UK group Lowes Financial Management is to launch a new structured investments Ucits fund.
The group is to launch the Lowes UK Defined Strategy Fund, which invests in a variety of strategies most commonly seen within structured investments.
Lowes said the fund “aims to deliver in excess of a cash plus 5% return per annum over the medium to long term”.
“Rather than buying individual structured products, the fund acts like a typical Ucits fund for advisers and their clients, offering daily pricing, a highly diversified asset base, wide wrapper availability, and platform execution,” the group said in a statement.
Autocall strategies
The fund works by creating, buying and selling strategies commonly found within the structured investment market, diversifying across different types of product but with a particular focus on autocall – or kickout – strategies which are most favoured by financial advisers and their clients and the mainstay of the sector, the statement added.
Autocall strategies run for a set period of years but offer the opportunity to deliver a pre-determined return at certain points – such as an index reaching a certain level at a future date – which then result in products delivering its return and maturing for subsequent reinvestment.
The fund will continuously repeat this process via the underlying investments, ensuring it has exposure to many such strategies at any given point, thus creating a diversity of return profiles and counterparties, although the latter will be heavily biased towards UK government issued Gilts.
As the investment manager, Lowes will not only select the investments, but also actively manage the portfolio, with the option to sell investments ahead of any potential return date if in the interests of shareholders.
The fund, which goes live on 11 December, has a 3-week offer period when it is priced at £1 per share.
Lowes Financial Management which manages almost £1bn (€1.15) on behalf of clients.
