The risks of investing

Before you put money into an investment it’s essential that you consider the risks involved.

Overview

This page outlines the specific risks of each of our investment products and services. Please read these thoroughly and if there's anything you don't understand, contact your financial adviser. Downing does not provide investment and tax advice.

The risks of investing in IHT services

  • Downing Estate Planning Service

    Investing in Inheritance Tax Services involves taking on certain risks, mainly in relation to the value of the money you have invested and the tax treatment of the investments held in the services. The value of your investment may go down so you might get back less than you paid in. 

    Below is a full list of the risks that investors need to understand:

    • Capital is at risk: the value of investments and any income derived from them may go down as well as up and investors may not get back the full amount invested.
    • Tax reliefs are not guaranteed: the rates of tax, tax benefits and allowances are based on current legislation and HMRC practice and dependent on personal circumstances. These may change from time to time and, as such, they are not guaranteed. In addition, any changes to the sectors that qualify as IHT trades may have a material adverse effect on the value of the shares or the ability to achieve the objectives of the Service.
    • Qualifying investments are not guaranteed: there is no guarantee that sufficient investments in IHT qualifying businesses will be made within the expected timetable, or at all. In addition, IHT qualifying businesses may subsequently cease to qualify for IHT relief. In such cases, the IHT relief could be delayed or lost.
    • Investments are long-term and high-risk: investments must be held for at least two years and held at death to benefit from IHT relief. Although you can request a withdrawal from your portfolio (available twice a month), there could be a delay because the investments made through the Service will be in unquoted companies, the shares of which are less liquid than listed shares. Such investments are also considered to be higher risk than securities listed on the London Stock Exchange.
    • Target returns are not guaranteed and you cannot rely on past performance: please remember that past performance is not a guide to future performance and there is no guarantee that the Service’s objectives will be achieved.
    • Conflicts of interest: the IHT companies may co-invest alongside other funds managed or advised by Downing. With these relationships, there’s a chance that the interests of one group of investors will present a conflict with the interests of another group or with the interests of Downing. In the event of a conflict of interest, Downing’s investment committee will work to ensure that any conflicts are resolved fairly and in accordance with Downing’s conflicts policy.
  • Downing AIM Estate Planning Service

    Investing in Inheritance Tax Services involves taking on certain risks, mainly in relation to the value of the money you have invested and the tax treatment of the investments held in the services. The value of your investment may go down so you might get back less than you paid in. 

    Below is a full list of the risks that investors need to understand:

    • Capital is at risk: the value of your capital may go down as well as up and you may not get back the full amount invested.
    • Investments are long term and high risk: investments must be held for at least two years and held at death to benefit from IHT relief. Portfolios will be invested in smaller companies quoted on the Alternative Investment Market (AIM), which may be significantly more volatile, carry higher risk and be materially less liquid than many other investments and in particular in comparison to larger companies traded on the main market of the London Stock Exchange.
    • The insurance policy is not guaranteed to remain in place: the insurance policy is a Downing group policy, paid for by Downing. It is renewable each year (subject to a minimum period of at least two years for each investor) and there is no guarantee that it will remain in place following the first or any subsequent renewal date, or that it will pay out if a claim is made because there are a number of exclusions.
    • Qualifying investments are not guaranteed: although it is intended that the Service will be operated such that investors will qualify for IHT relief after holding the underlying shares for a period of two years, there is no guarantee that this will be achieved or maintained. The level of IHT relief could be restricted if any IHT Company becomes non-qualifying for Business Relief purposes. Loss of IHT Company status could occur if, for example, such a company changes its business activities or its corporate structure, or if that company is taken over by another company which does not qualify for business property relief, or if a company’s shares become listed on a stock market so that they cease to be unquoted for tax purposes.
    • Your portfolio may be difficult to sell: AIM companies invested in may be illiquid and such shares tend to be harder to sell than those of large companies. This means that if you decide to make a withdrawal or transfer from your portfolio, you may not be able to sell the shares immediately and you may have to accept a price that is less than the real value of the companies.
    • An investment in the Service will not be suitable for all investors: the Service’s objectives have been formulated on the basis that you have the potential to save 40% IHT on the value of your portfolio and that you are UK resident and UK domiciled. We always recommend that you seek specialist independent tax and financial advice before investing. Please note, we do not offer tax or investment advice.
    • Dealing costs: for smaller portfolios, dealing costs may be significant to the performance of your portfolio.
    • You cannot rely on past performance: please remember that past performance is not a guide to future performance and there is no guarantee that the Service’s objectives will be achieved.
  • Downing AIM ISA

    Investing in Inheritance Tax Services involves taking on certain risks, mainly in relation to the value of the money you have invested and the tax treatment of the investments held in the services. The value of your investment may go down so you might get back less than you paid in. 

    Below is a full list of the risks that investors need to understand:

    • Capital is at risk: The value of your capital may go down as well as up and you may not get back the full amount invested.
    • Investments are long term and high risk: investments must be held for at least two years and held at death to benefit from IHT relief. Portfolios will be invested in smaller companies quoted on the Alternative Investment Market (AIM), which may be significantly more volatile, carry higher risk and be materially less liquid than many other investments and in particular in comparison to larger companies traded on the main market of the London Stock Exchange.
    • Tax reliefs are not guaranteed: IHT relief is described in accordance with Downing’s interpretation of current legislation, rules and practice, which are subject to: (i) change in the future; and (ii) personal circumstances. IHT relief will not be available if the investor has not held shares for at least two years at the date of death.
    • You cannot rely on past performance: Please remember that past performance is not a guide to future performance and there is no guarantee that the service’s objectives will be achieved.
    • The insurance policy is not guaranteed: the insurance policy is a Downing group policy, paid for by Downing. It is renewable each year (subject to a minimum period of at least two years for each investor) and there is no guarantee that it will remain in place following the first or any subsequent renewal date, or that it will pay out if a claim is made because there are a number of exclusions. Please see the Terms & Conditions document for more details.
    • IHT-qualifying investments are not guaranteed: although it is intended that the Service will be operated such that investors will qualify for IHT relief after holding the underlying shares for a period of two years, there is no guarantee that this will be achieved or maintained. The level of IHT relief could be restricted if any IHT Company becomes non-qualifying for Business Relief purposes. Loss of IHT Company status could occur if, for example, such a company changes its business activities or its corporate structure, or if that company is taken over by another company which does not qualify for business property relief, or if a company’s shares become listed on a stock market so that they cease to be unquoted for tax purposes.
    • Your portfolio may be difficult to sell: AIM companies invested in may be illiquid and such shares tend to be harder to sell than those of large companies. This means that if you decide to make a withdrawal or transfer from your portfolio, you may not be able to sell the shares immediately and you may have to accept a price that is less than the real value of the companies.
    • An investment in the service will not be suitable for all investors: the service’s objectives have been formulated on the basis that you have the potential to save 40% IHT on the value of your portfolio and that you are UK resident and UK domiciled. We always recommend that you seek specialist independent tax and financial advice before investing. Please note, we do not offer tax or investment advice.
    • Dealing costs: for smaller portfolios, dealing costs may be significant to the performance of your portfolio.

The risks of investing in VCTs

  • Downing ONE VCT

    VCT investments are high risk. The value of your investment may go down so you might get back less than you paid in. 

    Below is a full list of the risks that investors need to understand:

    • Capital is at risk: The value of the shares and income derived from them can fluctuate. There’s no guarantee you’ll get back the amount you invest.
    • Investments are long-term and high-risk: You should be prepared to hold your shares for a minimum of five years. Qualifying investments made by the Company will be in businesses which have a higher risk profile than larger “blue chip” companies and whose securities are not readily realisable and therefore may be difficult to realise.
    • Tax reliefs are not guaranteed: The tax rules, or their interpretation, in relation to an investment in the Company and/or the rates of tax may change during the life of the Company. Changes may apply retrospectively, which could affect tax reliefs obtained by shareholders and the VCT status of the Company. If you dispose of your shares within five years of issue, you’ll have to repay any income tax reliefs originally claimed.
    • Maintaining VCT status is not guaranteed: There can be no guarantee that the Company will retain its status as a VCT. Losing VCT status could lead to adverse tax consequences including a requirement for you to repay the 30% initial income tax relief.
    • Shares may be difficult to sell: Although the Company’s shares are traded on the London Stock Exchange, there may not be a liquid market in the shares and you may find it difficult to sell them. In addition, the price at which shares are traded may not reflect their underlying net asset value.
    • You cannot rely on past performance: There can be no assurances that the Company will meet its objectives or identify suitable investment opportunities. The past performance of the Company and other funds managed or advised by Downing is not a guide to future performance.
    • There are investment restrictions: The Company’s ability to obtain maximum value from its investments may be limited by the VCT rules. Changes in the VCT rules may be applied retrospectively and may reduce the level of your returns. Several new investment restrictions came into force in 2015 and 2017, which include VCT funds being prohibited from being used to finance management buy-outs or the acquisition of existing businesses as well as the inclusion of a ‘capital-at-risk’ test. In addition, the maximum lifetime amount a company can receive from VCTs has been restricted, as well as limiting VCT investment to companies under a certain age.
    • There are market risks: The investments the Company may make in funds comprising listed stocks will be subject to normal market fluctuations and other risks inherent in investing in securities.
  • Downing FOUR VCT Generalist

    VCT investments are high risk. The value of your investment may go down so you might get back less than you paid in. 

    Below is a full list of the risks that investors need to understand:

    • Capital is at risk: The value of the shares and income derived from them can fluctuate. There’s no guarantee you’ll get back the amount you invest.
    • Investments are long-term and high-risk: You should be prepared to hold your shares for a minimum of five years. Qualifying investments made by the Company will be in businesses which have a higher risk profile than larger “blue chip” companies and whose securities are not readily realisable and therefore may be difficult to realise.
    • Tax reliefs are not guaranteed: The tax rules, or their interpretation, in relation to an investment in the Company and/or the rates of tax may change during the life of the Company. Changes may apply retrospectively, which could affect tax reliefs obtained by shareholders and the VCT status of the Company. If you dispose of your shares within five years of issue, you’ll have to repay any income tax reliefs originally claimed.
    • Maintaining VCT status is not guaranteed: There can be no guarantee that the Company will retain its status as a VCT. Losing VCT status could lead to adverse tax consequences including a requirement for you to repay the 30% initial income tax relief.
    • Shares may be difficult to sell: Although the Company’s shares are traded on the London Stock Exchange, there may not be a liquid market in the shares and you may find it difficult to sell them. In addition, the price at which shares are traded may not reflect their underlying net asset value.
    • You cannot rely on past performance: There can be no assurances that the Company will meet its objectives or identify suitable investment opportunities. The past performance of the Company and other funds managed or advised by Downing is not a guide to future performance.
    • There are investment restrictions: The Company’s ability to obtain maximum value from its investments may be limited by the VCT rules. Changes in the VCT rules may be applied retrospectively and may reduce the level of your returns. Several new investment restrictions came into force in 2015 and 2017, which include VCT funds being prohibited from being used to finance management buy-outs or the acquisition of existing businesses as well as the inclusion of a ‘capital-at-risk’ test. In addition, the maximum lifetime amount a company can receive from VCTs has been restricted, as well as limiting VCT investment to companies under a certain age.
    • There are market risks: The investments the Company may make in funds comprising listed stocks will be subject to normal market fluctuations and other risks inherent in investing in securities.
  • Downing FOUR VCT Healthcare

    VCT investments are high risk. The value of your investment may go down so you might get back less than you paid in. 

    Below is a full list of the risks that investors need to understand:

    • Capital is at risk: The value of the shares and income derived from them can fluctuate. There's no guarantee you'll get back the amount you invest.
    • Investments are long-term and high-risk: Investors should be prepared to hold their shares for a minimum of five years. Qualifying investments made by the Company will be in businesses which have a higher risk profile than larger “blue chip” companies and whose securities are not readily realisable and therefore may be difficult to realise.
    • Tax reliefs are not guaranteed: The tax rules, or their interpretation, in relation to an investment in the Company and/or the rates of tax may change during the life of the Company. Changes may apply retrospectively, which could affect tax reliefs obtained by shareholders and the VCT status of the Company. If you dispose of your shares within five years of issue, you'll have to repay any income tax reliefs originally claimed.
    • Maintaining VCT status is not guaranteed: There can be no guarantee that the Company will retain its status as a VCT. Losing VCT status could lead to adverse tax consequences, including a requirement for you to repay the 30% initial income tax relief.
    • Shares may be difficult to sell: Although the Company’s shares are traded on the London Stock Exchange, there may not be a liquid market in the shares and you may find it difficult to sell them. In addition, the price at which shares are traded may not reflect their underlying net asset value.
    • You cannot rely on past performance: There can be no assurances that the Company will meet its objectives or identify suitable investment opportunities. The past performance of the Company and Downing is not a guide to future performance.
    • Single sector exposure: The qualifying investments in this share class will only be invested in the healthcare sector, which may increase risks compared to a VCT share class that is diversified by sector.
    • There are investment restrictions: The Company’s ability to obtain maximum value from its investments may be limited by the VCT rules. Changes in the VCT rules may be applied retrospectively and may reduce the level of your returns. A number of new investment restrictions came into force in 2015 and 2017, which include VCT funds being prohibited from being used to finance management buy-outs or the acquisition of existing businesses as well as the inclusion of a 'capital-at-risk' test. In addition, the maximum lifetime amount a company can receive from VCTs has been restricted, as well as limiting VCT investment to companies under a certain age.
    • There are market risks: The investments the Company may make in funds managed by Downing and/or listed shares will be subject to normal market fluctuations and other risks inherent in investing in securities.

The risks of investing in EIS

  • Downing Ventures EIS

    EIS investments are high risk. The value of your investment may go down so you might get back less than you paid in.

    Below is a full list of the risks that investors need to understand: 

    • Capital is at risk: the value of investments and the income derived from them may go down as well as up and you may not get back the full amount invested.
    • Tax reliefs are not guaranteed: the rates of tax, tax benefits and allowances are based on current legislation and HMRC practice - these may change from time to time and as such, they are not guaranteed and are subject to personal circumstances.
    • Qualifying investments are not guaranteed: there is no guarantee that sufficient investments in EIS companies will be made within the expected timetable, or at all. In addition, it is possible that the EIS companies may subsequently cease to qualify for EIS tax reliefs, in which case, the tax reliefs you receive could be delayed or lost.
    • Gearing: although most of our Ventures EIS investments have little or no leverage, debt (or any other prior-ranking securities) used by qualifying companies will significantly increase risk.
    • Diversification: this may not be achieved and investments may be in the same sector.
    • Investments made through Downing Ventures EIS are long term and high risk: you should not consider investing if you think you could require access to your funds within approximately four to eight years from the date shares are originally acquired. Please remember, investments made through our EIS will be in early stage companies that are much smaller, unquoted technology companies that are higher risk than those listed on the London Stock Exchange. The chances of companies failing are high.
    • You cannot rely on past performance: please remember that past performance is not a reliable guide to future performance and there is no guarantee that the service’s objectives will be achieved. As is the nature of making early stage investments, we expect some companies to fail. If a company does fail, investors can claim EIS loss relief and elect to set the EIS loss relief against income or capital gains (but not both). We will provide investors and advisers with all the necessary information to help with the application process once a company has been dissolved.

The risks of investing in funds

  • Downing Monthly Income Fund

    Investing in a fund involves taking on certain risks. The value of your investment may go down so you might get back less than you paid in. 

    Below is a full list of the risks that investors need to understand: 

    • Capital is at risk: the value of investments and the income derived from them may go down as well as up and you may not get back the full amount invested.
    • Diversification: this may not be achieved and investments may be in the same sector.
    • Investments made through Downing Monthly Income Fund are long term and high risk: you should not consider investing if you think you could require access to your funds in the medium to long term.
    • There are market risks: The investments the Company may make in funds managed by Downing and/or listed shares will be subject to normal market fluctuations and other risks inherent in investing in securities.
    • Shares may be difficult to sell: Although the Company’s shares are traded on the London Stock Exchange, there may not be a liquid market in the shares and you may find it difficult to sell them. In addition, the price at which shares are traded may not reflect their underlying net asset value.
    • You cannot rely on past performance: please remember that past performance is not a reliable guide to future performance and there is no guarantee that the service’s objectives will be achieved.
  • Downing UK Micro-Cap Growth Fund

    Investing in a fund involves taking on certain risks. The value of your investment may go down so you might get back less than you paid in. 

    Below is a full list of the risks that investors need to understand: 

    • Capital is at risk: the value of investments and the income derived from them may go down as well as up and you may not get back the full amount invested.
    • Diversification: this may not be achieved and investments may be in the same sector.
    • Investments made through Downing UK Micro-Cap Growth Fund are long term and high risk: you should not consider investing if you think you could require access to your funds in the medium to long term.
    • There are market risks: The investments the Company may make in funds managed by Downing and/or listed shares will be subject to normal market fluctuations and other risks inherent in investing in securities.
    • Shares may be difficult to sell: Although the Company’s shares are traded on the London Stock Exchange, there may not be a liquid market in the shares and you may find it difficult to sell them. In addition, the price at which shares are traded may not reflect their underlying net asset value.
    • You cannot rely on past performance: please remember that past performance is not a reliable guide to future performance and there is no guarantee that the service’s objectives will be achieved.