MB Capital

Risk Warnings

This notice cannot disclose all the risks associated with the products we make available to you. You should not invest in or deal in any financial product unless you understand its nature and the extent of your exposure to risk. You should also be satisfied that it is suitable for you in the light of your circumstances and financial position. Different investment products have varied levels of exposure to risks and to different combinations of risks.

General

All investments involve a degree of risk of some kind. This section describes some of the risks which could be relevant to the services we provide to you. We may provide further risk information during the course of our services to you, as appropriate.

Our services relate to certain investments whose prices are dependent on fluctuations in the financial markets outside our control.  Please be aware that the value of investments linked to the stock market and the income from them, may rise or fall depending on market conditions and that you may not always recoup your initial investment. In addition past performance should not be seen as an indication of future returns.

Advice in relation to trusts, wills and tax planning is not regulated by the Financial Conduct Authority, however, the products used in relation to trusts and to mitigate tax may be regulated.

Taxation

Taxation reliefs, levels and bases can change in the future and the contents of this website refer to our understanding of current taxation legislation.

Tax is dependent on your own personal situation and circumstances and is subject to change based on UK legislation and taxation regime.

Collective Investment Schemes (commonly known as ‘funds’)

A fund is a term that covers different types of structure, normally Open Ended Investment Companies (‘OEICs’ – by far the most common) or Unit Trusts. You will generally not be given a choice as to the structure of a particular fund, as  each fund will already have its own preferred structure. Most funds can be held in tax-efficient wrappers, such as ISAs and pensions. Funds are arrangements that enable a number of investors to ‘pool’ their money, in order to gain access to professional fund managers. Investments held by these funds may typically include gilts, bonds and quoted equities, but depending on the type of scheme, may hold higher risk instruments such as property, derivatives, unquoted securities and other complex products. The value of a fund, and the income derived from it, can decrease as well as increase and you may not necessarily get back the amount you originally invested. In addition, funds bear investment management risks, insolvency risks and possibly liquidity risks (see below). You should ensure that you understand the nature of any fund before you invest in it. You can do this by making sure you read the Key Investor Information Document (which is made available to you for each fund) for a summary of the main risks. Some of the more common risk factors are detailed below in the ‘Sector/asset-specific risks’ sections.  

Investment trusts

Investment trusts are similar to funds in that they provide a means of pooling your money but they are publicly listed companies whose shares are traded on the London Stock Exchange. The price of their shares will fluctuate according to investor demand and changes in the value of their underlying assets. They will be subject to a combination of the risks associated with shares, bonds and funds in which they are invested. The value of investment trusts, or the income derived from them, can decrease as well as increase and you may not necessarily get back the amount you invested.

Pensions

Pension investment funds and the income from them may fluctuate and can fall as well as rise.  Eventual retirement income will depend on the size and value of your pension pot, future interest rates and tax legislation. Tax treatment is dependent upon individual circumstances and may be subject to change in future.

Sector/asset-specific risks

This section lists some common risk factors relating to the geographical area, industry and/or asset type applicable to a particular investment product, particularly funds.

  • Different funds carry varying levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing.
  • Targeted Absolute Return funds do not guarantee a positive return and you could get back less than you invested much like any other investment. Additionally, the underlying assets of these funds generally use complex hedging techniques through the use of derivative products.
  • Smaller companies’ shares can be more volatile and less liquid than larger company shares, so smaller companies funds can carry more risk.
  • Underlying investments in emerging markets are generally less well regulated than the UK. There is an increased chance of political and economic instability with less reliable custody, dealing and settlement arrangements. The market(s) can be less liquid. If a fund investing in markets is affected by currency exchange rates, the investment’s value could either increase or decrease in response to changes in those exchange rates. These investments therefore carry more risk.
  • Funds which invest in a specific sector may carry more risk than those spread across a number of different sectors. In particular, gold, commodity, technology and other similarly-focused funds can suffer as the underlying stocks can be more volatile and less liquid.
  • Due to their nature, specialist funds can be subject to specific sector risks. Investors should ensure they read all relevant information in order to understand the nature of such investments and the specific risks involved.
  • Bonds issued by major governments and companies will be more stable than those issued by emerging markets or smaller corporate issuers; in the event of an issuer experiencing financial difficulty, there may be a risk to some or all of the capital invested. Any historical or current yields quoted should not be considered reliable indicators of future performance.
  • The property market can be illiquid; consequently, there can be times when investors in property funds will be unable to sell their holdings. Property valuations are subjective and a matter of judgement.

Shares

Shares carry varying risks brought about by the performance of world markets, interest rates, taxes on income and capital, foreign exchange rates, liquidity (the ease with which a security can be traded on the market) and the financial performance of the issuing companies. The value of, or income from shares can go down as well as up and you may not get back the original amount you invested. Shares purchased on the Alternative Investment Market (AIM) and PLUS market (especially those known as ‘penny shares’) carry a higher degree of risk of losing money than other UK shares. This is because the requirements on companies that are listed on AIM and PLUS markets are less stringent than those for companies with a full market listing. There is also usually a wider spread between the buying price and the selling price of these shares and if they have to be sold immediately, you may get back less than you paid for them due to a lack of liquidity. The price of these shares may change quickly and they may go down as well as up. It may also be difficult to obtain reliable information about their value or the extent of the risks to which they are exposed. 

Exchange Traded Funds (ETFs)

ETFs are investment funds, traded like shares which hold assets such as shares, commodities or bonds. They normally closely track the performance of a financial index, and as such, their value can go down as well as up and you may get back less than you originally invested. Some ETFs rely on complex investment techniques, or hold riskier underlying assets, to achieve their objectives and therefore you should always ensure you read the documentation provided to ensure you fully understand before you invest the risks you are taking on.

Bonds

Bonds are loans to a government or company. They are also known as debt investments, and cover the categories of Debt Securities and Fixed Income Investments. Generally, they will be more stable than share-based investments but in some circumstances (particularly when interest rates are changing) they can be more volatile. Bonds issued by major governments and companies are generally more stable than those issued by emerging markets or corporate issuers, and in the event of an issuer experiencing financial difficulty there may be a risk to some or all of the capital invested.

Currency risk

Investments denominated in a currency other than sterling or ones that undertake transactions on foreign markets, which include the financial markets of developing countries (Emerging Markets), may expose you to greater risks caused by fluctuations in foreign exchange rates. This can adversely affect the value of your return and the value of your investment. Investments in emerging markets are exposed to additional risks, including accelerated inflation, exchange rate fluctuations, adverse repatriation laws and fiscal measures, and macroeconomic and political factors.

Investment manager risks

This is the risk of loss from the poor performance of the fund managers in your portfolio as well as by us in the management of your managed or advised portfolio.

Liquidity risk

There may be difficulty in selling an investment caused by a number of factors, including but not limited to insolvency of the investment, adverse stock market conditions, selling restrictions placed on funds by their managers (sometimes referred to as gating, lockups, notice periods or suspension of redemptions). In these circumstances you may not be able to sell such investments in a timely manner and the value of those investments may fall significantly.

Suspensions of trading

Under certain trading conditions it may be difficult or impossible to liquidate a position. This may occur, for example, at times of rapid price movement if the price rises or falls in one trading session to such an extent that under the rules of the relevant exchange trading is suspended or restricted.

Mortgages

All loans are subject to a credit search, valuation and in some cases status enquiries by the lender. Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.

This list is not intended to be fully inclusive of all relevant risks; we would strongly encourage you to ensure that you have read all relevant literature, and that you are comfortable that you understand all of the associated risks relating to an investment, before you decide whether or not to purchase it.  Should you be in any doubt as to the risks involved, or to the suitability of a particular investment, you should seek professional financial advice