Key Risks and Features

Equities and Equity-Like Instruments Risk Disclosures

Investing in equities provides an investor with an exposure to an issuer company and may provide a return either through the dividends paid from the issuer’s profits or increase in the share price of the issuer. Equities are a high-risk investment where the investor participates fully in the issuer’s economic risk.

Ordinary shares

Usually carry a right to vote on certain issues at general meetings of the issuer. There is no guaranteed return on an investment in ordinary shares and in a liquidation of the issuer, ordinary shareholders are amongst the last who have a right to repayment of their capital and any surplus funds of the issuer.

Preference shares

Unlike ordinary shares, preference shares give shareholders the right to a fixed dividend, the calculation of which is not based on the success of the issuer company. They therefore tend to be a less risky form of investment than ordinary shares. Preference shares do not usually give shareholders the right to vote at general meetings of the issuer, but shareholders will have a greater preference to any surplus funds of the issuer, should the issuer go into liquidation.

Exchange Traded Funds (“ETF”)

ETFs are investment funds that are traded like shares and which invest in a diversified pool of assets. In general, they track the performance of a benchmark or index (financial, sector specific, country specific) and the value of your investment will fluctuate accordingly.

The value of equities and equity like instruments may fluctuate and income is not guaranteed. Your investment may not increase in value and you may lose some or all of your investment.

Market Risk

The value of shares may fluctuate significantly in a short period of time exposing investors to a high level of risk. Income from your investment is not guaranteed and you could get back less than you invest. If the issuer fails then investments in its equity can become worthless and you may lose up to 100% of your investment.
Market risk in equity markets can materialise due to macroeconomic or issuer specific factors, and may impact a single issuer, issuers within a particular industry sector, or the market as a whole.
The value of equity shares and the dividends they distribute are determined by the financial performance of the company issuing the equity shares, but they can also be influenced by the performance of similar companies in the same sector, takeover activity, social or governmental issues in the home country of the corporation, and by financial analysis recommending investors to undertake a specific course of action (e.g. buy, sell, hold).

Volatility Risk

In adverse market conditions the value of equities may be affected by increased volatility and quick changes to value.
The volatility of equity markets cannot be assumed to follow historic trends.
Certain shares can be very volatile, especially those of smaller companies quoted on AIM.
A small change in the company’s financial performance can have a big impact on its value and smaller companies tend to have less resources to overcome financial difficulties.

Liquidity Risk

Certain shares can be illiquid which can lead to a big difference between the buying price and selling price, and it may be difficult to dispose of the shares. This may particularly be the case for smaller companies quoted on AIM.
If you need to sell illiquid shares at short notice, you may get back significantly less than you invested.

Credit Risk

Whilst the credit strength of the company in which you buy shares may impact the share price and the expected dividend payments, you are not exposed to any direct credit risk against IBP as a result of investing in equities.
In the event of insolvency of the issuer, recovery of an equity investment will be superseded by claims from creditors of the issuer.

Currency Risk

Equities may trade in different currencies and, as such, you may be exposed to fluctuations in FX rates if you invest in equities priced in foreign currencies.
Potential profit or loss of an issuer which derives its revenues in foreign currency from transactions on foreign markets may be affected by fluctuations in currency exchange rates.

Concentration Risk

Holding large, concentrated positions in a narrow pool (e.g. sector) of equities may carry a concentration risk and expose you to potential loss of capital in the event of a downturn in a specific industry sector or stock.

Conflicts Risk

IBP may take and / or hold positions that conflict with those of our clients. Further details regarding the handling and execution of client orders can be found in the IBP Order and Best Execution policy.
Conflicts arising from IBP’s business model are managed through internal controls and processes, as detailed in IBP’s Conflicts of Interest policy.

Margin Risk

Margin Risk is not applicable to equities.

Contingent Liabilities

Contingent Liabilities are not applicable to equities.

Leverage

Leverage is not applicable to equities.

Exit Costs

Early exit fees are not applicable to equities.

Interest Rate Risk

Interest rate risk does not have a direct impact on equity prices but may impact the profit and loss of an issuer company if they are affected by changes in interest rates.

Additional risks associated with this instrument

Some off-exchange transactions may involve a higher risk than investing in on-exchange securities because it may more difficult to assess the exposure to risk and the value of the position.

Transparency

Equity markets are very transparent with a primary issuance of equity having to comply with stringent disclosure rules and near-live prices being accessible from a number of public sources.
Certain emerging markets securities may have lower levels of transparency due to varying levels of regulatory requirements and disclosure obligations.