When entering the capital market, you should always be aware that this is associated with risks. Hereby, we want to familiarize you with it in depth so that you can assess the implications and feel safe with your investment.
Risk means that you could receive less than the paid-in capital at the time of the payout. Even temporarily, the value of the investment can fluctuate and fall below the sum of the deposited amounts.
With Ginmon, you invest in a portfolio that contains funds with stocks and bonds. In general, securities offer opportunities for price increases, but price losses may also occur. The return is, to a certain extent, the investor’s reward for the risk he has taken. In general, the return increases in line with the risk, but at the same time increases the possibility of a loss.
The following risks should be considered when investing:
The prices of financial instruments such as ETFs / index funds are subject to fluctuations due to dynamic prices on the global stock exchanges. This applies to the funds themselves as well as to the included securities of the indices. Prices are determined by supply and demand, are subject to fluctuations and may fall in value. In extreme cases, even a total loss of the capital invested may occur.
Furthermore, economic, political or even societal conditions can affect price formation.
Credit and issuer risk
Some fund products enter security lending contracts with the securities included. This means that they pass on the securities they contain to third parties for a certain period of time. If this third party becomes insolvent, the securities lent are lost and the fund loses value overall.
To do this, some funds use derivatives (swaps) rather than physically buying securities. As a result, there is a credit risk regarding the issuing party (issuer or counterparty). Should this counterparty encounter financial difficulties, this may affect the value of the portfolio. Ginmon completely avoids such products and relies purely on physically replicated ETFs.
ETFs / index funds may be quoted in EUR, but also in foreign currencies such as USD. As the Ginmon portfolio is quoted in the local currency EUR, fluctuations in value may also occur if the EUR-USD exchange rate changes. Within a fund, fluctuations may also occur if, for example, the underlying index increases, but the securities included are in a different currency and the corresponding exchange rate moves in the opposite direction.
Changes in the general interest rate level can lead to price fluctuations. If the main refinancing rate falls, stock prices generally rise as investors switch to alternative forms of investment. If prices on the stock market rise, the prices of fixed-interest securities or bonds usually fall. If stock prices fall on the stock market, bond prices rise accordingly. To keep the overall fluctuation of the portfolio low, these two forms of investment are often combined.
For securities that are traded only in small amounts or only on selected stock exchanges, it can happen that, at certain times, no efficient price is built, or a security cannot be bought or sold.
The performance of ETFs / index funds is usually slightly below the performance of the underlying assets/indices themselves. On the one hand, the fund manager charges a fee for its services and, on the other hand, it can never replicate an index 100%, but only approximate. The extent of this tracking error depends, in part, on the approach adopted by the fund to replicate. The more liquid the securities are within the index, the more accurate it can be reflected. If dividend payments are not reinvested immediately, this may also result in a different performance.
In addition to those mentioned here, other risks associated with investing may occur.
The contents of this platform do not constitute investment advice or solicitation to buy or sell financial instruments. We also do not provide legal or tax advice. However, we would like to point out that income from capital assets is subject to capital gains tax, withholding tax and / or other taxes. Some of these taxes are paid directly by the custodian bank. If you have any questions, please contact the responsible tax authority or a tax adviser.