Frequently Asked Questions
- ↑↓What is the RBAM Fixed Income Fund?
It is a bond fund intended for conservative investors who aim to receive a return which exceeds the bank deposit interest rates and the rate of inflation. The fund is officially registered in Malta, which is a member of the European Union and the euro zone. The fund is administered by the independent company Valletta Fund Services and annually audited by world-renowned KPMG company. - ↑↓What yield is expected after payment of all commissions?
The fund’s net forecasted yield is 5-7% per annum, after the deduction of commissions and other costs. - ↑↓What are the risks of investing in an investment fund?
Chief risks an investor may face are: - Volatility or price risk. Volatility of prices is related to the fluctuation of the cost of the bonds, which form the fund, in response to activities of certain issuers and/or depending on the general state of the market (the market risk). As a result, the prices for the bonds of the funds or their income (if available) can either grow or decrease. Therefore, a situation is possible, when investors do not receive the amount of their initial investments, especially in the event of a premature exit.
- Interest rate risk. The interest rate risk is related to the fluctuation of the cost of the bonds as a result of the changing interest rates. As a rule, the value of the fixed income securities is decreases alongside the interest rate increases. Besides, the interest rate risk has a tendency of growing when the maturity of the fixed income securities is extended.
- Credit risk. The credit risk is related to the probability that the issuer of the securities will not be able to make interest payments and/or to fully reimburse the main debt amount.
- Liquidity risk. The liquidity risk is the risk that the fund will not be able to pay the amounts due to the investors (the clients) for buying out their shares within the terms stipulated by the Issue Prospectus, as a result of unfavourable circumstances on the market, an unusually large volume of requests for the redemption or other reasons.
- Currency risk. Fluctuations of the exchange rate of the fund’s basic currency and the investor’s currency, as well as the currency of main investments of the fund, may unfavourably impact the value of the investments and the income received.
- Political risk. These risks are mainly related to the instability of the economy, political instability and, in some cases, the lack of liquidity on the market.
- ↑↓Does the bank guarantee a certain rate of return on investments from this fund?
Investments in the fund do not guarantee an exact, annual profit known in advance, but allow an investor to receive a long-term income which exceeds the bank deposit interest rates. One should also take into account that the historical rate of return of the fund does not guarantee the same one in the future. - ↑↓What is the fund’s minimum investment amount?
The minimum investment amount is USD 75 000 or its equivalent in another currency. - ↑↓What are the advantages of this investment fund?
These are the potentially high returns which exceed the deposit interest rates, high liquidity, the relatively low risk level, the diversification by currency, issuing countries and industries. - ↑↓Can one obtain financing secured by the fund? What are the terms?
The client may receive a loan secured by the fund’s shares of up to 70% of his investment amount at 3% per annum for purchasing additional shares or for other purposes. - ↑↓What are the criteria for selecting bonds in the portfolio?
When selecting the bonds, the following criteria are considered: Credit ratings: 80% of the securities should have composite credit ratings (issued by S&P, Moody’s and Fitch) between B- to AAA. Reliability of issuers: The quality of public issuers is evaluated through a number of political and economic factors. The financial standing of corporate issuers should meet the following strict criteria: - Total Debt/EBITDA maximum 2
- Total Debt/Total Capital maximum 60%
- Interest Coverage Ratio above 3.5
- Current Ratio above 1.5
Liquidity: - 80% of issuers have an issue volume exceeding USD 500 million.
- 20% of issuers have an issue volume exceeding USD 100 million.
Proportions: - The proportion of a separate industry within the total spread of investments shall not exceed 25%.
- The proportion of investments in the state debt of a separate country shall not exceed 25%.
- The maximum investment in one issuer shall not exceed 5% of the total volume of the portfolio.
- ↑↓What is the minimum term for investing in the fund?
The minimum term for investment is one year. The maximum term for the investment is unlimited - ↑↓Where are the fund’s resources stored and who controls the fund’s operation?
The bank holder is JSC Rietumu Bank. The fund Manager is JSC RB Asset Management. The Fund Manager is controlled by the Financial and Capital Market Commission (FKTK) of Latvia. - ↑↓Is the income received from the fund taxable?
The income of non-residents received from the fund is not taxable. The 15% tax is levied from the income of residents received from the fund. - ↑↓Can I invest if I am not a client of the bank?
To invest capital in the fund, one must have a current account and an investment account at Rietumu Bank. A consultation on opening a current account and an investment account may be received at the central office of Rietumu Bank, as well as by telephone + 371 67025284. - ↑↓How can I acquire shares of the fund?
If you would like to acquire shares of the fund (being a client of the Bank and having an investment account at the bank – see Question 12), you should study the Issue Prospectus of the specific fund, sign and send us an application for the acquisition of the shares (the application for acquisition of the fund’s shares is submitted with a full set of documents), as well as remit the required amount to your investment account at Rietumu Bank. - ↑↓Where should I forward my application for acquisition or sale of shares?
The signed original of your application should be forwarded to the following address: RB Asset Management
Vesetas iela 7,
Riga, LV-1013,
Latvia Rietumu Bank
Department of Securities and Financial Markets
Vesetas iela 7,
Riga, LV-1013,
Latvia - ↑↓May I send my application for the acquisition or sale by fax or e-mail?
Yes, you may, but your application must be signed by using the test keys received when opening your current account. The application may be sent to the fax +371 67-02-52-26 or e-mail: customersupport@rietumu.lv or info@rbam.lv. - ↑↓What is the fund’s Issue Prospectus?
The Issue Prospectus is a legal document which contains important information about the investment objectives, the management structure, the commission rates, the performance and operations of the fund. Prior to acquiring the fund’s shares, an investor should study this document. - ↑↓Is it possible to sell shares prior to the expiry of the minimum investment term?
The client may sell the fund’s shares prior to the expiry of the minimum investment term (i.e. in less than a year), but, in this case, he/she will be charged a penalty commission of 0.75% of the investment amount for the premature exit. - ↑↓Are there any additional costs I should expect (a management commission, an excess yield commission, etc.)?
Entry commission – 0.3% of the investment amount;
Investment management commission – 0.7% per annum of the Net Asset Value;
Storage commission – 0.15% per annum of the Net Asset Value.
All commissions and costs are accounted for in the value of the fund’s shares. - ↑↓Can I see the current yield of my shares of the fund? If yes, can I fix this earning by selling the shares?
A weekly quote allows the client to evaluate or sell his/her shares of the fund any time. As the clients must open their investment accounts, they can follow the current yield of their shares from the bank’s statements. - ↑↓How quickly can one receive the money after selling the fund’s shares?
Revaluation of the fund takes place weekly, on the last trading day of the week (Friday). An investor can receive the money for the shares sold within 2-3 business days after the corresponding trading day.
|
