Vive Funds Exchange 2024: Your Investments

Why this fund switch?

Vive's investment team carefully evaluates our mutual funds annually and keeps an eye on product offerings in the financial markets.

This is how we ensure that our clients' investment plans remain optimal.

This year we identified some better alternatives to our current mutual funds within three of our asset classes:

• Money market investments Euro
• Government bonds Euro
• Inflation-Related Government Bonds Euro
  

Below we explain for each category why the switch to the new mutual fund is an improvement to our clients' investment plans and what it means for you as a client.

The new investments

Money market investment Euro

The new fund in the Money Market Investment Euro category is the "DWS ESG Euro Money Market Fund." Money Market Investments Euro is the least volatile category in our model.

Money market funds invest in short-term and safe bonds to offer stable returns with minimal risk. Because money market funds invest only in short-term bonds, they are highly liquid. This means investors can quickly and easily withdraw their money from the fund when needed.

The new fund has lower fees, making it more advantageous to switch. By the way, both funds have no selling or buying costs, so the switch doesn't cost money either. We calculated that a €1,000 investment in the new fund saves €7.44 over a 5-year term. This seems like a minimal amount, but on a large scale and over time it can have a larger effect than you might expect.

Government bonds Euro

The new fund in the Government Bond Euro asset class is the "Vanguard Euro Government Bond Index Fund." Government bonds are loans you give to the government. In exchange, the government pays you regular interest, and at the end of the term you get back the amount you borrowed.

Our sovereign bond funds contain loans from European governments in the Eurozone with a good credit rating ("investment grade"). It is a safe way to invest money, because these European governments are reliable in repaying their loans.

The new fund has a longer duration than the current government bond fund. This means that the new fund has loans with longer average maturities. Because these loans are fixed longer, the fund is more sensitive to changes in interest rates. If interest rates rise or fall, it will affect the value of the new fund more. This is also known as interest rate risk. Our analysis showed that investing in a government bond fund with a longer duration provides better diversification for portfolios in our model. The new fund also has less concentration in countries with relatively higher risk, such as France and Italy.

In addition, the fund has lower costs. We calculated that an investment of €1,000 in the new fund saves €5.00 over a 5-year term. This assumes the selling costs of the old fund. The new fund has no purchase costs.

Inflation-Related Government Bonds Euro

The new fund in the Inflation-Linked Government Bond Euro asset class is the "Vanguard Eurozone Inflation-Linked Bond Index Fund."

Vive clients whose retirement age is approaching will slowly move into inflation-linked government bonds in the retirement plan. These are government loans where the value grows with inflation. This means that when prices rise (inflation), the interest rate and the amount you get back also go up. Thus, these bonds protect your accrued pension from inflation.

The new fund has a better spread across European countries. It invests in bonds of more different European countries. The new fund, like the old fund, has the condition that the governments must be creditworthy ('investment grade') and it only contains bonds of countries in the Eurozone. By spreading the investments over more countries, we spread the risk. At Vive, we think risk diversification and risk management are important.

In addition, the new fund has lower costs than the current fund. We calculated that an investment of €1,000 in the new fund saves €2.25 over a 5-year term. This assumes the selling costs of the old fund. The new fund has no purchase costs. For most clients, the final savings will be even higher, since they do not yet invest in inflation-linked government bonds and therefore now face no sales charges.

In conclusion

The fund switch improves Vive's portfolios. The government bond fund fits our model better because of its higher duration. The inflation-linked government bond fund has better risk diversification. In addition, like the new money market investment fund, these funds have lower costs.

With these changes, we ensure that your investment plan is better positioned for the future.

Sincerely,
The Vive Investment Team