Quarterly Review: WS Amati Global Innovation Fund – Q4 2023
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Our fund disclaimer
Amati Global Investors Limited
This website is not intended to provide investment, tax or legal advice and none of its content should be construed as a recommendation to buy, sell, or hold, any security, investment product or service. You are solely responsible for determining whether any investment is appropriate for you, based on your investment objectives, financial circumstances and risk tolerance. If you are unsure about the meaning of any information provided, or if you are uncertain as to how to proceed, please consult an independent financial adviser. If you do not have a financial adviser, please contact, where information on finding one can be obtained.
Any research or analysis contained in this website has been prepared or obtained by Amati for its own use. While sources of information are believed to be reliable, no guarantee, warranty or representation is given as to their accuracy or completeness. Investment markets and conditions can change rapidly and as such any views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions.
By checking the box and proceeding to the website you have confirmed that you have read and understood the information set out below and that you fully understand the risks involved in an investment of this nature.
Risk Warnings – general
- Past performance is not a reliable indicator of future performance.
- The value of investments and the income from them may go down as well as up, which means that your entire capital is at risk and you may not get back the full amount invested.
- Investment in smaller companies can be higher risk than investment in well-established blue chip companies. Funds investing significantly in smaller companies can be subject to more volatility due to the limited marketability of the underlying asset.
- Smaller companies are less likely to have multinational markets for their products or services than large companies and, as a result, may be more exposed to national economic cycles rather than global economic cycles.
- Investors should be aware that any investment in equities is subject to risk, and that investment in smaller companies, in particular unquoted companies and those quoted on the Alternative Investment Market (AIM), carries an even higher risk than that of larger companies listed on the main market of the London Stock Exchange. This is due to the higher volatility and lack of liquidity often found in smaller company shares, as well as typically higher levels of business specific risks. Illiquidity means that buying and selling portfolio holdings may take some time, and in a worst case scenario portfolio companies could be delisted from AIM, making them very difficult to buy or sell, which in turn could affect the value of your investment.
- Taxation rules and legislation may be subject to change and depends on the circumstances of each investor.
- The real value of any returns that a Shareholder may receive from an investment could be affected by interest rates and inflation over time.
- The spread between the buying price and the selling price of AIM-traded companies’ shares may be wide and thus the mid-market price used for valuation may not be achievable. Unquoted shares are inherently more difficult to value and, as a result, valuations are subject to uncertainty. The market for new shares on AIM is subject to market forces and there can be no certainty that there will be sufficient new share issues to enable to the company to achieve the intended level of investment in qualifying investments.
- There is a risk that any company providing services such as safe keeping of assets or acting as counterparty to derivatives may become insolvent, which may cause investment losses.
Risk Warnings – product specific
WS Amati UK Smaller Companies Fund
WS Amati Strategic Metals Fund
WS Amati Strategic Innovation Fund
- You should regard your investment as long-term. A dilution levy may be applied to the share price whenever a fund is expanding or contracting. Should you buy when a fund is expanding and sell when a fund is contracting, this will have an adverse impact on the return from your investment. Further information regarding the dilution levy may be found in the Supplementary Information Document or the full Prospectus.
- To make an informed decision about investing in these funds you need to read the relevant Key Investor Information Document and Supplementary Information Document and decide whether to contact an authorised intermediary. If you do not already have a copy, please call T. Bailey on 0115 988 8275. The relevant Supplementary Information Document and Key Investor Information Document details your cancellation rights (if any) and shows you how charges and expenses might affect your investment.
- Under the OEIC Regulations, each Sub-fund is a segregated portfolio of assets and those assets can only be used to meet the liabilities of, or claims against, that Sub-fund. Whilst the provisions of the OEIC Regulations provide for segregated liability between Sub-funds, the concept of segregated liability is relatively new. Accordingly, where claims are brought by local creditors in foreign courts or under foreign law contracts, it is not yet known whether a foreign court would give effect to the segregated liability and cross-investment provisions contained in the OEIC Regulations. Therefore, it is not possible to be certain that the assets of a Sub-fund will always be completely insulated from the liabilities of another Sub-fund of the Company in every circumstance.
- The investment manager may employ derivatives with the aim of reducing the risk profile of the funds, reducing costs or generating additional capital or income, in accordance with Efficient Portfolio Management (“EPM”).To the extent that derivative instruments are utilised for hedging purposes (reduction of the risk profile of the funds), the risk of loss to the funds may be increased where the value of the derivative instrument and the value of the security or position which it is hedging prove to be insufficiently correlated.
- The investments associated with the TB Amati Strategic Metals Fund are concentrated in natural resource companies, which are subject to greater risk and volatility than those in other funds with investments across a range of industries and sectors.
- The return on investments in overseas markets may increase or decrease as a result of exchange rate movements. This is of particular relevance to the TB Amati Strategic Metals Fund and the TB Amati Strategic Innovation Fund.
- The TB Amati Strategic Metals Fund invests in companies that are susceptible to fluctuations in certain commodity markets and to price changes due to trade relations. Any negative changes in commodity markets that may be due to changes in supply and demand for commodities, market events, political events, regulatory developments, other catastrophic events, or other factors that the Investment Manager cannot control could have an adverse impact on those companies.
- The TB Amati Strategic Metals Fund and (to a more limited extent) TB Amati Strategic Innovation Fund invests in companies that have operations in developing markets and which may therefore be subject to higher volatility due to political, economic and currency instability.
- The TB Amati Strategic Innovation Fund may invest in securities or instruments which have exposure to the Chinese market. The fund may have direct access to certain eligible Permissible PRC Instruments via Hong Kong Stock Connect. This is a relatively new scheme whose rules may change at any time in a manner which may adversely affect the fund. Investing in the securities markets of China is subject to the risks described in paragraph 8 above, as well as China-specific risks. The legal rights of investors in China may be subject to uncertainties as the relevant legal and regulatory systems and practice in the PRC are less well established than is generally the case in more developed markets and subject to change, and there is a risk of governmental intervention under exceptional circumstances. Key market infrastructure, such as custody and trading systems, is comparatively new and less tested. Political developments involving China may lead to the imposition of additional constraints on foreign investment in China which may adversely affect the fund.
Amati AIM VCT
- Realisations of investments in AIM-traded companies and unquoted investments can sometimes be more difficult than realisation in companies listed on the Main Market of the London Stock Exchange and can take more time. The Company’s ability therefore to obtain maximum value from its investments (for example, through a sale or takeover) may be restricted because of the requirement to satisfy certain conditions necessary for it to maintain its VCT status (such as the condition that not less than 80% by value of its investments must be in qualifying holdings).
- We recommend that potential investors seek independent financial advice prior to investing in a VCT. Investment in a VCT carries a higher risk than many other forms of investment.
- The tax rules or their interpretation in relation to an investment in the company and/or rates of tax may change during the life of the company. There can be no guarantee that the company will achieve or maintain full VCT status. If the company fails to obtain full approval as a VCT, or ceases to retain approval as a VCT before qualifying subscribers have held their ordinary shares for three years, the 30% income tax relief obtained will have to be repaid. Following a loss of VCT status a qualifying subscriber will be taxed on dividends paid by the company and, in addition, a liability to capital gains tax may arise on any subsequent disposal of ordinary shares. If at any time VCT status is lost, dealings in the ordinary shares will normally be suspended until such time as the Company has published proposals either to continue as an investment company or to be wound up.
- VCT investment should be viewed as a long-term investment with shares being held for a minimum of five years from the date of issue in order for the shareholder to retain the initial income tax relief received following subscription.
- The spread between the buying price and the selling price of AIM-traded companies’ shares may be wide and thus the mid-market price used for valuation may not be achievable. Unquoted shares are inherently more difficult to value and, as a result, valuations are subject to uncertainty. The market for new shares on AIM is subject to market forces and there can be no certainty that there will be sufficient new share issues to enable to the company to achieve the intended level of investment in qualifying investments.
- The existing levels and bases of, and reliefs from, taxation may change. The value of tax reliefs depends on the personal circumstances of investors, who should consult their own tax advisers before making any investment. In addition the VCT legislation in relation to what constitutes a qualifying holding has changed regularly, as described in the introductory section to Amati AIM VCT on this website. There is a risk that future changes could increase the risk profile of the investments which Amati AIM VCT needs to make in order to maintain its qualifying status.
- It is likely that the selling price for an Ordinary Share, which a shareholder could achieve on the stock market, will be less than the Net Asset Value per Share )”NAV per Share”) or the price paid by the Shareholder to acquire that Share. The Ordinary Shares may trade at a discount to the NAV per Share for a variety of reasons, including as a consequence of general market conditions, concerns regarding the general marketability of the Ordinary Shares or the actual or expected performance of the Company.
- The Company is a closed-ended investment company. Shareholders will have no right to have their Ordinary Shares redeemed or purchased by the Company at any time. Shareholders wishing to realise their investment will be required to dispose of their Ordinary Shares on the stock market. Accordingly, the ability of Shareholders to realise the NAV per Share of, or any value in respect of, their Ordinary Shares is dependent on the existence of a liquid market in the Ordinary Shares and the market price of such Ordinary Shares. Although the Ordinary Shares already issued by the Company have been (and it is anticipated that the New Shares will be) admitted to the premium segment of the Official List of the FCA and traded on the Main Market, if the Company is unable to maintain its share buyback policy (which has been put in place in order to enhance liquidity in the Ordinary Shares), there may not be a liquid market for the Ordinary Shares (given that there is a limited secondary market for shares in VCTs, primarily because initial VCT income tax relief is only available to individuals subscribing for newly issued shares) and investors may find it difficult to realise their investments.
- The Company invests predominantly in AIM-traded companies. Investment in AIM-traded companies, by its nature, may involve a higher degree of risk than investment in companies traded on the Main Market of the London Stock Exchange. In particular, AIM-traded companies are often smaller companies which may have limited product lines, markets or financial resources and may be dependent for their management on a smaller number of key individuals.
- The fact that a share is traded on AIM does not guarantee its liquidity. The spread between the buying and selling price of such shares may be wide and thus the price used for valuation may not be achievable. The valuation of the Company’s portfolio and opportunities for realisation may also depend on stock market conditions.
- In the short to medium term the returns to Shareholders will be determined by the existing portfolio of the Company, which largely consists of investments made prior to the VCT rules being amended by the Finance Acts of 2015 and 2018. The consequence of these amendments is that VCTs are now required to invest in earlier stage companies. Over time, as the Company’s portfolio is brought in to line with the amended VCT rules, Shareholder returns and dividends payable by the Company may take longer to generate and the levels of those returns may be more volatile due to the nature of investing in earlier stage companies.
- Investments in AIM-traded companies are more likely to be illiquid than investments in companies traded on the Main Market of the London Stock Exchange. Investments may not be able to be realised within a reasonable time frame or at all. Such illiquidity may affect the ability of the Company to vary its portfolio or dispose of investments in a timely fashion and at satisfactory prices in response to changes in economic or other conditions. This could have an adverse effect on the financial condition and results or operations of the Company as it could reduce the profits and proceeds expected to be realised from such investments by the Company.
Amati AIM IHT Portfolio Service
- Tax treatment may be subject to change and depends on the individual circumstances of each investor. The availability of tax reliefs also depends on the investee companies maintaining their qualifying status.
- Amati, in its capacity as Discretionary Fund Manager (DFM), will select stocks which it expects to qualify for Business Property Relief (BPR), but it cannot guarantee that 100% of the portfolio will be exempt from Inheritance Tax after 2 years, nor that the qualification rules as set out by HMRC will not change in future in a way that affects the status of individual holdings.
- Amati, in its capacity as Discretionary Fund Manager (DFM), will select stocks which it expects to qualify for Business Property Relief (BPR), but it cannot guarantee that 100% of the portfolio will be exempt from Inheritance Tax after 2 years, nor that the qualification rules as set out by HMRC will not change in future in a way that affects the status of individual holdings.
- Current tax rules and the available tax reliefs offered on investments into AIM-quoted stocks may change at any time, and there is a considerable risk that if the legislation changed in respect of these tax reliefs, then those portfolio companies that no longer qualified for such reliefs would be subject to heavy selling pressure, potentially leading to significant investment losses.
Issued by: Amati Global Investors Limited, 8 Coates Crescent, Edinburgh EH3 7AL. Registered in Scotland (company no. SC199908). FCA reference number: 198024
Amati Global Investors is authorised and regulated by the Financial Conduct Authority.
Head Office
8 Coates Crescent
Edinburgh
EH3 7AL
