Risks and Costs Associated with Investment Trust
Important Notes
The following statements are presented in compliance with Article 37 of the Financial Instruments and Exchange Act. Please be noted that the costs or risks may vary depending on the investment trusts that clients will purchase. In addition, the costs and fees associated with the investment trusts differ according to the distributors and the products. Thus, we can only provide the maximum amounts for all fees associated with investment trusts we manage. Before purchasing our managed investment trusts, we sincerely ask our clients to read prospectus of the investment trusts and make the ultimate investment decision at their own discretion.
Risks Associated with Investment Trusts
Investment trusts invest in assets with price movements, mainly in equities, public bonds, and real estate investment securities (assets in foreign currencies also include exchange risks). The Net Asset values (NAVs) of investment trusts will fluctuate. Therefore, investment trusts do not guarantee returns on invested capital. They may incur losses from declines in the NAVs primarily due to transaction price and currency fluctuations in relevant markets. These losses may result in decreasing initial investments.
The NAVs of investment trusts with concentrated portfolio will move differently from ones with diversified portfolio as they invest in a narrower range of stocks. Therefore, they are much more likely to experience NAV fluctuations, regardless of market trends.
Long-Short Strategy investment trusts will have short selling positions, meaning that when stocks in short positions see share price growth, the NAVs will fall. Moreover, when both long and short positions incur losses, there is possibility that the greater losses may occur compare to those of normal long-only equity investment trusts.
These risks are only a portion of the risks associated with investment trusts. The details and nature of the risks differ according to the type of investment assets, investment restrictions, trading markets, and countries covered by each investment trust.
Costs Associated with Investment Trusts
The maximum expenses (fees) for investment trusts at SPARX Asset Management are as follows:
Costs directly charged to clients
Subscription fee:
Up to 3.78% (including tax)
Redemption fee:
None
Retained Amount in investment trust:
Up to 0.5%
Indirect costs incurred while holding investment trusts
Management fee:
Up to 2.052% annually (including tax)
Performance fee(*):
Some investment trusts may require performance fee.
*The amount of performance fees varies per the NAV level, so it is not possible to indicate a maximum amount in advance.
Other expenses/fees:
Auditing costs; sales commissions generated by composite marketable securities (including funds) transactions, which include costs for creating prospectuses or investment reports; costs incurred in futures or options transactions; and custodial costs for assets in foreign currencies. When composite marketable securities are funds, they may charge for other expenses, including fiduciary trust company and custodial firm fees. These fees vary per management conditions, so it is not possible to indicate the maximum amounts in advance.
*The total amount of fees differs according to the length of holding, so it Is not possible to indicate the total amount in advance.
*The fees and costs also differ according to products. For more detailed information, please contact the distributors.