Important Amendments to the Rules and Prospectus of Avaron Flexible Strategies Fund
On August 25th, 2025, the Estonian Financial Supervision Authority approved material amendments to the rules and prospectus of Avaron Flexible Strategies Fund. The changes will take effect on September 29th, 2025.
Transition to a UCITS Fund. Avaron Flexible Strategies Fund will continue as a UCITS fund. While Avaron’s other funds (Emerging Europe Fund, Smaller Companies Fund, and High Yield Bond Fund) have always operated as UCITS funds, the Flexible Strategies Fund has so far been managed as an alternative investment fund. Why was the fund set up as an alternative fund in 2008 instead of a UCITS fund? At that time, our aim was to invest not only in listed equities and bonds but also in gold and unlisted bonds, which offered higher yields. More than 15 years ago, a large share of corporate bonds was not listed on exchanges. Today, the situation has changed significantly – most of the bonds of interest to us are exchange-listed, and the fund no longer needs a high allocation limit for unlisted securities. From the investor’s perspective, a UCITS fund entails lower risk compared to an alternative investment fund due to stricter investment restrictions. A practical change for investors is that they will no longer need to complete the questionnaires required by banks for investments in complex financial instruments.Fund Name. To better reflect the fund’s strategy, the English name of the fund will change to Avaron Active Multi-Asset Fund. In Estonian, the fund will continue under its already familiar name – Avaroni Privaatportfelli Fond.
Changes in Investment Policy. An important change is that the fund may now use a credit limit of up to 10% of the fund’s net asset value. The purpose of this addition is to enable more efficient portfolio management when participating in new issues. This allows the fund to subscribe to securities in a primary issue using the credit line and, once the allocated amount of bonds is confirmed, sell lower-yielding instruments from the portfolio to cover the credit used. This way, the fund’s assets do not have to remain idle in cash in the interim.
Since Avaron Flexible Strategies Fund has so far been managed in line with principles similar to those applied to UCITS funds, no changes in the portfolio are required for its continuation as a UCITS fund. The applicable investment principles and restrictions are set out in the fund’s prospectus, Investment Policy section (pp. 5–8).
The redemption terms will become more favourable, providing investors with better liquidity when trading fund units. Going forward, investors will be able to receive larger redemption amounts within a shorter timeframe:
- Redemption orders up to EUR 100,000 (incl.) will be executed on any banking day (no notice period applied).
- Orders over EUR 100,000 and up to EUR 500,000 will be executed with 10 banking days’ notice.
- Orders over EUR 500,000 and up to EUR 3 million will be executed with one month’s notice.
- Orders over EUR 3 million will be executed with two months’ notice.
If the fund holds sufficient free, uninvested cash, the fund manager may decide to execute a redemption order with a shorter notice period. In that case, requests will be processed in the order they were submitted to the unit transaction agent.
Changes in Unit Exchange Rules. To simplify transaction processing, it will no longer be possible to make direct unit exchanges between different Avaron funds. Instead, units must be redeemed and new units or shares in another Avaron fund purchased. Within Avaron Flexible Strategies Fund, exchanges between different unit classes will remain permitted.
The content and wording of the fund documents will be harmonised with those of Avaron’s other funds. The updated list of fund-related fees can be found in section 6 Fees and Expenses of the Fund of the terms. In addition, editorial adjustments and other minor updates will be made to improve readability.
The updated fund documents, effective from 29 September 2025, are available here.
Published 29.08.2025
