Investment Risk Document
Investment Risk Document
GOODFOLIO Ltd (“GOODFOLIO”, “we”, “us” or “our”) (firm reference number: 974431) is an appointed representative of RiskSave Technologies Ltd, a firm authorised and regulated by the Financial Conduct Authority (FCA), under firm reference number 775330. GOODFOLIO Ltd is Registered in England & Wales (20-22 Wenlock Road, London, England, N1 7GU), Company Number 13402423.
Unless specified otherwise, all definitions are adopted from the GOODFOLIO Ltd Terms of Service which are available here.
GOODFOLIO provides investment services to Customers by transmitting Orders to a Third Party Broker for execution (or onward transmission for execution).
The Services that we offer are what is known as “execution-only” services. That means, we will (subject to the terms available here) execute your Instructions without investigating or advising on the suitability or otherwise of the investment or your Instructions. Here we seek to provide Customers and potential Customers with a general description of the nature and risks of Instruments.
We do not provide or offer any investment or other advice, including advice on the suitability of any particular investment or investment strategy.
If you are unsure of any investment or investment decision, you should seek the services of a qualified and registered financial adviser before you make the investment or decision.
Importantly, as with any investment, your capital is at risk.
- the Securities available to you through our Services may not be suitable for everyone,
- the value of your investments may go up and may go down,
- investment carries an inherent risk that you may lose some or all of the monies that you have invested and
- liability to tax is dependent on your personal circumstances and independent advice should be sought if required.
Before buying or selling any Instruments, you should ensure that you have adequate financial resources and the ability to bear losses which may arise as a result. You should not rely on being able to generate profits for any purpose (such as the repayment of debts) and should not enter into any borrowing arrangements to fund your purchases of any Instruments via GOODFOLIO.
We provide a non-advised (execution only) order transmission service in shares and other Instruments. This means we will (GOODFOLIO Ltd Terms of Service which are available here.) execute your Orders without investigating or advising on the suitability or otherwise of the investment or your Orders.
As we do not provide or offer any investment or other advice, including advice on the suitability of any particular investment or investment strategy you do not benefit from the protection of the FCA Rules on assessing suitability.
We may from time to time publish general or specific information or commentary on our website, in the general press, through communications with you, or otherwise. This information is not, and should not be interpreted as, advice, and any decision to submit Orders is made solely by you.
When you provide an Order to us through the GOODFOLIO platform, we will assume that you have considered the risks associated with any particular Instrument and deem it suitable or appropriate for your individual circumstances or needs. We also assume you have taken independent professional advice where necessary.
You are responsible for your own investment decisions and have sufficient knowledge and experience to make those decisions, understanding the risks associated with making investments and have taken professional advice where appropriate to make those decisions.
Types of investment risk
Please find below, for information purposes only, a non-exhaustive list of the main risks to which investors may be exposed.
Market risk is the risk that you will get back less than you put in due to changes in the market prices of your investments.
The value of a particular Instrument may fluctuate according to changes in the market within which the Instrument is situated. Market events, investor perception, and the ability to deal in the relevant Instrument may create a positive or negative impact on the investment’s price. For example, securities listed in the US may be subject to market trends located in the US, and may therefore be unfamiliar or unforeseen by you.
In times of market volatility, the price of an Instrument may change significantly and unexpectedly and it may become more difficult to purchase or sell and / or you may see the price of an Instrument increase or decrease when executed compared to the price quoted at the time an Order was submitted.
You have sole responsibility for monitoring the value of your Positions and should check your GOODFOLIO account regularly on an ongoing basis to monitor your Positions.
Currently all investments funds offered on Goodfolios platform are rated 6 or 7 out of 7 on a risk scale. This means that the risk of loss in any particular investment is particularly high.
Liquidity risk is the risk that you may not be able to sell your investment at a fair price or at all due to a lack of buyers in the market. ETFs are generally supported by dedicated market makers but in certain conditions these market makers may not offer a price at which they will buy your investment when you choose to sell it.
If you decide to close your Account, you will need to sell all your positions before doing so, potentially experiencing liquidity risk.
If we were to simply stuff our savings under the mattress, in 10 years it would hopefully still be there but the value of what it could actually buy would be diminished.
Holding cash exposes savers to that inflation risk so investing with a view to at least matching the inflation rate can be appealing.
The theory here is that, if your money matches that level, your purchasing power in the real world is maintained. That step from saving to investing brings its own risks though (you’re currently reading all about them) so it’s not always helpful to compare the returns you can get from cash savings to those from the stock market.
Inflation is a measure of the rate of rising goods and services in an economy. Increases in inflation are typical in most markets, however the rate of increase may have detrimental effects on your investment. Inflation rates may accelerate due to a number of factors, such as changes in production costs, availability of raw materials, and the average price of employee wages. A rising rate in inflation may reduce the real value of an investment over time. The rate of return on a particular Instrument may become lower than the rate of inflation, leading to losses that you would otherwise not have incurred had they invested in another Instrument whose value kept pace with the rate of inflation.
ETF specific risks
The main risk index ETFs are exposed to is market risk. As they seek to replicate broad market indices, anything weighing on those indices will likely have a similar impact on the ETF.
Thematic ETFs designed to track proprietary indices can be much more exposed to specific sectoral risk. If a particular sector is hit hard by an external influence, and stocks in that sector are the only holdings for that ETF, it follows that the ETF will be hit hard too.
Investing in these products may expose you to additional risk, for instance you may be at risk if the product's counterparties fail. It's important you understand the specific risks associated with your investment.
Finally there is no guarantee that an ETF will effectively track the performance of its benchmark. This can happen due to management fees, trading frictions or due to the manager not being able to purchase all the assets in the benchmark.
Your investments are priced in Pounds Sterling (GBP). However, the fund may earn returns by investing your money in non-GBP assets. While some of this risk may be hedged by the fund manager, if the currency of the funds’ investment underperforms GBP you will be exposed to a loss.
Operational risk, such as breakdowns or malfunctioning of essential systems and controls, including IT systems, can impact on all financial products. Business risk, especially the risk that the business is run incompetently or poorly, could also impact on investors in such a business. Personnel and organisational changes can severely affect such risks and, in general, operational risk may not be apparent from outside the organisation.
Third Party Risk
In respect of certain Instruments, the settlement, perfection, transfer, or realisation of that Instrument may depend on or require some action, performance or consent from a third party. For example, trustees, custodians, agents, clearing houses and exchanges may need to take some action in order for an investment to settle or for the legal right of ownership to change. As such, you shall remain subject to the risks of a failure by the relevant third party to act as required or in a timely manner.
In respect of securities that are listed or traded on a public exchange, the ability to deal in those securities will be subject to the terms, conditions, rules, and procedures applicable to that exchange or clearing house.
In certain circumstances, it may be more difficult to acquire or sell an Instrument as a result of changes or decisions at the exchange level. For example, at times of rapid volatility and price movements, the relevant exchange may take the decision to temporarily block, restrict, or suspend dealings in that product. This may result in you being unable to liquidate your Position at a particular time and for a particular price, or alternatively make it difficult or impossible to acquire an Instrument.
If you invest through an ISA product you may not be liable for income or capital gains tax. However this is subject to the ISA rules and it is your responsibility to check this.
If you invest through a GIA product you will be liable for all capital gains and income taxes associated with the performance of your investment. It is your responsibility to ensure that you pay all relevant taxes in full.
Tax rules are liable to change in the future. If you are unsure of how to proceed you should speak to a tax expert.
GOODFOLIO ISA’s Key Features Documents can be found here and are also sent to you in durable format upon opening an account with us.
Failure of Goodfolio
Goodfolio is a startup company which means that there is a greater than normal risk that it will cease to trade due to a variety of reasons, including an inability to secure investment funding. While your assets and money are securely held by a third party custodian and further secured up to £85,000 by the FSCS, the failure of Goodfolio could lead to a delay in your ability to access your investments.
Risks associated with ethical information provided
As well as access to financial information, GOODFOLIO will display ethical information where available. This data will be provided to us by third parties. This type of data in particular is subject to constant change and may be updated frequently.
This information does not provide an indication of current or future performance nor do they represent the potential risk and reward profile of a fund. They are provided for transparency and for information purposes only.
There are no guarantees that we will always be able to provide this data. There are also no guarantees that ethical goals and objectives of the fund are met or remain the same over time.
This information should not be considered solely or in isolation, nor should it be taken as advice or recommendation.
Investments are subject to a variety of risks and you should not invest more than you can afford to lose. You should ensure that you maintain an adequate amount of savings in bank accounts to cover your living expenses in case you suffer any deterioration in your personal circumstances. Please ensure that you do this before investing any money in a risk-bearing product such as those offered by Goodfolio.