The performance of the Fund was positive in May, rising by 0.64%. (Source of all figures: FE Analytics)

Markets responded positively in the first half of the month following the latest Bank of England Monetary Policy Committee (MPC) meeting. Whilst they took the decision not to cut rates just yet, comfort was taken from two members voting for a rate cut, compared to one in the previous meeting. Enthusiasm was tempered in the second half of the month, with inflation coming out slightly higher than expected. Whilst it continued to move in the right direction, at 2.3% year on year to April, it had been forecast to be closer to the 2% target.

Stronger than expected economic growth meant that the more domestically orientated UK equity indices, encompassing small and mid-cap companies, were again the strongest performers in May. GDP figures showed that the UK came out of recession, with the economy growing 0.6% in the first quarter, which was above the consensus forecast of 0.4%.

Two strategies had observation dates in May, with both maturing on their first anniversary. Both were gilt collateralised, over the counter contracts, linked to the FTSE CSDI index. The first, strategy 56, was a step-down contract, returning 8.26%, while the second, strategy 57, was an at the money contract, returning slightly higher at 9.60%.

Two strategies were added to the Fund during the month, strategies 72 and 73, to replace those that had matured. These were both gilt collateralised, over the counter contracts.

The first is a maximum eight-year contract linked to the FTSE CSDI Index. To mature it requires the index to be at or above its starting level on any anniversary from year one onwards. For each year that it is in force it will accumulate a coupon of 8.70%.

The second is linked to both the FTSE CSDI and EStoxx 50 Indices, again over a maximum eight years. This strategy is more defensive with a step-down feature. To mature it requires both indices to be at or above a reducing level on any anniversary from year one onwards. In the final three years, both indices could be down by up to 10% from their initial levels and the strategy would still mature. For each year that it is in force it will accumulate a coupon of 8.83%.

Further details of this and all the other strategies within the Fund can be found on the Fund’s website: www.UKDSF.com.

The value of this investment can fall as well as rise and investors may get back less than they originally invested.

The Fund is suitable for investors who are seeking capital growth over a medium to long term horizon but who are willing to tolerate medium to high risks due to the potentially volatile nature of the investments.

This article is for information purposes only and should not be construed as advice. We strongly suggest you seek independent financial advice prior to taking any course of action.

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.