Risk Summary for Non-Mainstream Pooled Investments

Estimated reading time: 2 min 

Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be very complex and high risk.  For a full list of risks, please see the fund Offering Memorandum. 

The fund adopts a “fund of funds” strategy and will invest substantially all of its assets into underlying target funds managed by third-party asset managers. 

What are the key risks? 

  1. You could lose all the money you invest 
  • If the business or businesses the underlying target funds invest in fail(s), there is a high risk that you will lose all your money. 
  • Advertised rates of return aren’t guaranteed. This is not a savings account. If the issuer doesn’t pay you back as agreed, you could earn less money than expected or nothing at all. A higher advertised rate of return means a higher risk of losing your money. If it looks too good to be true, it probably is
  1. You are unlikely to be protected if something goes wrong 
  • The business offering this investment is not regulated by the FCA. Protection from the Financial Services Compensation Scheme (FSCS) only considers claims against failed regulated firms. Learn more about FSCS protection here. 
  • The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm. Learn more about FOS protection here.
     
  1. You are unlikely to get your money back quickly 
  • Even if the businesses the underlying target funds invest in are successful, it will take several years to get your money back. You are unlikely to be able to sell your investment early.
  • The most likely way to get your money back is if the business in which the underlying target funds invest is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
  • You are unlikely to be able to cash in your investment early by selling your investment. In the rare circumstances where it is possible to sell your investment in a ‘secondary market’, you may not find a buyer at the price you are willing to sell. 
  • You may have to pay exit fees or additional charges to take any money out of your investment early. 
  1. This is a complex investment 
  • This kind of investment has a complex structure based on other risky investments, which makes it difficult for the investor to know where their money is going. 
  • This makes it difficult to predict how risky the investment is, but it will most likely be high. 
  • You may wish to get financial advice before deciding to invest. 
  1. Don’t put all your eggs in one basket 
  • Putting all your money into a single type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well. 
  • A good rule of thumb is not to invest more than 10% of your money in high-risk investments. 

If you are interested in learning more about how to protect yourself, visit the FCA’s website here.

For further information about unregulated collective investment schemes (UCIS), visit the FCA’s website here.