Analysis of recent market corrections have once again proven our defensive characteristics
For the shield may be as important for victory, as the sword or spear, said Charles Darwin. One of the benefits of the Levendi Thornbridge Defined Return Fund is that it offers a degree of protection when markets fall. This benefit has been important over the last twelve months. In this performance update we look at the performance of the fund over the 3 major drawdowns we have seen over our first year and compare the Fund to a range of benchmark assets.
The markets have had four major market downturns during the life of the fund, from 22nd of May to 25th of June (the first being the peak before the drop, and the latter being the bottom), 9th of August to 7th September, and finally 1st of October to 24th of December.
The chart below showcases the performance of the Fund against our benchmarks. We use the FTSE100 total return and Eurostoxx50 total return. The shorter the bar, the smaller the loss over each period.
MAY TO JUNE CORRECTION
From the 22nd of May till the 25th of June the markets experienced a month-long correction due to slowing global trade as geopolitical tensions and policy concerns, particularly around tariffs. This sent shockwaves into the markets which saw the FTSE100 Total Return tumble -4.34%, while the Eurostoxx50 Total Return saw a -5.65% drop.
The Levendi Thornbridge Defined Return Fund outperformed both the index benchmarks as well as the UK Autocall Index, by falling only by -1.73%.
AUGUST TO SEPTEMBER TURBULENCE
Threats of another $200 billion in U.S tariffs on Chinese goods and a rising dollar coupled with Italy’s debt issues created the perfect storm for a drop of -5.60% and 5.74% for the FTSE100 Total Return and Eurostoxx50 Total Return respectively. The Levendi Fund greatly outperformed both indices, falling only by -1.35%.
OCTOBER TO DECEMBER CRASH
US Mid Term elections, Brexit uncertainties might have amplified the ‘October Effect’. Investors have every reason to be concerned in October considering how the Panic of 1907 Black Tuesday (1929), Black Thursday (1929) Black Monday (1929) and Black Monday (1987) all happened during this month. This in turn caused the FTSE100 Total Return and the Eurostoxx50 Total Return to drop considerably.
Following October, fear took over the markets during December, resulting in a rather wild month in world markets. It experienced a historic period of volatility, driven mainly by the FED’s quantitative tightening, and China’s manufacturing sector contracting for the first time in two and a half years. Their economy was and still is feeling the effects of worsening trade outlook and the government attempting to stave off a rapid rise in debt levels. These factors rippled through the financial markets affecting the FTSE100 Total Return and Europe Total Return to the tune of -10.12% and -12.67% respectively, a much worse performance than the Levendi Fund’s -3.53%.
In all three scenarios, The Levendi Fund has fallen significantly less than its underlying indices in these turbulent markets. This demonstrates the defensive benefits of the Levendi Thornbridge Defined Return Fund and the degree of protection it offers when market falls.
The contents of this document are communicated by, and the property of, Levendi Investment Management Ltd. Levendi Investment Management Limited Ltd is an appointed representative of Thornbridge Investment Management LLP which is authorised and regulated by the Financial Conduct Authority (“FCA”). The information and opinions contained in this document are subject to updating and verification and may be subject to amendment. No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained in this document by Levendi Investment Management Ltd or its directors. No liability is accepted by such persons for the accuracy or completeness of any information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained in this document. The information contained in this document is strictly confidential. The value of investments and any income generated may go down as well as up and is not guaranteed. Past performance is not necessarily a guide to future performance.