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 – 28th October 2022

News flow continues to be dominated by inflation, its knock-on effect on the future direction of monetary policy, and escalating geopolitical tensions, much as it has been over the course of the year thus far.

Inflation prints continue to be troublesome, particularly accelerating core inflation in the US, where shelter and services more than offset falling energy and finished good prices.

Central banks continued on their hawkish trajectory for the most part; the ECB raised by another 0.75%, whilst at the time of writing the Federal Reserve have also raised by another 0.75% as well as indicating a higher terminal rate, and rates staying there for longer than previously anticipated.

In spite of this, equity markets on the whole posted healthy returns after September’s volatility. The exception was China, where hopes that the Party Conference would possibly signal an end to the country’s insane zero-covid policy were premature as Xi Jinping instead used the occasion to consolidate power, notably with the Game of Thrones-style removal of former President Hu Jintao from the chamber.

The Fund increased by 3.8% over the month.

There was one investment that matured during the month, four years since its inception. The investment was replaced at terms that show just how attractively the market is pricing currently, with a coupon of 10.5% and protection that would allow the indices to fall 40% over 6 years from already depressed levels before any capital erosion.

The opportunity was also taken at the start of the month to restructure one of the two Hang Seng positions, before the party conference. The position was switched into an investment on the US 2000 and Swiss Market 30 indices with an annual payoff of 11.3%, which improved the Fund’s GRY in all scenarios as well as adding extra protection given the new investment was also struck with a 40% buffer.

Persistent inflation, central banks steadfast in their hawkishness to bring it under control as well as continued geopolitical tension and the de-globalisation it brings mean that investors must take seriously the prospect that equity returns may be anaemic over the medium term. The Fund remains poised to deliver significant returns if markets do turn out to be anaemic, just as it does if there are further falls or indeed a recovery from here.

Total Return 2022 October
UK 100 -1.5% 2.3%
US 500 -17.4% 8.9%
Europe 50 -14.0% 8.9%
Japan 225 -4.3% 4.5%
Hong Kong 50 -34.5% -13.7%
US 2000 -16.9% 11.0%
Swiss 30 -13.9% 4.9%
BCOM 12.7% 0.2%
US Treasury -15.4% -0.9%
Euro Property -37.6% 3.0%
PGF -9.6% 3.8%
AGF 0.8% -0.9%
Real Estate -34.5% 4.4%
US Equity Income -17.4% 8.9%


– 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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