Risk information

Every investment on the capital market is fraught with opportunities and risks. Therefore, with this risk information we would like to give you an understanding of the risks of financial investments and related services. The value of the brokered ETFs is subject to fluctuations on the market. The price of the investments can rise or fall. In the most extreme case, the invested amount can be completely lost. In addition, the other documents made available and in particular the prospectuses of the capital management companies contain more detailed information with a view to the respective investment.

I. General Investment Risks

Economic risk:

Economies do not develop evenly, but are subject to cyclical fluctuations with phases of upswing and downturn, high phases and low phases. These cycles can last for several years or even decades and have an impact on the performance of investments. In phases of downturn, the value of the investment can be negatively affected. If the investor does not take into account the economic development or does not take it into account correctly and thereby makes or holds an investment at an unfavorable time, there is a risk of price losses.

Inflation risk:

Inflation risk is the risk that currency devaluation will lead to a reduction in real assets and income. If inflation is greater than the return on an investment, the result is a loss of purchasing power. In this case, one speaks of negative real interest, which means a loss in real income.

Country, transfer, payment transaction risk:

If the debtor is resident abroad, despite his ability and willingness to pay, there may be a delay or failure of payments if the foreign state influences capital movements or the transferability of its currency. The background could be economic or political instability. This country or transfer risk can lead to a financial disadvantage for the investor.

Currency risk:

In the case of investments in a foreign currency, the real return on the investment may differ from the nominal return on the investment. If exchange rates develop unfavorably, this change in exchange rate alone can lead to a financial disadvantage for the investor. If the foreign currency depreciates against the investor’s currency, the exchange rate may cause a depreciation on repayment.


The prices of investments show fluctuations over time. The volatility describes the extent of these fluctuations. The higher the volatility of an investment, the stronger the price swings up and down. Accordingly, investing in capital investments with a higher volatility is riskier because it is associated with a higher risk of loss.

Liquidity risk:

The market value of investments is subject to fluctuations. A certain period of time may elapse between the order to buy/sell an asset and its execution. This period depends on how liquid the market is. For liquid investments, there is usually a sufficient number of buyers and sellers to ensure continuous and smooth trading. In the case of illiquid investments or in market phases in which there is insufficient liquidity, however, there is no guarantee that an investment can be sold at short notice and at low price discounts. This can lead to asset losses if, for example, an investment can only be sold with price losses.

Risk of loan-financed security purchases:

If capital investments are financed by borrowing or if additional loans are taken out for the investment by borrowing on the securities, this leads to a leverage effect of the capital employed. This can significantly increase the risk for the investor. If the value of the capital investment falls, the loan may have to be repaid with additional funds and the investor is forced to sell the capital investments. In the case of lent investments, if the value of the investment falls, the lender may demand additional collateral and, in the event of non-fulfillment, demand the loan amount back.

Tax risks:

Income from investments is subject to tax for the investor. Taxes and duties reduce the investor’s actual return. A change in the tax framework for investment income can lead to a higher tax and contribution burden. In addition, investments abroad may be subject to double taxation. Tax policy can have a positive or negative effect on share price developments on the capital markets as a whole.

Cost risk:

Costs have a significant impact on the return because the costs have to be covered before a profit can be made. Banks, financial service providers and fund providers charge management fees, commissions and other costs for their services. In addition to the price of the capital investment, various costs, such as transaction costs or commissions, are incurred when buying and selling them. In addition, follow-up costs, such as deposit costs, must also be taken into account. Great care must therefore be taken with the costs of an investment.

II. Special Risks of Investing in Mutual Fund Shares

Issuing costs:

When investing in fund units, front-end loads and internal administration and management costs may apply. It should be noted: The amount of the initial charge and administration and management costs can vary. Ongoing administration and management costs add up over a longer holding period. With a short holding period, on the other hand, purchasing an investment fund with a high initial charge can be more expensive. The subscription fee and administration costs may not be incurred if the underlying securities are purchased directly, or not in the same amount.

Risk of falling unit prices:

Declines in the price of the securities contained in the fund are reflected in the unit price of the fund.

Risk concentration:

The more a fund is specialized, for example in a certain region, industry or currency, the more pronounced the return and risk profile. On the one hand, this means higher price opportunities, on the other hand, it is associated with a higher risk and higher volatility.

Risk of misinterpretation of performance statistics:

Performance statistics are used to compare the management success of mutual funds. However, they require interpretation and are only conditionally suited to reflect the investment success for the investor. For example, a front-end load is often not taken into account. For a future-related investment decision, past-related performance information does not provide reliable assistance.

Risk of transfer/termination of special assets:

Under certain conditions, the fund’s fund can be transferred to another fund or the capital management company can terminate its management. In this case, the continuation is possible at worse conditions and there is a risk that the investor will lose profits.

III. Specific risks of investing in ETFs

1. How ETFs work

Exchange Traded Funds (hereinafter “ETFs”) are open-ended investment assets. The funds paid into the investment funds by the investors are invested by the capital management company (hereinafter “KVG”) according to a defined investment strategy. The investor participates in the fund’s assets by purchasing securitized units. In the case of open-ended investment funds, the number of units is indefinite; the capital management company can continuously issue new units or redeem units that have already been issued.

The so-called net asset value is decisive for the pricing of an open-ended investment fund. It results from the value of the total fund assets divided by the number of units issued.

Investment funds are referred to as index funds that aim to replicate a specific index.

ETFs are a special type of index fund, the shares of which are traded on an exchange.

In addition to the option of acquiring and returning shares to the KVG, the investor can buy or sell his shares at any time via stock exchange trading. There is a stockbroker for every ETF who provides liquidity in stock market trading by publishing a buy price and a sell price.

2. Risks of ETFs

Exchange rate risks:

ETFs are not actively managed but passively track the underlying index. They are therefore subject to the same fluctuations as their base value. The price risks therefore correspond to the fluctuation risks of the underlying indices. The risk of fluctuations in an index results from the risks inherent in the securities that make up the respective index, in the case of the portfolios offered, that is, stocks and / or bonds (see point 3 below).

Exchange rate risk:

If the ETF is not quoted in the currency of the underlying index, the performance of the ETF will be negatively affected if the index currency weakens against the currency of the ETF.

Replication risk (physically replicating):

There may be discrepancies between the value of the underlying index and the ETF. In addition to transaction costs in connection with the composition of the index, the timing of dividend payments and tax treatment can also have a negative impact on performance.

Counterparty risk (synthetically replicating):

With synthetically replicating ETFs, there is a risk that the swap counterparty may not be able to meet his payment obligations. This can lead to losses for the investor.

Over-the-counter trading:

If trades in ETFs or the underlying components are carried out outside trading hours, there is a risk that the performance of the underlying index will differ. This can happen if the ETF and its underlying components are traded on several exchanges with different trading hours.

3. Risks of the underlying (index)

ETFs in the portfolios offered map indices made up of bonds or stocks. The risks of these securities described below are therefore reflected indirectly in the price risk of the ETF:

A) Special Risks of Investing in Bonds

Credit risk/issuer risk:

Interest-bearing securities (bonds) are issued by issuers. If the creditworthiness of the issuer falls or the issuer becomes insolvent, there may be a loss in value or a default with regard to the capital investment. A high rating does not guarantee the creditworthiness or solvency of the issuer – credit ratings are subjective.

Interest rate risk/price risk:

The price development of a bond is related to the development of the market interest rate. The development of market interest rates is influenced by government budget policy, monetary policy, inflation, the economy, foreign interest rates and exchange rate expectations. The longer the remaining term of the bond and the lower its nominal interest rate, the stronger the effect. If the market interest rate rises, the investor is exposed to a price loss.

B) Special Risks of Investing in Equities

Business risk / bankruptcy risk:

The buyer of a share is an equity provider and therefore a co-owner of a stock corporation. He participates in the economic development of society. There is the entrepreneurial risk that the corporation may develop differently than expected and the investor may not get back the capital invested. In the worst case, the bankruptcy of the company, there may be a complete loss of the invested amount.

Exchange rate risk:

Share prices show unpredictable fluctuations. The price development is influenced by the market development and the profit situation of the company. In the short and medium term, the influences of current events as well as economic, currency and monetary policy can overlap.

Dividend risk:

If the company has low profits or losses, the dividend can be cut or even canceled. Past dividend payments are not a reliable indicator of future dividend income.

Market Participant Psychology:

Rising or falling share prices depend on the assessment of market participants. In their decision to buy or sell, they are influenced not only by objective factors but also by irrational opinions and mass psychological behavior. This can lead to intensifying share price movements that are not economically justifiable.

IV. Special risks in the processing of securities orders

Price Risk:

The relevant stock exchange price may change disadvantageously between the time the order is placed and the execution on the stock exchange. Even if orders on the stock exchange are generally executed quickly and reliably, delays cannot be completely ruled out.

Course suspension:

In special situations, the stock exchange can temporarily suspend price fixing in order to prevent sharp price fluctuations. In this case, a buy or sell order will not be executed on a domestic stock exchange and will expire. The respective customs apply at a foreign exchange