Schroders Capital Climate+ LTAF: The Opportunity for DC Schemes

While private assets investments offer potentially significant capital returns, funds and companies may face business and financial uncertainties. There can be no assurance that their use of the financing will be profitable to them or to any Fund. Investing in private asset funds and unlisted companies entails a higher risk than investing in companies listed on a recognised stock exchange or on other regulated markets. This is in particular because of the following major risk factors:

Capital loss risk: The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.

Liquidity risk: The fund will invest in long term illiquid instruments. Illiquidity increases the risks that the fund will be unable to sell its holdings in a timely manner in order to meet his financial obligations (including payment of redemptions) at a given point in time. Illiquidity of the underlying assets also means that in order to achieve a timely realisation, assets may be sold at a price that does not reflect their fair value, resulting in a reduction of the fund’s net asset value.

Valuation risk: Private asset investments are generally valued on a less frequent basis than listed securities. In addition, it may be difficult to find appropriate pricing references for private asset investments. This difficulty may have an impact on the valuation of the fund’s portfolio. Certain investments are valued on the basis of estimated prices and are therefore subject to potentially greater pricing uncertainties than listed securities.

Private equity risk: Compared to investments in public equities, investments in private equity involve a number of additional risks. Private equity-owned companies may be less mature with new or unproven management, technologies or business strategies and they may face competition from larger better resourced competitors.Private equity-owned businesses may be financed through extensive borrowings, increasing the risk of failure if cashflows are not sufficient to service the borrowing costs

Real estate risks: Real estate investment is subject to a variety of risks includingthe cyclical nature of real estate values, general economic conditions, increases in property taxes, environmental risks, changes in laws (e.g. environmental and zoning) and the risk that one or more tenants may be unable to meet their rental obligations.

Infrastructure risks: The fund intends to invest in infrastructure assets with a focus on renewable energy and other sustainable infrastructure. The renewable energy sector greatly depends on political and governmental support for the increased use of renewable energy. Unanticipated changes to the applicable legal, regulatory and policy framework or the support provided could have a material adverse effect on the operations and financial performance of fund’s infrastructure investments.

Sustainability: The fund applies sustainability criteria in its selection of investments. This investment focus may limit the fund's exposure to companies, industries or sectors and the fund may forego investment opportunities that do not align with its sustainability criteria chosen by the investment manager. As investors may differ in their views of what constitutes sustainability, the fund may invest in companies that do not reflect the values of any particular investor.