Risk information

Last updated: 01.03.2021

I. General Risks when Investing in Financial Instruments

There are general risks associated with investing in financial instruments that apply to all asset classes and services related to investing in financial instruments. Some of these risks are described below.

1. Economic risk

Economic risk describes the risk of losses that arise from the fact that the investor does not take into account the economic development or does not take it into account correctly in his investment decisions and thereby makes a financial investment at the wrong time or holds or does not sell financial instruments in an unfavorable phase of the economic cycle.

The overall economic development of an economy typically runs in waves, the phases of which can be divided into the sub-areas upswing, high phase, downturn and low phase. These economic cycles and the interventions by governments and central banks that are often associated with them can last for several years or decades and have a significant impact on the performance of various asset classes. Unfavorable economic phases can therefore have a long-term impact on a financial investment.

The changes in the economic activity of an economy, for example, always have an impact on the price development of securities: The prices fluctuate roughly in rhythm with the economic upswing and downturn in the economy.

Investors should therefore note that forms of investment which are advisable in certain economic phases and which can be expected to generate profits are less suitable in other phases and may result in losses.

2. Inflation Risk

The inflation risk describes the danger of suffering financial loss through monetary devaluation. If inflation - i.e. the positive change in prices for goods and services - is higher than the nominal interest rate on an investment, this results in a loss of purchasing power equal to the difference. In this case, one speaks of negative real interest rates. The real interest rate can serve as a benchmark for a possible loss of purchasing power. If the nominal interest rate of a financial investment is 4% over a certain period and inflation is 2% over this period, the real interest rate is +2% per year. In the case of an inflation of 5%, the real interest rate would only be -1%, which would correspond to a loss of purchasing power of 1% per year.

3. Country Risk

A foreign state can influence the movement of capital and the transferability of its currency. If a debtor resident in such a country is unable to meet an obligation (on time) despite his own solvency, we speak of a country or transfer risk. An investor can suffer financial loss as a result.

Reasons for influencing the financial markets and / or transfer restrictions despite sufficient creditworthiness can be, for example, a lack of foreign currency, political and social events such as a change of government, strikes or foreign policy conflicts.

4. Currency Risk

In the case of investments that are denominated in a currency other than the home currency of the investor, the income generated does not only depend on the nominal income of the investment in the foreign currency. It is also influenced by the development of the exchange rate between the foreign currency and the home currency. In addition to long-term factors such as inflation trends, medium-term factors such as trade and current account figures, short-term factors such as current market opinions or political conflicts can also influence a country's foreign exchange rate. The investor can suffer financial loss if the foreign currency in which the investment was made is devalued against the domestic currency. In this case, the loss due to the currency devaluation can significantly exceed the return otherwise achieved on the investment and thus lead to an overall loss for the investor. Conversely, a devaluation of the home currency can result in an advantage for the investor.

5. volatility

The prices of financial instruments fluctuate over time. The degree of these fluctuations over a certain period of time is known as volatility. The volatility is calculated on the basis of historical data using certain statistical methods. The higher the volatility of a financial instrument, the stronger the price swings up and down. An investment in financial instruments with a high volatility is therefore riskier, as it entails a higher potential for loss.

6. Liquidity Risk

The liquidity risk of a financial investment describes the risk for an investor not to be able to sell his securities at any time at market prices. In principle, the supply and demand of a market are decisive for the processing of securities transactions. If there are only a few and very different orders for a security in the market, a market is referred to as illiquid. In this case, the execution of buy or sell orders is not possible immediately, only in part or only under unfavorable conditions. As a rule, an average sales order leads to noticeable price fluctuations or can only be executed at a significantly lower price level.

7. Cost Risk

When buying and selling financial instruments, additional costs are incurred in addition to the current price of the financial instrument. The additional costs can be divided into three categories. The first category looks at costs that are directly related to the purchase. These are transaction costs and commissions that are passed on from banks to customers. The second category is made up of follow-up costs, such as custody account management costs. As a third category, ongoing costs, such as management fees for investment fund units, must also be taken into account. The amount of the ancillary costs directly influences the realizable return an investor can achieve with a financial instrument. The higher the additional costs, the higher the return must be to cover the costs.

8. Tax Risks

Income generated from financial investments is usually subject to taxes and / or duties for the investor. Changes in the tax framework for investment income can lead to a change in the tax burden. In addition, investments abroad may be subject to double taxation. Taxes and levies therefore reduce the investor's effectively achievable return. In addition, tax policy decisions can have a positive or negative effect on the overall price development of the capital markets.

9. Risk of loan-financed financial investments

Investors may be able to obtain additional funds for their investments by borrowing or lending their financial instruments, with the aim of increasing the amount invested. This procedure creates a leverage effect on the capital employed and can lead to a significant increase in risk. This leverage effect is increased again if the credit-financed financial instrument itself has a leverage effect, as in options transactions or futures. If the value of the financial instrument falls, it may no longer be possible to meet obligations to make additional contributions on the loan or interest and repayment claims on the loan, and the investor is forced to (partially) sell the financial instruments. Investors should only use freely available capital for the financial investment , which is not required for the current lifestyle and covering current liabilities. Investors should never trust that they will be able to repay the loan taken out and the interest from the income from the financial investment, but rather ensure that they can pay off the loan and the interest if the financial investment leads to losses or even total loss.

10. Risk of Incorrect Information

Correct information forms the basis for successful investment decisions. Wrong decisions can be made due to missing, incomplete or incorrect information as well as incorrect or delayed transmission of information. For this reason, if you are interested in a financial investment, it may be appropriate not to rely on a single source of information, but to obtain additional information.

11. Transmission Risk

Orders by the investor to buy or sell financial instruments must contain certain absolutely necessary information so that the investor can claim execution against the investment services company and misunderstandings can be avoided. This includes in particular the instruction to buy or sell, the number of units or the nominal amount and the exact description of the financial instrument.

12. Risk of self-custody of securities

Keeping securities in custody creates the risk of losing the documents, for example through fire or theft. The procurement of new securities documents embodying the rights of the investor can be time-consuming and costly. Investors who keep their securities in custody also run the risk of missing important deadlines and dates, so that certain rights from the securities can only be asserted with a delay or not at all.

13. Risk of custody of securities abroad

Securities acquired abroad are usually held in safe custody abroad by a third party selected by the custodian bank. This can lead to increased costs, longer delivery times and imponderables with regard to foreign legal systems. In particular in the case of insolvency proceedings or other enforcement measures against the foreign custodian, access to the securities may be restricted or even excluded.

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II. Special Risks When Investing in Certain Financial Instruments

1. Special risks of stocks

1.1 Risk of bankruptcy

A shareholder is not a creditor, but an equity provider and co-owner of the stock corporation and thus exposed to all entrepreneurial risks. In extreme cases, ie if the stock corporation becomes insolvent, shareholders will only participate in the liquidation proceeds after all creditors' claims have been satisfied.

1.2 Exchange rate risk

Share prices show unpredictable fluctuations. From the shareholder's point of view, the exchange rate risk can be divided into general market risk and company-specific risk. Both taken individually or cumulatively, influence the share price development. The general market risk of a share is understood to be the risk of a price change as a result of the general trend on the stock market. The price change is not directly related to the company's economic situation. All stocks are subject to such market risk. The extent can vary. The company-specific risk describes the risk of a decline in the price of an individual company due to factors that directly or indirectly affect the company under consideration. Management decisions, for example, can be listed as factors. The company-specific risk can therefore lead to stock prices taking a very individual course contrary to the general trend.

The confidence of market participants in the respective company can also influence the price development. This applies in particular to companies whose shares have only been admitted to the stock exchange or another organized market for a short period of time; with these, even small changes in forecasts can lead to strong price movements. If the proportion of freely tradable shares owned by many shareholders (so-called free float) is low in a share, even smaller buy and sell orders can have a strong impact on the market price and thus lead to higher price fluctuations.

Furthermore, the price development of the share is determined by the expectations of the market participants in relation to the specific company and the general market development as well as the investment behavior of the market participants. The investment behavior of market participants can also be influenced by irrational factors such as moods, opinions and rumors, irrational considerations and behavior of the mass psychology such as herd behavior or orientation towards individual market participants or other exchanges. This can lead to the fact that existing trends in the market are further strengthened and become disconnected from the overall economic situation or that of the company and no longer reflect this.

1.3 Dividend Risk

Dividends describe the participation of shareholders in the profits of a company. The dividend of a share is largely based on the profit generated by the company and can rise, fall or fail entirely in one year, depending on the company's financial situation. Furthermore, a shareholder does not necessarily have a right to the distribution of the dividend. If a stock corporation deems provisions to be necessary due to likely financial burdens, it can suspend the distribution of dividends under certain conditions.

1.4 Interest rate risk

In the course of rising interest rates, share prices may decline - usually with a certain time lag. This is due, for example, to the fact that companies now have to take out loans at higher interest rates. On the other hand, in addition to the higher interest rate, there may be attractive investment opportunities for investors.

1.5 Forecast risk

The investor can incorrectly or temporarily incorrectly estimate the future performance of the share even when using individual or different analysis techniques (fundamental analysis or chart analysis) and purchase or sell the shares at a time that is unfavorable for the investor.

1.6 Risk of losing or changing membership rights and delisting

Actions by the company, such as a change of legal form, mergers, spin-offs or company agreements, can change or partially or completely cancel the rights of the shareholder. In addition, if a major shareholder is present, minority shareholders can, under certain conditions, be excluded from the company as part of a squeeze-out. These measures taken by the company can mean that the investor has to sell his shares at an early stage with losses and cannot realize the intended investment period in the shares. Furthermore, the measures can lead to price losses for the share. In the case of lost membership rights, the investor may be entitled to a compensation claim against the company due to legal regulations, which, however, may lag behind the lost membership right in terms of value.

Furthermore, the company can decide to revoke the admission of the shares to trading on the stock exchange (delisting). In this case, the shares can only be traded with difficulty and regularly with significant price discounts to the previous stock exchange price. Due to this restricted tradability, the announcement of a delisting regularly leads to significant price losses for the share concerned.

1.7 Risk of low tradability for unlisted shares

In the case of shares that are not traded on a stock exchange, there is a risk that the shares cannot be sold immediately.

1.8 Risk in Trading Penny Stocks

So-called penny stocks are stocks whose value is often below one in the respective local currency. In the euro zone, these are stocks with a value below EUR 1. Penny stocks are usually not traded on organized exchanges. Instead, penny stocks are mostly traded over the counter. Penny stocks once acquired outside of a market organized on an exchange may not be resold at all or under difficult conditions and - due to the discrepancy between supply and demand rates - only with considerable price disadvantages. Trading illiquid penny stocks is therefore highly risky and can lead to the total loss of the capital invested.

In the context of unregulated over-the-counter trading, the regulatory protective provisions, e.g. the Securities Trading Act, only apply to a limited extent. Trading via unregulated broker platforms therefore also harbors great risks (e.g. an increased risk of price manipulation by other market participants) for shareholders.

2. Special risks of bonds

2.1 Issuer / credit risk

The credit risk is understood to mean the risk of the issuer's insolvency or illiquidity. This means a possible, temporary or permanent inability of the issuer to meet its interest and / or repayment obligations on time. In case of doubt, an investor is threatened with a total loss of his capital. The creditworthiness of an issuer can result from changes in the economy, changes in the issuer itself (e.g. economic crisis in a country) or political developments. The creditworthiness of many issuers is assessed at regular intervals by rating agencies and divided into risk classes. An issuer with a poor credit rating usually has to pay a higher interest rate as compensation for the credit risk to the buyer of the bonds than an issuer with an excellent credit rating. In the case of secured bonds (“covered bonds”), the creditworthiness primarily depends on the scope and quality of the collateral (cover pool) and not exclusively on the creditworthiness of the issuer.

2.2 Inflation Risk

Inflation risk is the change in the purchasing power of the final repayment and / or the interest income from an investment. If inflation changes during the term of a bond in such a way that it is above the bond's interest rate, the investor's effective purchasing power falls (negative real interest rates).

2.3 Interest rate risk and exchange rate risk

The key interest rate determined by the central bank has a decisive influence on the value of a bond. When interest rates rise, for example, the interest on a bond with a fixed interest rate becomes relatively less attractive and the price of the bond falls. A rise in market interest rates is therefore usually accompanied by falling bond prices. Even if an issuer pays all interest and the nominal amount at the end of the term, a bond investor can suffer a loss if, for example, he sells before the end of the term at a price that is below the issue or purchase price of the bond.

2.4 Termination Risk

In the terms of issue, the issuer of a bond can reserve the right to early termination. Bonds are often given such a unilateral right of termination in periods of high interest rates. If the market interest rate falls, the risk increases for a creditor that the issuer will make use of his right of termination. In this way, the issuer can reduce its liabilities or refinance itself more cheaply by issuing a new bond. In this case, a creditor is exposed to a reinvestment risk, as a new investment may be less advantageous due to changed market conditions.

2.5 Risk of Low Tradability

In the case of bonds that are not traded on a stock exchange, there is a risk that the bond cannot be sold immediately.

2.6 Special Risks Associated with Fixed Income Securities

Investing in fixed-income securities involves the risk that the market interest rate at the time a security is issued changes. If the market interest rate increases compared to the interest rate at the time of issue, the prices of the fixed-income securities usually fall. On the other hand, if the market interest rate falls, the price of fixed-income securities rises. This price development means that the current yield on the fixed-income security roughly corresponds to the current market interest rate. These price fluctuations vary depending on the (remaining) term of the fixed-income securities. Fixed-income securities with shorter terms have lower price risks than fixed-income securities with longer terms. Fixed-income securities with shorter terms, on the other hand, generally have lower returns than fixed-income securities with longer terms. Due to their short term of a maximum of 397 days, money market instruments tend to have lower price risks. In addition, the interest rates of various interest-related financial instruments denominated in the same currency with a comparable remaining term may develop differently.

2.7 Special risks of convertible bonds and bonds with warrants

Convertible bonds and bonds with warrants certify the right to exchange the bond for shares or to purchase shares. The development of the value of convertible and option bonds is therefore dependent on the price development of the share as the underlying. The risks associated with the performance of the underlying shares can therefore also have an impact on the performance of the convertible and warrant bonds. Bonds with warrants, which give the issuer the right to offer the investor a pre-determined number of shares instead of the repayment of a nominal amount ( reverse convertibles ), are increasingly dependent on the corresponding share price.

3. Special risks with participation certificates and participation rights

The special risks associated with profit participation certificates and profit participation rights depend essentially on the specific design of the profit participation certificate or profit participation right.

3.1 Profit participation certificates

Participation certificates can be influenced in the long term by the share price of the issuing company or by the market interest rate. Depending on the design, the following risks may exist with participation certificates.

3.1.1 Distribution Risk

Unless a minimum interest rate is guaranteed in the participation certificate conditions, the interest on the participation certificate is linked to the fact that the company issuing the participation certificate makes a profit or pays a dividend. In the event of the loss of the company, no distribution will be made.

3.1.2 Repayment Risk

Depending on the terms and conditions of the participation certificate, a loss to the company during the term of the participation certificate can also lead to a reduction in the repayment amount.

3.1.3 Termination Risk

If the terms of the participation certificates provide for a right of termination for the issuing company, early termination by the company can lead to early repayment of the paid-in capital. In this case, the redemption rate for termination specified in the terms and conditions of the participation certificates should be observed.

3.1.4 Liability risk

Participation certificate holders are usually treated with lower priority in the event of the company's insolvency or liquidation. You will only get back the invested capital to the extent that all of the company's other creditors have been satisfied.

3.1.5 Risk of low tradability

Despite a possible stock exchange listing of participation certificates, a lack of demand on the secondary market can mean that a participation certificate cannot be sold, not immediately or only at a discount.

3.2 Profit participation rights

In the case of profit participation rights, the transfer of the profit participation right to third parties can be excluded or restricted, depending on the structure of the conditions of the profit participation agreement. In this case, the holder of the profit participation right cannot dispose of the amount paid in or only with restrictions before the term of the profit participation right expires.

4. Special risks with certificates

4.1 Special risks for all types of certificates

4.1.1 Issuer risk

The issuer risk is the risk that the issuer of the certificate will not be able to meet its obligations under the certificate during or at the end of the term of the certificate. In this case, the investor is exposed to the risk of a partial or total loss of the capital invested, as he does not receive any income payment in the form of interest and / or does not receive the repayment amount at the end of the term. In addition to the risk of the issuer of the certificate becoming insolvent, there is also the insolvency risk of the companies whose securities form the basis of the certificate. In this case too, depending on the design of the certificate, the investor may lose all of the capital invested.

4.1.2 Exchange rate risk

Certificates relate to underlyings that may be subject to fluctuations in value. If the price of the underlying changes, the price of the certificate also changes. Falling prices of the underlyings can mean significant losses for the investor, depending on the conditions of the certificate. Downward price changes may no longer be compensated for once an agreed lower threshold value (barrier) has been reached or fallen below. Then the investor no longer benefits from a subsequent sharp rise in the price of the underlying asset. An underlying, the price of which fluctuates significantly, therefore represents a greater risk for the investor because the lower threshold values ​​that may have been agreed can be reached more quickly.

4.1.3 Correlation Risk

In addition to the value of the underlying, other factors can also influence the price development of the certificate. These include changes in the interest rate level, market expectations, dividends retained by the issuer or any exchange rate risks that occur with certificates in foreign currency. The price of the certificate will therefore not accurately reflect the performance of the underlying during the term. This effect, which cannot be precisely calculated in advance, is called the correlation risk.

4.1.4 Risk of deterioration in value

The settlement or repayment amount at the end of the term is determined by the value of the underlying asset on the due date. Therefore, the settlement amount can also be below the purchase price of the certificate. This can lead to a total loss of the invested capital for the investor. Only with agreed capital protection is this risk wholly or partially excluded. Since capital protection depends on the solvency of the issuer, the issuer risk must also be taken into account here.

4.1.5 Liquidity Risk

When purchasing a certificate, investors should check whether there is a sufficiently liquid secondary market for it and whether the issuer or a third party continuously provides binding prices for the certificate. The issuer usually provides indicative buying and selling prices for the certificate on an ongoing basis, but is not legally obliged to do so. A lack of demand on the secondary market can mean that a certificate cannot be sold, not immediately or only at a discount. Underlying delivery risk

In the case of certificates on individual values, the delivery of the base value is regularly possible. If an underlying does not develop as favorably as assumed when the certificate was purchased, the underlying itself is often delivered instead of the settlement amount at the end of the term. In this case, the investor receives one share, for example. The current market value of the underlying can be lower than the purchase price paid by the investor for the certificate. This can lead to a partial or, in extreme cases, a total loss of the invested capital for the investor if he wishes to sell the underlying asset. If the investor does not sell the underlying, he is subject to the price risks associated with holding the underlying, which can lead to further losses for the investor if the price of the underlying continues to fall.

4.1.6 Currency Risk

There are currency-hedged and non-currency-hedged products for certificates that refer to underlyings in foreign currencies. Certificates with currency hedging are also called quanto certificates. With them, the currency risk is hedged, which can be associated with internal costs and hidden fees for the investor. In the case of certificates that are not currency hedged, currency risks arise both in the event of early sale and in the event of redemption on the due date, which the investor must bear directly.

4.1.7 Influence of the issuer's hedge transactions on the Certificates

The issuer regularly hedges itself in whole or in part against the financial risks associated with the certificates by means of hedge transactions (hedging transactions) in the underlying asset of the certificate. These hedging transactions can have an impact on the price of the underlying asset forming on the market and thus have a negative impact on the value of the certificates or on the amount of the settlement amount due at the end of the term. This can lead to a partial loss of the invested capital for the investor.

4.2 Special risks of certificates due to their structure

4.2.1 Risk of capital loss at the end of the term

In the case of bonus certificates and express certificates, capital may be lost at the end of the term if a specified barrier has been reached or fallen below during the term. In this case, the investor receives a payment that corresponds to the value of the base value on the due date. This can be less than the purchase price for the certificate. The investor therefore fully bears the price risk of the underlying asset as soon as a defined barrier has been reached or fallen below during the term. If the price of the underlying asset falls, the investor's repayment claim also falls proportionally. In extreme cases, this can lead to a total loss of the invested capital for the investor.

4.2.2 Correlation Risk

The price of the certificate is based on the price of the underlying asset, but usually does not reflect it exactly.

If the base value of bonus certificates is quoted close to the barrier, this can lead to increased price fluctuations of the bonus certificate, especially at the end of the term, as slight changes in the price of the base value can then decide whether a bonus payment is made or not.

In the case of express certificates, the price increase potential is limited to the defined repayment amount. The redemption amounts in the event of early maturity are also specified in the terms and conditions of the issue, so that even strong price movements in the underlying asset at the beginning or during the term cannot be tracked linearly.

Discount certificates also usually do not accurately reflect the performance of the underlying asset, as the cap limits the opportunity for profit for them. If, at the end of the term, the repayment amount or the value of the delivered shares, taking into account the subscription ratio, is below the purchase price of the certificate, the investor suffers a loss. The investor is therefore threatened with a total loss of the capital invested if the underlying value of the respective discount certificate is worthless.

4.2.3 Liquidity risk

In the case of bonus certificates and express certificates, the tradability of the certificate may be restricted during the term if the base value falls significantly below the barrier. In this case, only the issuer may be available as a trading partner.

4.3 Special risk with capital protection certificates

Capital protection certificates involve product-related risks if the issuer and the investor have not agreed on fixed interest payments, but instead have made these dependent on certain market conditions. Depending on the development of the market, these interest payments can fail completely.

4.4 Special risks with leverage certificates

4.4.1 Total loss risk due to knock-out

Leverage certificates carry a particularly high risk of total loss. If the certificate terms and conditions stipulate that the certificate expires worthless immediately upon entry into the knock-out agreement, this results in a total loss of the invested capital for the investor.

4.4.2 Leverage Risk

Leverage certificates involve an increased risk of loss because, due to the leverage effect, they display fluctuations in the underlying asset disproportionately, i.e. intensify them.

4.4.3 Influence of ancillary costs

In the case of leverage certificates, the commissions due per transaction combined with a low order value can lead to costs that, in extreme cases, can significantly exceed the value of the leverage certificate. This can lead to a total loss of the invested capital for the investor.

4.4.4 Liquidity Risk Before Maturity

The possibility of selling certificates on the secondary market is not guaranteed. Therefore, there is no guarantee that a leverage certificate can be sold in good time before the knock-out threshold is triggered. A sale may no longer be possible as soon as the base value approaches this threshold.

4.5 Special risks with factor certificates

Due to the leverage that characterizes factor certificates, the value of the certificate can fluctuate widely on a daily basis. There is therefore the risk that an investor could suffer very high losses up to and including the total loss of the capital invested.

The factor certificate is a complex financial instrument. Under certain circumstances, it is difficult for the investor to understand the price trend of a factor certificate. If, for example, the price of the underlying asset is initially subject to strong fluctuations for several (stock exchange) days, but after this phase of fluctuation it is finally listed again at the value it originally had at the time the certificate was issued, this does not necessarily mean that the the related factor certificate has the same value after the fluctuation phase as at the beginning of the fluctuation phase lasting several days. This is due to the valuation of factor certificates. For these financial products, the percentage gain or loss of the base value is determined on a daily basis. The respective end of the day is then set as the basis for calculation for the following day (chaining). As a result, the price of the factor certificate can deviate significantly from the price of the underlying after the end of a fluctuation phase. In the example outlined here, in which the price of the base value has returned to the initial value after the strong fluctuations, the price of the associated certificate would have a significantly lower value.

In the case of factor certificates, there is also the risk of a so-called negative sideways return if the certificate shows considerable losses, especially with a longer holding period, despite the sideways price path of the underlying.

In addition, factor certificates usually have a daily right of termination for the issuer . This can lead to the situation that the investor, despite the acquisition of a profitable factor certificate with a positive performance, would not be able to participate to the expected extent in the price performance of the corresponding underlying if the factor certificate is terminated early by the issuer.

Once losses have been generated, investors can only compensate for them to a limited extent because of the high leverage by continuing to hold the factor certificate.

4.6 Special risks associated with certificates on raw materials

The factors influencing raw material prices are very complex, so that only a few factors that can specifically affect raw material prices are briefly explained below.

4.6.1 Cartels and regulatory changes

If there are cartels of raw material producers, these usually influence the raw material price. Trading in raw materials is also subject to certain rules from supervisory authorities or stock exchanges. A change in these rules can affect the price development of the raw material.

4.6.2 Cyclical behavior of supply and demand

Certain raw materials are produced all year round, but are only in greater demand in certain times of the year (e.g. energy). Other raw materials are in demand all year round, but only produced at a certain time of the year (e.g. agricultural products). This can lead to strong price fluctuations.

4.6.3 Direct investment costs

The acquisition of raw materials involves costs for storage, insurance and taxes. In contrast, no interest or dividends are paid on commodities. This affects the total return on raw materials and thus influences the price of one of the certificates on raw materials.

4.6.4 Political Risks

Raw materials are often produced in emerging countries. This harbors political risks, such as embargoes, armed conflicts or economic and social tensions, which can affect the prices of raw materials.

4.6.5 Weather and natural disasters

Unfavorable weather conditions can affect the supply of certain raw materials temporarily or for the entire year. Natural disasters can cause lasting damage to production and conveyor systems. If this causes a supply crisis, this can lead to strong price fluctuations.

5. Special risks from option transactions

Due to their design, option transactions are associated with a very considerable risk of loss, which every investor should be aware of. With warrants it should be noted that the probability of losses or a total loss is very high.

5.1 Effects of costs

For all option transactions, minimum commissions, percentage commissions or fixed commissions per transaction (purchase and sale) can lead to costs that, in extreme cases, can even exceed the value of the options many times over. Exercising options often results in additional costs. Overall, these costs can be of a considerable order of magnitude compared to the price of the options. Any costs change and worsen the profit expectations of those who buy the option because a higher price swing than what the market believes is realistic is required to get into profitability.

Option deals are a bet on the future course of the price. The option buyer has to pay the so-called option premium to place this bet. Whether the option holder achieves a profit depends on whether a difference can be redeemed by exercising the option or closing out the option, which results between the base price and the difference redeemed by closing out or exercising the option. Whether a profit is made depends on whether the difference is higher than the premium paid. This must first be earned again before the option buyer even comes into profitability. As long as the difference is lower than the premium paid, the option holder is in the so-called partial loss or option zone. If the strike price does not rise at all or if it falls during the option period, the option buyer loses all of his premium.

It must be taken into account that the amount of the premium corresponds to the price expectations that the market still considers realistic, even if they are already speculative. The option premium settles in the convergence of bid and counter-bid and thus marks the framework of a risk area that is considered to be justifiable by the market. All additional costs, fees and possible surcharges on the option premium worsen the ratio of opportunity and risk. Because these costs must first be earned before the option holder even comes into profitability. Depending on the amount of costs incurred in addition to the option premium, the ratio of opportunity to risk changes so much due to the amount of the fees that realistically, profits can no longer be expected. Surcharges on the stock market option premium also lead to the fact that with every transaction the chance of achieving an overall profit decreases and possibly even destroys any chance of winning.

5.2 Price Change Risk

The price of an option is subject to fluctuations based on various factors. This can lead to the worthlessness of the option. Because of the limited duration of options, the investor cannot trust that the price of the option will recover in time.

5.3 Dependence of the option on the underlying

In the case of call options, impairments in value occur regularly when the price of the underlying asset falls, and in the case of put options when the price of the underlying asset rises. Conversely, not every positive price development of the underlying security has to have a positive consequence for the value of the option. The price of the option can even fall if the price development of the underlying is overcompensated, for example, by falling volatility with a negative impact or the imminent expiration date.

5.4 Risk of forfeiture, depreciation and total loss

Options can expire and thus become worthless or lose value. The shorter the remaining term, the greater the risk of a loss in value or even total loss.

Impairments occur if the expected price developments do not materialize during the term. Because of the limited terms of options, it cannot be assumed that the course or price of an option will recover in good time before the end of the term.

5.5 Option risk

The seller of the option (writer) is obliged to deliver or accept the underlying asset at the agreed price from the buyer after exercising the option. The writer bears the risk of a price increase (call) or price decline (put) of the underlying.

5.6 Unlimited Risk of Loss

Entering into option positions can lead to a total loss of the amount invested due to unfavorable market developments, the occurrence of conditions or the passage of time. Depending on the position taken, there is even an unlimited risk of loss that goes beyond the total loss (obligation to make additional contributions). The risks are not limited to the collateral provided, but can exceed this.

5.7 Risk from decay of fair value

The fair value of a warrant, ie the premium paid over and above its intrinsic value, decreases steadily as the remaining term of the warrant decreases. When the term expires, the fair value expires and is zero. The loss of fair value occurs faster as the expiration date approaches. Purchases of warrants that have a relatively high fair value shortly before they expire are therefore associated with a particular risk.

5.8 Leverage Risk

Warrants have a leverage effect on the earnings opportunities and the risk of loss of the capital employed: They show changes in the price of the underlying asset over-proportionally and thus offer higher opportunities during their term - with high risk of loss at the same time, as the leverage effect leads to both higher and higher profits Losses compared to a corresponding investment in the underlying. The greater its leverage, the riskier it is to buy a warrant. The leverage effect is particularly evident in the case of warrants with very short remaining terms.

In contrast to factor certificates, the leverage for warrants is not fixed. Rather, it can change during the term, depending on the design of the respective warrant and the development of the underlying.

5.9 Issuer Risk

In addition to the risk of insolvency in relation to the underlying, the option holder also bears the credit risk of the issuer of the warrant. If the issuer of the warrant is unable to meet his payment obligations from the warrant, the option holder will suffer a loss even if the value of the underlying is favorable for him.

5.10 Counterparty Default Risk

In the case of non-exchange option transactions, the buyer of the option is exposed to the counterparty risk of his contractual partner. This consists in the fact that the creditworthiness of the contractual partner when exercising the option may not be sufficient for the latter to be able to fulfill his obligation from the option to the buyer of the option. If the counterparty default risk is realized, the buyer of the option does not receive the service to which he is entitled after exercising the option from the writer of the option and may have to procure this by other means at additional costs.

5.11 Transactions affecting the issuer

Issuers of warrants regularly protect themselves, in whole or in part, against the financial risks associated with the warrants by means of hedging transactions in the underlying asset (e.g. share underlying warrants). This can influence the price of the underlying asset and thereby have a negative effect on the value of the warrant or on the amount of the redemption amount to be claimed by the warrant holder.

5.12 Correlation Risk

Option transactions can be used to hedge other transactions. In this case, there is a correlation risk for the investor if the option transaction concluded for hedging is not congruent with the transaction to be hedged. In this case, the performance of the position to be hedged and the option transaction may develop differently, so that a complete hedge is not achieved.

5.13 Margin Payment Risk

To secure the possible payment obligations from the option transactions, the parties or one party to the option transaction may be obliged to provide security in the form of account balances (so-called margin). The required margin is recalculated at regular intervals up to daily. If the possible payment obligation from the option transaction increases, the respective party may be obliged to increase its margin accordingly for a short time, for which the party needs additional liquidity. If a party does not meet the margin requirements, this can lead to an inevitable premature close-out of the option transaction and thus to a realization of the loss for the party.

5.14 Risk of inability to limit losses

The investor in an option transaction bears the risk that opposing transactions with which he wishes to limit or exclude the risk from an existing option transaction cannot be concluded or can only be concluded to a limited extent and the investor cannot therefore limit or exclude his loss as desired.

5.15 Early Close Out Risk

If a moratorium is imposed on the bank through which the customer has entered into the option transaction or if it becomes insolvent, this can lead to a compulsory closing out of all option transactions entered into by the customer through the bank. This can lead to an involuntary realization of losses.

6. Special risks in futures

Investors need to be aware that futures have a symmetrical risk profile. Profits and losses are mirror images of each other and are basically unlimited. The loss of one is the gain of the other.

6.1 Price change risk

The price of futures is subject to fluctuations that depend on various factors. This can lead to the futures becoming worthless. Due to the fixed maturity of the future, the investor cannot trust that the price will recover in time.

6.2 Basis risk

The basis risk arises from the fact that the future price does not regularly correspond to the price of the underlying asset. This difference is also known as the base. The value of the base is subject to fluctuations and cannot be predicted with certainty.

The basis risk can be realized when hedging positions in the underlying by entering into an opposing future. There is a risk that the price of the future will not develop completely parallel to the price of the underlying asset. If a position in the underlying is to be closed out in the meantime by a hedging transaction in the future, due to the uncertainty regarding the value of the basis, it cannot be predicted with any certainty whether this will succeed in full. As a result, the hedging transaction may result in unpredictable losses or gains.

6.3 Leverage Risk

For the conclusion of a futures contract, lower financial resources are initially required, since only the margin to be deposited has to be used. However, futures regularly have a leverage effect on the earnings opportunities and the risk of loss of the capital employed: They show changes in the price of the underlying asset over-proportionally and thus offer higher opportunities during their term - with higher risk of loss at the same time, as the leverage effect leads to higher profits as well as leads to higher losses compared to a corresponding investment in the underlying.

6.4 Correlation Risk

Futures can be used to hedge other trades. In this case, there is a correlation risk for the investor if the future entered into for hedging is not congruent with the transaction to be hedged. In this case, the performance of the position to be hedged and that of the future may develop differently, so that a complete hedge is not achieved. Because futures are a standardized product, full hedging is regularly not possible.

6.5 Delivery Risk

In the event that there is no close-out, both buyer and seller must fulfill their contractual obligations. This means that the buyer has to pay the agreed purchase price and the seller has to deliver the underlying assets of the contract.

The buyer therefore needs liquid funds that will regularly by far exceed the margin paid. The seller must buy the underlying assets at the current market price if he does not own them. This can be well above the agreed future price, which at least theoretically leads to an unlimited risk of loss.

6.6 Margin Payment Risk

To secure the possible payment obligations from the futures, the parties or one party of the future may be obliged to provide security in the form of account balances (so-called margin). The required margin is recalculated at regular intervals up to several times a day. If the possible payment obligation from the future increases, the respective party may be obliged to increase its margin accordingly at short notice, for which the party needs additional liquidity. If a party does not meet the margin requirements, this can lead to an inevitable premature closing of the future and thus to the realization of the loss for the party.

6.7 Early Close Out Risk

If a moratorium is imposed on the bank commissioned by the customer for the purchase of the future or if it becomes insolvent, this can lead to a compulsory closing out of all futures that the customer holds at the bank. This can lead to an involuntary realization of losses.

6.8 Additional costs

When buying and selling futures, there are additional costs such as commissions and transaction costs. These additional costs charged to the customer reduce the potential profit of the customer and increase any loss of the customer. The customer must first earn the incidental costs with the business so that he can make a profit from the business.

7. Special Risks of Investing in Mutual Funds

7.1 Fund management

If the investment result of the fund turns out to be very positive in a certain period of time, this success may also depend on the suitability of the people involved and thus the correct decisions of the management. However, the composition of the fund management team can change. New decision-makers may then be less successful.

7.2 Issue and redemption costs

Initial surcharges and costs for the administration of the fund result in total initially higher total costs for an investor than if he were to acquire the assets held in the fund directly. In the case of a short holding period, the acquisition of funds with a high issue surcharge can therefore be more expensive than the acquisition of funds with no issue surcharge. In addition, redemption costs in the form of redemption fees may arise when the fund is returned. An issue surcharge paid when purchasing units or a redemption surcharge paid when units are sold can reduce or even consume the success of an investment, especially if the investment is only for a short period of time.

7.3 Fluctuation in the fund unit value

The fund unit value is calculated from the value of the fund's assets divided by the number of units put on the market. The value of the fund's assets corresponds to the total of the market values ​​of all assets in the fund's assets less the total of the market values ​​of all liabilities of the fund's assets. The fund unit value is therefore dependent on the value of the assets held in the fund assets and the amount of the liabilities of the fund assets. The assets held in the fund are subject to market risks that can lead to losses in value.

In real estate investment funds, fluctuations arise, among other things, from different developments on the real estate markets. Negative value developments are also possible. If the value of these assets falls or the value of the liabilities increases, the fund unit value falls.

7.4 Risk of negative credit interest

The capital management company invests the fund's liquid assets with the depositary or other banks for the account of the fund. For some of these bank balances an interest rate has been agreed which corresponds to the European Interbank Offered Rate (Euribor) minus a certain margin. If the Euribor falls below the agreed margin, this leads to negative interest on the corresponding account. Depending on the development of the European Central Bank's interest rate policy, short, medium and long-term bank balances can generate negative interest rates.

7.5 Risks in connection with securities loan transactions entered into by the Fund

If the capital management company grants a loan for securities for the fund's account, it transfers this to a borrower who, after the transaction has ended, transfers back securities of the same type, quantity and quality (securities loan). The capital management company has no right of disposal over loaned securities during the business period. If the security loses value during the course of the transaction and the capital management company wants to sell the security as a whole, it must terminate the loan transaction and wait for the usual settlement cycle, which can result in a risk of loss for the fund.

7.6 Risks associated with repurchase agreements concluded by the Fund

If the capital management company retires securities of the fund, it sells them and undertakes to buy them back for a surcharge at the end of the term. The repurchase price plus surcharge to be paid by the seller at the end of the term is determined when the transaction is concluded. Should the securities given in the pension lose value during the business term and should the capital management company want to sell them in order to limit the losses in value, it can only do this by exercising the right of early termination. The early termination of the business can result in financial losses for the fund. In addition, it may turn out that the surcharge to be paid at the end of the term is higher than the income that the capital management company has generated by reinvesting the cash received as sales price.

If the capital management company retires securities for the fund's account, it buys them and has to sell them again at the end of a term. The repurchase price plus a surcharge is already determined when the transaction is concluded. The securities taken into repurchase serve as collateral for the provision of liquidity to the contractual partner. Any increases in the value of the securities do not benefit the fund.

7.7 Risks in connection with derivative transactions

The capital management company may enter into derivative transactions for the fund (e.g. buying and selling options and entering into futures contracts or swaps). These can not only be used to hedge the investment fund, but also represent part of the investment policy. Due to the leverage effect of derivative transactions, the fund is disproportionately involved in the development of an underlying asset. The use of derivatives can result in losses that cannot be foreseen and even exceed the amounts used for the derivatives business.

7.8 Risks in connection with the receipt of collateral by the Fund

The capital management company receives collateral for derivative transactions, securities lending and repurchase transactions. Derivatives, loaned securities, or repurchased securities may increase in value. The collateral received could then no longer be sufficient to fully cover the delivery or retransfer claim of the capital management company against the counterparty.

The capital management company can invest cash collateral in blocked accounts, in high quality government bonds or in money market funds with a short term structure. The credit institution with which the bank balances are kept can fail, however. Government bonds and money market funds can develop negatively. When the transaction is terminated, the collateral invested may no longer be available in full, although the capital management company has to return it to the fund in the amount originally granted. The Fund would then have to bear the losses incurred on the collateral.

7.9 Suspension of redemption of units

The capital management company may temporarily suspend the redemption of the units if there are exceptional circumstances that make a suspension appear necessary, taking into account the interests of the investors. Extraordinary circumstances in this sense can be, for example, economic or political crises, redemption requests on an extraordinary scale, the closure of stock exchanges or markets, trading restrictions or other factors that affect the determination of the unit value. This means that there is a risk that the units may not be able to be redeemed at the time requested by the investor due to limited redemption options. The unit value may also decrease in the event of a suspension of unit redemption; z. B. if the capital management company is forced to sell assets below market value during the suspension of the redemption of units. The unit price after resumption of unit redemption may be lower than the price before the suspension of redemption.

The capital management company is also obliged to refuse and suspend the redemption of the units for a limited period if, in the event of extensive redemption requests, the liquid funds are no longer sufficient to pay the redemption price and to ensure proper management or are not immediately available. This means that investors cannot redeem their units during this time.

The acquisition of units is not limited by a maximum investment amount. Extensive redemption requests can affect the fund's liquidity and require the redemption of units to be suspended. If the redemption of units is suspended, the unit value may decrease; z. B. if the capital management company of a real estate fund is forced to sell real estate and real estate companies below market value during the suspension of the redemption of shares. A temporary suspension can lead to a permanent suspension of the redemption of units and the dissolution of the fund assets, for example if the liquidity required to resume the redemption of units cannot be obtained by selling real estate. It can take a long time, possibly several years, to dissolve the fund. For the investor there is therefore the risk that he will not be able to realize the holding period he has planned and that substantial parts of the invested capital may not be available for an indefinite period of time or may be lost altogether.

7.10 Changes to the investment policy or the investment conditions

The capital management company can change the investment conditions. This can also affect the rights of the investor. The capital management company can change the fund's investment policy, for example by changing the investment conditions, or it can increase the costs to be charged to the fund.

7.11 Dissolution of the Fund

The capital management company has the right to terminate the management of the fund. The capital management company can completely dissolve the fund after the management has been terminated. The right of disposal over the fund's assets is transferred to the custodian after a notice period of six months. For the investor there is therefore the risk that he may not be able to realize the holding period he has planned. When the fund assets are transferred to the custodian, taxes other than German income taxes may be charged to the fund assets. If the fund units are booked out of the investor's custody account after the liquidation process has ended, the investor may be charged income tax.

7.12 Transfer of all assets of the fund to another investment fund (merger)

The capital management company can transfer all of the fund's assets to another fund. In this case, the investor can exchange his units free of charge for units in the other fund, which is compatible with the previous investment principles, or redeem his units at no additional cost. This also applies if the capital management company transfers all of the assets of another fund to this fund. The investor must therefore make a new investment decision ahead of time as part of the transfer. Income taxes may apply when the unit is returned. If the units are exchanged for units in a fund with comparable investment principles, the investor may be charged taxes, for example if the value of the units received is higher than the value of the old units at the time of purchase.

7.13 Transfer of the fund to another capital management company

The capital management company can transfer the management of the fund to another capital management company. The fund remains unchanged, as does the position of the investor. However, in the context of the transfer, the investor must decide whether he considers the new capital management company to be just as suitable as the previous one. If he does not want to remain invested in the fund under new management, he must return his units. Income taxes may apply here.

7.14 Inflation Risk

Inflation carries a risk of devaluation for all assets. This also applies to the assets held in the fund. The rate of inflation may exceed the fund's growth in value.

7.15 Currency Risk

Fund assets may be invested in a currency other than the fund currency. The fund receives the income, repayments and proceeds from such investments in the other currency. If the value of this currency falls in relation to the fund currency, the value of such investments and thus also the value of the fund's assets are reduced.

7.16 concentration risk

If the investment is concentrated in certain assets or markets, the fund is particularly dependent on the development of these assets or markets.

7.17 Risks in connection with investing in fund units

The risks of shares in other investment funds that are acquired for the fund (so-called “ target funds ”) are closely related to the risks of the assets contained in these target funds or the investment strategies pursued by them. Since the fund managers of the individual target funds act independently of one another, it can also happen that several target funds pursue the same or opposing investment strategies. As a result, existing risks can accumulate and potential opportunities can cancel each other out. As a rule, it is not possible for the capital management company to control the management of the target funds. Their investment decisions do not necessarily have to correspond to the assumptions or expectations of the capital management company. The capital management company will often not be aware of the current composition of the target funds in a timely manner. If the composition does not correspond to its assumptions or expectations, it may only be able to react with a significant delay by returning target fund units.

Open-ended investment funds in which the fund purchases units could also temporarily suspend redemption of units. The capital management company is then prevented from selling the shares in the target fund by returning them to the capital management company or custodian of the target fund against payment of the redemption price.

7.18 Profitability and achievement of the investor's investment objectives

There can be no guarantee that investors will achieve their desired investment success. The unit value of the fund can fall and lead to losses for the investor. Investors could thus get back an amount less than the amount originally invested. A front-end load paid when purchasing units can also reduce or even consume the success of an investment, particularly if the investment is only for a short period of time.

7.19 Special Risks for Exchange Traded Investment Funds

The price for the on-exchange acquisition of units in a fund that was not specifically set up for stock exchange trading may differ from the value of the fund's assets per unit. One reason for this is that prices in exchange trading are subject to supply and demand. Differences also result from the different temporal recording of the unit prices. While the share price is determined once a day by the capital management company, new prices are usually continuously generated on the stock exchange.

7.20 Special risks for selected open-ended investment funds          

7.20.1 Specific risks with ETFs

Particular risks can arise from investing in ETFs:

a. Price risk

Since ETFs passively track an underlying index and are not actively managed, they generally bear the basic risks of the underlying indices. ETFs therefore fluctuate in direct proportion to their underlying. The risk-return profile of ETFs and their underlying indices are therefore very similar. If the DAX falls for example, by 10%, the price of an ETF that tracks the DAX will also fall by around 10%.

b. Concentration of risk

The investment risk increases with the increasing specialization of an ETF, for example in a certain region, industry or currency. However, this increased risk can also result in increased earnings opportunities.

c. Exchange rate risk

ETFs involve exchange rate risks if their underlying index is not quoted in the ETF's currency. If there is a weakening of the index currency against the currency of the ETF, the performance of the ETF is negatively affected.

d. Replication risk

ETFs are also subject to a replication risk, ie there may be discrepancies between the value of the index and the ETF (“ tracking error ”). This tracking error can go beyond the difference in performance due to the ETF fees. Such a discrepancy can be caused, for example, by cash on hand, rebalancing, corporate actions, dividend payments or the tax treatment of dividends.

e. Counterparty risk

In addition, there is a counterparty risk with synthetically replicating ETFs. If a swap counterparty fails to meet its payment obligations, the investor can suffer losses.

f. Over-the-counter trading

If ETFs and their underlying components are traded on different exchanges with different trading hours, there is a risk that transactions in these ETFs will be carried out outside the trading hours of the respective components. This can lead to a deviation in the performance compared to the underlying index.

7.20.2 Special risks for open-ended real estate funds

The risks below can impair the performance of the fund's assets or the assets held in the fund's assets and thus have a negative impact on the unit value and the capital invested by the investor.

a. Significant risks from real estate investment, participation in real estate companies and encumbrance with a heritable building right

Real estate investments are subject to risks that can affect the unit value through changes in income, expenses and the market value of the real estate. This also applies to investments in real estate held by real estate companies. The following examples of risks are not an exhaustive list.

i. In addition to the change in general economic conditions, there are risks inherent in real estate, such as vacancies, rent arrears and rent defaults, which can result from changes in the quality of the location or the tenant's creditworthiness, among other things. Changes in the quality of the location can mean that the location is no longer suitable for the selected use. The condition of the building can make maintenance expenditures necessary, which cannot always be foreseen. In order to limit these risks, the capital management company strives for a high level of third-party use of the property and a tenant structure that encompasses many industries. Continuous maintenance and modernization or restructuring of the properties should maintain or improve their competitiveness.

ii. Risks from fire and storm damage as well as natural hazards (floods, floods, earthquakes) are covered internationally by insurance, provided that the appropriate insurance capacities are available and this is economically justifiable and objectively necessary.

iii. Real estate, especially in metropolitan areas, can potentially be exposed to the risk of war and terrorism. Without being affected by an act of terrorism, a property can be economically devalued if the property market in the affected area is permanently impaired and the search for tenants is difficult or impossible. Terrorism risks are also covered by insurance insofar as the corresponding insurance capacities are available and this is economically justifiable and objectively necessary.

iv. Risks from contaminated sites (such as soil contamination, asbestos installations) are carefully examined, especially when purchasing real estate (if necessary by obtaining appropriate appraisal reports). Despite all due care, however, risks of this type cannot be completely ruled out.

v. During project development, risks can e.g. B. due to changes in the land-use planning and delays in the granting of building permits. Increases in construction costs and completion risks are counteracted as far as possible through appropriate arrangements with the contractual partners and their careful selection. However, it is important to point out the remaining risks as well as the fact that the success of the initial rental depends on the demand situation at the time of completion.

vi. Real estate can be fraught with construction defects. These risks cannot be completely ruled out even through careful technical examination of the property and, if necessary, obtaining appraisal reports prior to acquisition.

vii. When purchasing real estate abroad, risks arising from the location of the real estate (e.g. different legal and tax systems, different interpretations of double taxation agreements, different views when determining transfer prices or income accruals and changes in exchange rates) to take into account. In addition, the development of case law can have a negative or beneficial effect on real estate investments. In the case of foreign real estate, the increased administrative risk and any technical difficulties, including the transfer risk for current income or sales proceeds, must also be taken into account. There are currency opportunities and risks when doing business in foreign currencies.

viii. When a property is sold, warranty claims can arise from the buyer or other third parties, for which the fund's assets are liable, even if the greatest commercial care is taken.

ix. When acquiring stakes in real estate companies, risks arising from the corporate form, risks in connection with the possible loss of shareholders and risks of changes in the tax and corporate law framework must be taken into account. This applies in particular if the real estate companies are based abroad. In addition, it must be taken into account that in the event of the acquisition of investments in real estate companies, these may be burdened with obligations that are difficult to identify. Finally, there may be no sufficiently liquid secondary market in the event of the intended sale of the participation.

x. Real estate investments can be financed with leverage. This is done to achieve a so-called leverage effect (increase in the return on equity by borrowing capital at an interest rate below the property return) and / or, in the case of properties or real estate companies located abroad, for currency hedging (borrowing in the foreign currency of the country where the property is located) The loan interest can be deducted for tax purposes, provided that the applicable tax laws allow this. If outside financing is used, changes in the value of the property have a greater impact on the equity capital employed in the fund assets, e. For example, a 50 percent loan financing would double the effect of a lower value of the property on the invested fund capital compared to a full equity financing.

xi. If a property is encumbered with a heritable building right, there is a risk that the person entitled to heritable building does not meet his obligations, in particular not paying the ground rent. In this and in other cases, the heritable building right can be prematurely reversed. The capital management company must then seek another economic use of the property, which can be difficult in individual cases. This also applies accordingly to reversals after the contract expires. Finally, the encumbrances on the property with a heritable building right can limit the fungibility, ie the property may not be as easy to sell as without such encumbrance.

b. Significant risks from the liquidity investment

If the open real estate fund holds securities, money market instruments or investment fund shares as part of its liquidity investments, it should be noted that these investments also contain risks.

8. Special risks of investing in closed-end mutual funds

8.1 Business risk

Investments in closed-end funds are entrepreneurial investments in nature. Due to the mostly low spread of the capital employed, which is associated with the investment in one or a few tangible assets, the development of the investor's participation depends heavily on the success of the management and the value development of the investment property (s). Depending on the type of investment property acquired, its value development can depend heavily on macroeconomic developments or the development of a specific market. Industry-specific and property-related risks can also have a negative impact on the value development of an investment property. There is therefore the risk that the economic development of the participation in the closed-end fund will not be positive. This can lead to a loss of the invested capital or even total loss for the investor.

8.2 Limited tradability of the participation

The units in closed-ended investment funds cannot normally be returned during the term of the fund. Ordinary termination of the investment in the fund company is usually not possible. The investor is only entitled to the statutory right of termination for an important reason. As a rule, it is therefore not possible to dispose of the capital employed during the term of the fund. The investor can only liquidate his participation in the closed-ended investment fund during its term by selling it to a third party. However, the transfer of the share often requires the approval of the fund company. In addition, there is no regulated secondary market for units in closed-end funds that is comparable to a stock exchange. There is therefore the risk that the unit will not be sold due to a lack of approval from the fund company or a lack of demand on the part of the buyer, or that the sale of the units will only be delayed due to low demand on the part of the buyer and only with significant reductions in the purchase price compared to the originally used Capital is possible.

8.3 Resurgence of Liability

If the investor acquires a stake in an investment limited partnership, he is initially personally liable as a limited partner in the amount of the liability amount agreed in the articles of association for the liabilities of the fund company. The liability amount is mostly well below the subscription amount. However, the personal liability of the investor expires as soon as he has paid his contribution (subscription amount plus issue surcharge / premium, if applicable) into the fund company. Personal liability can resume at a later point in time up to the amount of the agreed liability amount if an investor receives payments while his equity stake is reduced to below the amount of the liability amount due to losses of the fund company, or if his capital participation falls below the amount of the liability amount due to the payment . Such payments represent a so-called return of contributions. However, such a return of contributions requires the consent of the investor concerned. In the event of the insolvency of the fund company, there is a risk that the investor will have to repay the payments received by way of the return of contributions to the fund company.

8.4 External Financing Risk

In addition to equity capital, closed funds regularly take out loans (outside capital) to finance the planned investment. The loans are usually secured by the investment objects. For the investors, the additional borrowed capital acts like a kind of lever, which increases the relative influence of fluctuations in value on the invested equity, both positively and negatively.

In the event of a loss in value of the investment property, the loss of the investor is also dependent on the ratio of equity and debt. The higher the proportion of debt financing in relation to equity, the greater the impact any loss in value will have on the loss of equity invested by the investor. Leverage therefore increases the investor's risk of suffering higher losses. However, it generates the opportunities to the same extent through higher relative profits.

In addition to the leverage effect described, there is a risk with external financing that if the fund's current income develops negatively, the loans taken can no longer be serviced in accordance with the contract or can be repaid. In this case, there is a risk that the lender will order the forced sale of the investment objects. For the investor, this can lead to high losses or even a total loss of the capital invested. If follow-up financing becomes necessary and it cannot be concluded or can only be concluded on less favorable terms, this can also have a negative impact on the fund's result and the payments to investors.

8.5 Inflation and foreign currency risk, country risk

Real assets can also be subject to an inflation risk, i.e. the risk that the fund will actually suffer a loss of value as a result of monetary devaluation. This can have a negative impact on the payouts to investors. If a closed-end investment fund is quoted in a foreign currency, generates its main income in the foreign currency area, or if income and expenditure or liabilities are in different currencies, the fund may be exposed to a foreign currency risk. For example, due to an appreciation of the euro against foreign currencies, foreign tangible assets valued in euros may lose value. If the fund company invests abroad or if significant cash flows from foreign borrowers are planned, this can also result in a country and transfer risk. Political instability, a shortage of foreign currency or restrictions on the transfer of cash payments from abroad can have a significant impact on the fund's performance.

8.6 Risk from failure of contractual partners

As part of the conception, sales and administration, the fund company enters into contracts with service providers. There is a risk that the contractual partners will not behave in accordance with the contract and fail to meet their obligations or not meet them adequately. This can be the case in particular if the creditworthiness of the contractual partner deteriorates. The failure of contractual partners can lead to delays in operation and to higher expenses as well as reduced income, which have a negative effect on payments to investors. There is also the risk that the user of the investment property will not be able to meet his payment obligations. This can lead to income and loss of value for the fund. In this case, the investor runs the risk of a total loss of the capital invested.

8.7 Risk from changes in the legal and economic framework

There is a risk that the legal and economic framework under which the fund was set up could change adversely during the fund's usually multi-year term. This also applies to potential tax risks. This can have a negative impact on the Fund's income and result in lower payouts to investors.

8.8 Insolvency of the fund company

As shareholders, investors bear the risk of the fund company's insolvency. In insolvency, your claims against the fund company are subordinate to the claims of other creditors of the fund company. The statutory regulations on deposit protection do not apply to an investment in a closed fund. Losses of the capital employed are to be borne by the investor alone.

9. Specific Risks of Investing in Hedge Funds

9.1 Risky strategies, techniques and instruments of capital investment

Hedge funds are also allowed to make high-risk investments. This results in a high risk of loss or even total loss. For the investor there is consequently the risk of a total loss of the capital invested.

9.1.1 Acquisition of particularly risky papers

The acquisition of securities whose issuers are in economic difficulties is associated with an increased risk. It is difficult to assess whether the issuer's economic situation will improve. The prices of these securities are often subject to very high fluctuations. Such investments have a high risk of total loss.

9.1.2 Short Selling

In the case of a short sale, the seller is speculating on being able to buy the security at a later date at a lower price. If the development expected by the seller does not occur, there is an unlimited risk of loss, as the seller must subsequently procure the securities at current market conditions.

9.1.3 Derivatives

Hedge funds can make extensive use of on-exchange and over-the-counter derivatives. In the event of an unfavorable market development, the fund exposes itself to a risk of loss that cannot be determined in advance. This risk can go well beyond the collateral originally provided and is theoretically unlimited. If the fund invests in derivatives traded over the counter, it is also exposed to the credit risk of its counterparties. This applies regardless of the market development.

9.1.4 Commodity futures

Commodity futures have a different risk of loss than conventional financial instruments. Goods markets are highly volatile. They are influenced by many factors (economic developments, supply and demand, political circumstances).

9.2 Leverage

In the event of a negative market development, the use of leverage increases the risk of loss. The level of the leverage has a disproportionately high risk. The greater the leverage used, the higher the probability that there will be a total loss of the capital invested.

9.3 Liquidity Risk

Insofar as hedge funds invest in illiquid investment instruments or participations for which there is no regulated secondary market, the liquidation of these investments may not be possible in individual cases or only with the acceptance of high losses.

9.4 Prime broker

If a prime broker is commissioned with the execution of investment transactions, the commission for the execution of a significant number of transactions for the hedge fund can result in conflicts of interest at the prime broker. Furthermore, there may be the risk that the prime broker, contrary to the strategy of the hedge fund, may demand the repayment of the securities lending or of loans if the market situation is appropriate.

9.5 Limited Return Risk

If investors can only return their units once a calendar quarter according to the regulations in the investment conditions and have to announce the return up to forty days in advance, the risk of loss in value may increase for the investor, since in the period between the return declaration and the actual redemption by the capital management company the market value of the fund's assets may fall. Investors will then get less money back than they expected at the time they bought the unit or made the return declaration.

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III. Investment services in connection with investing in financial instruments

In connection with the investment in financial instruments, Cooler Future 1.5 GmbH offers investment brokerage services. A distinction can be made between the following types of investment brokerage: non-advisory business and pure execution business.

1. Advice-free business

As part of the advice-free business, the investment services company obtains information from the customer about the customer's knowledge and experience with financial instruments. When placing an order, the investment services enterprise checks whether the customer has the necessary knowledge and experience to be able to adequately assess the risks associated with the type of financial instrument (so-called appropriateness test). Any investment goals and financial circumstances of the customer are not taken into account in the adequacy test.

If the investment services enterprise comes to the conclusion during this appropriateness test that the financial instrument considered by the customer is not appropriate for the customer, it is obliged to inform the customer of this. If the customer nevertheless wishes his order to be carried out, the investment services enterprise may carry it out as instructed.

When brokering investments, there is no advice to the customer with regard to a specific investment decision taking into account his or her individual investment goals and financial circumstances. The customer is only informed about the investment in a financial instrument.

As a rule, the investment services company does not bill the customer for the service when brokering the investment. Rather, the remuneration of the investment services enterprise takes place regularly via remuneration from the provider or issuer of the financial instrument, for example via a brokerage and / or inventory commission priced in the financial instrument or a premium to be paid by the customer.

2. Pure execution business

The pure execution business (also called " execution only ") must be distinguished from the advice-free business. Cooler Future 1.5 GmbH offers the pure execution business on its platform. In the pure execution business, the investment services company executes orders to buy or sell financial instruments at the instigation of the customer. Neither the customer is advised nor a review of the appropriateness of the contracted business for the customer takes place. The duty of the investment services enterprise to examine the transaction with regard to the interests of the customer is least structured in the pure execution transaction.

However, the pure execution business may only be carried out for non-complex financial instruments. Non-complex financial instruments include, for example, exchange-traded stocks, money market instruments, debt securities without a derivative element and certain investment fund shares.

Cooler Future 1.5 GmbH hereby points out that it does not carry out the appropriateness test otherwise required in accordance with Section 63 (10) WpHG in accordance with Section 63 (11) WpHG. There is therefore neither a consultation of the customer nor an examination of the appropriateness of the contracted business for the customer. The duty of Cooler Future 1.5 GmbH to examine the business with regard to the interests of the customer is least structured in the pure execution business.

If Cooler Future 1.5 GmbH consequently offers a service that consists in executing the pure execution of an order or the mere acceptance and transmission of an order of the customer in non-complex financial instruments at the request of the customer, it may carry out the order placed by the customer or the transmission of the order in non-complex financial instruments without first having to obtain and evaluate information on the personal circumstances of the customer. Cooler Future 1.5 GmbH does not check - in contrast to other advice-free business - whether the commissioned business is appropriate for the customer. As a result, the customer will not be informed if the deal is not appropriate for them.