Sustainability

Schroder GAIA Helix

At Schroders, we believe that it is our collective responsibility to protect the world for future generations, and as stewards of client capital, we should be investing with that in mind. As investors' preferences for sustainability expand, they need solutions to help them build diversified portfolios, and that includes liquid alternatives. We believe equity based alternative strategies naturally lend themselves to ESG integration and that ESG analysis helps deliver sustainable returns over the long term. 

In our view shorting can have a clear role in a sustainable approach, and it may be said that shorting something is a stronger expression of a view than being underweight it. This can in turn lead to an increased cost of capital for laggards which can in conjunction with other factors lead to changes in behaviour over the long term. 


What sustainability means to us

Helix is classified as Article 8 under SFDR, meaning ESG considerations are integrated into our approach. 

We consider this from both a bottom-up and a top-down perspective: 

  • Bottom-up: all underlying strategies are required to integrate ESG factors into their approach 
  • Top-down: we consider the aggregate sustainability profile of the fund and manage risk associated with our profile, just like any other risk factor 

We have committed to maintaining a positive absolute sustainability score for the fund over time. We utilise our in-house proprietary tool, SustainEx, to measure this.   

SustainEx is Schroders’ proprietary tool which provides our investment teams with an estimate of the potential social or environmental impact that an issuer may create. It does this by using certain metrics with respect to that issuer, and quantifying the positive and negative impacts of each of those metrics in economic terms to produce an aggregate measure. An issuer may be a company, a country or sovereign.

Can a long short fund be sustainable?

Sustainable investing shouldn’t be the preserve of long-only investors. Nicholette MacDonald-Brown explains the role that shorting can play, and the importance of integrating ESG research. 

What are the risks?

Distribution Costs: The level of distribution costs in certain jurisdictions may impact the ability of the investment manager to meet the fund’s investment objective across all share classes after fees have been deducted. 
Credit risk: A decline in the financial health of an issuer could cause the value of its bonds to fall or become worthless. 
Currency risk / hedged shareclass: The hedging of the share class may not be fully effective and residual currency exposure may remain. The cost associated with hedging may impact performance and potential gains may be more limited than for unhedged share classes. 
Derivatives risk: Derivatives may be used to manage the portfolio efficiently. The fund may also materially invest in derivatives including using short selling and leverage techniques with the aim of making a return. A derivative may not perform as expected, may create losses greater than the cost of the derivative and may result in losses to the fund. 
Event risk: The fund will take significant positions on companies involved in mergers, acquisitions, reorganisations and other corporate events. These may not turn out as expected and may result in losses to the fund. 

IBOR risk: The transition of the financial markets away from the use of interbank offered rates (IBORs) to alternative reference rates may impact the valuation of certain holdings and disrupt liquidity in certain instruments. This may impact the investment performance of the fund.
Interest rate risk: The fund may lose value as a direct result of interest rate changes. 

Liquidity risk: In difficult market conditions, the fund may not be able to sell a security for full value or at all. This could affect performance and could cause the fund to defer or suspend redemptions of its shares.
Multi-Manager risk: The fund allocates capital to multiple strategies managed by separate portfolio managers who will not coordinate investment decisions, which may result in either concentrated or offsetting risk exposures. 
Multi-Strategy: The fund can be exposed to a broad range of risk. These include high yield bonds, ABS and MBS, convertible contingent bonds, emerging market and frontier and smaller companies risks. This can give rise the following risks: interest rate, credit, currency and liquidity risk. 

Operational risk: Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the fund.

Performance risk: Investment objectives express an intended result but there is no guarantee that such a result will be achieved. Depending on market conditions and the macro economic environment, investment objectives may become more difficult to achieve.
Stock connect risk: The fund may be investing in China "A" shares via the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect which may involve clearing and settlement, regulatory, operational and counterparty risks. 
Sustainability risk: The fund has environmental and/or social characteristics. This means it may have limited exposure to some companies, industries or sectors and may forego certain investment opportunities, or dispose of certain holdings, that do not align with its sustainability criteria chosen by the investment manager. The fund may invest in companies that do not reflect the beliefs and values of any particular investor. 
Counterparty risk: The fund may have contractual agreements with counterparties. If a counterparty is unable to fulfil their obligations, the sum that they owe to the fund may be lost in part or in whole. 
Issuer risk: The fund is permitted to invest more than 35% of its scheme property in transferable securities and money market instruments issued or guaranteed by an EEA State / governments of the following country: United States of America. 
Market risk: The value of investments can go up and down and an investor may not get back the amount initially invested. 


Important Information:


Marketing material for professional clients only 

This document does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder GAIA (the “Company”). Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares. An investment in the Company entails risks, which are fully described in the prospectus.

Subscriptions for shares of the Company can only be made on the basis of its latest Key Investor Information Document and prospectus, together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Europe) S.A.

For Luxembourg, these documents may be obtained in English, free of charge, from the following link: www.eifs.lu/schroders.

Schroders may decide to cease the distribution of any fund(s) in any EEA country at any time but we will publish our intention to do so on our website, in line with applicable regulatory requirements.

Schroders uses SustainEx™ to estimate the net social and environmental “cost” or “benefit” of an investment portfolio having regard to certain sustainability measures in comparison to a product’s benchmark where relevant. It does this using third party data as well as Schroders own estimates and assumptions and the outcome may differ from other sustainability tools and measures.

A summary of investor rights may be obtained from https://www.schroders.com/en/lu/private-investor/footer/complaints-handling/  

**The fund has environmental and/or social characteristics within the meaning of Article 8 of Regulation (EU) 2019/2088 on Sustainability-related Disclosures in the Financial Services Sector (the “SFDR”). For information on sustainability-related aspects of this fund please go to www.schroders.com 

Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy. 

Past Performance is not a guide to future performance and may not be repeated. 

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. Exchange rate changes may cause the value of investments to fall as well as rise.

Schroders has expressed its own views and opinions in this document and these may change. 

Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy.

Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at www.schroders.com/en/privacy-policy/ or on request should you not have access to this webpage. 

For your security, communications may be recorded or monitored. 

Issued by Schroder Investment Management (Europe) S.A., 5, rue Höhenhof, L-1736 Senningerberg, Luxembourg. Registration No B 37.799. 




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