SRP asked three fund managers about the performance of their fund in the first quarter of 2026, the impact of the war in the Middle East, and their expectations for the second quarter.
This Dutch fund invests in a variety of structured products to generate an average long-term return at least equal to the average long-term return of equity markets in general, but with a lower level of risk compared to a diversified equity portfolio. The fund closed March 2.13% lower compared to February.
Jeroen Sinnige, managing director, portfolio management & sales at Market Stability Fund.
After a positive start to the year, financial markets came under pressure in March due to geopolitical concerns. The consequence of this was a rising oil price with potential rising inflation. The rising interest rates that appeared to result from this were already a reason itself for a period in which less risk is taken on equity positions. The yet unpredictable scale of the conflict in the Middle East was an additional concern.
These elements, coupled with relatively high valuations, resulted in lower levels of the indices in our autocallables.
The total net asset value (NAV) of the Market Stability Fund appears likely to exceed €200 million in the short term
Furthermore, the increased volatility that became visible as a result had a negative impact on our positions. However, with redemption barriers of at least 60%, that impact was limited. Now that financial markets seem less concerned about the events of March, our positions are recovering quickly.
Expectations for the second quarter are optimistic. With an average annualised coupon on our products of 14%, we are currently assuming an average monthly return of approximately one percent. Based on the recovery visible in the financial markets, the likelihood that this average percentage is achievable seems plausible. A further escalation of the situation in the Middle East could, of course, have a new impact on valuations. Other unforeseen events could also have an impact.
The total net asset value (NAV) of the Market Stability Fund appears likely to exceed €200 million in the short term. We are continuing our investment policy and note that an increasing number of investors wish to participate. Our ambitions are primarily to grow further by achieving returns that remain attractive when adjusted for the risk taken.
The Market Stability Fund has €190m (US$223m) in assets under management (AuM) as of 31 March 2026. The fund was launched on 1 January 2018, and the minimum subscription is €100,000. Dealing/liquidity: weekly and monthly. Key investor information risk and reward profile: five out of seven.
Levendi Thornbridge Defined Return Fund/Causeway Dynamic Growth Fund
The Levendi fund aims to maximise the chance of generating an average medium-term annual return of six percent above GBP deposit rates while the Dynamic Growth Fund aims to achieve an annualised net return of eight to nine percent over the medium to long term. Both will do so by providing exposure to a portfolio of autocallables linked to major equity indices. Their performance for March was -3.11% and -2.33%, respectively.
Andrej Ogorevc, chief investment officer, Causeway Securities.
As with any market-linked strategy, short-term geopolitical events can create temporary higher volatility. Defined growth funds may see brief mark-to-market pressure when equities fall and volatility rises sharply.
Historically, these effects tend to be short lived. As markets stabilise, the funds typically recover efficiently, driven by rising asset prices and a compression in volatility. Overall, performance has remained resilient, and both the Causeway Dynamic Growth Fund and Levendi Defined Return Fund are currently at or near their highest levels to date.
Periods of geopolitical uncertainty can create short-term noise, but they often reinforce the value of strategies designed to deliver more predictable outcomes
Our outlook for the coming quarter is positive. If volatility continues to ease and markets remain broadly range-bound or modestly positive, we expect the funds to continue progressing steadily.
The portfolios are built to generate defined returns across a wide range of market environments, including flat and even slightly falling markets, which can be a particularly supportive for these strategies. In weaker market conditions, the funds would typically be expected to participate less than direct equity exposure, given their lower sensitivity and embedded downside protection.
Periods of geopolitical uncertainty can create short-term noise, but they often reinforce the value of strategies designed to deliver more predictable outcomes with lower day-to-day dependence on market direction. We remain confident in the positioning of both funds and believe the current environment continues to favour disciplined defined growth strategies.
The Levendi Thornbridge Defined Return Fund has £123m (US$166m) AuM as of 31 March 2026. The fund was launched on 31 January 2018 and has a minimum subscription of £5m for institutional investors (B-Class) and £1,000 for retail investors (A-Class). Dealing/liquidity: daily. The Causeway Dynamic Growth Fund has US$20.7m in AuM as of 31 March 2026. The fund was launched on 4 February 2020, and the minimum subscription is US$1,000. Dealing/liquidity: daily. Key investor information risk and reward profile: six out of seven.
The objective of this Swiss open-ended fund is to provide an efficient investment in a diversified portfolio of barrier reverse convertible (BRC) products linked exclusively to equity indices of the major developed countries. The fund decreased by -2.21% in March.
Vincent Bonnard, founding partner at Finanzlab.
In March, markets were impacted by an escalation of tensions between the US, Israel and Iran, with reciprocal strikes across the region and disruptions to key energy supply routes, contributing to higher oil prices and a broad-based risk-off environment. Equity markets corrected by roughly five percent to 13%, while volatility spiked, with the VIX briefly exceeding 31.
As we often emphasize to our investors, volatility spikes tend to create attractive entry points
In this context, the fund declined by a moderate 2.21% during the month (-1.87% year-to-date). This move was primarily driven by the mechanical impact of higher implied volatility on structured product valuations rather than any fundamental deterioration. The portfolio remained highly resilient: as of end-March, 42% of underlyings were above their strike levels, and even the closest index to its barrier (DAXK), included in a conditional coupon BRC (XS3244494855) on a basket comprising Ibex 35, FTSE 100, Nikkei 225 and DAXK issued via Marex, still offered a comfortable 44.8% buffer—highlighting the strong defensive positioning of the portfolio.
As we often emphasize to our investors, volatility spikes tend to create attractive entry points. Temporary mark-to-market pressure pushed the NAV to a discount of more than four percent relative to its theoretical value, historically a strong indicator of potential catch-up. This theoretical value reflects our internal portfolio assessment, where all structured products are valued at their redemption level (100%), plus cash and minus costs—thereby illustrating the economic outcome assuming the products perform as expected until maturity.
Looking ahead, we expect volatility to remain elevated amid ongoing geopolitical uncertainty. However, now that the fund has absorbed the volatility spike, the NAV should resume its upward trajectory. This environment is also constructive for the strategy, allowing reinvestment at more attractive levels and supporting higher coupon generation.
The rebound has already been swift: in early April, the fund not only fully recovered the March drawdown but also reached a new all-time high, once again confirming the resilience of the strategy.
Finanzlab Multi Index Fund has CHF45.2m (US$57.8m) in AuM as of 31 March 2026. The fund was launched on 20 October 2021. There is no minimum subscription. Dealing/liquidity: daily. Key investor information risk and reward profile: two out of seven.
Image: Phongphan Supphakank/Adobe Stock.
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