As of now, all existing wikifolio certificates and each newly issued wikifolio certificate will benefit from a collateralization solution.
The investment in certificates is generally accompanied by an issuer risk. This means that if the issuing company is no longer able to meet its financial obligations, the risk becomes imminent and the creditors may incur losses.
In order to limit losses from a possible insolvency, an issuing company can specifically collateralize its securities in the interest of its customers. For this purpose, the equivalent value of the investments in the collateralized securities is deposited in whole or in part with the selected custodians. The deposit is usually supervised by a trustee specifically appointed for this purpose. If the issuing company were to face economic difficulties, the trustee would access the deposited collateral and pay it to the creditors.
In order to hedge its obligations from outstanding wikifolio certificates, Lang & Schwarz Aktiengesellschaft pledges all securities and cash accounts held to fulfill this obligation. The money accounts are held at different banks and will be partly solely for collateral purposes. A trustee assumes the function of checking the collateral on behalf of the investors and determining the degree of collateralization.
The collateralization solution is effective immediately for all wikifolio certificates, no matter when a wikifolio certificate was purchased or how high the sum of investments in a wikifolio certificate.
Details can be found in the Base Prospectus dated 28 December 2016 [German]
Neither the investor nor the wikifolio trader incur any additional costs from the collateralization solution. Lang & Schwarz and wikifolio.com bear the expenses resulting from the collateralization.
Thanks to the collateralization of the wikifolio certificates, investors benefit from a hedge against losses resulting from the issuer risk. This does not affect losses from any other risks associated with investments in wikifolio certificates (such as currency or price risks).