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Who is Arctic Return suitable for?
- Arctic Return is suitable for those who have funds to spare that you do not want to place in investments with higher risk, but which still provide a higher return than in a savings account.
What is the difference between a bank saving account and Arctic Return?
- While in a savings account you place the money with the bank and they pay you a stated interest rate, through Arctic Return you will invest in the debt of companies with good credit risk with an average credit score of Investment Grade.
What interest rate can I expect on savings in Arctic Return relative to bank savings accounts?
- As the companies Arctic Return invests in on average will have to pay higher interest on their debt than the bank rate, you will be able to expect to get more paid by investing in Arctic Return than in a savings account.
How are the interest rates determined on the bonds Arctic Return invests in?
- The interest rate is determined by a market of investors who, with each bond issuance, contributes to determine the risk premium level when the coupon rate is set. The coupon rate is Nibor plus the risk premium.
What is the difference between the yield and the interest rate I want to achieve on my placement in Arctic Return?
- The yield is the estimated interest rate that will be achieved by investing in the fund today at current bond prices and underlying Nibor interest rates. This is calculated by taking annual interest payments from the bonds in the funds (nominal coupon) divided by the bond value at current rates. The interest rate obtained may differ from the yield because the rates on the bonds in the fund may vary, the managers may change which bonds the fund is invested in and the underlying Nibor rate may change.
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What impact will higher interest rates have on my investment in Arctic Return?
- Since most of the bonds Arctic Return are invested in have a floating coupon rate, the portfolio yield will increase with higher interest rates. If a bank raises interest rates, it is likely that the Nibor rate, the underlying interest rate of the bonds in Arctic Return, has already moved upwards.
If I put the money in my savings account in the bank, I will be able to withdraw the money the next day. How long will it take to get the money out in Arctic Return?
- Arctic Return is a so-called UCITS fund, which sets requirements for daily liquidity with two days of settlement. If you ask to withdraw the money on Monday morning, they will be available in your bank account by Wednesday.
What interest rate has Arctic Return achieved historically relative to bank savings accounts?
- Since its inception in 2010, Arctic Return has provided an interest rate (annual return after fees) of 2.9%, while in bank savings accounts you would have received 1.2% interest rate annually.
What is the coupon rate of the underlying bonds in Arctic Return?
- Arctic Return invests mainly in bonds with floating coupon interest. The coupon rate consists of a three-month Nibor rate plus a risk mark, which should reflect the risk of investing in the underlying bond. The Nibor rate, which is a three-month money market rate, may change. The risk premium added to the Nibor rate is fixed through the term of the bond.
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