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FAQ's

What is the definition of a warrant?

A warrant is a security that entitles the holder to buy stock of the company that issued it at a specified price, which is usually higher than the stock price at time of issue. Because Intereffekt Japanese Warrants (IJW) is a long only fund and is aiming to get return from rising markets, it only has long call warrants in the portfolio. IJW will not take any short positions in the portfolio.


What is the difference with call options?

  • Warrants are issued by private parties, typically the corporation on which a warrant is based, rather than a public options exchange. 
  • Warrants are considered over the counter instruments.
  • A warrant's lifetime is measured in years, while options are typically measured in months.
  • Warrants are not standardized like exchange-listed options.

What is a stop loss certificate?

Just as with a warrant an investor can create leverage in different kind of underlying assets like stocks, indices and commodities. Stop loss certificates can anticipate on an increase or decrease of an underlying asset. The portfolio of IIW also consists stop losses, but these stop losses only anticipate on an increase of the underlying asset.

IJW is a long only fund, but is there a possibility for downside protection?

The fund manager can decrease leverage by buying warrants which are deep in the money (the exercise price is lower). In extreme situations the fund manager can hold cash up to 50% of the funds value.

Why is Intereffekt Japanese Warrants not rated by Morningstar?

The Dutch Morningstar website classified Intereffekt Japanese Warrants as ‘overig’ with no benchmark or other funds in its peer group. The Morningstar RatingTM Methodolgy is therefore not applicable.

Has IJW a limited term?
The fund does not have a limited term. The warrants in portfolio have a limited term. The remaining term of the warrants in portfolio can be extended by employing the so-called “roll-over” principle, amongst other things. This involves selling warrants that are deep in the money or those with a short time to run, or exchanging them for warrants that have just become out of the money and/or warrants which still have a longer time to run. In the event of extremely adverse market conditions and/or an outflow of funds, it is possible that the opportunities to extend the remaining term are limited, as a result of which the warrants in portfolio could expire and lose their value.