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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 isseeing 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
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.
Your capital is at risk, and you may not get back the full amount invested.
Investment manager Downing is expanding estate planning support as forecasts* suggest IHT receipts will surge by 67% over the next five years.
Downing’s new free to use Inheritance Tax (IHT) Calculator will enable advisers to model clients’ IHT liabilities ahead of major legislative changes, including the inclusion of unused defined contribution (DC) pensions in estates from the 2027/28 tax year, to support estate planning decisions.
IHT receipts forecast to rise sharply over the next five years
The UK’s Office for Budget Responsibility (OBR) forecasts total IHT receipts are set to increase 67% over the next five tax years from around £8.7 billion in the 2025/26 tax year to £14.5 billion in the 2030/31 tax year.
The projected increases in IHT receipts could mean estates in London will be paying around £3.3 billion in 2030/31 with the South East contributing £3.2 billion and the South West around £1.5 billion. The East of England will be the fourth highest region, paying more than £1 billion at £1.45 billion. In the North West, total receipts are forecast to be around £730 million and around £507 million in Yorkshire & The Humber.
Downing’s IHT Calculator enables advisers to view estimated IHT liabilities, including the impact of Business Relief (BR) reforms that came into play from 6 April 2026 and the inclusion of unused DC pensions within estates from 6 April 2027.
The Calculator, which is available via Downing’s Adviser Hub, allows advisers to export a co-branded report showing a summary of their clients’ IHT positions for use in meetings.
It includes an exclusive rebalancing function for BR investments, so advisers can shift values between AIM and unquoted BR holdings to model different planning scenarios and optimise mitigation strategies.
Why estate planning is becoming more urgent for advisers
Rebecca Ward-Howes, Head of Product, at Downing, said: “IHT receipts have reached record highs and, with further increases forecast over the next five years, the imperative for robust estate planning has never been greater. Recent policy changes have prompted every adviser to fundamentally revisit all estate planning with clients - and in doing so, they are accelerating real innovation across the IHT planning landscape.
At Downing, we recognise that advisers need more than product solutions; they need the tools and supporting materials to model complex scenarios with confidence and communicate outcomes to clients in a compelling, accessible way.
We are seeing strong demand from advisers for Business Relief, with successive Budgets adding further momentum. We responded by building what we believe is a best-in-class planning tool - and the market has validated that. Since launch, 124 advisers have adopted the tool, with feedback overwhelmingly affirming it as superior to what they were previously using.”
Key IHT policy changes advisers need to plan for
Changes from April 2026 mean that qualifying agricultural property relief (APR) and BR assets benefit from 100% relief up to £2.5 million per individual (combined limit for APR and BR). Above that threshold, relief is available at 50%, resulting in an IHT charge on the excess.
Downing research** shows advisers reported a 76% rise in the proportion of clients using Business Relief for IHT planning while nearly 60% of advisers estimate between 20% and 30% of their IHT-planning clients use Business Relief solutions.
Pension reforms are driving estate planning activity – nearly half (47%) of advisers say clients are cutting pension contributions to invest in IHT solutions, and 30% report clients are withdrawing pension funds to support estate planning.
Government projections suggest the pension IHT changes will raise a cumulative £3.44 billion in additional receipts over the first three years of implementation. Additionally, the Government has extended the freeze on the Nil-Rate Band (NRB) threshold, which has been fixed at £325,000 per person since 2009, until April 2031.
The table below shows estimated total IHT receipts across UK regions by 2030/31, with London and the South East accounting for nearly half (45%) of the UK total.
Estimated IHT receipts by region (2030/31)
Projected Inheritance Tax receipts across UK regions for the 2030/31 tax year.
Region
Estimated IHT Receipts 2030/31
London
£3.335 billion
South East
£3.19 billion
South West
£1.522 billion
East of England
£1.45 billion
West Midlands
£768 million
North West
£739 million
Scotland
£725 million
East Midlands
£536 million
Yorkshire & The Humber
£507 million
Wales
£333 million
North East
£188 million
Northern Ireland
£73 million
Source: https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/inheritance-tax/. Figures are projections and subject to change.
** Downing commissioned independent research company PureProfile to interview 100 UK financial advisers and wealth managers using an online methodology during August 2025.
This content 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. Whilst care has been taken in compiling this content, no representation or warranty, express or implied, is made by Downing LLP as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. 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.
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