constructing a portfolio that can combine higher-growth sectors with more defensive ones (such as Utilities) to improve overall stability while maintaining return potential.

These terms are often used interchangeably in practice, but there is a technical distinction.

A strategy defines the rules for how capital is allocated across a set of underlying assets, specifically, the weights in each asset and how those weights evolve over time. For example, a simple strategy might specify: allocate 25% of capital to each of four stocks, and rebalance periodically to maintain those weights.

An index is the time series representation of applying that strategy to a notional starting capital. To construct it, you pick a base level (e.g. $10,000), allocate it according to the strategy, and then track how the value evolves as underlying prices move and as the strategy rebalances. By construction, the index starts at 10,000 on day one and fluctuates thereafter based on the performance of the underlying basket and the rebalancing rules.

So in practice:

• The strategy is the methodology (the rules engine)
• The index is the resulting performance path (the observable P&L series)

In QIS, instruments like GLRUSSC1 typically refer to both depending on context:

• When discussing construction, it refers to the strategy specification
• When discussing performance or pricing, it refers to the index level

There are a few challenges to keep in mind when building infrastructure to run strategies yourself:

1. Data infrastructure and quality control
   Access to high-quality data is not straightforward. Even with strong vendors, you still need to continuously ingest, normalize, and curate data, while handling issues like corporate actions, ticker changes, market halts, and missing prints. Options data alone can easily exceed 60GB per day, and strategies often require the full depth of the feed at all times, not just snapshots.
2. Continuous operations and reliability
   Strategies don’t run “when convenient”, they must operate throughout the entire trading day with strict timing constraints. This requires production-grade infrastructure with redundancy, failover systems, monitoring, and the ability to recover instantly from outages or data gaps without corrupting positions.
3. Derivatives modeling and calibration complexity
   Real-world derivatives modeling goes far beyond textbook Black-Scholes. Even simple replication or delta-hedging requires continuously calibrated inputs such as interest rate curves, dividend forecasts, and full volatility surfaces. These inputs are themselves noisy, high-dimensional, and market-dependent, and small errors can compound quickly into large P&L deviations.
4. Research, backtesting, and simulation integrity (often underestimated)
   Developing strategies is not just about coding a signal, it requires a robust research pipeline where backtests are realistic, bias-free, and reproducible. This includes handling look-ahead bias, survivorship bias, execution assumptions, and realistic transaction costs (including slippage and impact). Many strategies that look strong in research fail once implemented because the simulation environment was not sufficiently faithful to live trading conditions.

All our strategies are defined as intraday strategies, meaning they continuously monitor the market for new information. While the exact behavior varies from strategy to strategy, a few things are in common:

• Portfolios are checked for rebalancing
• Rebalances only occur when certain minimum thresholds are met
• We ensure that there's no churn: if a small sell would reverse an earlier buy, we may not execute it
• Risk management overlays, such as volatility targeting, can trade in exceptional circumstances, for example, if spikes due to macro economic events occur

Typically, our quantitative investment strategies turn over between 4 to 8 times per year.