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Joseph Catley
Operations & Marketing Assistant
Weekly update
We are delighted to announce today the completion of our management buyout of Downing Liquid Alternatives. The business has officially launched today under its new name ‘Capel Asset Management Limited’, fully authorised by the FCA.
The business has rapidly grown to over £400m in AUM, across 2 funds and a mandate, and Capel remains committed to delivering class-leading performance at the lowest possible cost for clients.
MGTS Capel Active Defined Returns Fund* - £282m
MGTS Capel Diversified Opportunities Fund* - £53m
Sentinel Navigator mandate - £72m
* : Please note the funds are in the process of being renamed to ‘Capel’ subject to regulatory approval
The Directors (Russell Catley, Paul Adams, Jonathan Gumpel) fully own Capel Asset Management Limited and have invested in the business to fund its further growth – in AUM, talented PMs, and new alternative strategies that focus on deliver targeted returns that provide real solutions to multi-asset investors. The full investment and operations teams have come across to Capel and we look forward to building the team further.
Portfolio Data and Market Commentary - Friday 25th Sept 2026
MGTS Downing Active Defined Return Assets Fund
Fund NAV:
113.11
-0.19% WoW
Fund AuM:
£281,825,413
+8.36% WoW
Performance*
1 mth: -0.17%
6 mths: +6.42%
12 mths: +8.98%
*: F-class
MGTS Downing Diversified Opportunities Fund
Fund NAV:
125.73
-1.14% WoW
Fund AuM:
£53,740,950
-0.82% WoW
Performance*
1 mth: -2.37%
6 mths: +3.36%
12 mths: +8.28%
*: F-class
Please note the fund performance above is at Thursday close of business and does not include the strong Friday risk rally after US payrolls.
Global equities experienced another mixed week, with some relief on Friday after a dovish/soft US payrolls print seemed to take an Oct hike off the table. September posting losses for most major indices and a rout in global bond markets driven by growing government debt/GDP ratios (with little transmission mechanism), soaring AI corporate borrowing and the reality of higher debt servicing costs. Energy driven inflation persists, and CB’s have turned hawkish in September.
September saw a growing divergence between equity and bond market sentiment and returns (widest divergence in returns in 60 years), and we expect this to drive volatility through October.
US equities saw the SPX (-0.27%) and RTY (-0.16%) fractionally lower on the week, but NDX was a bright spot hitting a new high as Tech continued to be the market leader. NDX has outperformed all other US indices now for 6 weeks in a row.
In Europe, the STOXX600 Index resumed its weakness falling -1.10% amid elevated oil prices, weakness in financials and rising sovereign bond yields. French Govies (OATS) were the epicentre of pain, as spreads over Bunds blew out past 140–150 basis points, reaching levels not seen since the 2011–2012 Eurozone debt crisis. Germany’s DAX -0.70% lower, France’s CAC 40 Index -2.24% (led lower by Sanofi -3.3%, Kering -3.2%, Capgemini -2.9%) and Italy’s FTSE MIB -2.67%.
In the UK, FTSE 100 Index slid 2.18% driven by similar macroeconomic pressures but also a material pullback in banking stocks as Chancellor Healey summoned Bank CEOs to a mandatory meeting to discuss a potential 38% windfall tax (HSBC -4.6%, Barclays -4.4%, Lloyds -4.4%, NatWest -4.6%).
In Asia, markets performed better with the N225 +2.93%, as large cap AI stock drove the gains in the N225 whilst broader sentiment remained subdued of fears of further BoJ tightening. China saw equities pullback (CSI300 -1.8%, HSI -2.2%) on disappointment over Beijing’s latest stimulus package. Golden Week started on Thursday (Oct 1-7th), which typically sees a pick-up in travel and retail spending, which the market will be watching closely for signs of positive domestic consumption.
Other Assets:
Bond Markets saw another rough ride for investors, as yields continued to push higher briefly hitting levels last seen in 2002. Yields of shorter duration bonds generally finished flat (UST 2yr at 4.84%), while the longer end rose (UST 10yrs hit 5.28%, 30yr rose to 5.63%).
Precious Metals posted another week of losses as Gold fell 3.4% hitting a 7-week low ($4,134/oz), overshadowed by continued USD strength. Silver followed gold lower, losing -6% to close around $60.4/oz.
Energy markets saw Brent fluctuating between $98 to $108 but aggressively fell on Friday as Trump ruled out a proposed diesel export ban to Europe, the G7 announced a 100m barrel reserve release (next 4 mths) and physical tracking data showed Middle Eastern crude exports unexpectedly rebounded slightly above pre-war levels.
Crypto Markets saw Bitcoin (BTC) rally strongly on the weak US payrolls data hitting $87k before pulling back over the weekend. Continued positive sentiment will see BTC challenge the YTD highs and shrug off its poor start to 2026.
Macro:
US: the key event was the softer US payrolls print (+29k vs est. 90k), July/Aug were also revised lower by 60k, and the UE rate ticked up to 4.2%. This drove futures markets to take any Oct hike off the table (79% chance of a hold), but Nov is still on the table. PCE data continued to show moderating inflation and the BEA revised up Q2 GDP to 2.2% annualised (from 1.5%).
Europe: saw inflation surprise to the upside (3.8% vs 3.6% est., and 3.2% in Aug). France saw fiscal concerns dramatically escalate on uncertainty ahead of the 2027 presidential elections, with OAT yields spiking (10yr at 5% highest since 2002) and borrowing costs rose dramatically, driving the French banks to underperform on fears of a sovereign credit downgrade.
UK: revised data showed UK GDP for Q2 at +0.5% (vs est, 0.4%) with the positive surprise led by services. The S&P Global UK Manufacturing PMI rose to 51.9 in September (vs 51.7 MoM).
Japan: minutes from the Sept BoJ hike decision saw division over the pace of tightening, but tempered expectations of an immediate follow-up hike in Oct.Leading JGBs yields to trad flat over the week. However, Tokyo area inflation accelerated, and CPI rose 2.7% YoY (up from 1.8% in Aug) and hence the direction of travel remains clear it’s just a question of timing.
China: the latest stimulus package underwhelmed investors, it included mortgage interest payment subsidies, incentives to raise bank lending to key sectors, and a reduction in the PSL lending rate. In an effort to maintain growth at it’s 4.5-5% target, the market remained unconvinced.
Fundamentals
This week the focus is on consumer demand through Constellation Brands, Pepsi, and Delta Airlines.
A range of reporting in the US and Eurozone will inform the October round of Central Bank decisions in both regions:
Monday: US Institute for Supply Management’s nonmanufacturing index
Wednesday: Release of Sept Minutes from US FED decision. UC Consumer credit data
Thursday: Wholesale inventories, U.S. Census Bureau, US Weekly unemployment claims, U.S. Department of Labor
Friday : University of Michigan Index of Consumer Sentiment, preliminary result
Active Defined Returns Fund Highlights ('CDR')1:
· The Fund returned -0.19% this week, against broadly negative equity index performance (SPX -0.27%, RTY -0.16%, UKX -2.18%, SX5E -1.02%, SMI -2.04%, NKY +2.93%, HSI -2.19%), demonstrating strong resilience from the buffered downside protection.
· The Fund has delivered predictable, consistent returns over 6 months (+6.4%) and 12 months (+9%). Dragged slightly lower by the September pullback in markets but the fund is well positioned for performance into the end of the year and we continue to outperform our peers over 12 months2.
· The Fund is now £282m AUM with strong inflows of £63m in September, and we have a strong pipeline to £300m in the next 4-6 weeks.
· EQD defined return pricing is currently very strong, boosted by higher GILT yields, delivering coupons of approx. GILTs + 5%. This has allowed us to add new positions with a higher 40% cover-to-capital loss (vs. 35% as standard) and still retain high coupons and deliver our targeted 10%+.
· The GILT portfolio remains fully interest-rate hedged to protect against the recent multi-week pressure on Gilt prices (rising yields).
· We took advantage of intra-week volatility again to trade;
We added £28m into 4 new EQDs at an average coupon of 9.34%, combined with greater downside protection
We added £28m to the GILT portfolio also, building our 4t35 and 4f34 Gilt positions and securing strong yields in the current environment
· The EQD portfolio is well diversified with 50 positions and a wtdaverage coupon of 9.79%.
· Core risk metrics remain robust, providing strong resilience to a downturn with a Cover-to-capital-loss at 36.3%.
· The portfolio provides strong funding in excess of SONIA +43bps and maintaining a money-wtd maturity of 6.8 yrs.
Active Diversified Opportunities Fund Highlights ('CDO')1:
The fund returned –1.14% over the week, in a period dominated by a further bond market selloff as the 10-year Treasury yield hit 5.18% and the 30-year reached 5.44%. Whilst equity markets broadly fell (1-3%), with the exception of the mega cap tech driven Nasdaq.
The primary drag came from two sources:
Thematic Gold: Bullion fell more than 3% to a seven-week low as rising yields and elevated energy prices weighed heavily on precious metals, with Gold Miners falling 5-6%.
An exception to that was Northern Star which rose 8% on bid interest.
Bond and bond equivalents: Suffered in line with the wider bond complex. IG Group Holdings fell sharply after the company reported a surprise 14% fall in third-quarter revenue, months after upgrading its outlook.
Positive performance was predominantly driven by Korean equities: SK Square +5.5% and Hanwha Aerospace +3.7% continued to deliver on the ‘Value Up’ thesis. South Korea cut its volume of announced October bond issuance on a tax revenue windfall, which provides another supportive domestic catalyst.
Fujikura was the top performer as it announced a large order in the nascent fusion sector to add to its growth drivers.
The Funds remain well covered with strong equity protection given the volatile nature of Sep/Oct, and Alts and Bonds are positioned defensively and should benefit from a stabilization in yields.
1: Due to the forward pricing of UCITS Funds, the NAV does not relate to the exact same period as quoted for indices
2: Source Bloomberg on a 12 mth rolling basis, versus the WisdomTree Defined Returns Fund (B-class), and the Fortem Capital Progressive Growth Fund (A-class)
This material is provided for information purposes only and is intended for regulated financial advisers and professional investors only. It is not intended for retail clients and should not be distributed to or relied upon by retail investors.
It does not constitute investment advice, a personal recommendation, or an invitation or inducement to buy or sell any investment. Any decision to invest in or recommend the fund should be made solely on the basis of the current Prospectus and Key Investor Information Document (KIID), together with independent professional assessment of suitability.
Past performance is not a reliable indicator of future performance. Capital is at risk and investors may get back less than they originally invested.
Issued by Downing LLP, 10 Lower Thames Street, London, EC3R 6AF. Downing LLP is authorised and regulated by the Financial Conduct Authority (Firm Reference No. 545025). Registered in England and Wales (No. OC341575).
