None of the information provided is investment or tax advice.
You should always read the associated risks before deciding whether to invest. These can be found on the product pages as well as in our risks overview.
Please confirm you have read the information above.

Confirm

Welcome to Downing LLP

Other
plus icon
document search icon 3
4/11/2019
5
min read

Downing backed Pivot Power acquired by EDF renewables

No items found.
Downing
Downing

Downing launches new actively managed liquid alternatives fund aiming to deliver 7% to 10%+ per annum and positive returns in most markets. The new MGTS Downing Active Defined Return Assets Fund (‘Active Defined Returns’, the ‘Fund’), is the first fund from its new Liquid Alternatives team.

The Fund is aimed at institutional investors, Discretionary Fund Managers, IFAs and advised sophisticated individual investors, and will primarily consist of UK Government bonds and large-cap equity index options, which provide significant scalability and strong liquidity. It aims to deliver 7% to 10%+ per annum and positive returns in all markets except for a sustained equity market fall (generally more than 35%), over a period of at least six years.  

The Fund is the first to be launched by the new Liquid Alternatives Team established by Downing. Collectively, the team has over 125 years of experience and sector knowledge, and includes Tony Stenning, who held senior roles at BlackRock and most recently was CEO of Atlantic House Group; Russell Catley, founder and also a former CEO of Atlantic House Group; Huw Price, a former Executive Director at Santander Asset Management, and Paul Adams, former Head of Cash Equities and Derivatives Sales, Royal Bank of Canada.          

The Fund offers investors a compelling building block for multi-asset portfolios, aiming to add consistent and predictable returns, typically secured with a portfolio of UK Government bonds. The unique proposition includes a hybrid approach of using systematic derivative strategies and active management, combining liquid investments with predictable returns, and an equity like risk profile.

Investment strategy: Maximising the probability of delivering predictable defined returns across the economic cycle.

  • Systematic Liquid Derivatives:  Systematic, derivative strategies optimise the equity risk-return profile. The Fund uses rules-based derivative strategies linked to the most liquid, large-cap global equity indices (i.e. FTSE100, S&P500) with the aim of harvesting well-proven consistent returns across a wide corridor of market conditions. 
  • Strong security:  The Fund will hold a high-quality portfolio of assets as secure collateral – typically UK Government bonds.
  • Active benefits: At times, rules-based, passive derivative strategies can underperform when markets move strongly – this is when specialist active management can add incremental gains by monitoring and monetising positions and applying active risk management.

Key benefits

  • Increased consistency and predictability of returns: Positive returns in all markets except for a sustained equity market fall of more than 35% over at least six years.
  • Diversification of risk: The Fund’s risk components are diversified across large, liquid equity indices, observation levels and counterparties. Secured with high-quality assets – typically UK Government bonds.
  • Active management: Our experienced team will actively manage the Fund and its investments to optimise risk and reward for investors.
Russell Catley, Head of Retail, Liquid Alternatives at Downing, said: “Put simply, we focus your investment risk on the probability of receiving the returns you need, not those you don’t.  We target the highest probability of delivering 7% to 10%+ per annum with active management adding material incremental gains. We believe that we are building the next evolution of the proven success of Defined Returns funds
The Downing team is seeing strong demand from clients looking for alternatives to large-cap equity funds which are becoming concentrated in technology stocks, or alternatives to UK equity income funds and illiquid alternatives.”   
Tony Stenning, Head of Liquid Alternatives at Downing, said: “The launch of our Active Defined Return Assets Fund is a significant milestone in the ambitious build-out of our new Liquid Alternatives strategies. It is a solution-focused fund that should deliver stable high single or low double-digit returns across a wide spectrum of equity market conditions, except for a persistent multi-year bear market. The Fund is designed to enhance balanced portfolios by providing consistent, predictable returns and is suitable for accumulation or drawdown.
“We aim to deliver a unique combination of proven systematic derivative strategies and specialist active management, and we are doing so at a very compelling fee level, below our closest competitors and in line with active ETFs.”

How the Fund is expected to perform in different markets

  • In bullish markets:  UK Government bonds secure the capital, and the equity index options deliver a predictable 7-10%+ return per annum – giving up some less likely upside.
  • In neutral markets and normal market corrections:  UK Government bonds secure the capital, and the index options deliver a predictable 7-10%+ return per annum.
  • In a sustained sell-off:  if markets fall more than the cover to capital loss and do not recover for six years. Then capital is eroded 1:1 in line with the worst performing index.
  • The average Cover to Capital Loss is targeted at 35%:  the average cover to capital loss represents the average level the Global indices within the Fund could fall before capital is at risk.

Fund key risks

  • Performance:  Capital is at risk. Investors may not get back the full amount invested.
  • Liquidity:  Access to capital is always subject to liquidity.
  • Counterparty risk: Other parties could default on the contractual obligations.

Fund Structure

  • UK regulated OEIC fund structure, fully UCITS compliant
  • Daily dealing, at published NAV
  • Minimum investment: £100,000
  • SRRI: 6 out of 7
  • Depositary: Bank of New York
  • Authorised corporate Director (‘ACD’): Margetts Fund Management Ltd.
  • I share-class:  SEDOL: BM8J604 / ISIN: GB00BM8J6044
  • F share-class: SEDOL: BM8J615 / ISIN: GB00BM8J6150

Learn more about the Fund here.


Risk warning: Opinions expressed represent the views of the fund manager at the time of publication, are subject to change, and should not be interpreted as investment advice. Please refer to the latest full Prospectus and KIID before investing; your attention is drawn to the risk, fees and taxation factors contained therein. Please note that past performance is not a reliable indicator of future results. Capital is at risk. Investments and the income derived from them can fall as well as rise and investors may not get back the full amount invested. Investments in this fund should be held for the long term. 

Important notice: This document is intended for professional investors and has been approved as a financial promotion in line with Section 21 of the FSMA by Downing LLP (“Downing”). This document is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it. Downing does not offer investment or tax advice or make recommendations regarding investments. Downing is a trading name of Downing LLP. Downing LLP is authorised and regulated by the Financial Conduct Authority (Firm Reference No. 545025). Registered in England and Wales (No. OC341575). Registered Office: 10 Lower Thames Street, London EC3R 6AF.

Downing-backed Pivot Power acquired by EDF Renewables UK

Pivot Power, a privately-owned developer of transmission-connected battery storage and electric vehicle (EV) charging networks, has been acquired by EDF Renewables UK from funds managed by Downing LLP.

Downing has partnered with Pivot Power since its inception, having provided key investment and support over the course of the last two years to secure 45 sites across the UK as part of the first stage of a world-first EV charging and grid connected battery network. The funding and support have helped Pivot Power grow from two members of staff to a team of fifteen in that period.

As well as providing critical infrastructure for EV charging, Pivot Power’s battery development portfolio (at 2GW across 45 sites) represents a huge increase in battery capacity for the UK market. This storage capability creates a key resource for the National Grid, allowing it to better manage increasing supply and demand issues and support the integration of more renewable energy resources as part of the UK's sustainable energy mix.

The divestment is the latest in a series of transactions that Downing has completed in the space, building on the installation of one of the UK's largest behind-the-meter battery storage systems at Arsenal Football Club’s Emirates Stadium in November last year and the acquisition, structuring and ongoing construction of the first of Pivot Power’s projects in Southampton, now owned by Downing.

Sean Moore, Investment Director at Downing LLP, comments: “We are delighted that the dedication and ambition of Pivot Power’s management team has been recognised by EDF Renewables UK and are confident that this acquisition will really help accelerate the firm’s next stage of growth.”

Colin Corbally, Partner and Head of Investment Strategy at Downing, adds: "At Downing we’re also extremely proud to play a small part in supporting the UK's transition towards sustainable energy and transport, both through our support for Pivot Power and through our ongoing investment in the UK’s first rapid EV charging station and battery storage site in Southampton. This is a brilliant example of the type of profitable investment with the environmental and social impact which Downing is committed to seeking out on behalf of our investors.”

Matt Allen, Chief Executive Officer of Pivot Power, comments: “The Downing team have been a key part of Pivot Power's journey so far and have helped us reach where we are today. We're delighted to have had their support and now look forward to the next stage of our journey as a business.”

The investment came via Downing’s Estate Planning Service, which is a flexible discretionary managed portfolio service for UK investors. By investing in unlisted UK trading businesses, their investment is exempt from inheritance tax after two years.

Share
https://downing.co.uk/insights/downing-backed-pivot-power-acquired-by-edf-renewables-uk

We're here to help

If you are a financial adviser, or discretionary fund manager call 020 7630 3319 or email us at sales@downing.co.uk

If you are a private investor call  020 7416 7780 or email customer@downing.co.uk