The Fund rose 1.25% during May, ahead of its performance comparator of cash (as measured by the Bank of England’s Sterling Overnight Index Average (“SONIA”)) + 5% which rose by 0.51%. It is also ahead over the year to date, with growth of 2.99% since the turn of the year, compared to 2.27%.

It was another topsy-turvy month for equity markets, with inflation continuing to weigh heavily on people’s thoughts. In the UK, the Consumer Prices Index (CPI) rose by 9.0% in the 12 months to April 2022, up from 7.0% in March. In the US meanwhile inflation reached 8.6%, up from 8.3% the previous month. The central banks became more hardline as a result, promising to raise base rates faster in response. Pleasingly, despite the UK stockmarket (as measured by the FTSE 100 index) falling by 4.35% at one point, the Fund only fell 2.67%, providing a significant level of downside protection. (Source of all figures: FE Analytics)

Three strategies had observation points in May, all structured notes. The first, a maximum seven-year note with Morgan Stanley as the counterparty needed the FTSE 100 Index to be at or above its starting level on the observation date on a capital return basis. The index was up by only 0.55% over the period, but this was sufficient for the strategy to mature on its third anniversary, with a gain of 32.25%, 9.76% annualised.

The second, a maximum eight-year strategy with Citi as the counterparty matured on its first anniversary. This strategy was linked to the FTSE CSDI, again simply needing it to be at or above its starting level on the observation date. Over the year the index rose by 5.65%, triggering the maturity and returning a gain of 9.50% for the year.

Finally, a maximum eight-year note with Bank of America ML as the counterparty matured on its third anniversary. This strategy, linked to the FTSE 100 index, needed to index to be at or above a reducing index level on the observation date. This meant that the index could be down 5% and the strategy would still mature with a gain. As it was the index was up 5.88% over the period, triggering the maturity and returning a gain of 26.25%, 8.06% annualised.

The proceeds from the first two notes were used to upsize the two over the counter trades taken out in April. The fall in pricing experienced by these two strategies in their early days meant they were offering a better annualised return than investing in new trades, so the decision was taken to add to these. The proceeds from the third note will be received in June, at which point they will be invested into a new strategy.

To view all the strategies within the fund in detail, please visit the portfolio page on 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.