Risks And Expenses Associated With Discretionary Investment Agreements

Risks and Expenses

Risks and Expenses Associated with Discretionary Investment Agreements

 

Risks

The management of securities, etc. based on discretionary investment contracts has the following risks.

 

Price Fluctuation Risk
The investment results of equity and bond investments are greatly influenced by price fluctuations caused by supply and demand relationships in the trading market, changes in the operating results and financial conditions of issuers, and changes in the external environment surrounding them.
 

Interest Rate Risk
Generally, if interest rates rise, prices will fall, and if interest rates fall, prices will rise, so there is a possibility that prices will fall due to the influence of interest rate fluctuations. Bank loans have a floating interest rate, and the impact of interest rate fluctuations tends to be relatively smaller than fixed-rate bonds.
 

Liquidity Risk
If the market size and trading volume are small, you may not be able to buy or sell at the price expected from the fundamentals when buying and selling the included stocks, and you may suffer unforeseen losses.
 

Credit Risk
Due to the impact of the issuer's business performance or other factors, there is a possibility that defaults, interest payments, or reimbursement payments may be delayed, resulting in a decline in prices.
 

Early redemption risk
After the initial period of prohibition of early redemption has passed, there is a possibility that the repayment will be made even before maturity depending on the interest rate situation and the financial situation of the issuer.

Currency Fluctuation Risk
If you wish to hedge your foreign exchange rate, you will hedge your assets against the yen to reduce foreign exchange risk, but since it is difficult to completely hedge them, you may incur losses due to exchange rate fluctuations in the U.S. dollar. Also, if the yen interest rate is lower than the US dollar interest rate, hedging costs equivalent to the interest rate difference between the US dollar and the yen will be incurred. If you do not wish to hedge foreign exchange, we will not hedge your investment in foreign currency-denominated assets. Therefore, yen-based investment results are greatly influenced by fluctuations in exchange rates.

Derivative Risk
Financial derivatives called derivatives based on financial instruments transaction contracts may be used, the value of which fluctuates depending on the underlying underlying underlying asset value and indicators, and depending on the type of derivative, it may fluctuate more than the value of the underlying underlying underlying asset or indicator. In addition, there is a possibility that you will not be able to execute the transaction according to the original contract and incur losses due to bankruptcy of the counterparty, there is a possibility that you will not be able to buy or sell against the transaction when you settle the transaction, and there is a possibility that you will be able to buy and sell only on conditions that are significantly disadvantageous than the theoretical price.
 

Country Risk
The price of the assets you incorporate may fluctuate and decline in price due to the influence of the policies, taxation, legislation, business regulations, investment regulations, etc. of the country in which you issue or transact them. In addition, emerging markets generally have undeveloped market sizes, systems, etc., and country risk is high.

The above is a general explanation. There are inherent risks depending on the investment target and method, and there is a risk that the principal may be lost, so it is necessary to carefully read the contents of the documents etc. before concluding the contract and make a decision based on your own judgment and responsibility.

Expenses related to discretionary investment contracts

When you do business with us, you will be required to pay the investment advisory fee. This remuneration is subject to a separate consumption tax. In addition, for securities transactions associated with investment management entrusted to the customer, the customer shall be responsible for various expenses such as trading commissions, trust fees and management fees related to the custody and management of securities, etc.

These investment advisory fees and other expenses are determined according to the investment strategy delegated, the amount of assets under management, individual transactions, etc., so it is not possible to describe the amount or calculation method in advance. For details, it is necessary to carefully read the documents etc. before concluding the contract and make a transaction.