Cumberland Capital Appreciation Fund may commence the use of certain derivative securities for hedging purposes, Cumberland Private Wealth Management Inc. announced Tuesday.

This change to the fund’s investment strategies will be effective June 1.

Cumberland says the Fund may use a variety of derivatives such as options, swaps and forward contracts, however derivatives will not be used for leverage, and the fund will not assume net short positions.

The intended use of derivatives is consistent with Toronto-based Cumberland Private Wealth Management’s philosophy and with the investment objective of the fund to achieve long-term capital appreciation while managing risk, the company says.

As the fund has a targeted 100% equity mandate, which is primarily, but not limited to North American equity securities, it will typically have a considerable amount of securities denominated in U.S. dollars. Having exposure to foreign currencies such as the U.S. dollar can impact returns through the fluctuation of the foreign exchange rates versus the Canadian dollar. The primary use of derivatives will be to execute a currency hedging strategy in an effort to reduce the overall risk of such currency fluctuations. From time to time derivatives may also be used to hedge against a decline in value of other assets in the fund.

IE