30 June 2022
The Fund fell by 3.50% during June, behind its performance comparator of cash (as measured by the Bank of England’s Sterling Overnight Index Average (“SONIA”)) + 5% which rose by 0.49%. It was ahead of the FTSE 100 index, however, which fell by 5.76% over the month.
The likelihood of an economic slowdown continued to build throughout the month, and fears of falling into recession lead to falling stock markets around the world. Europe and the US suffered the worst in local currency terms, but the UK was not immune, with the FTSE 100 index falling by 5.76% over the period. Although the Fund fell also, it was pleasing to see it did provide a level of protection compared to the index, only capturing 61% of its fall.
(Source of all figures: FE Analytics)
One strategy had an observation point in June. The strategy required the FTSE 100 index to be at or above its starting level on the observation date to mature. The index was down 2.8% at that point, so the strategy moves on to its next anniversary, the first of a further five opportunities to mature in the future with the total potential gain rising by 8.95% each year.
The proceeds from the strategy which matured at the end of May were reinvested in June. A maximum eight-year strategy linked to the FTSE CSDI index, it can mature on any anniversary provided the index is at or above a reducing level. The total potential gain will increase by 8.7% for each year the strategy is in force.
Two further strategies were added in the month, allocating the positive inflows seen by the Fund. The first was a maximum eight-year structured note with Citigroup as the counterparty. With a potential coupon of 9.80% each year, the strategy simply requires the underlying index, the FTSE 100 index, to be at least 95% of its starting level on any anniversary to trigger a positive maturity.
The second, is a maximum eight-year strategy linked to the FTSE CSDI index, with the potential to mature on any anniversary provided the index is at or above a reducing level. We took advantage of volatility in the market to secure a higher potential annual coupon of 9.48%, with a lower strike level.
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.