Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong.
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Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

**For further Fractional Bond specific risk factors here.

What are the key risks?

1. You could lose all the money you invest

  • If the bond issuer you invest in defaults, there is a high risk that you will lose some or all your money.
  • Advertised bond yields aren’t guaranteed. This is not a savings account. If the bond issuer doesn’t pay you back as agreed, you could earn less money than expected or nothing at all. A higher advertised bond yield means a higher risk of losing your money. If it looks too good to be true, it probably is.
  • These investments are sometimes held in an Innovative Finance ISA (IFISA). While any potential gains from your investment will be tax free, you can still lose all your money. An IFISA does not reduce the risk of the investment or protect you from losses.
  • Wisealpha carry out due diligence on the corporate bond issuers, but it is your responsibility to decide whether to invest or not. You should do your own research before investing.

2. You are unlikely to be protected if something goes wrong

  • Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here.
  • Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection here.

3. You are unlikely to get your money back quickly

  • Many corporate bonds last for several years or much longer, so you should be prepared to wait for your money to be returned even if the business you’re investing in repays on time.
  • When you invest in Fractional Bonds you will be investing in a fraction of a specific corporate bond and will not hold the full corporate bond directly as the minimum denominations are usually £100,000. The Fractional Bonds are issued and held by the trustee WiseAlpha Technologies in a bare trust arrangement and you cannot transfer or sell a Fractional Bond in the open market.
  • You may have the opportunity to sell your Fractional Bonds early through WiseAlpha’s Secondary Market, but there is no guarantee you will find a buyer at the prevailing market price.

4. The value of your investment can go up or down

  • Bonds are investments and the price of these investments can go up or down with changes in the financial performance of companies or due to a number of other factors such as, but not limited to changes in economic conditions, changes in interest rates and other market factors.

5. Don’t put all your eggs in one basket

  • Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
  • A good rule of thumb is not to invest more than 10% of your money in high-risk investments.

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.