The investment strategy of each fund is specified in the relevant fund’s prospectus. The supervisor of the funds follow strict rules of procedure on the funds' investment decisions and the rules of procedure state clearly that investments must fall within the framework set by the funds' investment strategies. Possible deviations from the investment strategy are monitored daily. A breakdown of the assets of UCITS and alternative investment funds marketed towards the public is sent to the FME every quarter. Unit holders can see this breakdown of assets in the factsheets for each fund on Stefnir's website. The information is updated monthly.

Investors can subscribe to most funds operated by Stefnir. The minimum subscription is ISK 5,000 a month. When a client subscribes to a fund the distributor of the fund is responsible for debiting the due amount at the end of each month. The factsheets for each fund specify whether investors can subscribe to a particular fund or not. If you choose to subscribe to Stefnir’s funds you will be granted a 50% discount on the front load of the relevant fund and the handling fee is waived.

If you wish to subscribe to a fund please contact one of Arion Bank's financial advisors on 444 7000 or send an e-mail to verdbrefathjonusta@arionbanki.is.

The distributors of Stefnir’s funds can provide advice on investing in Stefnir’s funds. Information on individual funds is also available on Stefnir’s website.

Fund distributors

Investors’ capital is not tied up in the funds with the exception of the few days it takes to redeem their shareholdings from the funds. In most UCITS and alternative investment funds marketed towards the public this process takes two working days but it could be longer in the case of funds with international assets. Further information on individual funds can be found in under the headings for each fund and in the funds’ prospectuses. www.stefnir.is.

When a client invests in a fund, the investment is recorded at the fund’s offer price. When the client redeems their holding, this is done at the fund's bid price.

Sales fee: When an investment is made in the fund a sales fee is collected in the form of the spread between the bid and offer prices (also called the front load). A sales fee is not collected when investing in Stefnir – Liquidity Fund.

Handling fee: Collected on all transactions in the fund in accordance with the distributor's rate list. There is no handling fee when subscribing to investing in funds.

Management fee: A management fee is paid annually and goes towards paying the funds’ operating costs. The management fee is taken into account when performing the daily calculations of the funds’ price and returns. The management fee is taken into account when performing the daily calculations of the funds’ price and returns.

Further information on costs can be obtained from the funds' prospectuses and factsheets.

Risk appetite: Since price volatility is one of the main measures of risk, financial instruments which are less volatile are considered low risk while financial instruments which are more volatile are considered high risk. If you wish to keep risk to a minimum, you should select a fund with low volatility. If you are prepared to take more risk in order to gain higher returns, you should select a more volatile fund. Note that measures of risk are only based on the fund’s historical volatility and it does not take into account the risk of loss.

Risk tolerance generally depends on the investor‘s financial position and how long they wish to save for. Investors who intend to make long-term savings are usually more prepared to take more risk to maximize returns than those saving in the short term. Your financial position may also influence how much risk you are prepared to take when investing savings. It is important to take into account the objective of your investment; if the savings are designed to be a back-up fund and if you have no other reserve funds to help cope with a financial crisis, you are advised to select a lower risk fund for these savings.

Investment horizon: The longer the investment horizon, the greater the potential for higher returns. If you intend to invest in the short term, you are advised to take less risk and to select a fund with low volatility, e.g. Stefnir – Liquidity Fund. When a long-term investment is made, there is greater volatility in returns but there is also more potential for higher returns. The difference between terms which invest in the short term and the long term is the fluctuations in the price of the assets in the fund. Short-term assets, e.g. those with a duration of a few months, have limited price fluctuations but assets with a duration of several years might fluctuate sharply. It is important to remember however that higher returns are generally thought to involve higher risk.

Fund distributors

The scale does not measure risk such as the risk of loss from investing in funds, but rather shows a fund’s volatility in historical terms. The least volatile funds have a rating of 1 out of 7; the most volatile funds are rated 7 out of 7. The more volatile the fund’s return, the higher the rating and therefore the associated risk is conceivably higher because of future price changes.

The best fund for you is the one that suits your financial goals at any particular time. You should select a fund which matches your risk appetite and your preferred investment horizon. You are advised to seek expert advice before investing in funds. The distributors of Stefnir’s funds can provide information on the funds.

Fund distributors

Stefnir is subject to a wide range of supervision from internal and external bodies. The company is a limited company by law and publishes its annual accounts which are available on its website. It is important to be realize that Stefnir is separate from the funds it operates. Stefnir operates a number of funds; the management and administration of the funds' assets are the responsibility of Stefnir's employees and the holdings of unit holders always represent a proportional claim to the assets of a fund. The custody of the funds’ assets is the responsibility of an independent custodian recognized by the FME.

Article 39 (3) of Act no. 116/2021 defines ownership rights to shares in a fund as follows: All holders of a share in a UCITS, or individual division of the same, shall have an equal claim to the income and assets of the fund or the division in question, in proportion to their share, with the unit share certificates serving as confirmation of a claim to securities held by the fund. This underlines the fact the management company has no claim on a fund’s assets as long as it is not a unit holder in the fund, in which case it has a proportional holding in the fund just as other unit holders do. In the same way, the management company does not bear any operational risk in relation to the funds.

The annual accounts of the management company and funds operated by the company are kept separate; all funds have their own balance sheets and income statements. The annual accounts of Stefnir are published on the company’s website.

Article 160 (2) of the Public Limited Companies Act no. 2/1995 defines a Partnership Limited by Shares as the type of Limited Partnership where one or more Company members (guarantors) are directly or indirectly responsible in solidum for the Company's liabilities, while other Company members (shareholders), one or more of them, are subject to limited liability on the basis of contributions forming the Company's share capital. Guarantors may also be shareholders. Partnerships Limited by Shares are governed by the Public Limited Companies Act.

Undertakings for collective investment in transferable securities (UCITS) are portfolios of bonds, stocks and other liquid securities, as well as deposits. The structure of the funds varies. Icelandic UCITS operate in accordance with Act. No. 116/2021 on UCITS. One of the objectives of the Act is to ensure effective consumer protection; the Act imposes various restrictions on the operation of the funds. By law all funds are operated by a management company which is an independent financial company. All supervision and custody of securities in funds managed by Stefnir is handled by a separate financial company, Arion Bank. The custodian is a supervisory body and its responsibilities include ensuring that the price calculation, sale, issuing and redemption of unit shares are conducted in accordance with the law and funds' articles of association.

Redemption refers to when a client redeems unit shares and receives cash in his/her account in return. The amount received by the client is equal to the number of units he/she owns in the fund (redeems) multiplied by the price of the fund on the date of redemption (minus a handling fee).

The investment strategy of Icelandic UCITS is decided in advance and investors can therefore examine the funds' investment authorization before making an investment. The investment strategy of a UCITS may not be changed without the prior consent of the Financial Supervisory Authority (FME) which supervises the activities of the relevant management company and thus the fund.

Alternative Investment funds marketed towards retail investors are licensed forms of funds for collective investment pursuant to Act. No. 45/2020 on Alternative Investment Fund Managers. Alternative investment funds marketed towards the public are governed by different rules to UCITS according to Act no. 30/2003, e.g. with respect to investment limits and the duty to effect redemption.

The investment limits of alternative investment funds marketed towards the public are broader under the law and investments in such funds may involve a greater degree of risk than investments in UCITS. Investors are encouraged to remember the difference between alternative investment funds marketed towards the public and UCITS and to closely examine the investment strategy applicable to the fund in which they have unit shares or in which they intend to invest in the future.

An institutional investor fund is a fund for collective investments which is only open to institutional investors. Institutional investment funds are subject to minimal regulatory supervision. The funds have defined investment strategies and are often established in connection with very limited investments. Institutional investors are clients who have the investment strength stipulated by law, the experience, knowledge and expertise to make independent decisions on investments and to assess the risk associated with an investment. Investors need to meet certain requirements of Act no. 108/2007 on Securities Transactions and to undergo an assessment in order to be classed as institutional investors.

If one examines the return on investments over a period of time, it can be seen that higher returns generally involve a higher degree of risk. The main risk is the price volatility of securities in the short term. Since price volatility is one of the main measures of risk, securities which are less volatile are considered lower risk while securities which are more volatile are considered higher risk. Risk can also take other forms. Equities are generally considered to be a riskier investment than bonds because shareholders are behind bondholders in the priority order of claims. This is particularly true of equities and bonds issued by the same party or similar issuers.

It is also important who issues the securities in the funds. It is often been stated that governments are more dependable issuers than companies. However, this is an oversimplification as the recent debt problems of many western countries have shown. It is more accurate to say that funds whose securities are issued by financially strong issuers represent a lower risk than funds whose securities are issued by less dependable issuers.

Stefnir Asset Management Company is a well-established Icelandic fund manager with assets of approximately ISK 230 billion under active management at the end of 2020. Stefnir has about 20 specialists in four teams managing a diverse collection of UCITS, alternative investment funds marketed towards the public and institutional investment funds. The company also manages the assets of several partnerships limited by shares that have been established around enterprise investment schemes.

Stefnir was founded in 1996 and its investment team has on average around 10 years' experience on the financial market. The company has from the beginning been at the forefront of the development of new types of funds, both for retail and professional clients. The best interests of the clients are the focus when the developing and managing funds. Stefnir believes that trust and confidentiality are the keys to long-term relationships with its clients. Stefnir therefore places a keen emphasis on open and transparent communications and exchanges of information.

Stefnir’s role is to manage its clients’ assets as best serves their interest. Stefnir’s clients own unit shares in funds managed by Stefnir. Those unit shares are confirmation of ownership in the funds’ asset portfolios. The funds’ assets are therefore wholly owned by its current unit holders (fund members). By law the assets of Stefnir hf. and the assets of funds under management are kept separate in financial statements. The custody of the funds’ assets, along with calculations of the price of the funds, is the responsibility of a separate company, Arion Bank.

Stefnir places special emphasis on security in all its activities. To this end the company has set up sophisticated control and risk management systems based on clear procedures, internal and external auditing, compliance and systems tailored to manage investment strategies. The company also carries out an annual internal risk assessment of major operational risk factors. Stefnir’s UCITS and alternative investment funds marketed towards the public are subject to supervision by the Icelandic Financial Supervisory Authority (FME).

The minimum investment in most funds is ISK 10,000 and ISK 5,000 by subscription. Some funds have different minimum investments. See the relevant prospectus or factsheet for details.

It depends on the investment strategy of individual funds. Some are defined as short-term funds since they invest in bonds with short durations, e.g. 1-5 years. Others are categorised as long-term funds as they invest in bonds with longer durations, i.e. 5 years or longer. In the short term there is a greater risk of volatility in returns in long-term funds than in short-term funds. It is therefore important that the choice between long-term or short-term funds takes into account your objectives and financial circumstances.