Pillar 3 Disclosure Statement Portfolio Advantage LLP ("Portfolio Advantage" or "the LLP") is authorised and regulated by the UK Financial Conduct Authority ("FCA") as CPMI firm. As a CPMI firm Portfolio Advantage is subject to the capital adequacy rules of both the MiFID and AIFMD regimes. Of these the more onerous, given the nature of Portfolio Advantage’s business is the AIFMD rules. The FCA capital adequacy framework consists of three Pillars: Pillar 1 sets out the minimum capital amount that meets the Firm's credit, market and operational risk; Pillar 2 requires the Firm to assess whether its Pillar 1 capital is adequate to meet its risks and is subject to annual review by the FCA (the ICAAP as set out below); and Pillar 3 requires disclosure of specified information about the underlying risk management controls, capital position and remuneration. This wording is Portfolio Advantage’s Pillar 3 disclosure statement. As required by the rules of the FCA the LLP has undertaken an 'Internal Capital Adequacy Assessment Process' ("ICAAP"). The ICAAP is reviewed annually or whenever there is a material change to the business, whichever is sooner. The most recent ICAAP review was undertaken as at 31 December 2021 during the early part of 2022. The ICAAP process considered the risks that the LLP is exposed to and the controls that exist to mitigate those risks. It further considered whether additional capital was required to meet the risks that the LLP faces including, as required by the FCA rules, the potential cost of closing the LLP down in the unlikely event that such action was necessary. The LLP's Pillar capital requirement is the higher of the base capital requirement of €50,000, the sum of the credit risk and market risk requirements and the fixed overhead requirement. Currently the base capital requirement, which is €125,000 or £105,000 is in excess of the alternative capital requirements and thus the Pillar 1 capital requirement is £105,000. The LLP has assessed that the risks that it takes do not generate an additional capital requirement under Pillar 2 other than the LLP allowed for a 10% potential change in GBP/EUR exchange rates. The LLP will re-evaluate the exchange rates periodically. For 2022, the MiFID capital rules will change. This will have no practical impact on the LLP. Risk Management: The LLP is an asset manager and does not risk its own capital in the financial markets. The LLP does not have regulatory permission to take proprietary trading risk and does not take such risk. Accordingly, the risks that the LLP faces are more limited in scope than for other types of regulated firms. The risks and controls detailed below are, in accordance with the BIPRU rules, risks that the LLP faces in respect of its own activities. The risk management processes and controls for monies managed by the LLP are not part of these disclosures. Capital: The capital of the LLP is in the form of capital contributed by members less cumulative losses. All of the capital of the LLP is Tier 1 capital. As at 31 December 2021 the LLP had Tier 1 capital of £127,143 made up of members’ capital of £914,904 less amounts due from members of £787,760. Principal risks and uncertainties: The LLP has identified and performed an assessment of the key risks that may impact its business. The LLP is an investment manager and does not undertake proprietary trading. The material risks to the LLP largely fall within the "Business Risk" and "Operational Risk" categories. Market risk: For the purposes of these disclosures, market risk is the risk value of, or income arising from, the LLP's assets and liabilities varying as a result of changes in the market price of financial assets, changes in exchange rates or changes in interest rates. The LLP does not take proprietary trading risk. The LLP's risk management activities are on behalf of clients and the LLP's own money is not at risk. The only market risks that the LLP potentially faces are: risks related to the short term investment of surplus cash belonging to the LLP and currency risk due to the mismatch of the currencies in which income is earned and the currencies in which costs are incurred. For capital adequacy purposes, in accordance with the rules, the LLP monitors its current exposure due to amounts held and receivable in currencies other than sterling. The directors consider potential future exposures as part of their overall risk monitoring. Credit risk: Credit risk refers to the potential risk that the LLP's bankers or customers fail to meet their obligations as they fall due. The LLP has credit risk on its clients for fees earned but not received. The LLP has appropriate policies to monitor this exposure on an ongoing basis. The LLP also has credit exposure to its bankers and monitors this risk regularly. Liquidity risk: The LLP's liquidity policy is to maintain sufficient liquid resources to cover cash flow imbalances and fluctuations in fees received/receivable. The LLP maintains cash balances at its bankers to cover liquidity risk. Operational risk: Operational risk is the risk of loss arising from failed or inadequate internal processes or systems, human error or other factors. The risk is managed by the directors who have responsibility for putting in place appropriate controls for the business. The LLP documents the risks that it is exposed to and the compensating controls in its ICAAP. Business risk: Business risk is the risk that the LLP may not be able to carry out its business plan and could therefore suffer losses if its income falls. This is a risk that all businesses face. The directors continuously monitor income and expenditure levels and adjust their plans accordingly. Concentration risk: Concentration risk is the risk that the LLP is overly dependent upon any one customer or any one group of connected customers either in terms of income dependency or in terms of credit risk. Currently the only such exposure is to the LLP's bankers. Pension obligation risk: The LLP has no defined benefit schemes and thus has no pension obligation risk. Interest rate risk: The LLP is not exposed to interest rate risk. Residual risk: Residual risk is any risk not covered by the specific risk categories outlined above. The directors do not consider that there are any residual risks that require the LLP to maintain any additional capital. Overall Capital Summary (£,000): Total Tier 1 Capital: 127 Pillar 1 Capital requirement: 105 Additional requirement under Pillar 2: 11 Total Capital requirement:116 Capital surplus: 11 Capital adequacy percentage 109% Remuneration disclosures: Under the Remuneration Code (the "Remuneration Code"), the LLP, as is standard for an investment management firm, is classified as a Proportionality Level three firm. Proportionality Level: Three firms are permitted to disapply many of the technical requirements of the Remuneration Code and proportionately apply the Remuneration Code's rules and principles in establishing the LLP's policy. During the year ended 31 December 2021 the LLP had 5 code staff members. All of the code staff are members of the LLP. The total remuneration paid to members of the LLP was £89,652.00. The LLP has only one business area which is its investment management business.