Please read this Risk Disclosure carefully. Investing in Canadian Invest involves significant risk. You may lose some or all of the money you invest. Returns are not guaranteed. Past performance does not predict future results. This page is not financial advice and is not a substitute for the fund documents.
1. General risk of investing
All investments carry risk. The value of an investment can go down as well as up, and you may receive back less than you invested, including the possibility of losing your entire investment. Investment returns are not guaranteed by Canadian Invest, by any financial institution, by any government body or by any deposit insurer.
An investment in the fund is not a deposit and is not insured by the Canada Deposit Insurance Corporation (CDIC), the Autorité des marchés financiers, or any other deposit protection or investor protection scheme.
You should invest only money that you can afford to lose, and only after considering your own financial situation, objectives, risk tolerance and investment time horizon.
2. Concentration risk — Canada only
Canadian Invest invests in Canadian assets only. This is the fund's defining feature, and it is also one of its most significant risks.
Because the portfolio is concentrated in a single country, the fund does not benefit from the diversification that comes from holding assets in different markets and economies. If the Canadian economy or Canadian financial markets perform poorly, the value of the fund may decline, potentially significantly, and losses may be greater and last longer than they would in a more geographically diversified portfolio.
Concentration risk can affect the fund even when global markets are performing well, and it cannot be eliminated by the fund's manager.
3. Market risk
The value of the fund's investments will fluctuate with movements in financial markets. Market prices can be affected by many factors, including economic conditions, interest rates, inflation, currency movements, political events, regulatory changes, natural disasters, public health events and investor sentiment.
Market declines may be sudden, prolonged or both. The fund may experience losses even if the broader Canadian economy appears healthy, and recoveries in value are not guaranteed.
4. Sector concentration risk
The Canadian market is weighted heavily toward certain sectors, in particular financial services, energy, mining and other natural resources. A fund that invests only in Canadian assets is therefore likely to have significant exposure to these sectors.
If any of these sectors experiences a downturn — for example, because of falling commodity prices, lower energy demand, environmental regulation, trade disputes or a slowdown in the financial sector — the fund may be disproportionately affected compared with a more broadly diversified fund.
5. Commodity and resource risk
A meaningful portion of the Canadian economy, and potentially of the fund, is linked to natural resources, including oil, natural gas, minerals, metals and forestry products. Prices for these commodities are volatile and are influenced by global supply and demand, geopolitical events, weather, transportation constraints, environmental regulation and the policies of major producing countries.
Commodity price declines can reduce revenues, profits and valuations of resource companies, which may in turn reduce the value of the fund.
6. Currency risk
The fund's assets are expected to be denominated primarily in Canadian dollars. If the fund holds any assets denominated in other currencies, or if the fund's reporting currency differs from the currency of your own expenses or liabilities, changes in exchange rates may affect the value of your investment.
Currency movements can increase or decrease returns, and may amplify losses. Currency risk is not hedged unless the fund documents expressly state that hedging is used.
7. Interest rate risk
Changes in interest rates can affect the value of the fund's investments. Rising interest rates may reduce the value of fixed-income securities, increase borrowing costs for companies in which the fund invests, and lower the present value of future cash flows.
Interest rate changes may also affect sectors that are sensitive to rates, such as real estate, utilities and financial services, which may represent a significant portion of the Canadian market.
8. Liquidity risk
Some assets in which the fund may invest may not trade actively, or may not be readily convertible into cash. In stressed market conditions, the fund may be unable to sell assets quickly at a fair price, or at all.
Liquidity risk may also affect your ability to redeem your investment. Redemptions may be limited, delayed, suspended or subject to restrictions, as described in the fund documents. In certain circumstances, redemptions may be suspended entirely.
9. Real estate risk
If the fund invests in real estate or real estate–related assets, the value of those investments may be affected by property market conditions, vacancy rates, tenant defaults, property taxes, insurance costs, interest rates, environmental liabilities and changes in zoning or regulation. Real estate can be difficult to sell quickly, and valuations may be based on appraisals that do not reflect actual sale prices.
10. Infrastructure risk
Infrastructure investments may be affected by construction delays, cost overruns, operational failures, regulatory changes, environmental requirements, disputes with public authorities and changing demand for the underlying service. Infrastructure assets are often illiquid and may be difficult to value or sell.
11. Small and mid-capitalization company risk
The fund may invest in companies of various sizes, including small and mid-capitalization companies. These companies often have less experienced management, limited financial resources, narrower product lines and more limited access to capital than larger companies. Their securities may trade less frequently, in smaller volumes and with greater price volatility, and they may be more vulnerable to economic downturns.
12. Valuation risk
Some of the fund's assets may not have a readily available market price. In those cases, the manager will determine a fair value using assumptions, models and estimates. Fair value determinations involve judgment and may differ from the price that would be obtained in an arm's-length transaction. Inaccurate valuations can affect the fund's reported net asset value and the price at which you buy or redeem units.
13. Leverage and derivatives risk
If the fund uses borrowing, leverage or derivative instruments, it may magnify both gains and losses. A small adverse movement in the value of an underlying asset can result in a loss that is greater than the amount invested. Derivatives also involve counterparty risk, the risk that the other party to the transaction fails to meet its obligations, as well as the risk that a derivative does not perform as expected.
The use of leverage and derivatives, if any, will be described in the fund documents.
14. Counterparty and credit risk
The fund may be exposed to the risk that a counterparty — such as a bank, broker, issuer of a debt security or other financial institution — fails to meet its obligations. Credit risk may increase during periods of economic stress or financial market disruption, and losses may be significant and difficult to recover.
15. Regulatory, tax and legal risk
Changes in Canadian or foreign laws, regulations, tax rules or administrative practices may affect the fund, its investments or your returns. Tax rules are complex and may change, sometimes retroactively, and their application may depend on your personal circumstances. The fund's tax treatment may differ from what you expect, and you may owe tax even if your investment has lost value.
The fund may also be affected by changes in environmental, competition, foreign investment, sanctions or reporting requirements.
16. Political and geopolitical risk
Canadian assets can be affected by political and geopolitical developments, including changes in government policy, trade disputes and tariffs, changes to energy or environmental policy, and events affecting Canada's trading relationships. These developments can affect specific sectors or the Canadian economy as a whole, and their impact may be difficult to predict.
17. Operational and cybersecurity risk
The fund depends on the systems, processes and personnel of Canadian Invest and of third-party service providers, including administrators, custodians, brokers and technology providers. Failures, errors, fraud, cyberattacks, data breaches or business interruptions at any of these parties could result in financial loss, delays, incorrect valuations or disclosure of confidential information.
Despite reasonable safeguards, no system is completely secure, and the fund may not be able to recover all losses caused by such events.
18. Manager and key person risk
The fund's performance depends in part on the skill, judgment and continued involvement of the manager and key personnel. The loss of one or more key individuals, or a change in the manager's strategy or ownership, could adversely affect the fund. The manager may also have conflicts of interest, which will be described in the fund documents.
19. Fees and expenses reduce returns
The fund charges management fees and may bear other expenses, including operating costs, transaction costs, taxes and, where applicable, performance fees. Fees and expenses are charged regardless of whether the fund is profitable and reduce the value of your investment and your overall return. Detailed fee information is set out in the fund documents.
20. Redemption and liquidity for investors
Your ability to redeem your investment may be limited by the terms of the fund documents, including notice periods, minimum holding periods, redemption gates, lock-up periods or suspension rights. Where redemptions are restricted, you may be unable to access your money when you want or need it.
Units may not be listed on any stock exchange, and no secondary market for the units is expected. You may not be able to sell your units to another party.
21. No guarantee of distributions
Any distributions made by the fund are not guaranteed. Distributions may vary over time and may be reduced, suspended or discontinued. A distribution is not a return on your investment and may include a return of your original capital.
22. Suitability
The fund may not be suitable for all investors. It may be appropriate only for investors who can tolerate significant price fluctuations, who can accept concentration in Canadian assets, and who do not need access to their money in the short term.
Before investing, you should read the fund documents in full, ask questions and, where appropriate, seek independent financial, legal, tax and accounting advice.
23. No advice, no offer
Nothing on this page or elsewhere on the Canadian Invest website constitutes financial, investment, legal, tax or accounting advice, or an offer to sell or a solicitation of an offer to buy any security. Any offering is made only through the fund documents, in jurisdictions where the offering is lawful. See our Terms of Use for more information.
24. Where to get more information
The fund documents contain a more complete description of the risks summarized here, together with the fund's strategy, fees, redemption terms and other important information. You should read them before making any investment decision.
If you have questions about the risks described on this page, please contact us:
Canadian Invest Inc.
1800-150 King Street West
Toronto, ON M5H 1J9, Canada
E-mail: info@canadianinvest.ca