The Fund rose by 2.00% in December, taking the return for the year to 7.50%.

December was a positive month for western developed markets, including the UK. Comments from central bank monetary policy meetings, in particular that of the US, were the key driver of market performance. The latest Federal Reserve dot plot, a summary of the expectations of committee members, suggested a median outcome of three interest rate cuts in the US during 2024.

Although the Bank of England failed to signal the potential for interest rate cuts the market took its lead from the US, with expectations being the UK will eventually need to follow. The possibility of interest rate cuts in 2024 increased investor belief that a softer economic landing was now a possibility, or even potentially no landing at all.

(Source of all figures: FE Analytics)

One strategy had an observation point in the month, namely Strategy 50. This was a gilt backed contract, linked to the FTSE CSDI, which needed the index to be at or above a reducing reference level on any anniversary to mature with a gain. As it turned out it matured on its first anniversary, giving a return of 9.16% for a corresponding rise in the index of 3.49%.

Two new strategies were added in December. Strategy 67 is a new structured note linked to the FTSE 100 index, with Credit Agricole as the counterparty. A maximum eight-year contract, it needs the index to be at or above its starting level on any anniversary to mature with a positive return, accumulating a 9.60% coupon for each year it is in force.

Strategy 68 is a new gilt backed contract linked to both the FTSE CSDI and EuroStoxx 50 index. Again, a maximum eight-year contract, it needs both the indices to be at or above reducing reference levels on any anniversary to mature with a positive return, accumulating a 8.15% coupon for each year it is in force. The reference level is 100% of the strike levels in year 1, dropping to 95% in years two and three, 90% in years four and five, and 85% in years six to eight.

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