risks.

The following risks may be materially relevant but may not always be adequately captured by the summary risk indicator and may cause additional loss: Counterparty risk, Concentration risk and Model risk.

Transition Materials

Essential elements of the transition to a low carbon economy
 

The global economy is transitioning, transforming three systems: energy, land and oceans, as well as materials, accelerated by the pricing of carbon. As these changes unfold, we are seeing a fundamental re-wiring happening to our economies. In this transition, new technologies will unavoidably depend on key materials. 

Please note the Sub-Fund changed its name from LO Funds – Commodity Risk Premia on 2 May 2023.

Source: LOIM research analysis

In the shift to electrification, green mobility, material substitution, and recyclability, we foresee many dislocations in supply and demand.

For example, we anticipate upward price pressures (driven by both demand and scarcity) in copper, nickel, cobalt, aluminium, steel, and lumber among many other materials we constantly keep under review.

In our Transition Materials strategy, we actively seek exposure to these commodity-heavy themes at the forefront of the transition.

the market opportunity.

Past industrial revolutions have, historically, been a core driver of shifts in commodity markets. We estimate as much as USD 24.5 in trillion in capital expenditure may be deployed this decade in the energy transition alone.

And just looking at supply and demand at lithium markets today, we see a clear supply gap.

transition demand.

Commodities can be perceived as a sound investment in the transition. Most of the technologies needed heavily depend on specific materials such as copper, tin, zinc, steel, nickel or cobalt.

exploiting dislocations.

For example, solar photovoltaic (PV) plants, wind farms and electric vehicles (EVs) generally require more minerals to build than their fossil fuel-based counterparts. A typical electric car requires six times the mineral inputs of a conventional car and an onshore wind plant requires nine times more mineral resources than a gas-fired plant.

As transition technologies experience exponential growth, so too will the demand for the underlying commodities with which they are built. Ongoing proprietary research with our dedicated experts looks for dislocations in future supply and demand dynamics of those commodities. We look to exploit these within our portfolios.

 

Targeting commodities essential to the transition

our strategy.

Our Transition Materials strategy is designed to benefit from the long-term growth potential of commodity-heavy themes at the forefront of the transition.

  • Access to a broad and diversified basket of commodities identified as essential to the transition.
  • Exclusion of commodities negatively exposed to the transition, such as all energy fossils related commodities
  • Supply risk hedge. Direct exposure to upstream components (raw materials and supplies), different from manufacturers you can access with equities
  • Inflation hedge. Diversifying source of returns, low to negative correlation to traditional asset classes
  • Long-term potential upside driven by growth demand and sustainable supply chain risk
  • Fundamental investment framework integrating forward looking assessment of the supply / demand chain driven by the transition
  • Implemented through a rigorous systematic investment process based on risk diversification principles
  • Privileged market access with potential broader return opportunities relative to traditional Metals centric commodity benchmarks
  • 12+ years of experience in managing commodity strategies. Stable investment team, leveraging on the roadmaps research team insight as well as LOIM’s wider infrastructure
  • Benchmark - BCOM Industrial Metals Index and BCOM Global Commodity Index
  • UCITS funds with daily liquidity

 

Our investment process focusses on four key areas

Source: LOIM Research. For illustrative purposes only. There is no guarantee that a target objective will be reached (not an accurate indicator).

our themes explored.

investment team.

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Laurent Joué
Head of Systematic Alternatives, Lead Portfolio Manager

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Marc Pellaud, PhD
Lead Portfolio Manager

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Cesar Moura, PhD
Senior Quantitative Analyst

LOcom_AuthorsAM-Hohne-Sparborth.png

Thomas Hohne-Sparborth, PhD
Head of Sustainability Research

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Maria von Prittwitz
Senior Roadmap Analyst

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Alexandre Garrett
Senior Roadmap Analyst

more about our funds.

Past performance is not a guarantee of future results. If the funds are denominated in a currency other than that in which the majority of the investor's assets are held, the investor should be aware that changes in rates of exchange may affect the value of the funds' underlying assets. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.

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insights.

Do markets disagree with the economic data?
investment viewpoints Institutional
investment viewpoints Institutional Multi-asset Wholesale

Do markets disagree with the economic data?

What happens when markets price a no-landing scenario, but the macro data suggests otherwise? In Simply put, we explain why one of the two needs to give. 

Widen the net: the case for non-sponsored direct lending exposure
investment viewpoints Institutional
investment viewpoints Institutional Wholesale Alternatives. Sustainable Private Credit

Widen the net: the case for non-sponsored direct lending exposure

This Q&A with our Sustainable Private Credit team considers market dynamics in direct lending and why there is a compelling case for non-sponsored allocations. 

Multi asset: the road to normalisation
investment viewpoints Institutional
investment viewpoints Institutional Multi-asset Wholesale

Multi asset: the road to normalisation

We focus on normalisation in this quarterly issue of Simply put – of market and macro conditions, and correlations among risk premia.

Why the unexpected Swiss interest-rate cut?
investment viewpoints Institutional
investment viewpoints Institutional Wholesale Fixed Income Swiss Franc bonds

Why the unexpected Swiss interest-rate cut?

The Swiss National Bank surprised with an interest rate cut at its March meeting. What drove monetary policy and how does it impact fixed income investors?

Investing in a new usage model to cut plastic packaging
investment viewpoints Asset Management
investment viewpoints Asset Management Investment strategies DC DB Banks Wholesale Official institutions Third party asset managers Geronne Independants Institutional Consultants Insurance Fund of funds Endowments Sustainable Plastic Circularity Strategy Equities

Investing in a new usage model to cut plastic packaging

How can private-equity investments cut plastic waste? We consider a portfolio company providing concentrated and refillable personal and household products.

Listening to central bankers, not just inflation data
investment viewpoints Institutional
investment viewpoints Institutional Multi-asset Wholesale

Listening to central bankers, not just inflation data

How does the tone of central banks affect interest-rate expectations beyond data? Simply put listens in for a steer on future policy. 

important information.

Lombard Odier Funds (hereinafter the “Fund”) is a Luxembourg investment company with variable capital (SICAV). The Fund is authorised and regulated by the Luxembourg Supervisory Authority of the Financial Sector (CSSF) as an Undertaking for Collective Investments in Transferable Securities UCITS under Part I of the Luxembourg law of the 17 December 2010 implementing the European directive 2009/65/EC, as amended (“UCITS Directive”). This marketing document particularly relates to Climate Transition, a Sub-Fund of LO-Funds (hereinafter the “Sub-Fund”). The Management Company of the Fund is Lombard Odier Funds (Europe) S.A. (hereinafter the “Management Company”), a Luxembourg based public limited company (SA), having its registered office at 291, route d’Arlon, 1150 Luxembourg, authorised and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended; and within the meaning of the EU Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD). The purpose of the Management Company is the creation, promotion, administration, management and the marketing of Luxembourg and foreign UCITS, alternative investment funds (“AIFs”) and other regulated funds, collective investment vehicles or other investment vehicles, as well as the offering of portfolio management and investment advisory services. Lombard Odier Investment Managers (“LOIM”) is a trade name. The prospectus, the articles of incorporation, the Key Investor Information Documents, the subscription form and the most recent annual and semi-annual reports are the only official offering documents of the Sub-Fund’s shares (the “Offering Documents”). The Offering Documents are/will become available in English, French, German and Italian at www.loim.com and can be requested free of charge at the registered office of the Sub-Fund in Luxembourg: 291 route d’Arlon, 1150 Luxembourg, Grand Duchy of Luxembourg. The information contained in this marketing communication does not take into account any individual’s specific circumstances, objectives or needs and does not constitute research or that any investment strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes a personal investment advice to any investor. This marketing communication is not intended to substitute any professional advice on investment in financial products. Before making an investment in the Sub-Fund, an investor should read the entire Offering Documents, and in particular the risk factors pertaining to an investment in the Sub- Fund. We would like to draw the investor’s attention toward the long-term nature of delivering returns across the economic cycle and the use of financial derivative instruments as part of the investment strategy may result in a higher level of leverage and increase the overall risk exposure of the Sub-Fund and the volatility of its Net Asset Value. Investors should take care to assess the suitability of such investment to his/her particular risk profile and circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. There can be no assurance that the Sub-Fund’s investment objective will be achieved or that there will be a return on capital. Past performance is not a reliable indicator of future results. Where the Sub-Fund is denominated in a currency other than an investor’s base currency, changes in the rate of exchange may have an adverse effect on price and income. Please take note of the risk factors. MSCI information may only be used for internal purposes, may not be reproduced or disseminated in any form whatsoever and may not be used as the basis or constituent element of any financial instruments, products or indices. MSCI information should not be construed as investment advice or recommendations to you to make (or refrain from making) any investment decision and cannot, as such, be considered reliable. Historical data and analyses should not be considered as any indication or guarantee in any analysis, forecast or prediction of future performance. MSCI information is provided “as is” and the user of this information assumes full responsibility for the use that is made of this information. MSCI, each of its affiliates and others involved in or concerned with the compilation, calculation or creation of MSCI information (collectively the “MSCI Parties”) expressly disclaim all warranties (including, without limitation, all warranties of originality, accuracy, completeness, timeliness, noninfringement, market value and fitness for a specific purpose) with respect to such information. Without limiting the foregoing, in no event shall the MSCI Parties be liable for any direct, indirect, specific, incidental, punitive, consequential (including, without limitation, lost profits) or other damages. (www.msci.com). Any benchmarks/indices cited herein are provided for information purposes only. No benchmark/index is directly comparable to the investment objectives, strategy or universe of a Sub-Fund. The performance of a benchmark shall not be indicative of past or future performance of any Sub-Fund. It should not be assumed that the relevant Sub-Fund will invest in any specific securities that comprise any index, nor should it be understood to mean that there is a correlation between such Sub-Fund’s returns and any index returns. Target performance/risk represents a portfolio construction goal. It does not represent past performance/risk and may not be representative of actual future performance/risk. The information and analysis contained herein are based on sources considered to be reliable. Lombard Odier makes its best efforts to ensure the timeliness, accuracy, and completeness of the information contained in this marketing communication. Nevertheless, all information and opinions as well as the prices, market valuations and calculations indicated herein may change without notice. Source of the figures: Unless otherwise stated, figures are prepared by Lombard Odier Asset Management (Europe) Limited. 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