The Fund fell by 1.86% during August, behind its performance comparator of cash (as measured by the Bank of England’s Sterling Overnight Index Average (“SONIA”)) + 5% which rose 0.59%.

Markets rose throughout most of August as it was expected that central banks, and the Federal Reserve in particular, would be more accommodating in response to softening economic data, which was raising fears of a recession. Jerome Powell, Chairman of the Federal Reserve, reversed this belief with his Jackson Hole speech at the end of the month, however, where he took a much more hawkish tone than expected. He reiterated that the Fed’s focus remained on bringing inflation back to its 2% target, and whilst he acknowledged that higher interest rates would bring pain to employment and the economy in the short term, it was a cost that had to be paid to restore price stability.

This led to a fall in markets, with the S&P 500 in the US down 4.24% over the month in local currency terms, whilst the FTSE 100 fared a little better, but still ended down 1.88%.

(Source of all figures: FE Analytics)

Two strategies had observation points in August. The first, a structured note, required the FTSE 100 index to be at or above 95% of its starting level on the observation date to mature. The index was down, but only by 2.29% at that point, allowing the strategy to kick out on its third anniversary with a gain of 23.67% despite the underlying index falling over the period.

The second was a gilt backed over the counter contract which required the FTSE 100 index to be at or above the original strike level for the strategy to mature. In this case, the index was up by just 0.03%, which led to the strategy kicking out on its third anniversary with a gain of 27%.

Two new strategies were also added during the month. Both are 8-year step down contracts, which will mature on the first anniversary where their underlying index is at or above a reducing reference level, dropping down to 90% of the original strike level in years 6 to 8. The first was written as a contract based on the FTSE CSDI index, whilst the second was a structured note based on the FTSE 100 index, with Credit Agricole as the counterparty.

Further details of all the strategies within the fund can be found on the Fund’s website: fund.lowes.co.uk.

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.