Important Risk-related information:
The main risks for investors if they invest in the Fund are as follows:
- Equity Risk
The price of an equity security can increase or decrease in accordance with changes in the issuer’s risk exposure or in the economic conditions of the market in which the security is traded. Equity markets are more volatile than fixed income markets, where under stable macroeconomic conditions income over a given period of time can be estimated with reasonable accuracy
- Risk of investing small and mid-cap companies
The fund is exposed to small and medium-capitalisation companies, which may increase market and liquidity risks. The prices of these securities therefore increase and decrease more sharply and more rapidly in response to market movements than do the prices of large-cap stocks. The fund’s net asset value could behave similarly and therefore fall more sharply than that of a similar investment in large-capitalisation equities.
- Low Benchmark Index diversification risk
Since the index to which investors are exposed represents given regions, sectors and strategies it may provide less diversification of assets in comparison with a broader index that is exposed to several regions, sectors or strategies. Exposure to such a less-diversified index may result in higher volatility than more diversified markets. Nevertheless, diversification rules of the UCITS Directive still apply to the fund’s underlying assets at all times.
- Capital at risk:
The initial capital invested is not guaranteed. Therefore, investor’s capital is at risk and the amount originally invested may not be wholly or partially recovered, notably if the Benchmark Index is subject to a negative performance over the investment period.
- Liquidity Risk on Primary Market:
If, when the FCP adjusts its exposure, the markets linked to this exposure are limited, closed or subject to significant differences in the purchase / sale price, the value and / or liquidity of the FCP may be adversely affected. The inability, due to low trading volumes, to carry out transactions linked to the replication of the Index may also have consequences on the process of subscriptions, conversions and redemptions of units.
- Liquidity risk on a listing market (specific risk related to the listed share (EUR Share Class)
The FCP’s stock market price may deviate from its indicative net asset value. The liquidity of FCP units on a listing market may be affected by any suspension that may be due, in particular, to:
- a suspension or termination of the calculation of the Index, and / or
- a suspension of the market (s) of the underlyings of the Index and / or
- the impossibility for a given listing market to obtain or calculate the indicative net asset value of the FCP and / or
- a breach by a market maker of the rules applicable on this market and / or
- a failure in the systems, in particular computer or electronic systems of this market.
- Currency Risk
The Fund is exposed to currency risk, as the underlying securities composing the Benchmark Index may be denominated in a currency different from the Benchmark Index, or be derived from securities denominated in a currency different to that of the Benchmark Index. Changes in exchange rates may therefore adversely affect the Fund’s Benchmark Index.
- Risk that the investment objective is only partially achieved:
There is no guarantee that the Fund’s Investment Objective will be achieved.
Indeed, no asset or financial instrument will allow automatic and continuous replication of the Benchmark Index, especially if one or more of the following risks occur:
- Index Tracking Risks
While the Fund seeks to track the performance of its Benchmark Index, there is no guarantee that it will achieve perfect tracking and the Fund may potentially be subject to tracking error risk, which is the risk that its returns may not track exactly those of its Benchmark Index, from time to time. In particular, for liquidity reasons, the fund may have to keep part of its net assets in cash, these assets therefore not following the evolution of the benchmark index. In addition, the Company relies on an index licence granted by a third-party index provider to use and track the Benchmark Index. In the event that the index provider terminates or varies an index licence, it will affect the ability of the Fund to continue to use and track its Benchmark Index and to meet its investment objective.
- Risk due to a shift in tax policy:
Any change in the taxation legislation in any jurisdiction where the Fund is registered for sale or cross-listed, could affect the tax treatment of the Shareholders of the Fund. In the case of such an event, the Fund’s Manager shall not be liable to any investor for any payment required to be made by the Company or the corresponding Fund to a fiscal authority.
- Risk due to a shift in the underlyings’ tax policy:
Any change in the taxation legislation in any jurisdiction of the underlyings of the Fund could affect the tax treatment of the Fund. As a result, in case of a discrepancy between the estimated and effective tax treatment applied to the Fund, the net asset value of the Fund may be affected.
- Regulatory Risk affecting the Fund:
In the event of a change in the regulatory regime in any jurisdiction where the Fund is registered for sale or cross-listed, the process of subscriptions, conversions and redemptions of Shares may be affected.
- Regulatory Risk affecting the underlyings of the Fund:
In the event of a change in the regulatory regime in any jurisdiction of the underlyings of the Fund, the net asset value of the Fund as well as the process of subscriptions, conversions and redemptions of Shares may be affected.
- Risk related to events affecting the Index:
In the event of an event affecting the Index, the manager may, under the conditions and limits of the applicable legislation, have to suspend subscriptions and redemptions of shares in the Fund. The calculation of the Fund’s net asset value may also be affected. If the event persists, the manager of the Fund will decide on the appropriate measures to be adopted, which could have an impact on the net asset value of the Fund.
In particular, “events affecting the Index” means the following situations:
- The Benchmark Index is deemed to be inaccurate or does not reflect actual market developments;
- The Benchmark Index is permanently cancelled by the Benchmark Index provider;
- The Benchmark Index provider fails to calculate and announce the Benchmark Index level;
- The Benchmark Index provider makes a material change in the formula for or method of calculating the Benchmark Index (other than a modification prescribed in that formula or method to maintain the calculation of the Benchmark Index level in the event of changes in the constituent components and weightings and other routine events) which cannot be efficiently replicated with reasonable costs by the Fund;
- One or several constituents of the Benchmark Index become illiquid, (i) their quotation being suspended on a regulated stock exchange, or (ii) becoming illiquid constituents for the securities negotiated over the counter (such as, for example, the bonds);
- The constituents of the Benchmark Index are impacted by transaction costs in relation to the execution, the settlement, or specific tax constraints, except if those costs or tax constraints are reflected in the performance of the Benchmark Index.
- Sustainability risk
This is the risk associated with an event or situation in the environmental, social or governance field which, if it occurs, could have a significant negative impact, actual or potential, on the value of the investment
The Fund does not promote environmental and / or social characteristics and does not have a sustainable investment objective. Furthermore, sustainability risks are not systematically integrated and do not constitute a central element of the investment strategy. The Fund thus remains exposed to Sustainability Risks and the occurrence of these risks may result in a drop in the Fund’s net asset value. In general, given the theme of the index followed by the Fund, it does not take into account the negative effects of investment decisions on sustainability factors.
