Risk information
General Information
As defined by regulatory provisions and contractually agreed investment guidelines, Quoniam Asset Management GmbH (“Quoniam”) invests on a discretionary basis in assets that contain risks as well as opportunities for growth in value. Thus it is possible to sustain losses, more specifically the chance that the market value of invested assets can fall. Although Quoniam aims to achieve constant growth with each investment strategy, this cannot be guaranteed. Investors’ risk however is limited to the amount invested. The investor shall not be required to make any payments beyond the sum invested. Concentrating investments in certain assets or markets may create further risks. The portfolio is therefore particularly highly dependent on the development of these assets or markets. Furthermore, because of inflation there is a risk that all the assets will lose relative value. The investment strategy may focus on the acquisition of assets from, for example, only a small number of sectors, markets or regions/ countries. Such concentration on few specific investment sectors may offer special opportunities which may have corresponding risks (e.g. narrow markets, high volatility within certain economic cycles).
The following risk categories may not apply to all portfolios equally but depend on the chosen investment strategy and the investment guidelines agreed upon.
Market Risk
The price or market value of financial instruments depends in particular on the development of capital markets, which in turn is affected by the general global economic situation, and the economic and political conditions in the respective countries. The general development of securities’ prices, especially on a stock exchange, may also be affected by irrational factors, such as sentiment, opinions and rumors.
Risk of Interest Rate Changes
The risk that the interest rate given at the point of the transaction may change accompanies an investment in fixed interest rate financial instruments. If the market interest rate rises above the level present at the point of issue, the returns of the fixed interest rate financial instrument will generally fall. However, if the market interest rate falls below the instruments fixed amount, its returns generally increase. This price dynamic ultimately means that the fixed interest rate instrument’s current returns generally reflect the current market interest rate. However, these price movements differ according to the duration of the fixed interest rate instrument. Those with shorter durations carry lower fluctuation risks than those with longer durations. In contrast, fixed interest rate instruments with shorter durations also generally deliver lower returns when compared to those with longer durations. Money market instruments generally have a very low interest rate fluctuation risk. This is due to their short duration, of under 12 months.
Country or Transfer Risk
A country or transfer risk exits when, for example, a foreign debtor, despite solvency, is unable, because of a lack of transfer capability or readiness on the part of his country of domicile, to make payments on time or at all. Thus, for example, payments to which the portfolio is entitled may not be made or may be made in a currency that is no longer convertible due to foreign exchange restrictions.
Settlement Risk
Especially when investing in unlisted securities, there is a risk that the settlement will not run as expected over a transfer system due to a delayed or not agreed upon payment or delivery.
Counterparty risk
The portfolio may incur losses through the default of an issuer or counterparty. Issuer risk describes the effect of particular developments of individual issuers on the price of a security, in addition to the general trends in the capital markets. Notwithstanding a careful selection of assets, losses may result if issuers become insolvent. Counterparty risk is the risk that a counterparty to a contract partially or completely defaults on its liabilities.
Currency Risk
If assets are held in currencies other than the base currency, the portfolio receives the income, repayments and proceeds from the investment in the respective currency. If the value of that currency falls against the base currency, this reduces the value of the portfolio.
Custody
The custody of assets, particularly abroad, carries a risk of value losses that may result from insolvency, violation of due diligence or improper conduct of the custodian or sub-custodian. With regard to bank deposits with a credit institution, there is a risk of value losses in the case of the insolvency of the bank.
Liquidity Risk
Assets may be acquired for the portfolio, which are not admitted to official trading on a stock exchange or on a regulated market. Acquiring assets is associated with the risk that problems may arise when seeking to sell the assets to a third party.
Legal and Tax Risk
The legal and tax treatment of the portfolio may change in unforeseeable and uncontrollable ways.
Risks on the Exercise of Shareholders’ Rights
If contractually agreed, Quoniam may exercise the voting rights attached to investments on behalf of the investor. A performance disadvantage may arise for the portfolio due to the practice of some countries’ markets to block pending stocks.
Risks Associated with Derivative Transactions
If the investment guidelines allow for the acquisition and sale of options, futures contracts or swaps, then the following risks apply:
- Fluctuations in the basis value can reduce the value of an option or a futures contract to nil. Through a value change in the underlying assets of a swap, the portfolio may also suffer losses.
- The implementation of a counter-trade (closing out), when required, incurs costs.
- The value of the portfolio’s assets may be more strongly affected due to the leverage effect of options, compared with the acquisition of underlying assets.
- The acquisition of options also carries the risk that the option won’t be exercised. This can occur when the realised price of the base value is not as expected, the result being the loss of value in the portfolio in the amount of the paid out option premium. When dealing with the sale of options, there is also the risk that the sub-portfolio will be required to take on options at a price above the current market value, or sell them at a price below the market value. The portfolio then incurs a loss calculated by ascertaining the price difference minus the received option’s premium.
- Futures contracts also carry the risk that the portfolio may incur losses following an unanticipated movement in the market price at maturity.
Information Risk
Trading decisions may be erroneous if made on the basis of missing, incomplete or incorrect information.
Special risk in context of financial portfolio management
Although the Investment Manager is required to always act in the best interest of the client, wrong decisions and misconduct by the Investment Manager may affect the portfolio. The asset manager cannot guarantee the success or avoidance of losses. Even without intent or negligence, the agreed investment guidelines may be violated by market behavior.
More detailed information
For more detailed information, in particular a description of the fund’s risks and rewards, please refer to the prospectus, the key investor information document and the most recently published annual and semi-annual report. These publications are available upon request and free of charge from the German payment and information agents, DZ BANK AG (Frankfurt/Main). The aforementioned documents constitute the sole binding basis for the purchase of fund units.
Notices concerning investment advice and restrictions on sales
The document does not take account of the recipient’s personal and financial circumstances and represents neither an offer nor a recommendation to buy or sell financial instruments or securities services. Reported previous changes in performance, simulations or forecasts are not a reliable indicator for future performance In any case, the recipient is encouraged to obtain a review of suitability for his or her personal circumstances as part of an individual investment advising session.
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Severability clause
Should parts or individual provisions of this legal information not or no longer comply with the prevailing legal situation, or do so only in part, this shall not affect the content or validity of the remaining parts of the legal information.