Risk Warnings

Your capital is at risk

All investment involves risk. The value of your investments can go down as well as up, and you may get back less than you put in. No investment strategy removes that risk, and none of our services guarantees a return or the preservation of capital.

You should not invest money you cannot afford to lose, and you should keep an appropriate reserve of accessible cash for short-term needs.

Past performance is not a guide to the future

Figures showing how an investment, portfolio or market has performed in the past are not a reliable indicator of how it will perform in the future. Simulated or back-tested performance carries the additional limitation that it was not achieved with real money in real market conditions.

Where we quote a target return, an objective or a comparison against an index, that is an aim rather than a promise. It is not guaranteed.

Income is not guaranteed

Dividends, interest and other distributions can be reduced, suspended or cancelled, and the yield on an investment can fall as well as rise. Where you take income from a portfolio, drawing more than the portfolio generates will erode your capital and reduce the income it can produce in future.

Market risk

Investment values are affected by movements in financial markets, which respond to interest rates, inflation, economic data, corporate earnings, government policy, geopolitical events and investor sentiment. Markets can fall sharply and without warning, and falls can affect many asset classes at the same time.

Short-term volatility should be expected. The value of a portfolio may fall significantly over days or months even where the longer-term strategy remains sound.

Currency risk

Where an investment is denominated in a currency other than your base currency, changes in exchange rates will affect its value to you. A favourable investment return can be reduced or reversed by an adverse currency movement, and this applies both to direct holdings and to funds that invest overseas. Currency hedging, where used, has its own costs and may not fully remove the exposure.

Interest rate and inflation risk

Rising interest rates generally reduce the capital value of bonds and can affect the valuation of equities and property. Falling rates reduce the income available from cash and new fixed-interest investments.

Inflation reduces the real value of your money over time. Cash and fixed-interest investments are particularly exposed: a nominal return below the rate of inflation is a loss in real terms.

Credit and counterparty risk

An issuer of a bond, or a counterparty to a transaction, may fail to pay interest or repay capital when due, or may become insolvent. Lower-rated and unrated bonds offer a higher yield precisely because that risk is higher.

Banks, custodians, brokers and clearing houses can also fail. Although client assets and client money are held separately from our own, the failure of a third party could result in delay or loss.

Liquidity risk

Some investments cannot be sold quickly, or can only be sold at a price materially below their quoted value. This is more common in smaller companies, less-traded bonds, property funds and during periods of market stress.

Certain funds may suspend dealing or apply notice periods or exit charges, which would delay your access to your money.

Diversification does not remove risk

Spreading investments across asset classes, regions and sectors reduces the impact of any single holding, but it cannot eliminate investment risk or guarantee a positive return. In severe market conditions, asset classes that normally behave differently can fall together.

A portfolio concentrated in a single company, sector, country or currency carries a materially higher risk of loss.

Equities

Shares can be volatile and can lose value rapidly. In the event of a company's insolvency, shareholders rank behind creditors and may recover nothing. Dividends are discretionary and can be cut without notice. Shares in smaller companies are typically more volatile and harder to sell than those in larger companies.

Bonds and fixed income

The capital value of bonds moves inversely with interest rates, and longer-dated bonds are more sensitive to rate changes. Bonds are exposed to the credit quality of the issuer, which can deteriorate, and to the possibility of default.

Some bonds may be repaid early at the issuer's option, which may leave you reinvesting at a lower yield. Subordinated, convertible and perpetual bonds carry additional risks that we will explain where relevant.

Funds and exchange traded funds

Funds and ETFs give access to a diversified basket of investments, but you take on the risks of the underlying holdings and of the fund structure itself.

• The return will differ from that of the index being tracked, because of charges, cash balances and tracking error.
• Some ETFs achieve exposure synthetically, using derivatives, which introduces counterparty risk.
• Some funds engage in securities lending, which carries a risk of counterparty default.
• A fund's price on an exchange can differ from the value of its underlying assets, particularly in volatile markets.
• Funds bear their own ongoing charges, which reduce the return to you and are in addition to our fees.

Overseas and emerging markets

Investing outside the major developed markets adds currency risk, and can add political and economic instability, weaker regulation and accounting standards, less reliable settlement and custody arrangements, restrictions on repatriating money, and lower liquidity. Prices in these markets can be considerably more volatile.

Derivatives, leverage and margin

Derivatives and leveraged products are high risk and are not suitable for every investor. They are offered only where the service and your classification permit.

Leverage magnifies both gains and losses, so that a small movement in the underlying market can produce a large movement in the value of your position. Where a position is margined you may be required to provide further funds at short notice, and if you do not, your position may be closed at a loss. Losses on some leveraged products can exceed the amount you originally deposited.

The effect of charges

Our fees, dealing costs, custody charges and the ongoing charges of any funds you hold all reduce your return, and they are payable whether or not the portfolio grows. Their effect compounds over time. Frequent dealing increases costs and may reduce net performance.

Taxation

The tax treatment of an investment depends on your individual circumstances, on where you are resident, and on tax law that may change, sometimes with retrospective effect. Tax reliefs are not guaranteed to continue. We do not provide tax advice and you should take your own advice where the position is not clear to you.

Time horizon

Investment should be regarded as a medium to long-term commitment — generally five years or more. The shorter the period you hold an investment, the greater the chance that a market fall will leave you with less than you invested.

If you may need your money at short notice, or on a fixed date, tell us: that materially affects what is appropriate for you.

Discretionary management

Under a discretionary mandate, including the Model Portfolio Service, we make investment decisions and may change asset allocations, rebalance and replace underlying investments without asking you first and without prior notice. Transactions arising from those decisions may have tax consequences for you.

We manage within the mandate you have agreed, but we cannot protect a portfolio from general market falls.

Non-advised and execution-only services

Where a service is provided without advice — including your choice of model portfolio, and execution-only dealing — we do not assess whether the investment is suitable for your objectives or circumstances. Any educational material or risk questionnaire we provide is guidance only; it is not a personal recommendation or a suitability assessment.

The responsibility for the decision, and for its consequences, is yours.

Operational, cyber and fraud risk

Systems failures, human error or disruption at us or at a third party could delay a transaction or affect access to your account or to reporting.

Investment fraud is common and increasingly convincing. GAM will never contact you asking for your login details, and will never ask you to move money to a new or “safe” account. If you receive a call, email or message that appears to be from us and asks you to do either, do not act on it — contact us on +350 200 75181 first.

Regulatory and political risk

Changes to law, regulation, taxation, sanctions or government policy — in Gibraltar or in any market in which you are invested — can affect the value of investments, the cost of holding them, and whether a particular investment or service remains available to you.

Compensation does not cover investment loss

We participate in the Gibraltar Investor Compensation Scheme. The scheme may pay compensation where a participating firm is unable to meet its obligations to eligible claimants. Cover is subject to eligibility conditions and to limits set by the scheme; details are available from us on request.

The scheme does not protect you against investment loss. If your investments fall in value, that is not a claim on the scheme.