Fortem Capital Progressive Growth Fund

UK & EU – For professional and institutional investors only
Switzerland – this is an advertising document for professional and institutional clients as defined by the Swiss Financial Services Act only

Monthly Commentary – 29th April 2022

The trend that has characterised 2022 of bonds and equities selling off in tandem continued through April as investors again saw the war in Ukraine, increased hawkishness from central banks and the fallout from the misguided zero-Covid policy in China weigh on sentiment. There have been few places for the 60/40 portfolio to hide this year; the MSCI World Index is down 13.5% and Global Aggregate Bonds are down 11.3%. Again, given that the ultra-loose policy of the past decade or so is what drove the correlation to the upside, it is unsurprising to see the potential reversal of that policy driving correlation to the downside. The previously unloved FTSE 100 continues to stage something of a comeback due to its heavy exposure to financials and commodities.

The Fund returned -1.5% over the month.

Within the Fund, the equally weighted FTSE 100 continued to underperform its market cap weighted counterpart. Unsurprisingly, given the moves seen over the month, the S&P 500 was the biggest detractor.

One investment called during the month, at the end of the fourth year of its life, returning investors the full 32.5% in growth as well as original capital. A replacement investment linked to the Russell 2000 and Swiss Market Index was entered into in its place, with a headline coupon of 8.12% and a final protection barrier of 65% of initial strike.

The diversifier overlay returned 0.36%, driven mainly by the Fund’s CDS exposure.

Given the significant moves down in the underlying equities this year, it continues to be telling how much protection is in the Fund and is testament to the conservative setting of barriers at outset. The average protection before any loss of capital is 32.1%, and 29.8% before the full pre-defined capital growth is not paid.

As markets fall, the potential return on offer from the Fund continues to increase. The GRY grid, which can be seen on the factsheet, shows positive returns if equities are down, up or sideways, provided those final barriers are not breached at maturity. This year has shown, in an environment in which central banks are tightening and looking to shrink balance sheets, there are not many investments that can offer similar.

Total Return 2022 Apr
UK 100 3.6% 0.8%
US 500 -13.0% -8.7%
Europe 50 -10.9% -2.1%
Japan 225 -6.1% 3.5%
Hong Kong 50 -9.5% -4.1%
US 2000 -16.7% -9.9%
Swiss 30 -3.5% 0.9%
BCOM 30.6% 4.1%
US Treasury -9.5% -3.8%
Euro Property -10.3% -6.0%
PGF -5.5% -1.5%
AGF 1.6% 1.0%
Real Estate -7.4% -3.6%
US Equity Income -13.0% -8.8%


– This document has been issued and approved as a financial promotion by Fortem Capital Limited for the purpose of section 21 of the Financial Services and Markets Acts 2000. Fortem Capital Limited registration number 10042702 is authorised and regulated by the Financial Conduct Authority under firm reference number 755370.
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