Risk Disclosure
An open-ended investment fund is a type of capital investment associated with risks. The general principle applies that risks increase alongside opportunities, i.e. the greater the return potential of an investment fund, the higher the risks of incurring losses with the investment.
Important Notice
The content provided on this website and in our educational offerings explicitly does not constitute investment advice or investment recommendations, according to Art. 20 Market Abuse Regulation (EU) No. 596/2014 (MAR).
This is general information for educational purposes. All decisions you make based on this information are your sole responsibility.
Information Purpose
The content offered serves exclusively informational, educational, and entertainment purposes. If names, numbers, data, or similar information about investment products are mentioned, these serve only as illustrative examples.
In no case are buy or sell recommendations or other instructions for action given, in particular no recommendations to hold investment products.
Open-Ended Investment Funds
General Information
Investment funds are vehicles for collective asset investment under the regulations of the German Capital Investment Code. A distinction is made between open-ended investment funds, which are open to an unlimited number of investors, and closed-ended investment funds, which are open to a limited number of investors.
A capital management company determines the investment strategy of an open-ended investment fund and professionally manages the fund assets. The fund assets are strictly separated from the assets of the capital management company as special assets for investor protection reasons.
The fund assets can consist of various asset types depending on the type of investment fund (e.g. securities, money market instruments, bank deposits, investment shares, and derivatives).
Differentiation Criteria of Open-Ended Investment Funds
The different types of open-ended investment funds can be differentiated according to the following criteria:
- Composition: The fund assets can consist of various asset classes (e.g. equities, interest-bearing securities, commodities).
- Geographical Focus: Open-ended investment funds can either focus on specific countries or regions or invest globally.
- Investment Horizon: Open-ended investment funds can have a fixed or unlimited term.
- Income Use: Open-ended investment funds can distribute income regularly or reinvest it to increase the fund assets (accumulate).
- Currency: The prices of investment unit certificates of open-ended investment funds can be offered in euros or a foreign currency.
Risks of Open-Ended Investment Funds
- Market Risk: Since the investment assets are invested in financial instruments, the value of your investment fund units is significantly influenced by economic developments and capital market developments.
- Volatility: Units in open-ended investment funds can normally be redeemed on each stock exchange trading day at the applicable unit value. The unit value is subject to fluctuations.
- Risk Concentration: The opportunities and correspondingly the risks of an investment fund increase with increasing specialization in certain investment focuses.
- Derivative Risks: Investment funds can invest in derivatives (e.g. options, financial futures, swaps). The use of derivatives can involve risks that go beyond the risks of other financial instruments.
- Tax Risks: Income earned from investment funds is subject to income tax for the investor. Changes in the tax framework for capital gains can lead to a change in the tax burden.
Special Risks of Exchange Traded Funds
Exchange Traded Funds (ETFs) are exchange-traded open-ended investment funds that replicate the performance of an index. They are also known as passive index funds.
- Price Risk: Since ETFs passively replicate an underlying index and are not actively managed, they generally carry the base risks of the underlying indices.
- Replication Risk: ETFs are also subject to replication risk, i.e. there may be deviations between the value of the index and the ETF (tracking error).
- Counterparty Risk: In addition, there is a counterparty risk with synthetically replicating ETFs. Should a swap counterparty fail to meet its payment obligations, the investor may incur losses.
No Guarantee of Success
We give no guarantee that financial goals will be achieved. Past performance is not a reliable indicator of future results.
The strategies and methods taught in our educational offerings have worked in the past, but this does not mean they will work in the future.
Disclaimer of Liability
All information provided is provided to the best of our knowledge and belief. However, it is not excluded that it may prove to be incomplete, incorrect, or outdated.
We assume no liability for investment and purchasing decisions made based on our content. Every investment is made at your own risk.
Personal Responsibility
Before making investment decisions, you should:
- Inform yourself comprehensively about the respective products and their risks
- Analyze your personal financial situation carefully
- Only invest money whose loss you can afford
- Consult a qualified and independent financial advisor if necessary
Tax Information
The tax treatment of capital gains depends on the personal circumstances of each investor and may be subject to future changes. We recommend consulting a tax advisor for tax-related questions.
Questions?
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