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ITEM 1A:Risk Factors
There have been no material changes to the Companys risk factors from the information disclosed in Part I - Item 1A - Risk Factors of the 2024 Form 10-K, except as set forth below:
Changes in trade policy, including new tariffs and retaliatory measures, by the U.S. and other countries could adversely affect the U.S. economy and financial markets, which would have a material adverse impact on fund AUM and the Companys revenues and earnings.
Changes to economic conditions and policies in the U.S. and other countries could negatively impact the Companys business. Recently, the U.S. trade environment has become increasingly uncertain. In some instances, escalated tariff disputes with major trading partners and related uncertainty around future trade policy are contributing to higher import costs, strained export demand, and delayed investments by businesses. These dynamics can slow economic growth and disrupt financial markets in the U.S. and other countries, as evidenced by market volatility following intensified U.S.China tariff actions. Deteriorating economic conditions or reduced corporate earnings resulting from tariffs and other protectionist policies may lead to broad market declines, lower asset values, and diminished investor confidence. Like other investment managers, DHCM earns fees largely based on the value of assets it manages, so any sustained market downturn or erosion of U.S. asset prices will directly impact DHCMs fees, and thus, reduce the Companys revenues and earnings. Furthermore, negative investor sentiment or risk aversion in response to trade tensions could trigger increased redemptions or shifts to other asset classes, compounding the pressure on ourthe Companys AUM and revenues.
An unfavorable tariff environment amplifies macroeconomic headwinds including the risk of a U.S. economic slowdown, market volatility, elevated inflation, and interest rate shifts which could negatively impact the Company. If trade tensions continue or worsen, the resulting economic and market turbulence could materially and adversely affect fund AUM as well as the Companys revenues, profitability and growth prospects. The Company cannot predict the future of U.S. or foreign trade policy or the full impact of recently imposed tariffs, but prolonged trade disputes or new tariff shocks increase the likelihood of further market declines and industry-wide outflows, which would have a material adverse effect on the Companys business, revenues, earnings and financial conditions.
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