About Flameback Capital USA

Flameback Capital USA, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. Registration does not imply a particular level of skill or training or an endorsement by the SEC.

Investment management services under the Investment Management Agreement are provided by Flameback Capital USA, Inc. The firm is a wholly owned subsidiary of Flameback Capital Private Limited, an Indian company. The parent company is not a party to the client agreement and does not provide the services described in it.

Our investment management service

Flameback manages client accounts on a discretionary basis under a signed Investment Management Agreement. The client selects a strategy recorded in Exhibit A and may record reasonable written restrictions there. Flameback executes transactions for that strategy without seeking the client’s approval for each individual trade.

The client’s assets are held in the client’s name with the qualified custodian. Flameback’s trading authority does not allow it to change account ownership or withdraw or transfer client assets. Advisory fees are paid through the custodian’s account-deduction arrangement described in the agreement.

Flameback is a fiduciary and must place the client’s interests above its own when managing the account. Investment advice is based on the client’s information and the services agreed in the Investment Management Agreement. It is not a substitute for separate tax, legal, financial-planning, insurance or estate-planning advice.

Permitted investments

The strategies use exchange-traded funds and exchange-traded products listed on United States national securities exchanges. At initial inclusion in a strategy, each instrument must have at least $100 million in assets under management and at least $5 million in average daily trading volume over the trailing 90 calendar days. Leveraged, inverse, leveraged-inverse and single-stock ETFs are excluded.

The account does not invest in individual stocks, directly held cryptocurrency or physical commodities, options, futures or other derivatives, and does not use margin or account-level leverage. The full permitted universe and exclusions appear in the agreement and Item 8 of the brochure.

Custody and brokerage

Interactive Brokers is the qualified custodian used by the platform. Flameback is independently owned and operated and is not affiliated with or a related person of Interactive Brokers. Client account statements and transaction confirmations are provided by the custodian. Clients should review those records and compare them with any reports supplied through Flameback.

Risk assessment and portfolio choice

After the Investor Profile Questionnaire is completed, the platform assigns a risk score from 0 to 100 and recommends a portfolio for that risk band in the Static or Dynamic form selected by the client.

The risk bands are: Conservative: 0 through 20. Moderate-Conservative: above 20 through 50. Moderate-Aggressive: above 50 through 75. Aggressive: above 75 through 100.

A client may elect a portfolio other than the recommended one, including a portfolio in a higher risk band, only after
acknowledging in writing that the client understands and accepts the risks of doing so.

Recommendations depend on the information provided by the client. Clients should promptly report changes to their financial situation, investment objectives, risk tolerance, tax status, residence, citizenship or account restrictions. Flameback contacts clients at least annually to ask whether their information has changed.

Static, Dynamic and Hybrid portfolios

Static and Dynamic describe how a portfolio is managed and rebalanced. Static portfolios are reset to target weights annually. Dynamic portfolios are rebalanced weekly. Trades or rebalancing may also occur on the codified indicators or triggers described in Item 8.

Hybrid describes a portfolio that has a debt allocation alongside its other exposures. It does not mean simply that several component strategies are blended. A portfolio may use more than one component strategy without being Hybrid. Portfolios with no debt allocation may still include the gold-backed and spot-bitcoin ETP exposure described in the brochure.

Components and allocations

Portfolios are built from Static Equity Allocation, Alpha Rotation, Multi Asset Momentum and Debt Strategy. The Debt Strategy holds a single ETF providing exposure to United States Treasury obligations maturing within one year. Static portfolios allocate 20%, 60%, 80% or 100% to Static Equity Allocation for the Conservative, Moderate-Conservative, Moderate-Aggressive and Aggressive bands, respectively. The balance is allocated to Debt Strategy.

Dynamic portfolios allocate 10%/10%/80%, 30%/30%/40%, 40%/40%/20% or 50%/50%/0% to Alpha Rotation, Multi-Asset Momentum and Debt Strategy, respectively, in the same risk-band order.

Within Static Equity Allocation, 90% is allocated to index and sectoral equity funds, 5% to a gold-backed ETP and 5% to a spot-bitcoin ETP. The total static-portfolio gold and bitcoin allocations are therefore 1% each, 3% each, 4% each or 5% each, respectively. Dynamic portfolios have no gold-backed or spot-bitcoin ETP allocation. The current eight portfolio names, full allocations and risks are set out in Item 8 of the brochure.

Fees and costs

The standard advisory fee is 0.90% per year of assets under management, billed monthly in arrears and paid solely by deduction from the account by the qualified custodian. The custodian calculates the fee and provides an itemized statement under the Investment Management Agreement. Fees for partial periods are prorated.

The advisory fee is separate from brokerage commissions, transaction fees and the internal expenses of the ETFs and ETPs held in the account. Fees and costs reduce investment returns and are payable whether the client makes or loses money. See the client’s agreement, Exhibit A, the brochure and each fund’s prospectus for the applicable fees and expenses.

Investment and execution risks

Investing involves risk, including the loss of all or part of the amount invested. Flameback does not guarantee returns, preservation of capital or achievement of an investment objective. Past performance, whether actual or hypothetical, does not predict future results.

ETF and ETP risks include tracking differences, a market price above or below net asset value, underlying liquidity risk, expenses, concentration and general market risk. Gold backed and spot-bitcoin ETPs have the additional risks described in Item 8. Spot-bitcoin exposure can be highly volatile.

Client results may differ because of investment timing, deposits and withdrawals, client restrictions, execution prices, liquidity, trading costs, market conditions and technical interruptions. These risks do not make clients responsible for manually replicating Flameback trades or approving individual transactions.

Flameback assumes responsibility under the agreement for losses caused by its own trade errors, including a failure of its systems to execute according to established parameters, and will make the client whole for the resulting loss. This does not cover market losses unrelated to an adviser error.

Performance information

Performance information is not currently displayed.

Term and termination

The Investment Management Agreement continues until terminated. It is not a one-year contract and does not require annual renewal or re-execution.

A client may terminate at any time without penalty by written notice. Termination is effective when Flameback receives the notice, or on a later date specified by the client. Flameback may terminate on thirty days’ written notice. On termination, Flameback’s trading authority ceases and the account remains with the custodian. Only fees earned through termination are due; the treatment of partial periods is described in the agreement.

Client rights and conflicts

Nothing in these disclosures limits rights that cannot lawfully be waived under federal or state securities laws, or Flameback’s fiduciary duty or responsibility for its own negligence, willful misconduct or bad faith. Different strategies or client accounts may hold different positions or trade in different directions. Flameback, its officers and employees may hold securities also held in client accounts, subject to the firm’s Code of Ethics. Clients and prospective clients may request a copy of that code. Material conflicts are disclosed in the brochure and the client agreement.