Typically, structured investments are designed to be held for a set number of years and upon maturity potentially provide pre-defined returns subject to specific market conditions. The Lowes UK Defined Strategy Fund (the “Fund”), managed by independent financial advisers Lowes Financial Management Ltd, aims to generate capital growth over the medium to longer term. The fund intends to achieve its investment objective by investing in equity related securities, government and investment grade bonds and indirectly in these securities through financial derivative instruments. The strategies used are similar to the products commonly found within the UK retail structured investment market. It should be noted however, that strategies utilised within the Fund may not always outperform certain standalone plans which take on greater levels of risk or offer more favourable terms due to the market conditions at the time of pricing the plan. The Fund operates as part of an Irish domiciled Irish Collective Asset-management Vehicle (“ICAV”), the structure of which gives flexible potential for growth with respect to the Fund size, due to the ability to create units in the Fund whenever necessary. The ICAV also allows the Fund to grow and shrink whenever necessary as investors increase or reduce their holdings, or new investors choose to allocate their capital towards the Fund.
By using an ICAV, investors’ capital is pooled and may be diversified across the strategies within the Fund. Diversification of investments is a fundamental part of investing and when investing into the Fund, investors own a part of the whole Fund, thus multiple strategies at once, rather than a part of a singular structure (in the case of a retail plan). Diversification within the Fund aims to reduce the counterparty credit risk that investors bear relative to individual structured products, as their exposure to strategies within the Fund, and therefore the exposure to the potential bankruptcy of financial institutions is reduced (from 100% exposure to the credit risk of a bank, to a maximum of 10% portfolio exposure to any one bank serving as counterparty to the investments within the fund).
The Fund does not incorporate any plan manager fees which traditional structured investments have. Plan manager fees can be in excess of 2%. For example, the Tempo FTSE 100 FDEW Long Growth Accelerator Plan June 2019 contained a plan manager fee of 3.6%. in contrast, the Fund has no entry or exit charge, only charging an Ongoing Charges Figure, which is currently capped at 1%. It also contains no out of the market periods where the investment process need be repeated, whereby the investor would incur another plan manager fee. The Fund structure offers a benefit in this regard as once an investor has invested in the Fund through one of the platforms where the Fund is available, or through Northern Trust Fund Administrators there is no further application process or out-of-market period.
If you would like to know more about the Lowes UK Defined Strategy Fund, please visit the Fund website UKDSF.com/Literature for the Key Investor Information Document (“KIID”), Prospectus, and Supplement or call Lowes Financial Management on 0191 281 88 11.
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 Financial Management Ltd, Fernwood House, Clayton Road, Newcastle upon Tyne, NE2 1TL. Authorised and regulated by the Financial Conduct Authority.