Risks

General economic and political risks

The Fund’s investments are subject to risks of a general economic nature, such as a decline in ­commercial activities, a rise in interest rates, inflation and a rise in the prices of raw materials. The value of the Fund’s investments can be influenced by political developments and terrorist activities.

Market risks

There are financial risks involved in investing in shares. Investors must realize that the share price of the securities in which the Fund takes positions can fluctuate. In the past, stock markets have ­generated favourable returns. But this offers no indication or guarantee for the future. There is a risk that the entire market as a whole or a particular asset class decreases in value, which will impact the value of the Fund’s Investment. Because of price fluctuations, the Fund’s Net Asset Value can be subject to fluctuations too which can mean that ­Unit holders will not receive their entire investment upon termination of their participation in the Fund.

Performance Risk

The Fund is aiming for an average annual return in the medium term (3 to 5 years) of 10% after ­deduction of all costs. However, there is no guarantee that the targeted return will be achieved. The risk that the targeted return will not be reached can vary based on the possible choices made due to the investment policy. No guarantees can be given by third parties that the targeted return will be achieved. Furthermore, no guarantee of any kind can be given that the Fund Manager’s analysis of expected developments in the short or long term are correct. If the Fund Manager assesses the development of an investment’s value wrongly, this can lead to a loss for the Fund if the market value of a purchased investment declines or, in the case of a short position, the market value of the sold shares rises.

Capital Risk

The dividends and interest received by the Fund, together with any capital gains, will not be distributed but will be reinvested. Hence, no profit distributions take place. Through the redemption of Units, there is a potential risk of a reduction of the Fund’s capital in case that more Units are redeemed than issued.

Concentration risk

Because investments will only be made in about 25 companies on the ‘long’ side of the portfolio, this can lead to wider ­fluctuations in the Fund’s Net Asset Value than if investments were spread more widely. Because of the Fund’s strategy, its return can differ significantly from the world share index. This gives rise to specific risks that can result in considerable differences in the performance of the Fund and the world share index, both in the positive and the negative senses.

Liquidity risk in investments

The Fund will in particular take positions in companies with a market capitalization of less than € 2.5 billion. In general, these are less marketable. There is a risk that a position cannot be sold within a reasonable period and against a reasonable price.

Short positions

In theory, the possible loss on these positions is unlimited, while the possible profit cannot exceed the invested amount.

Historical relations and correlations

Optimizing the Fund’s portfolio will be based on (historical) correlations between shares mutually and between shares in relation to an index. These historical relations can change and correlations can change in times of major market tensions. The aforementioned can give rise to greater volatility in returns, both positive and negative.

Derivatives

It will be possible for the Fund to use quoted derivatives in order to protect positions taken. These products can behave in a volatile manner, which means their use can have great impact (both positive and negative) on the value of the Fund.

Counterparty risks

There is a risk that an issuing institution or counterparty will default on meeting its obligations.

Currency risks

The Fund does not hedge currency positions. This means that investments in currencies other than the € could give rise to fluctuations in the Fund’s Net Asset Value, both positive and negative.

Inflation

Inflation can decrease the relative value of a Unit. The Fund does not hedge inflation risk nor does it take any other measures to mitigate this risk.

Leverage effect

The Fund can invest with borrowed money (leverage) up to 25% maximum of the Fund’s Net Asset Value. This can give rise to greater profits as well as greater losses (the so-called ‘leverage effect’). This means that the Fund’s Net Asset Value could become negative and result in the bankruptcy of the Fund. There will also be interest charges.

Disposal risks

There is a risk that disposals via a payment system cannot be made as expected because a counterparty fails to pay for or deliver financial instruments in time, as expected or at all.

Risk of loss of assets given into custody

There is a risk that assets given into custody may be lost should the Depository, Legal Owner, Custodian or sub-custodian become insolvent or act negligently or fraudulently.

Risk of changes in the (fiscal) law

This is the risk that the fiscal treatment of the Fund changes in the negative sense or that different legislation is enacted that has a negative influence on the Fund and its Unit holders.

Dependence on key personnel of the Fund Manager

The investment policy is executed by (personnel employed) by the Fund Manager. Besides the risks specifically related to the Fund, there are also risks related to the Fund Manager. These risks relate to key personnel employed by the Fund Manager unexpectedly leaving, risks associated with outsourcing (administrative) duties to third parties, liability and reputational risks. This could all have a negative impact on the continuity of the Fund.