Defensive By Design Series Part 4: Liquid Underlyings
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.
Liquid Underlyings
The Levendi Thornbridge Defined Return Fund invests in liquid, defensive, and defined return strategies linked to a combination of the FTSE 100, S&P 500, and EURO STOXX 50. When selecting the underlying indices for the Fund’s holdings, the Fund Manager’s primary consideration is to avoid markets they deem likely to experience a significant and protracted decline.
The Fund Managers take a value-based approach to their selection process:
- They have a preference for mainstream equity market indices where deep and liquid markets exist. This is because the liquidity of the holdings we hold reflects the underlying liquidity of the equity derivative markets, which are, in turn, linked to the indices we use
- They have a value orientation, favouring markets with lower P/E multiples and reasonable, sustainable dividends, alongside other characteristics that provide support
- They prefer holdings that offer capital protection unless the underlying index falls below the lowest levels seen in approximately the last 10 years. Broadly speaking, we aim to set the put strike below a level we believe would be low enough to prompt central banks and governments to intervene in the event of significant market turmoil.
Overall, the Fund offers investors a significant degree of capital protection, designed to support both wealth preservation and growth. This is made possible, in part, by investing in some of the most liquid underlying assets globally. 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.
