The goal of investing is generating a profit. Success requires understanding & skillful risk management.
Money makes money
It's crucial to grasp that all types of investing carry risks, which is entirely normal. Market events beyond the control of investors or market participants, such as economic downturns or geopolitical events, can cause the value of investments to decline. However, there are manageable risks that investors should address. Remember, your risk tolerance is personal, so only you can determine what you're comfortable with.
Let's explore the risks on Nectaro and how you can handle them. Nevertheless, it's essential to understand that managing risk doesn't eliminate the possibility of losing part or all of your invested funds if some risks materialize. Smart investing means balancing risks and potential rewards effectively.
Risks related to the underlying loans
Lending company offers a buyback obligation in case the underlying loans are underperforming.
Additionally, Nectaro's responsible team members diligently monitor the performance of underlying loans, promptly responding to alarms and taking necessary measures when needed.
Risks related to the lending company
Nectaro ensures transparency and security in its collaborations with lending companies to protect our investors. We have a thorough onboarding and due diligence process, this ensures that all partners meet certain minimal criteria and receive legal opinions on the risks involved.
Rest assured, we actively monitor lending companies, keeping a close eye on their financial, operational, and regulatory status. In case of any issues, we have established security mechanisms to collect debt.
As an investor, we encourage you to review the Base Prospectus of any financial instrument. This will provide valuable insights into potential risks based on descriptions, historical performance, and other relevant data of the lending company.
Risks related to Nectaro
Nectaro is an authorized investment firm and a member of the national investor compensation scheme under Directive 97/9/EC. This scheme is designed to protect investors by providing compensation in case Nectaro fails to return financial instruments or investor funds.
Please note that the maximum compensation an investor can claim under this scheme is 90% of their net loss, up to a maximum of €20,000. However, it's essential to understand that the scheme doesn't cover investment risk, such as poor performance of underlying loans, borrower default, or lending company default.
Risks related to the issuer
The issuer is established as a special purpose entity. It is a wholly owned Nectaro company (SIA Nectaro) not engaged in any other business activities, thus limiting the default risk of the issuer.
Conflicts of interest risk
Nectaro has established internal procedures to detect and address conflicts of interest. You can find detailed information in our conflict of interest management policy.
Lending companies fund loans initially from their own budget and may not be certain of selling them to investors. Rest assured, all loans come with a buyback obligation. If a loan underperforms, the lending company will repurchase it.
Regulatory and compliance risk
At Nectaro, we closely monitor regulatory developments and adjust our strategy accordingly. Additionally, as part of our due diligence check, we assess the regulatory environment in which a lending company operates.
IT system risk
As a licensed investment firm, Nectaro adheres to regulatory requirements concerning our IT systems. These regulations prioritize robust IT processes to minimize risks of failure. The regulator conducts audits to ensure our compliance with these requirement.
Risks related to cooperation with external partners
We take partner selection seriously and have backup service providers whenever possible.
Please note that for more specific details, you can find comprehensive information in the Base Prospectus for each lending company* of notes. This document provide in-depth insights into the investment process and associated risks.