A specialist UK-based investment fund – representing a different way to invest in structured products – reached two significant milestones during the month of December 2021.
The Lowes UK Defined Strategy Fund, (the “Fund”) – comprising more than 20 defined investment strategies – has just reached the third anniversary of its launch and passed £20 million in assets under management.
The Fund is essentially a portfolio of defined investment strategies, similar to those found in retail structured plans. The investment strategies offer investors a defined return based on certain defined criteria, such as a named market index being at or above a set level on certain dates, with the potential to mature early if certain market conditions are met.
The Fund is managed by Lowes Investment Management Ltd – all the defined investment strategies in the Fund are linked to the performance of established stock market indices based on the top 100 largest companies listed in the UK.
The Fund seeks to generate returns more than those earned on cash (as measured by the Bank of England’s Sterling Overnight Index Average (“SONIA”) plus 5% over the medium-to-long-term. It aims to provide capital growth in rising or modestly falling UK equities markets, while being less volatile than a corresponding investment into UK equity markets, as evidenced by the annualised volatility of the fund over the first three years at 16.70%, compared to the Morningstar UK index over the same period at 19.51%. (Source FE Analytics)
Since December 2018 we have been through a period of high volatility in the markets due to the ongoing pandemic, lockdowns and disruption to national and international supply chains, and the Fund has not been immune.
Nevertheless, by the end of 2021, the value of the Fund had risen by 12.32% since launch.
Doug Millward, Investment Manager at Lowes Investment Management, said: “We’re delighted to see this innovative Fund reach these milestones. Our investment team here at Lowes have a proven history of selecting the types of strategies that feature in this Fund and that perform well over time.
“The Fund is an ideal investment vehicle for financial advisers and their investors. If an investor is comfortable with structured products but wishes to diversify away from the risk of just one or two counterparties the Fund provides a solution, with the majority of the strategies collateralised with short dated gilts, and the balance diversified across multiple counterparties. The observation dates of the strategies are also staggered over the year to provide multiple opportunities for them to mature, rather than depending on market conditions at just one or two points in the year.”
The Fund will usually invest in strategies that have a maximum duration of up to eight years. However, should the underlying stockmarket index the strategy is linked to, (the “Index”), be at or above its reference level on an observation date (usually each anniversary of the strategy’s start date), it would pay its return at the point. The proceeds would then be reinvested and this process is repeated time and time again, so the Fund continues to have exposure to many strategies that mature at different stages in the investment lifecycle.
One of the appeals of structured investments is the defined nature of the potential return. Such investments, like equities, can be subject to capital losses. However the underlying Index can usually be down at the end of the strategy’s term without creating a loss, unless the Index has fallen by more than an amount defined at the outset. To further mitigate the potential for capital loss, Lowes has led the move towards longer-duration structured investments providing more opportunities for the strategy to mature and longer for the market to recover from any corrections mid-term.
Investors can access the Fund daily via a range of investment platforms with low minimum investment amounts, including Aegon, Quilter, and Embark Advance.
Lowes UK Defined Strategy Fund is a sub-fund of Skyline Umbrella Fund ICAV, an Irish collective asset management vehicle structured as an umbrella with segregated liability between sub-funds, which is authorised and regulated by the Central Bank of Ireland.
The contents of this document have been issued and approved by Lowes Investment Management, who are authorised and regulated by the Financial Conduct Authority (FCA) under the firm reference number 192938.
Any investment should be made on the basis of the information contained within the Prospectus, Fund Supplement, Key Investor Information Document (KIID), and the Supplementary Information Document (SID), available from UKDSF.com
There are risks associated with any investment, and a full list of the Risk Factors associated with investment in the Fund are detailed in the Prospectus and Fund Supplement.
A full list of fees and other charges associated with your investment are detailed in the KIID and Fund Supplement.
For more information visit: UKDSF.com