31 January 2022
The Fund rose by 0.31% in January, just behind its performance comparator of cash (as measured by the Bank of England’s Sterling Overnight Index Average (“SONIA”)) + 5%, which rose by 0.43%.
January saw a good start to the year, continuing where 2021 left off as fears about the latest Covid variant, Omicron, continued to recede. By the close on the 20th January the UK stock market (as measured by the FTSE 100 index) was up 2.76% since the start of the month. Inflation worries rose again however, and by the 24th the FTSE 100 index had fallen 3.80% from its closing level on the 20th, caused by worries that the Federal Reserve would be more aggressive in their monetary tightening in response to persistently high inflation figures. A volatile few days eventually saw some of this fall reversed, with the FTSE 100 index finishing the month 1.12% up.
One strategy had an observation point in January – a structured note taken out in January 2020 with Morgan Stanley as the counterparty. This strategy needed the FTSE 100 index to be at or above its starting level of 7,609.81 on the observation date to mature with a gain. On the day the FTSE 100 index closed at 7,611.233, less than 2 points, or 0.019%, above the initial level, but enough to trigger the maturity with a gain of 21.6%.
The proceeds of this and those of the HSBC note which matured in December were re-invested into a new note at the end of the month, taking advantage of the sudden falls in the market described above. Based on the FTSE CSDI index, this is a maximum eight-year strategy, with Morgan Stanley as the counterparty, where the index must be above a falling reference level on any anniversary to mature with a gain, paying 9% simple for each year it is in force. In the first two years the reference level is 100% of the level at its start, years three to six see the level drop to 95% of the starting level, with the final two years only needing the index to be above 90% of its initial value.
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.