LO Transition Materials

Investment rationale

LO Funds - Transition Materials is a long-only commodity fund designed to give investors exposure to supply/demand opportunities linked to the transition to a low-carbon economy. The product is classified as UCITS and SFDR Article 8, has daily dealing, a summary risk indicator of 5 out of 7, and a recommended holding period of 5 years. In Switzerland, it is intended for professional investors only and is not FINMA-approved for distribution to non-qualified investors. It is intended for eligible investors with sufficient experience or professional advice, a long-term investment horizon, and the capacity to bear losses up to the full amount invested. Based on its narrow thematic commodity exposure and rule-based design, it is better described as a distinct satellite allocation rather than a broad core portfolio holding.

2026-08-31

How the strategy works

The Sub-Fund’s objective is to replicate the performance of a proprietary UCITS-compliant index made up of securities linked to commodity supply/demand chains expected to benefit from the low-carbon transition. It is actively managed, while the Bloomberg Commodity Total Return index is used for performance comparison and internal risk indicators, and the Bloomberg Industrial Metals Subindex Total Return may also be used for performance comparison and internal risk monitoring. The strategy focuses on commodity-heavy themes such as electrification, green mobility, materials substitution and recycled materials, and it does not invest in commodities adversely exposed to the transition such as fossil energy. The investment universe mostly includes technology-related metals and bio-based materials, some of which are outside traditional benchmarks; the share class is in USD, income is accumulated, redemptions are available daily, and the recommended holding period is 5 years. The expected leverage under the sum of notionals approach is around 175% of NAV.

2026-08-31

Investment philosophy

• The strategy is rule-based and long-only, with the objective of replicating a proprietary UCITS-compliant index focused on commodity supply/demand chains expected to benefit from the transition to a low-carbon economy.

• The investment universe mostly includes technology-related metals and bio-based materials, including some commodities not part of traditional benchmarks; stated themes include electrification, green mobility, materials substitution and recycled materials, while fossil energy is excluded.

• At 31 August 2026, portfolio weights were concentrated in industrial and transition-related metals, with the largest exposures in zinc (19.66%), copper (17.91%), aluminium (17.35%) and nickel (9.48%), followed by ethanol (5.25%), silver (5.15%), tin (4.83%) and lumber (4.67%).

• The portfolio also holds gold (4.52%), platinum (3.31%), lithium (2.06%), steel scrap (2.01%), HRC steel (1.99%) and cobalt (1.82%), showing exposure to both benchmark and ex-benchmark transition materials.

• Risk management is performed at portfolio level, with an independent team overseeing investment and operational risks; the expected leverage under the sum of notional derivatives approach is around 175% of NAV.

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Management team

The fund managers are M. Pellaud (Ph.D.) and L. Joué. An independent team oversees investment and operational risks.

2026-08-31

Distinctive features

The fund focuses on commodities tied to the low-carbon transition rather than broad commodity exposure. It combines a rule-based long-only approach with access to technology-related metals and bio-based materials, including exposures outside traditional commodity benchmarks such as tin, lithium, cobalt, HRC steel and steel scrap. The strategy explicitly excludes fossil energy and is offered in a UCITS format with daily liquidity. For the share class, entry and exit fees are 0%, the management fee is 0.75%, and the ongoing charge was 1.01% at 31 July 2026.

2026-08-31

Risks

The product has a summary risk indicator of 5 out of 7, described as medium-high risk, and it offers no capital protection, so investors could lose some or all of their investment. Additional material risks include counterparty risk, concentration risk and model risk, and sustainability risks may significantly affect the market price or liquidity of underlying investments. Concentration risk is relevant because the fund is focused on a specific commodity theme linked to the low-carbon transition and has large weights in a relatively small set of materials such as zinc, copper and aluminium. The fund also uses financial derivative instruments, with expected leverage around 175% of NAV under the sum of notionals approach, and exchange-rate movements may affect returns where an investor’s base currency differs from the fund currency.

2026-08-31

Asset manager

The fund is LO Funds - Transition Materials, a sub-fund of Lombard Odier Funds, a Luxembourg SICAV structured as a UCITS. The management company is Lombard Odier Funds (Europe) S.A., authorised in Luxembourg and regulated by the CSSF, with its registered office at 291, Route d’Arlon, L-1150 Luxembourg. The management company is part of the Lombard Odier Group and is clustered within the Lombard Odier Investment Management Division (LOIM). LOIM is the trade name of the Lombard Odier Investment Management Division.

2026-08-31

Performance commentary

Over the reported contribution period, the largest positive contributors were zinc, copper, silver, gold, aluminium, ethanol and platinum, while lumber, nickel, cobalt and tin detracted. Relative to the Bloomberg Commodity Index, industrial metals added the most, followed by live commodities, while energy and soft commodities detracted the most; precious metals, bio-based materials and ex-benchmark metals were also negative relative contributors. At 31 August 2026, positioning was tilted toward industrial metals through large weights in zinc, copper, aluminium and nickel, with additional exposure to bio-based materials and selected precious and ex-benchmark metals.

2026-08-31