Risk policy introduction

Risk policies are at the core of Vive's investment approach. Vive bases its strategies on risk budgets, which optimally align investments with its clients' objectives and risk preferences. This enables Vive to make the investment process not only science-based and efficient, but also personal and flexible.

Vive believes that a good risk policy is more than just portfolio-level risk management. It is a dynamic process in which personal direction is central. The best form of risk management is you. Therefore, Vive's risk policy is not only designed to optimize risks and returns, but also to provide you as an investor with continuous insight and action perspectives.

By setting a dynamic risk budget for each client's financial plan, which can change over time, Vive ensures that investors are exposed to investment risk very precisely and efficiently. This means you're not unnecessarily at risk, but also not missing out on potential returns. Vive ensures that you, the investor, always have insight and action perspective to keep control of your investment risks.

What risk policies are in place?

Vive's risk policy is fully tailored to the investor's individual needs and financial situation. Vive sees risk not as a limitation, but as a means to achieve your financial goals. The risk policy ensures that you not only have a well-diversified and efficient investment portfolio, but also the insights and tools to manage it.

Whereas traditional institutions often work with fixed risk profiles such as defensive, neutral or offensive, Vive takes a customized approach. Vive recognizes that every investor is unique and that risk preferences may even differ for each financial goal.

Vive therefore uses Value at Risk (VaR) as a core measure of risk management. This means that the maximum loss rate over a one-year period is calculated and tailored to what you consider acceptable. Based on this measure, Vive optimizes investment strategies so that your investments remain in line with your personal risk budget and objectives.

In doing so, Vive uses an internally developed Economic Scenario Generator (ESG). Through this technology, Vive can scientifically calculate the downside risks and expected returns of different asset classes-such as stocks, bonds and money market instruments.

Vive offers continuous monitoring of your portfolio and keeps a close eye on developments relative to your personal goals. This means you not only gain insight into the performance of your investments, but also receive concrete signals when action is required.

Using advanced technology and scenario analysis, where hundreds of thousands of market scenarios are calculated, Vive ensures that:‍

Risks are flagged early-You receive timely alerts if market developments or portfolio performance deviate from the expected course.

Dynamic adjustments are possible -Your risk budget can be adjusted as needed to keep it in line with your personal situation and goals.

Transparency and direction are key - You always have insight into how your portfolio is developing and remain in control of your financial future.

In addition to personal direction, Vive also applies advanced risk management at the portfolio level. In this way, risks are actively managed and adjusted where necessary. Vive makes use of:

Dynamic risk management - The risk budget is continuously evaluated and can be adjusted based on changing market conditions or personal goals.

Rebalancing - The portfolio is automatically adjusted as soon as it falls outside the strategic range, so that the target risk-return ratio is maintained.

Broad diversification - Investments are spread across multiple asset classes, regions and sectors to minimize concentration risks and reduce the impact of market volatility.

Scenario analysis and stress testing - The portfolio is constantly subjected to hundreds of thousands of simulated market scenarios. This allows Vive to assess how your investments are performing under different conditions and take proactive action when necessary.

With this approach, Vive offers a carefully managed and flexible investment process, in which you as an investor remain in control and can make conscious choices. Together we ensure an optimal balance between risk and return, tailored to what is really important to you.

How is risk mitigated and what risk measures are used?

Vive applies coherent and carefully structured risk management to ensure that risks remain within acceptable limits. This is done through a combination of broad diversification, strict selection criteria, active monitoring and risk measures that match the client's personal goals. The following measures are applied to mitigate risks:

Broadly diversified portfolios
By investing globally in different regions, sectors and asset classes (such as stocks and bonds), the portfolio becomes less sensitive to specific market or sector shocks. This broad diversification helps reduce overall risk and avoids over-reliance on individual markets or companies.‍

Strict selection of mutual funds
Vive invests only in UCITS funds with daily tradability, sufficient diversification and transparent costs. Multiple risk mitigation criteria are used in the selection of funds, such as:

- Currency risk - Wherever possible, unnecessary currency risk is avoided.

- Interest rate risk - The duration of bonds is carefully matched to the client's risk preferences.

- ESG criteria - Funds are assessed for sustainability risks to minimize long-term risks and encourage responsible investing.

‍Lifecycle approachand rebalancing

- For plans with a fixed end date, the risk level can be gradually reduced as the end date approaches, reducing the likelihood of large losses at a critical time.

- Rebalancing occurs when the portfolio deviates too much from the agreed risk limits (VaR) and the desired level of end-goal security. This keeps the portfolio optimally aligned with the investment strategy and objectives.

No complex or non-transparent products
Vive avoids investing in complex or opaque products, such as hedge funds and funds with complicated derivative structures. This avoids unpredictable risks, hidden costs and illiquidity, so investors always maintain a clear view of their portfolio.

What are the risk measures used?

To accurately assess both short-term and long-term risks, Vive uses several risk measures that may vary from plan to plan:

Value at Risk (VaR): The maximum accepted (negative) return within one year - given a 95% confidence level - in a bad weather scenario. Example: AVaR of 15% means that, in a bad weather scenario, the portfolio can fall a maximum of 15% within one year, with a 5% chance of a greater loss.

Impairment to Mission (ITM): The maximum allowable deviation from the plan's end goal with a 95% confidence level. Example: an ITM of 30% means that, in a bad weather scenario, the portfolio may deviate a maximum of 30% from the final target, with a 5% probability of a larger deviation. This measure is applied to plans with a concrete final target.

These measures form the basis for the design and risk management of each portfolio and each has its own function in setting the dynamic risk budget:

- VaR focuses on short-term risks (maximum loss within one year).

- ITM focuses on the long-term goal (maximum deviation from final value).

In addition to client-oriented risk measures, Vive also conducts internal analyses to ensure portfolio stability and efficiency:

Volatility (standard deviation): This measures portfolio volatility to understand the degree of price fluctuations.

Tracking Error: Measures the extent to which passive mutual funds deviate from their underlying index.

This combination of risk measures and management tools allows Vive to make a thorough and objective assessment of the level of risk and ensure that the portfolio is optimally aligned with the client's investment goals and risk preferences.

How is the portfolio monitored for risk?

Vive works only with strategic asset allocation. The portfolios are automatically checked daily whether they are still in line with the strategic asset allocation. If, for example, stocks rise or fall too much relative to bonds, a rebalancing follows automatically so that the portfolio fits the desired risk profile again. The underlying strategic asset allocation is recalculated periodically and changed if necessary.

1. Quarterly update: Each quarter, all scenarios are recalculated based on current market conditions.
2. Annual update: Annually, the risk premiums of each asset class are reviewed and an assessment is made as to whether the assumptions previously made are still current.

Vive continuously calculates your investment plan based on the most recent developments.If it turns out that the expected end goal differs from the original forecast, the investment plan is not automatically adjusted. Instead, you will receive an on-track/off-track notification. This gives you control and, if desired, you can make changes to:

- Portfolio risk level

- The monthly deposit

- The target amount

- The end date of the plan

This data-driven, systematic monitoring ensures that Vive's risk policy remains aligned with your personal goals and risk preferences at all times.

To provide complete control and insight, investors can always view the current setup of both the portfolio and the plan in the Vive app under "Strategic Portfolio." If desired, adjustments can be made here immediately.

This approach not only keeps the portfolio optimally aligned with your financial goals, but you as an investor also maintain maximum control and transparency over your risk level and the value development of your investments.