The Fund fell marginally in January, posting a return of -0.06% (Source of all figures: FE Analytics)

After the strong returns of December, January proved something of a weaker month for UK equities. Whilst interest rate cuts still remain likely in 2024, the market repriced just how quickly these may arrive. After the more dovish tone from the US Federal Reserve in December, March had been proven to be a likely candidate for the first. Jerome Powell rather quashed those hopes however during the first month of the year. The Bank of England also appear firm in their stance that they aren’t quite ready to budge from their ‘on hold’ stance. Whilst the economy remains weak compared to other G7 nations, it would appear that ensuring that high inflation is curtailed for the foreseeable remains centre of focus.

There was only one strategy which had an observation point in January, being Strategy 51. This was a note, issued by Morgan Stanley. To mature on what would have been its first observation, it required the FTSE CSDI index to be at or above the level of 176.16. The index was below the level however and will therefore move to the next observation point on the 30 January 2025, where the index will need to be at or above the same level.

If it were not to mature on its next anniversary, on the third, fourth, fifth and sixth observation the strategy benefits from a stepdown feature, whereby the index will need at be at or above 95% of the initial strike level, equating to 167.352. There is a further stepdown in year 7 and 8, being 90% of the initial strike level, or 158.544. The note has a 9.2% coupon and the strategy will therefore continue to benefit from the snowballing coupon effect should it take longer to mature.

There were no further potential maturities during the month. There were also no new strategies added during the period.

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.