Important Risks and Commitments
You need to be aware you could lose all or some of the money you invest.
Investments on the Wealth Club website are generally considered higher-risk and longer-term: they are not suitable for all investors. You should not invest money you cannot afford to lose. If your circumstances or objectives change, you should consider whether your investments remain right for you.
Wealth Club’s service is non-advisory and for Sophisticated and High Net Worth Investors. We do not give personal investment advice or recommendations. You should seek professional advice if you are unsure, including about the suitability of a particular product or product type for you.
Please carefully read and make sure you understand the risks and other information contained within the Investment Documentation (including Prospectus, offer document or Information Memorandum, and the Key Information Document where available) for the product you have chosen, together with the Terms and Conditions of the Wealth Club Services. Note, new risks may arise in the future which could not have been anticipated.
Past performance is not a guide to the future.
The value of investments and any income from them can fall as well as rise. Investment performance depends on a number of factors, including the performance of the underlying assets, sector or industry-specific factors, and wider factors such as changes in interest rates or inflation, price volatility, changes in regulation or economic shocks. These risks may be greater where a portfolio is concentrated.
Macroeconomic or geopolitical events – such as political instability, trade disputes, or shifts in investor sentiment – could also impact valuations, performance, or liquidity.
The value of investments in private companies could also be affected by the company issuing new debt or shares with greater rights or privileges.
Changes in laws or regulation may also affect the availability of certain investments, the ability to access them, or the terms on which investments can be held or traded.
Diversification, spreading your money across multiple investments and investment types can help manage risks and increase the chance of an overall return on your investment. You should consider how much of your portfolio you are comfortable investing in higher risk and longer-term investments.
Tax rules can change. The tax treatment (and any tax reliefs) depend on your circumstances.
You should consider charges carefully. Initial charges, other upfront and ongoing costs and performance fees will reduce the value of your investment. For some investments, the charges may be greater than for more mainstream investments. For example, dealing costs incurred by the investment manager to trade in underlying investments may be higher than for exchange-traded investments.
In many cases, investments are held on behalf of investors by a custodian or nominee and you should familiarise yourself with the details of this, if applicable.
Wealth Club’s services, and the operation of underlying investments, depend on Wealth Club’s own systems and those of third-party service providers. Operational disruption (including cyber incidents) could impact access to services, transaction processing, valuations or reporting.
The risks above, which are not exhaustive, are relevant to all investments available through Wealth Club.
Below we outline some of the specific risks for:
• VCT, EIS, SEIS, IHT portfolios, and single company private deals
Risks – VCT, EIS, SEIS, IHT portfolios, and single company private deals
Please read this section in conjunction with the risks that apply to all investments (above).
It is much more likely that you could lose your capital in an early-stage company than make a profit from it. These investments can be subject to sudden and large falls in value. The risk of investing in small companies and the risk of failure are higher.
It is prudent to only invest a limited proportion of your investable capital in start-up and growth-stage companies and to balance these investments with more liquid investments with a more predictable return. If you invest in a single company there is no diversification if things go wrong.
Any underlying unquoted investments are illiquid and generally not publicly traded or freely marketable. Performance information that affects price is also less readily available. Consequently, it might be difficult to realise an investment and it may take a long time for realisations to occur. The sale price achieved for these investments and the timing of any such realisation may be influenced by a large number of factors. Where a service such as an unquoted IHT portfolio offers the facility to sell shares to make a withdrawal, there must be a willing buyer for such shares at an acceptable price.
Investments quoted on AIM are volatile and illiquid and there is usually a significant difference between buying and selling price. The price could be subject to rapid fluctuations.
There is a limited secondary market for VCT shares. Certain VCTs may have buy-back policies in place. Any such buy-back policies are subject to liquidity and historically the directors of some VCTs have withdrawn buy-back policies or changed the level of the discount at which purchases have been made. Shares in VCTs typically trade at a discount to Net Asset Value (NAV). VCTs often return value to investors, including realised gains, through dividends. As a result, NAV and share price can decline over time to reflect capital returned, even where the VCT has performed well.
Although the official minimum holding periods are 5 years for VCTs, 3 years for EIS and SEIS and 2 years for IHT portfolios to qualify for or retain some of the tax reliefs, you should consider these much longer-term investments.
Any amount withdrawn from an IHT portfolio will lose any BPR eligibility. Withdrawals from an IHT portfolio may result in a Capital Gains Tax liability unless held in an ISA.
For tax-efficient investments, the underlying investee companies may lose their qualifying status if they do not comply with specific HMRC requirements throughout the relevant period. Tax relief could be delayed, denied or withdrawn.
Changes in tax or other government legislation could adversely affect the value of the VCT, EIS, SEIS or IHT portfolio. Other investment product types could become more tax efficient during the lifetime of your investment.
Past UK Government Budgets have changed company size and type criteria for meeting VCT, EIS and SEIS investment eligibility. Investors should be aware such amendments may alter the underlying risk profile of current offers relative to previous years’ offers in which they invested.
Applications for VCT, EIS or SEIS are not guaranteed to be accepted and may be returned, for instance, if the offer has not met its minimum fundraising target. This could pose tax planning issues near the end of a tax year. It could also mean your money is tied up for a period without being invested.
If the allotment or purchase of shares is slower than anticipated this could affect the tax year in which any tax reliefs are available or when the investment begins to qualify for any IHT relief.
Smaller funds or portfolios may be less diverse (increasing risk) and prove costlier to manage. In some cases, if the fund size is smaller than envisaged, fixed costs may have a greater impact on performance.
On IHT portfolios, although product providers operate the schemes with the intention that investors will qualify for IHT relief after holding the underlying shares for a two-year period, there is no guarantee that this will be achieved or maintained. BPR is assessed by HMRC on a case-by-case basis at the date of death. Some investments may include an insurance element. Where this is the case, investors should familiarise themselves with the conditions and exclusions of the policy before investing.
Risks – Managed portfolios
Please read this section in conjunction with the risks that apply to all investments (above).
The performance of the portfolios will depend significantly upon the ability of the manager to select profitable investments: this cannot be guaranteed. Returns for investors will also depend on asset allocation decisions (for example the balance between equities, bonds and other asset classes), which may perform differently in different market conditions.
A portfolio may have an indicator of risk/reward based on a target level of volatility. This is an objective and not guaranteed.
The liquidity of the portfolios will depend on the liquidity of the underlying holdings. It may not be possible to trade a fund or stock, for instance, in extreme liquidity conditions. Holdings in investment trusts could be impacted by movements in the discount or premium to NAV at which the trust trades. Such movements may be more likely at times of market stress. Exposure to smaller or less liquid investment trusts can increase these risks.
The portfolios invest through third-party funds and investment trusts and can therefore be exposed to changes in underlying managers’ strategies, dealing terms or liquidity.
The portfolios may invest in overseas assets and so be exposed to currency movements. Overseas equities may be subject to withholding taxes or other taxes imposed by the issuing jurisdiction. Such taxes may not exist when an investment is made and may be introduced while the investment is held.
Where portfolios include bond or credit exposure, they may also be affected by interest rate movements and changes in credit conditions. Where portfolios include underlying exposure to real assets or other private markets exposures, valuations may be more uncertain and liquidity may be more constrained. Rebalancing and portfolio changes may lead to transaction costs and, where investments are held outside tax wrappers, may also create taxable gains.
Risks – Private markets funds
Please read this section in conjunction with the risks that apply to all investments (above).
Only clients who qualify as Elective Professional Clients of Wealth Club can invest. Individual funds may also apply their own additional requirements and exclusions and you should review these carefully.
Private markets investments, including real assets such as forestry, should not be considered readily realisable. You must be comfortable with the potential for long periods of illiquidity. For semi-liquid funds, redemptions may be available on a periodic basis; however, net redemptions may be limited to a percentage of NAV, to manage liquidity. Some funds may levy an early redemption fee in the first few years (a soft lock). Private markets funds may also reserve the right to charge for, suspend, or otherwise restrict redemptions under conditions of market stress. Dealing terms for private markets funds may also change over time, including notice periods, redemption frequencies or limits, and investors should review fund documentation for the applicable terms.
The funds can be difficult to price and value. They may be valued based on estimated prices and therefore subject to potentially greater pricing uncertainties than listed securities.
Funds may specialise in more complex investments and/or use leverage, which can magnify positive or negative movements in value.
Private markets funds may invest in companies or instruments denominated in currencies other than sterling, so are exposed to currency fluctuations. Where a hedged share class is used, the cost of hedging may impact returns.
Tax treatment of private markets funds can be complex, especially outside of a tax wrapper, and you may wish to seek specialist tax advice.
Risks – Private Markets SIPP
Please read this section in conjunction with the risks that apply to all investments (above).
This section should also be read alongside the SIPP documents, including the SIPP Key Features.
A SIPP is intended for long-term retirement saving and may not be suitable for all investors. You should expect to remain invested for an extended period and you will not normally be able to access money held in a SIPP until age 55 (rising to 57 from April 2028). Withdrawals from a pension are generally taxable and taking benefits may affect your tax position.
The tax advantages of pension saving depend on your circumstances and are subject to limits and conditions. Tax relief on contributions is subject to eligibility and limits, including earnings. Most UK residents under 75 can usually contribute and receive tax relief, but contributions above applicable allowances may trigger a tax charge and certain allowances may be reduced in some cases depending on your circumstances. Pension and tax rules do change over time.
If you transfer existing pension benefits into a SIPP, you may be giving up valuable features of your current pension arrangements, including guarantees or protected benefits: you should check this carefully before deciding to transfer. Transfers into or out of a SIPP can take time and require investments to be sold and transferred as cash. During this period your money will be out of the market, and there may be delays while a transfer is processed.
Pension scams exist and you should be cautious of unsolicited offers or pressure to transfer, invest, or provide personal information.
If you become resident outside the UK, the tax treatment of pension contributions, growth and withdrawals may change. You should consider taking professional advice based on the rules in the relevant jurisdiction.
You should consider whether the long-term and potentially illiquid nature of these investments is compatible with your retirement time horizon and wider financial plans.