Mündelsicherheit (low-risk / gilt-edged) – what does it mean? Do investment options exist for which losses are unlikely? Here are the answers to your questions!
A ward (Mündel) is a person who is unable to take care of their affairs without a risk of causing themselves harm. In addition to children, this also extends to cover adults living with an intellectual or other impairment. Legal guardians or adults authorised to represent them look after their ward’s financial matters. They are required to invest their ward’s money in an low-risk manner – i.e. in particularly low-risk investments, where it is exceptionally unlikely that they will fall in value.
Low-risk investments are also used by investors wishing to take a very low risk. What options exist?
Low-risk / “gilt-edged” investment options
- Savings deposits*, bank deposits*, Austrian government debt or bonds guaranteed by the government as well as property in Austria are considered as low-risk (mündelsicher).
- Life insurance policies may be considered as an ultra-safe form of investment, provided they comply with the principles of safe and efficient asset management. The competent guardianship court decides whether this condition is met.
- Low-risk investment funds (mündelsichere Investmentfonds): investment funds and real estate funds may be considered suitable for investing money held in trust, provided certain conditions are met. In the case of an low-risk investment fund, only particularly safe investments like Austrian government debt instruments (“gilt-edged investments”) may be selected. In particular, they are not permitted to invest in shares, speculative instruments or in other investment funds that are not classified as low-risk. Funds are required to state in their investment terms about what they specifically invest in. The observance of investment terms is audited by an external auditor on an annual basis. Eligibility for the investment of money held in trust does not mean that the investment is completely risk-free, and does not exclude the possibility of market-related fluctuations.
The competent guardianship court may also recognise other forms of investment as being eligible for the purpose of investing money held in trust.
Investments classified as low-risk are nonetheless also exposed to certain risks and are subject to market-based volatility!
Money is collected from a large number of investors and invested on the financial markets.
You lend money to the government, and receive interest payments in return.
* Protection of deposits:
Up to Euro 100,000 are protected per person and per bank.
22 Sustainability when investing
21 Complaints about Financial Service Providers
There are two lists on the FMA’s website that contains lists of investment funds and real estate funds that are considered low-risk (mündelsicher)
AIFs and alternative investment funds