Market Disruption and Geopolitical Risk. Risks outside of the financial markets, economics, and politics affect the underlying investments, often at times significantly. The occurrence of events in recent years can result in market volatility, have long-term effects on the U.S. and worldwide financial markets, and cause further economic uncertainties in the U.S. and worldwide. Examples of such events include (but are not limited to): the aftermath of the political and military conflicts in Iraq and Afghanistan; instability in the greater Middle East; military conflicts in Ukraine; alleged cyber-attacks by Russia and North Korea; ongoing epidemics of infectious diseases that can be spread within a country, region, or globally; terrorist attacks in the U.S. and around the world; social and political discord; debt crises (such as the Greek crisis); sovereign debt downgrades; increasingly strained relations between the U.S. and a number of foreign countries, including traditional allies, such as certain European countries, and historical adversaries, such as North Korea, Iran, China, and Russia, and the international community generally; new and continued political unrest in various countries, such as Venezuela; the exit or potential exit of one or more countries from the EU or the EMU; and changes in the U.S. presidency and new administrations, among others. The recent outbreak of an infectious coronavirus developed into a global pandemic, which resulted in numerous disruptions in the market, significant economic impact, and general concern and uncertainty. The impact of this coronavirus, and other epidemics and pandemics that may arise in the future, can affect the economies of many nations, individual companies, and the market in ways that cannot necessarily be foreseen. Fixed Income Risk — Investments in fixed income securities owned through ETFs are subject to risk, including market risk, default risk, and liquidity risk. Inflation Risk — Inflation risk is the risk that the value of assets or income from investment will be worth less in the future, as inflation decreases the value of money. As inflation increases, the real value of securities and distributions with respect to those securities can decline. Deflation Risk — Deflation risk is the risk that prices throughout the economy decline over time, which can have an adverse effect on the market valuation of companies, their assets, and their revenues. In addition, deflation can have an adverse effect on the creditworthiness of issuers of fixe...
Market Disruption and Geopolitical Risk. Risks outside of the financial markets, economics and politics affect the underlying investments, often at times significantly. The occurrence of events in recent years such as (but not limited to): the aftermath of the political and military conflicts in Iraq and Afghanistan, the instability in the greater Middle East, military conflicts in Ukraine, alleged cyber-attacks by Russia and North Korea, ongoing epidemics of infectious diseases that can be spread within a country, region or globally, terrorist attacks in the U.S. and around the world, social and political discord, debt crises (such as the Greek crisis), sovereign debt downgrades, increasingly strained relations between the U.S. and a number of foreign countries, including traditional allies, such as certain European countries, and historical adversaries, such as North Korea, Iran, China and Russia, and the international community generally, new and continued political unrest in various countries, such as Venezuela, the exit or potential exit of one or more countries from the EU or the EMU, the change in the U.S. president and the new administration, among others, can result in market volatility, have long-term effects on the U.S. Inflation Risk – Inflation risk is the risk that the value of assets or income from investment will be worth less in the future, as inflation decreases the value of money. As inflation increases, the real value of securities and distributions with respect to those securities can decline. Deflation Risk – Deflation risk is the risk that prices throughout the economy decline over time, which can have an adverse effect on the market valuation of companies, their assets and their revenues. In addition, deflation can have an adverse effect on the creditworthiness of issuers of fixed income securities and can make issuer default more likely. Model Risk – Investment analysis from models can perform differently than expected and there is no guarantee that any model will achieve its objective due to underlying factors such as not performing in line with historical trends or data. The effectiveness of models can be reduced over time as a result of changing market conditions as models are often based on historical data. Management Risk – A strategy used by the investment team can fail to produce the intended results.
Market Disruption and Geopolitical Risk. The occurrence of events similar to those in recent years, such as the aftermath of the war in Iraq, instability in Afghanistan, Xxxxxxxx, Xxxxx, Xxxxx, Xxxxx, Xxxxxx, Xxxxxxx and the Middle East, ongoing epidemics of infectious diseases in certain parts of the world, terrorist attacks in the U.S. and around the world, social and political discord, debt crises (such as the Greek crisis), sovereign debt downgrades, increasingly strained relations between the United States and a number of foreign countries, including traditional allies, such as certain European countries, and historical adversaries, such as North Korea, Iran, China and Russia, and the international community generally, new and continued political unrest in various countries, such as Venezuela, the exit or potential exit of one or more countries from the EU or the EMU, the change in the U.S. president and the new administration, among others, can result in market volatility, have long-term effects on the U.S. and worldwide financial markets, and cause further economic uncertainties in the U.S. and worldwide. As a consequence of the United Kingdom’s vote to withdraw from the EU, the government of the United Kingdom gave notice of its withdrawal from the EU (“Brexit”). As a result of this decision, the financial markets experienced high levels of volatility and it is likely that, in the near term, Brexit will continue to bring about higher levels of uncertainty and volatility. During this period of uncertainty, the negative impact on not only the United Kingdom and European economies, but the broader global economy, could be significant, potentially resulting in increased volatility and illiquidity and lower economic growth for companies that rely significantly on Europe for their business activities and revenues. It is possible, that certain economic activity will be curtailed until some signs of clarity begin to emerge, including negotiations around the terms for United Kingdom’s exit out of the EU. Any further exits from the EU, or the possibility of such exits, would likely cause additional market disruption globally and introduce new legal and regulatory uncertainties. The occurrence of any of these above events could have a significant adverse impact on the value and risk profile of a client’s portfolio. Confluence does not know how long the securities markets will be affected by similar events and cannot predict the effects of similar events in the future on the U.S. economy and securiti...
