Investment Risk Factors

Investing in our units involves a high degree of risk. You should purchase units only if you can afford a complete loss of your investment. See "Risk Factors" beginning on page 55 of the private placement memorandum (PPM). Significant risks relating to your investment in our units include, among others:

  • Offering Risk. The Fund’s offering is on a best-efforts basis. There is no guarantee that the Fund will raise sufficient funds. If the Fund does not raise sufficient funds, it may not be able to acquire targeted assets or other investments sufficient to fulfill the Fund’s investment objectives, which reduces diversification and increases the potential for another layer of volatility.
  • Investment Objective Risk. The Fund commenced operations in February 2021 and has a limited operating history. If the Fund does not raise sufficient funds, it may not be able to acquire targeted assets or other investments sufficient to fulfill the Fund’s investment objectives. An investment in the Fund requires a long-term commitment with no assurance of investment return. An investor could lose the entire amount of their contributed capital and should only invest if they can withstand a total loss of their investment.
  • Illiquidity Risk. While the Fund may consider a liquidity event at a future time, it currently does not intend to undertake such consideration, and it is not obligated to effect a liquidity event at any time. Investors must be prepared to hold their investments for an extended period of time.
  • Inability to make Distributions Risk. Distributions are not guaranteed in frequency or amount. Distributions may be funded from multiple sources including offering proceeds, borrowings, net investment income from operations, expense waivers, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to the Fund. Distributions that are not derived from net income produced by the Fund's performance may not be sustainable and may dilute investors. 
  • Valuation Risk. Asset valuations will be estimates of fair value and are inherently subjective. and the Fund’s NAV may not accurately reflect the actual price at which its assets could be liquidated.  
  • Use of Leverage Risk. The Fund may incur leverage in an amount not to exceed 50% of its net value of assets; however, given changes in valuations, currency exchange rates and other situations, leverage may exceed that limit in which case the fund will not be permitted to use additional leverage. 
  • Conflicts of Interest Risk. The Fund's manager, sub-manager, and their respective affiliates, face conflicts of interest, including those that result from compensation arrangements and allocations of business opportunities. The Fund compensates the manager, sub-manager, and CNL Securities for services provided and may also compensate the parties when certain operational and performance thresholds are met. Certain management fees will be paid by investors even if they lose money in the investment. 
  • Precious Metals Investment Risk. Investments in gold, silver, platinum, and other precious metals are considered speculative. The Fund's investments can be significantly affected by developments in the precious metals industries and are linked to the prices of gold, silver, platinum, and other precious metals. These prices can be influenced by a variety of global economic, financial, and political factors and may fluctuate substantially over short periods of time and be more volatile than other types of investments.
  • Debt Asset Risk. The Fund will invest in non-rated and below investment-grade debt assets. These assets, which may include preferred stock and debt, are predominantly speculative and involve major risk exposure to adverse conditions. The Fund is subject to market risk, interest rate risk, inflation risk and the risk that a borrower's financial condition or project deteriorates. The illiquidity of the Fund’s loans may make it difficult for the Fund to liquidate its investments if desired and has the potential to cause the Fund to lose significant value in a down market. 
  • Natural Resource Investment Risk. This offering has natural resources risk, environment or geopolitical risks, mining risks, government regulation risk, low or slow production risks, and international investing risks.  The Fund will generally not own or operate the mines of its borrowers and will have limited contractual rights relating to the natural resource projects and related risks. 
  • Use of Derivatives Risk. The Fund uses a small amount of derivatives which may include options, futures contracts, swaps or options on forward contracts on securities and currencies in its portfolio. Such instruments may be traded on foreign exchanges. Participation in the options or futures markets, in currency exchange transactions and in other derivatives may involve investment risks and transaction costs to which the Fund would not be subject absent the use of these strategies.
  • Geopolitical Risk. Occurrence of global events similar to those in recent years may result in market volatility and may have long-lasting impacts on both the U.S. and global financial markets. Additionally, global events, as well as changes in foreign and domestic political and economic conditions could adversely affect the value of the Fund’s investments.
  • Pandemic Risk. There have been material events related to the outbreak and COVID-19 pandemic. The extent to which COVID-19 will affect any investment will depend on future developments, which are highly uncertain and cannot be predicted.
  • Foreign Currency Risk. The Fund intends for transactions to be denominated in U.S. dollars; however, there will be times when that is not feasible. Using foreign currency will present the risk of potential loss or gain based upon the standing of the currency in the world economy.
  • Undue Reliance on Managers or Past Performance. CNL Strategic Asset Management, LLC is acting as the manager. The sub-manager is Sprott Resource Lending Partnership, an Ontario partnership, an affiliate of Sprott Inc. (Sprott), publicly listed under the ticker SII, to provide certain investment management services to the manager. Each managing entity is an investment adviser registered with the U.S. Securities and Exchange Commission. Investors should not rely on the past performance of the managers and their respective affiliates as an indication of future performance. CNL Sprott Strategic Asset Fund (the Fund) is a different investment vehicle with fees and risks dissimilar to the manager's and sub-manager's other funds.

Additional Risk Factors Related to Our Private Offering:

Privately offered units will neither be (i) listed on an exchange or quoted through a national quotation system for the foreseeable future, if ever, nor (ii) registered under the Securities Act and thereby be subject to a number of restrictions on transfer. Therefore, if you purchase units that are privately offered, you will have limited liquidity and may not receive a full return of your invested capital if you sell your units.

Cautionary Note Regarding Forward-Looking Statements

Forward-looking statements are based on current expectations and may be identified by words such as believes, anticipates, expects, may, will, continues, could, targeted and terms of similar substance, and speak only as of the date made. Actual results could differ materially due to risks and uncertainties that are beyond the offering’s ability to control or accurately predict. Investors and financial advisors should not place undue reliance on any forward-looking statements. The Fund undertakes no obligation to publicly update or revise any forward-looking statements.

In addition to these risk factors and disclosures, please also review the Privacy Policy and Terms of Use for additional information particularly concerning links to other websites, limitation of liability and securities advice.