Fees and Risks
Fees and Risks Associated with Discretionary Investment Management Agreements
Our company provides the investment strategies of the Legal & General Investment Management Group (hereinafter referred to as the "LGIM Group") through discretionary investment management agreements. The management of assets under such agreements is, in principle, conducted through the allocation of foreign-domiciled investment trusts and similar products (hereinafter referred to as "foreign-domiciled funds") managed by the LGIM Group. The fees and risks associated with the discretionary investment management agreement are summarised below. Please read the pre-contractual disclosure documents carefully before concluding the agreement.
Fees
The discretionary management fee under the discretionary investment management agreement varies depending on the amount under management, the investment strategy, and the investment methodology. The final fee rate and calculation method will be determined through individual consultation with the client. Under the discretionary investment management agreement, investments are generally made by incorporating foreign funds managed by the LGIM Group. Consequently, you will indirectly bear costs associated with the securities transactions, management and administration fees, audit expenses, administrative costs, and custody fees of the incorporated foreign funds. These costs vary depending on the incorporated foreign fund and therefore cannot be specified.
Risks
Under discretionary investment management agreements, investments are generally made through holdings in foreign funds managed by the LGIM Group. Foreign funds may invest in assets whose value fluctuates, such as domestic and foreign equities, public and corporate bonds, and currencies, and may engage in derivative transactions. Consequently, the management of such foreign funds primarily involves risks including price fluctuation risk, foreign exchange risk, credit risk, liquidity risk, and country risk. Consequently, the net asset value of foreign funds may fluctuate, potentially resulting in a loss of the invested capital. Furthermore, foreign exchange risk arises when foreign funds are denominated in foreign currencies or when foreign exchange hedging is conducted outside the foreign fund itself. An overview of each risk is provided below. Please note that the specific risks vary depending on the investment strategy, management approach, and the foreign funds included in the portfolio, and are not limited to those described below.
- Price Fluctuation Risk: The risk of incurring losses due to fluctuations in the prices of securities
- Exchange Rate Fluctuation Risk: The risk of incurring losses due to fluctuations in foreign exchange rates
- Credit Risk: The risk of incurring losses due to changes in the creditworthiness of issuers of securities or counterparties to transactions, and changes in external assessments of such entities
- Liquidity risk: The risk of incurring losses due to being compelled to trade at less favourable prices than normal because of low liquidity
- Country risk: The risk of incurring losses due to changes in the political and economic conditions, investment regulations, currency controls, etc., of the countries or regions in which investments are made.
As stated above, the principal of assets under discretionary investment management contracts is not guaranteed, and there is a risk of principal loss. All gains and losses from the management belong to the client.