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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.
The call is loud, clear, and long overdue: The Mansion House Accord has spoken. But its predecessor, the Mansion House Compact, spoke last year to urge UK pension funds to invest 5% of their assets in our own companies. Since then, a mighty 0.36% has been invested. Now the Accord urges 10% to be invested into private markets – with half of that targeted for UK growth assets, including AIM and Aquis. Believe it? Action speaks louder than words.
From words to action – Finally?
Show us action and show us the money. This has taken nearly two years, which is a hell of a long time in markets! Since the Compact was announced in July 2023, and the Accord was announced on 13 May 2025, by any school report the Compact failed. In 2024 alone, 89 companies left the UK AIM market. This highlights the UK ‘giving away’ our UK earning companies. And that’s deeply disappointing.
AIM: thirty years of growth – and still overlooked?
Next month marks AIM’s 30th birthday – a milestone that highlights just how embedded, tested, and vital this market is to the UK’s capital raising ecosystem. Since its inception in 1995, AIM has supported more than 4,000 companies to raise nearly £135 billion from a committed base of investors. It’s already battle-tested, open and built for growth. For pension fund allocators newly turning their heads toward UK assets, AIM is arguably the most investable segment of the growth market spectrum. This isn’t just about hope or patriotism - it’s about functioning capital markets with price discovery, governance, and investor access.
Local Government Pension Schemes (LGPS) have already made soft noises hinting toward investing in UK growth businesses, including unquoted companies and those listed on AIM. The next big step is for defined benefit pension schemes (DB schemes) to follow suit. That’s what the Accord now urges - a target of 10% into private markets by 2030, with at least 5% directed into UK companies.
Talk is cheap – It’s time to deliver
But AIM can’t afford to wait until 2030. For many companies, the window of opportunity is now - not five years from now. And that’s why policy follow-through matters. If this happens, for those of us who’ve championed the UK’s public markets through lean times, it’s a moment of genuine celebration.
Personally, I am half-heartedly punching the air on this news. This is what we’ve been waiting for. But we need action and not talk. The last 12 months of provocation have paid the price – 89 companies have left the UK market due to being acquired, and many others have not come to market due to policy malaise.
Let’s not overstate it - or understate it. This is the most significant stance the UK government can take in a generation to back British business through capital markets. And unlike past headlines that have veered into unhelpful nationalism, this is pragmatic, targeted, and potentially transformative.
Acknowledging the elephant in the room
Of course, this optimism comes against a backdrop of real change. From April 2026, qualifying AIM shares held at the time of death will only be eligible for 50% relief rather than 100% from inheritance tax (IHT), resulting in an effective IHT rate of 20%- a major shift in the tax landscape.
And yes, many AIM stocks have found it difficult. Liquidity challenges, macro headwinds, and investor sentiment have all played a part. It may still get worse before it gets better.
But what’s kept us resilient is our approach: we’ve avoided the over-owned AIM BR names and instead focused on cash-generative, dividend-paying companies with real-world revenue and value. That’s why we believe AIM remains a credible, robust part of a diversified portfolio - not just for tax, but for long-term client outcomes.
Rediscovering Britain’s economic backbone
Over the past decade, UK pension allocations to domestic equities have collapsed from around 20% to just 2%. Meanwhile, the US market - now wildly overweight in many portfolios - has become increasingly expensive, fragile, and unpredictable.
We’re not just buying mega-cap US stocks that no one can influence - we’re backing companies we can actually relate to - they’re in our backyard, they’re cheaper, and frankly, they’re better value.
The frustration has long been that UK-listed companies - especially in the AIM and small-cap space - are simply overlooked. Many investors haven’t heard of them. They don’t get analyst coverage. They fall through the cracks of passive screeners and global asset allocators.
But that’s where the real gems are.
Take Synectics, a specialist in surveillance and control systems. This week they secured a major contract with Stagecoach - the kind of practical, scalable innovation that thrives when given the capital and attention it deserves. Their stock is up 79.45% year-on-year. It’s not a fluke. It’s what happens when smart capital meets undervalued innovation.
AIM must not be the bystander
The government’s guidance is expected to cover investments into UK growth companies - spanning unquoted businesses, those on Aquis, and the AIM market. But let’s be clear: AIM must not be left on the sidelines.
Many local government pension schemes have already begun exploring or supporting investment into these areas. But defined benefit and defined contribution schemes must now match this momentum — not with words or frameworks, but with actual allocation.
AIM is not just another option - it is the UK’s flagship growth market. It offers greater liquidity, transparency, and regulatory structure than many unquoted or junior markets.
I believe that AIM should stand up on its own merit. Too often it’s overlooked in favour of private equity, but in my opinion, the quality of companies and track record of delivery on AIM is unmatched. And the timing couldn’t be more fitting. Next month marks AIM’s 30th birthday - a milestone that highlights just how embedded, tested, and vital this market is to the UK’s capital-raising ecosystem.
Since its inception in 1995, AIM has supported more than 4,000 companies to raise nearly £135 billion from a committed base of investors. It’s already battle-tested. And for pension fund allocators newly turning their heads toward the UK, it’s arguably the most investable segment of the growth market spectrum. This isn’t just about hope or patriotism - it’s about functioning capital markets with price discovery, governance, and investor access.
The time is now
There’s a growing shift in attention toward the opportunities within the UK’s growth economy - from policymakers, capital allocators, and institutional investors alike. For many, this renewed focus on investing at home is a first real look at AIM and its role in supporting scale-up businesses across the UK. This is a structural rebalancing in motion - from global overexposure back to domestic opportunity.
Because the truth is, there are companies on AIM right now delivering true value: growth, dividends, and resilience. They’ve long been overlooked - but they’re exactly where smart capital should be heading next. These AIM-listed companies are equal to those within private equity mandates. AIM is not the little sister to private equity.
Partner at Downing and Chair of the Quoted Companies Alliance (QCA)
Important notice
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.
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. This content contains information that is believed to be accurate at the time of publication but is subject to change without notice. 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).
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