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 July 2022

July looked much like May as weaker growth numbers led market participants to bring forward expectations of a Fed ‘pivot’ as well as bring down the expected terminal rate of hikes; both were positive for risk assets.

Major equity markets were broadly positive with the exception of China, where concerns over the property sector outweighed some other positive data. The other thing of note was the outperformance of European and US markets against the FTSE, as would be expected as the oil price softened and rate expectations came down.

The Fund posted a return of 2.6% for the month.

There were again no maturities during the month, with three observation barriers being missed; those three investments simply roll onto next year, during which they will have another, lower observation barrier. The defined annual returns from this year also roll onto next year, hence the Fund is building in significant levels of value that is essentially locked in and paid so long as the investments’ final barrier, set in the 60s at outset, is not breached.

The Fund strongly outperforms equities in all of the scenarios listed on the GRY table which can be found on the first page of the factsheet. The stronger the equity market performance from here, the quicker the Fund will return to that longer term performance target, but even if markets were to deteriorate further from here, it still should also get there, investors will just have to wait a little longer for that catch up. If markets were to remain flat from here, then the terminal value of the core investments currently in the Fund would pay investors 30.3% over the next 2.8 years at a GRY of 9.9%. Given the more meagre returns possible or even likely in a less goldilocks-like environment, that should be of real value to investors.

The Federal reserve have abandoned forward guidance, for the time being at least, and are going to be led by ‘the data’. The market assumes that weaker growth numbers therefore will lead to a pivot. However, the data point in question is solely inflation. Even if the headline number moderates, it is telling that the stickier components such as wages and shelter continue to increase; add to that the US economy added over half a million jobs in July and the Fed are almost certain to feel the economy can take higher rates, and are probably unlikely to be willing to risk an early pivot given how wrong and behind the curve they have been thus far.

If there is a pivot, then risk assets are likely to benefit, at least in the short term, and the portfolio move back towards the trend line more quickly. If the Fed are to hike higher and for longer than the market anticipates, its defensive capabilities will serve its investors well.

Total Return 2022 July
UK 100 2.6% 3.7%
US 500 -12.8% 9.2%
Europe 50 -11.8% 7.4%
Japan 225 -2.6% 5.3%
Hong Kong 50 -11.9% -7.4%
US 2000 -15.4% 10.4%
Swiss 30 -11.1% 3.8%
BCOM 22.9% 4.1%
US Treasury -8.2% 2.4%
Euro Property -18.6% 12.5%
PGF -5.1% 2.6%
AGF -0.5% -1.7%
Real Estate -16.3% 8.6%
US Equity Income -12.8% 9.3%


– 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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