Risk Summary for LP funds
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.
What are the key risks?
1. You could lose all the money you invest
• If the business offering this investment fails, there is a high risk that you will lose all your money. Businesses like this often fail as they usually use risky investment strategies.
• Indicative rates of return aren’t guaranteed. If the fund manager is not able to generate the expected level of returns, you could earn less money than expected or nothing at all.
2. You are unlikely to be protected if something goes wrong
• The Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover investments in unregulated collective investment schemes. Try the FSCS investment protection checker here.
• Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
3. You are unlikely to get your money back quickly
• This type of investment is illiquid by its nature and should only be made by investors with a long term investment horizon.
• You may not be able to take any money out of your investment early, or where you are able to, you may have to pay exit fees or additional charges.
4. 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.
5. Don’t put all your eggs in one basket
• Putting all your money into a single business or 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.
For important information about Seedrs’ fund and convertible campaigns, please see this help article.