4th October 2018

Five reasons for a financial adviser to consider the Levendi Defined Return Fund

The target market for the Fund is Defensive and Cautious investors. As consensus estimates for equity and bond market returns are marked down, the return profile of the Fund becomes more attractive. Here are five reasons why you may consider the Fund.

1. Target Return of LIBOR +6%

We aim to maximise the chance of generating LIBOR +6%. One of the main benefits of the type of asset we hold is that we know what the return will be given the performance of the underlying indices (provided the investment grade issuer remain solvent). We define the terms of the assets we buy so that we maximise the chance of achieving the target return.

2. Low Volatility

When we design assets for the Fund we are sensitive to the likely volatility of returns and avoid investments that we consider to be too risky. The nature of the assets we hold mean that volatility of the Fund is currently 4.3%. We expect that volatility will be between 4% and 5% under normal market conditions and we aim to keep volatility below 10%.

3. Defensive Equity Exposure

The Fund can be used as a defensive equity fund. The investments we hold have some exposure to the main equity market indices. We expect that the exposure to equity markets will be between 30% and 40% and correlation with equity markets to be about 0.85 under normal market conditions. We are very careful about the underlying market exposure and consider fundamental and technical factors when investing. Currently we only have exposure to UK and European equity markets.

4. Positive Returns that Don’t Depend on Rising Markets

The Fund has absolute return characteristics. It can offer positive returns that do not depend on rising markets. The investments we hold are designed so that we can earn a positive return if markets rise, remain the same or even fall. Most of the assets we hold will offer a positive return even if markets fall by up to 40%. In the short term the value of the fund will fluctuate with the level of underlying markets, but over the medium-term we expect that the assets we hold will steadily accrue value month by month under most market conditions.

5. Some Protection When Markets Fall

Capital preservation is a high priority. We aim to minimise both the chance and scale of losses. The Fund has five defensive features that help to offer a degree of protection if markets fall. We expect that these features will help mitigate losses when markets fall and dampen the effect of any fall in the level of underlying markets on the value of the fund.