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 – 30th June 2022

As the curtain comes down on the first half of 2022, investors will not look back on it fondly. It has been the worst start to a year for equities in the previous 50 and, given the well documented bond market woes, there have been very few places to hide for the traditional 60/40 portfolio.

June saw continued stress in equity markets as first higher than expected inflation numbers caused investors to take central banks’ promises to tackle inflation more seriously, before weakening growth numbers added to stocks’ pain, but the bond market pivoted to believe that the Fed in particular were not quite as hawkish as they have been recently making out. 

It has left the MSCI World Index down over 20% for the year thus far.

The Fund posted a return of -2.7% for the month, and is down 7.4% YTD.

There were no maturities during the month, with three observation barriers being missed; those three investments simply roll onto next year, when 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.

Fundamentally, the defined aspect is what the attraction of the Fund is. It has clearly, as of yet, not delivered on its return target. However, the returns that the investments offer are contractually stipulated at outset. Therefore, provided that, at maturity, the investment satisfies its final observations, then the Fund will simply have to catch up in order to hit that target return. There is therefore a significant amount of intrinsic value in the Fund at the current time, best illustrated by the GRY table on the front of the factsheet. Irrespective of one’s views of other asset classes, this is a particularly opportune time to buy this type of defined return.

The Fund strongly outperforms equities in all of those scenarios listed on the same table, and the barriers were set defensively enough that even if the underlying indices to which the Fund is exposed were to all fall another 20% from these lows and not recover at all, the Fund would still post a positive return. 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 42% over the next 3.8 years at a GRY of 9.7%. Given the more meagre returns possible or even likely in a less goldilocks-like environment, that should be of real value to investors.

Total Return 2022 June
UK 100 -1.0% -5.5%
US 500 -20.2% -8.3%
Europe 50 -18.0% -8.8%
Japan 225 -7.5% -3.1%
Hong Kong 50 -4.9% 2.9%
US 2000 -23.4% -8.2%
Swiss 30 -14.3% -7.5%
BCOM 18.0% -10.9%
US Treasury -10.4% -1.6%
Euro Property -29.4% -15.9%
PGF -7.4% -2.7%
AGF 1.2% 1.3%
Real Estate -22.9% -11.9%
US Equity Income -20.2% -8.4%


– 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.
– This document is intended for Professional Investors, Institutional Clients and Advisors and should not be communicated to any other person.
– The information has been prepared solely for information purposes only and is not an offer or solicitation of an offer to buy or sell the product.
– Data is sourced from Fortem Capital Limited and external sources. The data is as at the date of this document and has been reviewed by Fortem Capital Limited.
– Information, including prices, analytical data and opinions contained within this document are believed to be correct, accurate and derived from reliable sources as at the date of the document. However, no representation or warranty, expressed or implied is made as to the correctness, accuracy or validity of such information.
– Fortem Capital Limited assumes

no responsibility or
liability for any errors, omissions or inaccuracy with respect to the information contained within this document.
– All price and analytical data included in this document is
intended for indicative purposes only and is as at the date
of the document.
– The information within this document does not take into account the specific investment objective or financial situation of any person. Investors should refer to the final documentation and any prospectus to ascertain all of the risks and terms associated with these securities and seek independent advice, where necessary, before making any decision to buy or sell.
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– The Fortem Capital Alternative Growth Fund is a Sub-Fund of Skyline, an open-ended investment company with variable capital incorporated on 1 June 2010 with limited liability under the laws of Ireland with segregated liability between Funds. The Company is authorised in Ireland by the Central Bank of Ireland pursuant to the UCITS Regulations.

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