Market risk – The net unit value of the Fund depends on the movement of market prices of the securities that form part of the Fund’s portfolio. A decline in securities prices may reduce the value of the Fund’s portfolio and its returns, and conversely an increase in securities prices may raise the value of the portfolio and its returns. To protect against market risk, the Company will seek to minimise it through portfolio diversification, in accordance with the principle of risk distribution.

Interest-rate risk – Changes in interest rates may have a positive or negative impact on the value of the Fund’s assets, since most assets will be invested in debt securities and deposits with authorised banks in the Republic of North Macedonia. Changes in interest rates are inversely proportional to changes in the price of debt securities. The sensitivity of short-term securities is, as a rule, lower than that of long-term securities. To reduce this risk, the Company will invest the fund’s assets in both short-term and long-term debt instruments.

Credit risk – Credit risk is the probability that the issuer of a particular security will not be able, fully or partially, to settle its obligations at the time they fall due. Failure by issuers to meet their obligations would affect liquidity and reduce the value of the Fund. The Company will minimise this risk by monitoring the credit quality of issuers.

Liquidity risk – Liquidity risk is the probability that, at any given moment, the Fund will have difficulty obtaining funds to settle obligations related to the redemption of units, as a result of being unable to quickly sell financial assets at a price approximately equal to their real value. The Company will manage liquidity risk by investing in the most liquid securities available.

Currency risk – Currency risk is a form of risk that arises when the price of one currency changes relative to another. As the name itself suggests, this fund is primarily euro-denominated, which makes it suitable for investors who want to avoid greater exposure to currency fluctuations.

Risk of change in tax regulations – The probability that the legislative authority, in the Republic of North Macedonia or abroad, will change tax regulations in a way that would negatively affect the Fund’s return.

Political risk – The possibility of political crises in the countries where the Fund has invested may lead to a change in the Fund’s assets.

Operational risk – Risk of loss due to inadequate or weak internal processes, inadequate personnel, inadequate or weak systems, and external events. Operational risk also includes legal risk, the risk of money laundering and terrorism financing, and the risk of inadequate information systems supporting operations.