Defensive By Design Series Part 2: Maximise the Chance of a Positive Real Return

In this multi-part series, our UK Business Development Manager, Tara Pain, describes how the Levendi Thornbridge Defined Return Fund is truly defensive by design. This approach allows the Fund to generate positive real returns in all but significant and sustained market declines, offering investors meaningful protection for their portfolios.

Maximise the Chance of a Positive Real Return

The Fund’s Portfolio Managers have a strong preference for defensive positions, which are designed to generate a positive real return in all but significant and sustained market declines. The defensive moniker is commonly applied to products where the autocall trigger level is set below the current index level.

For the Levendi Thornbridge Defined Return Fund, the products held within the Fund will generate a positive real return even if the underlying markets fall by c. 35%, i.e., to c. 65% of the initial level. This defensive final trigger level in Year 10 has a significant effect and materially increases the chance that all positions will offer a positive real return.

The table below shows the probabilities and payoffs of an example dual-index S&P 500 / EURO STOXX 50 autocall maturing. Results are presented from both the stress test (which runs over 100,000 simulations) and historical data from the last 30 years. The autocall trigger levels are set at 100% for the first 2 years, 98% for years 3–9, and 65% in year 10. The declining trigger levels throughout the life of the position, along with the very defensive final trigger level of 65%, materially increase the chance that the position pays out a positive real return.

Overall, the Fund offers investors a significant degree of capital protection, designed to support both wealth preservation and growth, all while limiting volatility. Investors gain equity market exposure that generates positive real returns in all but significant and sustained market declines. Consequently, the Levendi Thornbridge Defined Return Fund is truly defensive by design.

If you want to learn more about this Fund and our other defined outcome funds, email us at funds@causeway-securities.com

Important information

This is a marketing communication, not a contractually binding document. Please refer to the Fund Supplement and to the KIID, and do not base any final investment decision on this communication alone.

This publication is intended to be Causeway Securities own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell, or trade-in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price, or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a transaction, and if you require professional advice, you should contact your financial adviser.

As with all forms of investment, there are risks involved with structured products, including those on our website.

It should always be understood that:

• Structured products are not suitable for everyone
• Past performance is not a reliable indicator of or guide to future performance and should not be relied upon, particularly in isolation
• The value of investment and the income from them can go down as well as up
• The value of structured products may be affected by the price of their underlying investments
• The potential returns of a structured and the repayment of money invested in a structured product depend on the financial stability of the Issuer and Counterparty
• Capital is at risk and investors could lose some or all their capital

Causeway Securities incorporates Causeway Securities Ltd, authorised by the UK Financial Conduct Authority, and Causeway Securities LLC, a subsidiary of Causeway Securities Ltd, granted FINRA membership in July 2022 to conduct business in the US.

Causeway Securities Limited is authorised and regulated by the Financial Conduct Authority (FCA FRN 749440) in the UK and is an authorised financial services provider in terms of the Financial Advisory and Intermediary Services Act (Act No. 37 of 2002) in South Africa. Causeway Securities Limited is registered in England and Wales with company number 10102661. Registered address Causeway Securities, 60 Cannon Street, London, England, EC4N 6NP. Causeway Securities Ltd is the parent company of Levendi Investment Management. Levendi Investment Management Ltd (FRN: 783607) is an appointed representative of the Investment Manager Thornbridge Investment Management LLP (FRN: 713859), which is authorised and regulated by the Financial Conduct Authority.