30 June 2023
The Fund rose by 1.11% in June, whilst its performance comparator of cash (as measured by the Bank of England’s Sterling Overnight Index Average (“SONIA”)) +5% rose by 0.77%. The Fund remains in positive territory for the year to date at 2.68%.
(Source of all figures: FE Analytics)
Markets started June positively, before giving some of those gains back towards the end of the month. Inflation remained the main point of conversion, particularly following the higher than expected release at the end of May. As we progressed through June the market had begun to anticipate a 0.25% hike in interest rates. It therefore came something of a surprise when the Bank of England took the decision to increase by 0.5% to 5%, whilst remaining hawkish over the possibility of further hikes moving forward.
Whilst bringing inflation back in line with target is hoped for, the ever increasing level of interest rates will undoubtedly bring further pressure to households, in particular those who are faced with renewing their fixed rate mortgage. Higher costs here will undoubtedly mean a lower level of disposable income, therefore potentially curtailing spending power, having negative connotations for the economy.
This was a busy month in terms of successful maturities. We saw four strategies mature within the Fund – Strategies 41, 42, 43 and 12. The first three matured on their first anniversary, delivering a return per unit of 8.70%, 9.80% and 9.48% respectively. Strategy 12 meanwhile matured on its fourth observation with a return per unit of 35.80%. This was the first gilt collateralised strategy to be added to the Fund back in 2019.
Two new strategies were added in June. The first was a step-down shape offering a potential coupon of 9.45% for each year held, with Citigroup Global Markets as the counterparty. The second was also a step-down shape, with this feature coming into play from year three onwards. This one is a gilt collateralised strategy offering a potential return of 8.6% per unit for each year it is in force.
Further details of all the strategies within the fund can be found on the Fund’s website: www.UKDSF.com.
The Lowes UK Defined Strategy Fund is a sub-fund of the Skyline Umbrella Fund (ICAV) and is regulated by the Central Bank of Ireland. The KIID, Prospectus, and Supplement can be accessed by visiting UKDSF.com/literature and are only available in English.
Lowes Investment Management Ltd, Fernwood House, Clayton Road, Newcastle upon Tyne, NE2 1TL. Authorised and regulated by the Financial Conduct Authority.