LUXFUNDS-PORTFOLIO STRATEGIC ALLOCATION

Risk factors

The sub-fund applies a sustainable investment strategy. As a result, its market behaviour may differ from that of traditional peers due to its exposure to investments with an environmental and/or social focus. This leads to the presence of certain specific risks related to the sub-fund’s thematic orientation. One such risk is the subjective nature of the assessment involved in investment selection: There is a degree of subjectivity in evaluating the social safeguards that a company is expected to uphold. The factors used to assign an ESG rating to a security stem from the methodology applied within the investment process of the managers of the UCIs/UCITS in which the sub-fund invests. In addition to the risks associated with the sub-fund’s sustainable investment strategy, the following specific risks also apply to the sub-fund:

- The investments of the sub-fund are subject to fluctuations in the net asset value of the UCIs/UCITS in which the sub-fund has invested. These may invest in fixed-income or floating-rate debt securities or similar instruments, and/or money market instruments. The bond portfolio may include "high-yield" and/or "emerging market" bonds, which carry higher risk but may offer more attractive return opportunities. Over the long term, the bond market does not offer the same growth potential as the equity market but generally provides greater investment stability. 
- The UCIs/UCITS in which the sub-fund has invested may invest in the equity market, which is characterized by higher volatility but generally delivers better long-term performance than other types of investments. 
- The main risks related to investments in emerging markets include significant fluctuations in securities and currency prices in those countries, potential political, economic, social, or religious instability, unpredictable changes in legislation, and the existence of accounting and financial practices that are less rigorous than those in developed countries. The operating and regulatory conditions of emerging markets may differ from the standards prevailing in major international markets. In the event of a downturn in emerging markets, the sub-fund’s net asset value may decline.