The changes – which will come into effect from 24 February 2025 – will improve diversification, introduce a more balanced blend of investment styles, while maintaining the focus on sustainability, which is required to meet the FCA’s new higher threshold for sustainable investments.

Schroders will be added as the sole manager of the fund. The fund will invest in Schroders global sustainable growth and global value equity investment strategies. By blending the two investment styles, the range of companies the fund can invest in will increase.

Ongoing charges will reduce by 0.01% as a result of these changes.

Justin Onuekwusi, chief investment officer at St. James’s Place, said: “The bar to be a labelled fund is very high and will help clients to better understand how their money is being invested in companies that aim to deliver a positive outcome for people and the planet.

“Schroders is a well-regarded expert of sustainable investing, with a diversified approach. They have depth of experience across different equity investment strategies, which can provide a more balanced blend of investment styles for the fund.

“We’d like to thank the team at Impax for their expertise, partnership and their key role in the success of the fund to date. We continue to see Impax as a leader in investing in the transition to a more sustainable economy and a key partner for us in the future.”

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 (pictured), 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.”

QDEC is the latest addition to First Trust’s expanding suite of Target Outcome ETFs® in UCITS format.

Buffer ETFs seek to protect investors from a level of losses, while allowing participation in potential growth, up to a predefined cap.

This latest ETF joins the growing range of First Trust’s Target Outcome Investments®, with firmwide assets under management in Target Outcome strategies exceeding $25 billion as of end-September 2024.

The Fund is actively managed and seeks to provide returns that match the price return of the Nasdaq-100®, up to a predetermined upside cap, while providing a 15% downside cushion through a built-in buffer mechanism.

The outcome period runs for approximately one year, ending in December 2025, after which the cap and buffer are reset to prevailing market conditions.

QDEC has a perpetual structure and may be held indefinitely, providing a potential buy-and-hold investment opportunity.

The Fund is managed by First Trust Advisors L.P. and sub-advised by Vest Financial LLC, a pioneer of the buffer strategy and creator of the Target Outcome Investments® framework.

“We are excited to expand our range by bringing this innovative buffer strategy to European investors,” said Rupert Haddon, managing director at First Trust Global Portfolios. “QDEC represents the second ETF in our quarterly series of scheduled UCITS ETFs for our Nasdaq-100® Target Outcome suite. In today’s volatile market environment, we believe QDEC offers a compelling solution for investors seeking exposure to leading Nasdaq-100® companies while managing downside risk.”

Key Features of QDEC

• Market Participation with Reduced Volatility: QDEC provides capped upside potential along with a built-in contractual buffer against the first 15% of losses of the Nasdaq-100 Index.
• Smoother Returns: The Fund aims to reduce peaks and troughs for a more stable growth trajectory, potentially preserving more capital during market shocks. This buffer mechanism may be particularly beneficial given the index’s high exposure to ‘MAG 7’ stocks.
• Zero-Cost Buffer with Customised FLEX Options: QDEC uses FLexible EXchange Listed (“FLEX”) options, which are customised, exchange-traded contracts guaranteed for settlement by the Options Clearing Corporation.
• Flexibility and Transparency: Investors can buy or sell shares at any time with no early exit penalties. All option components are transparently displayed in the ETF holdings, available on our website.
• Lower Beta/Delta: The fund aims to have a lower beta/delta relative to the index, helping to cushion negative market movements.

The Association for Financial Markets in Europe (AFME), the European Association of Co-operative Banks (EACB), the European Banking Federation (EBF), the European Fund and Asset Management Association (EFAMA), the European Savings and Retail Banking Group (ESBG), and Insurance Europe call on the co-legislators to deliver on commitments to boost European competitiveness and to avoid concluding the Financial Data Access (FiDA) Regulation before a thorough assessment of its impact across the entire value chain is completed.

“To safeguard and boost the competitiveness of the European financial sector, it is essential to ensure an approach that delivers tangible benefits to European citizens while at the same time ensuring that Europe’s financial industry can continue to innovate in a robust and cost-effective manner”, the statement said.

The data economy, especially when based on an exchange of data between different sectors, holds the potential to spark data-driven innovation in the European economy, including the financial sector, and deliver new opportunities for customers.

The success of the proposed FiDA framework calls for a more focused and evidence-based approach that delivers clear benefits to European citizens and companies. This necessitates further time for careful scrutiny of its broader and practical impact, both for consumers and industry. Without such an approach, FiDA will not only fall short of its ambition, but also undermine the protection of EU/EEA citizens and the competitiveness of the European financial industry alike.

The financial industry highlights the following recommendations to ensure an effective FiDA framework:

• The framework should balance value for customers, market demand, and costs for financial institutions prior to implementation. It is noted that in the impact assessment for the proposed legislation the costs have not been adequately assessed, nor has customer and market demand for data sharing been evidenced. The FiDA framework needs to be driven by demonstrated evidence of benefits to customers and market demand, as otherwise it risks undermining the competitiveness of financial institutions operating in the EU/EEA, by diverting resources from innovation plans, including from areas where FiDA can be successful.
• As FiDA creates new entities (financial information service providers – FISPs) that will be on the receiving end of large quantities of sensitive customer data, implications for data security and privacy need to be carefully considered. This necessitates, at a minimum, robust regulation and supervision of FISPs (to the same standards as those applied to regulated financial institutions), while ensuring the rigorous protection of European companies’ data. These key aspects of data sharing cannot be adequately achieved by the current design of FiDA, therefore creating risks to upholding European citizens’ fundamental right to data protection.

The statement continued: “Following the ECON vote and the COREPER mandate for negotiations, and despite some positive improvements introduced in the EP and the Council positions, they remain very broad in scope, particularly in terms of data categories, and do not adequately address the competitiveness and data protection concerns mentioned above. The financial services industry has repeatedly raised these and other key concerns, also proposing relevant solutions, however they remain largely unaddressed.

“The financial services industry stands ready to continue contributing to ensure that provides legal clarity and can effectively support the sound development of Open Finance in the EU/EEA.”

The new client offering is starting with five VCTs, namely Octopus AIM VCT, Octopus AIM VCT 2, Octopus Apollo VCT, Blackfinch Spring VCT and Calculus VCT.

These additions are part of 49 existing VCTs on the HL platform.

Emma Wall, head of platform investments, Hargreaves Lansdown said: “HL’s new VCT online service will broaden our client offering, support the VCT investment market and help shape it for the future. After the commitment made by the Government to extended VCTs to 2035, and given the tax changes announced in the Budget, VCTs are a great way for people to invest their money in a tax-efficient way, over the longer term, as part of a diverse investment portfolio.

“We’re delighted to partner with Octopus Ventures, Calculus, and Blackfinch Investments to launch our new service with five initial VCTs, which will invest in AIM businesses and key sectors of the UK economy.

“The VCT market has been a vital tool for entrepreneurial UK businesses to get the seed funding they need to kick-start their enterprise for nearly 30 years, which has helped the UK to be one of the best places in the world to start a business.

“Using our market leading position and scale, our VCT service has the potential to help the VCT market grow in the future, delivering favourable returns for investors, and support more businesses at the start of their growth journey.”

The most recent National Audit Office statistics shows that in 2022 to 2023, over 26,000 VCT investors claimed income tax relief on £985 million of investment, and the table below provides an insight into the increase in flows into VCTs over the last few tax years.

Jess Franks, head of investment products, Octopus Investments: “It’s great to see Hargreaves Lansdown coming back to the world of VCTs, offering suitable retail investors the opportunity to access exciting, early-stage private companies.

“What this shows is how VCTs are continuing to become a more mainstream part of investing for those clients who undertake their own planning and are comfortable with the risks associated with the asset class. This launch also comes at a good time, with the government’s recent extension of VCT legislation until April 2035.”

John Glencross, chief executive of Calculus Capital: “Hargreaves Lansdown’s welcome return to the VCT market is a positive development for both investors – particularly in the post-Budget, higher-tax environment – and the broader UK economy. VCTs play a crucial role in providing funding to small and growing businesses, the backbone of innovation and job creation in the UK.

The Calculus VCT – available through Hargreaves Lansdown – offers investors a diverse portfolio of companies across a unique sector mix of Healthcare, Technology and Entertainment.”

Alex Sumner, commercial & investment director, Blackfinch Ventures: “We are delighted to be amongst the first partners for Hargreaves Lansdown as they expand their client offering to include Venture Capital Trust investments. The UK remains one of the best places in the world to launch and grow an ambitious start-up.

As McKinsey reported, out of Europe’s top 1,000 high-growth start-ups, 319 are UK-based. The tax incentives available through VCTs are undoubtedly one of the reasons for this success.

For investors, this doesn’t just mean 30% upfront tax relief and strong return potential – it also means helping the UK’s brightest entrepreneurs to build a better future. With a strong track record and the expertise of our skilled investment team, the Blackfinch Spring VCT provides investors with an opportunity to back the growth of these innovative technology-enabled companies across the UK.”