Risks associated with participation in the fund

Interested investors are expected to take note of the risks associated with participation in the AEF. Careful selection and diversification of the AEF's investments does not guarantee positive returns.

The main risks that may be involved in investing in the AEF are:

Return risk

The return on the investment in Participations over the period from the moment of purchase to the moment of sale is only determined at the time of sale of that investment. The value of Participations depends, among other things, on the development of the value of the Fund's investments and on the choices made in the implementation of the investment policy. There is no guarantee that the investment objective will be achieved and no return is guaranteed. Past performance is no guarantee of future performance. There is a risk that Participants will not receive their full investment back upon termination of their participation in the Fund.

Overall market risk

The AEF invests in listed companies. The value of these investments may vary greatly if financial markets or certain categories of investments as a whole decline as a result of factors beyond the control of the Fund, such as developments in economic growth, interest rate developments, the rate of inflation, price developments in the goods and foreign exchange markets and developments in the financial markets. The value of the AEF is directly linked to the value of these investments and can therefore also fluctuate considerably.

Risks of a general, economic and political nature

The AEF's investments are subject to risks of a general economic nature, such as a decline in economic activity, changes in inflation, interest rates and commodity prices. The value of the AEF's investments can also be influenced by (geo)political developments. 

Risks that investments do not develop as expected

The AEF invests in companies whose value, in the opinion of the Manager, is higher than the current market price (a long position is taken) or lower (a short position is taken). There can be no guarantee that the AEF will succeed in achieving the desired return on a long or short position. There can be no guarantee that the Manager's analyses, including those of expected developments, will be accurate in the short or longer term, which may result in a loss.

Leverage risk

The total positions of the AEF, long and short combined, may not exceed 150% of the total assets of the Fund. This is a leverage of 50%. As a result, the Participant runs a higher risk than if no leverage were applied.

Concentration risk

Because investments will only be made in a limited number of positions, this may lead to stronger fluctuations in the Net Asset Value of the AEF than if investments were more diversified. As a result of this strategy of the AEF, the AEF's performance may differ significantly from the European equity indices. This creates specific risks that can be reflected in significant differences in the performance of the AEF and the European equity indices, both positively and negatively.

Risk short positions

The AEF will ensure that there is sufficient cover at all times against the short positions taken. The AEF provides collateral for this purpose, either in shares or in cash. In theory, the possible loss on short positions is unlimited, while the possible profit is limited to approximately the amount of the investment.

Currency risk

In principle, the AEF does not hedge currency positions. As a result, investments other than in euros can cause fluctuations, both positive and negative.

Investment management risk

The performance of the AEF depends to a large extent on the performance of the people who manage the AEF. The AEF's investment policy is implemented by a small team. The possible loss of one of its members may result in the investment policy being less able to be implemented. The performance of the AEF can then be adversely affected.

Liquidity risk investments

The AEF may have a position in mid- and small-cap companies at any given time. Shares (and related derivatives) in these companies are sometimes limited in trade, which means that they may not be able to be monetised or can only be realised at a significantly lower price than market value.

Operational risk

There is a risk that losses can arise due to deficiencies in internal processes and systems, human error, or external events.

Cash flow risk

The AEF has a limited possibility of withdrawal: only on the first working day of a calendar month is it possible for a Participant to sell (part of) his Participations, provided that the request for sale is received no later than the 20th day of the previous calendar month. (In addition, the Administrator is entitled to suspend purchases under certain circumstances.) This means that between the moment a Participant decides to sell Participations and the moment when this can be realized, there is a risk of a write-down, in which case the sale proceeds will be lower than if the sale decision could have been implemented immediately.

Derivatives risk

The Administrator may make use of listed options. These products can behave in an extremely volatile manner, so their use can have a major impact (both positively and negatively) on the Net Asset Value of the AEF.

Risks of loss of assets placed in custody

In the event of insolvency, negligence or fraudulent acts of the Depositary, the Legal Owner, the Custodian or a sub-custodian, there is a risk of loss of assets placed in custody. Although the Custodian is liable for the (financial) consequences of such a loss, there is a risk that this will not offer any recourse.

Derivatives risk

The Administrator may make use of listed options. These products can behave in an extremely volatile manner, so their use can have a major impact (both positively and negatively) on the Net Asset Value of the AEF.

Counterparty risk

There is a risk that an issuer, a counterparty to a transaction or any other party against which the AEF has a claim may default on its obligations.

Systemic risk

Events in the world or activities of one or more major players in the financial markets may lead to a disruption of the normal functioning of those financial markets. This could result in large losses due to liquidity and counterparty risks materialised by that disruption.

Risk of (fiscal) legislative changes/changing regulations

This is the risk that the tax treatment of the AEF will change in a negative way or that other legislation will be enacted that will have a negative impact on the AEF and its Participants. Regulation is subject to change and changes in regulation could hinder the AEF in achieving its investment objective.

Erosion risk

If the Fund decreases in size (due to withdrawals and/or a decrease in the value of the investments), the fixed costs of the Fund will weigh more heavily on the (remaining) Participants than if the Fund remains the same or increases in size.