31 July 2023
The Fund rose by 1.06% in July, ahead of its performance comparator of cash (as measured by the Bank of England’s Sterling Overnight Index Average (“SONIA”)) +5% which rose by 0.82%. Year to date the Fund is up 3.77%.
(Source of all figures: FE Analytics)
Markets fell in the first part of July, as worries about rising interest rates continued. In the UK the middle of the month saw the inflation figure come in lower than expected, however, raising hopes that interest rates would not have to rise as far as previously predicted. Higher interest rates would have been a potential headwind for economic growth, so this lowering of expectations was seen as a positive, pushing the UK equity markets back into positive territory by the end of the month.
Two strategies had observation points in the month, but with the index below the required level for both, neither triggered an early maturity and they now continue to their next observation points, accumulating another year’s coupon in the interim.
A further two strategies were added in July, reinvesting the proceeds from some of the strategies which matured at the very end of June. Both were gilt collateralized contracts, and require the index to be at or above the starting level on any anniversary to mature with a gain. The first, Strategy 60, offers a potential coupon of 9.42%, whilst the second, Strategy 61, was slightly higher at 9.72%, benefitting from a fall in the markets between the two strategies being taken out.
All but two of the strategies within the Fund ended the month in positive territory. The defined returns on each mean we can still see inherent value within them. Below we provide details of a strategy which we feel highlights this return potential, subject to the performance of the underlying index and counterparty solvency where applicable.
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.