Premier Multi-Asset Conservative Growth Fund

Transcription

1 Premier Multi-Asset Conservative Growth Fund A Fund update - second quarter 2015 For retail investors and professional advisers

2 Premier Multi-Asset Conservative Growth Fund Need to know The Fund s four essential characteristics: Targeting returns of cash +3% per year over rolling three year periods. Emphasis on low volatility and steady capital growth. Returns typically in the form of capital growth rather than income generation. Not seeking reliance on rising stock markets to deliver a positive return. The performance information for Premier Multi-Asset Conservative Growth Fund in this document is based on the C share class, which has the lowest charging structure of the share classes available. To help with comparisons between the thousands of funds, UK authorised funds are categorised into different groups (known as sectors) by the UK investment management trade association, known as the Investment Association (IA). The IA sector will include funds with different share classes and different charges and is provided for illustrative purposes only. Performance returns will vary between share classes due to the different charges. Contents 3. Performance summary 4. Volatility summary 5. Market performance 6. Performance drivers - asset allocation 7. Performance drivers - holdings 8. Activity - asset allocation 9. Activity - holdings 10. The complete portfolio 11. Glossary of terms 12. Important information Please refer to our Glossary of terms on page 11 for an explanation of terminology. 2

3 Performance summary Most asset classes endured a tricky period, with very few avoiding a loss. Cash and commercial property were notable exceptions. The Fund was marginally down for the period. Although with a cautious stance entering the quarter, and very little exposure to traditional bonds and equities, it fared better than most. Given the recent rise in correlation between these two core asset classes, being more immune to the markets wider gyrations means the Fund is a useful alternative to both bonds and equities. The Fund reached its five-year anniversary at the end of June. In that time we are pleased that the Fund has been able to make decent capital returns, while providing firmer capital protection than its peers in times of stress. This is the result of its alternative asset exposures built through value-based, bottom-up security selection, with much less emphasis placed on a top-down, macro-driven view. Total returns 1 year Since launch ( ) Fund 4.2% 32.0% Sector 4.7% 35.0% LIBOR GBP 3m +3% 3.6% 19.9% Quarter ending Total return (%) Premier Multi-Asset Conservative Growth Fund IA Mixed Investment 20% to 60% Shares LIBOR GBP 3m +3% 3 Chart source: FE Analytics, bid to bid, total return, UK sterling basis. All performance data returns to Based on Class C Accumulation Shares. Past performance is not an indication of future returns.

4 Volatility summary With its focus on alternative asset types mixed through the entire portfolio, the Fund continues to highlight the benefits of genuine diversification. Over the recent volatile quarter, the Fund exhibited the lowest drawdown, or maximum loss of its peers, helping it to become the least-volatile fund in its sector since we began running it. Although we manage the Fund conservatively, we continue to look for rewarding opportunities offering clear value. This has enabled us to take on sensible risks when there is a greater margin of comfort for doing so, and reining in ambition when it does not pay to have it. The result has been decent risk-adjusted performance, including one of the highest Sharpe ratios in its sector. Returns versus volatility since launch ( )* Total return (%) Since launch* Annualised returns Volatility Fund 5.7% 2.9 Sector 6.2% 5.2 UK Gilts 5.3% 6.0 UK Equities 11.3% Volatility (annualised %) Premier Multi-Asset Conservative Growth Fund IA Mixed Investment 20% to 60% Shares UK Gilts UK Equities 4 Chart source: FE Analytics, bid to bid, total return, UK sterling basis. All performance data returns to Based on Class C Accumulation Shares. *On 01 July 2010, the Fund moved from the IA Specialist sector into the IA Mixed Investment 20%-60% Shares sector and performance history prior to this change has not been retained. Past performance is not an indication of future returns.

5 Market performance Total returns for quarter ending Global equities -5.2% Gold -6.5% Gilts -3.4% UK corporate bonds -3.9% UK equities -1.6% Cash 0.1% -8% -6% -4% -2% 0% 2% 4% UK commercial property 2.8% Receding paranoia over European deflation and US interest rate rises had already made for a tricky run in the second quarter, then the escalation of the Greek debt crisis poured fuel on that fire. The result was losses across most major asset classes and regions. Government bond markets had a rough and volatile quarter, particularly in Europe. They had previously rallied on fears of deflation, but as these fears dissipated prices fell sharply from their highs, causing yields to rise. Gilts were no exception to this trend. Like gilts, gold proved to be another safe haven that wasn t too safe, with its price off relatively steeply in sterling terms. In equity markets, Asia was the hardest hit, coming off a prior strong run. Greece, meanwhile, caused European shares to slip, while US equities continued to drag their heels in The UK proved the safest major stock market, helped by an unexpectedly decisive election result, which boosted sterling. Japan also fared relatively well, as did emerging markets. UK commercial property prices continued to rise, driven by hopes of solid future growth in rental income. Equities Bonds UK commercial property Alternative assets Cash 5 Source: FE Analytics, bid to bid, total return, UK sterling basis. Indices: FTSE All Share (UK equities), The BofA ML Sterling Non-Gilts (UK corporate bonds), FE UK Property Proxy (UK commercial property), S&P GSCI Gold Spot (Gold), FTSE World (Global equities), FTSE UK Conventional Gilt All Stocks (Gilts), LIBOR GBP 3m (Cash). Past performance is not an indication of future returns.

6 Performance drivers - asset allocation Relative to peer group Helped No explicit gilt or conventional bond allocations Low sensitivity to equities Avoidance of gold High sterling exposure Hurt Structured investments with a sensitivity to volatility Some stock-specific weakness in alternatives Limited exposure to UK commercial property Fund breakdown at end of last quarter ( ) Conservative equities 39.3% Specialist bonds 22.1% Alternative assets 28.0% Cash 10.6% Please note that the Fund breakdown may be above or below 100% due to rounding. 6

7 Performance drivers - holdings Notable contributors Notable detractors Amedeo Air Four Plus The shares had a positive start from this recent launch, following on from previous successful aircraft-backed debt launches from Doric. Bluefield Solar The assets continuing to perform well along with the lifting of some of the regulatory issues surrounding the sector began to abate. Burford Capital The company reported a very positive litigation result that continued to demonstrate the uncorrelated nature of financial return success. Empiric Student Accommodation Progress on acquisitions and market transactional evidence supported the buoyant outlook for this niche alternative property. Melchior European Absolute This equity fund was positioned to prosper if markets fell, allowing it to making good returns from the market weakness. Alternative Assets Opportunities The net asset value of this alternative asset fund was impacted by US dollar weakness over the period. BNP Absolute Dispersion This thrives on a wide dispersion of stock returns, so it struggled when correlations across and within assets rose this quarter. Jupiter Absolute Return With a net-long bias and positions in gold and UK and US sovereign bonds, this fund was on the wrong end of the markets moves. Polar Global Convertibles Convertibles usually provide some protection through their bond floor, but not in a quarter when bonds and equities both sold off. Polar Global Insurance Having been a star in the first quarter, this fund detracted given its sensitivity to falling stock markets and its dollar exposure. 7

8 Activity - asset allocation As at As at Change Conservative equity 39.3% 41.3% +2.0% Specialist bonds 22.1% 25.4% +3.3% Alternative assets 28.0% 28.4% +0.4% Cash 10.6% 4.9% -5.7% In a quarter that saw weakness in equity and bond markets alike, we would expect to top up on holdings in these parts of the portfolio, and with convertible bonds suffering from this twin headwind we did just that. This included the addition of a new convertible bond fund, which raised our Conservative Equity allocation overall for the quarter. This rise was tempered, however, by trimming our equity holdings that had held up well. We made little change to our overall alternative weighting, although we did make some changes at the holdings level. Specifically, we added a listed hedge fund and reintroduced a specialist property vehicle. We also sold litigation finance and solar funds into strength. There were plenty of new launches and capital raises for assetbacked credit alternatives. As such, we bolstered the Specialist Bonds position by including two new aircraft-leasing funds, revisiting an Infrastructure Debt fund and adding a European corporate loan position all at attractive prices. Having entered the quarter with some cash, we had reduced this by the quarter end through the opportunities set out above. Please note that the data may be above or below 100% due to rounding. 8

9 Activity - holdings Purchases AEW UK REIT Altin AG Amedeo Air Four Plus CVC European Opportunities Disposals Burford Capital Bluefield Solar Income Sequoia Infrastructure Debt Utilico 2020 ZDP DP Aircraft GCP Infrastructure Income Oaktree Non-US Convertible Bonds Tritax BigBox REIT Click here to read our latest views in full 9

10 The complete portfolio Alternative assets Ferox Convertible Absolute (4.3%) GS 4yr Commodity Basket Call Certificates (3.4%) Kames UK Absolute Return Equity (2.8%) BNP Absolute Dispersion Collateralised (2.7%) JPM Global Merger Arbitrage (2.2%) Dexion Absolute (2.2%) Foresight Solar Fund (2.1%) Absolute Progression 2 (2.0%) AEW UK REIT (1.6%) Altin AG (1.4%) VPC Specialty Lending (1.4%) Tritax Big Box REIT(1.0%) Alternative Assets US Life Interests (0.9%) Empiric Student Property(0.4%) FRM Credit Alpha (0.1%) Alternative assets 28.4% Cash 4.9% Specialist bonds 25.4% Conservative equity 41.3% Specialist bonds Kames Absolute Return Bond (4.9%) TwentyFour Monument Bond (4.6%) TwentyFour Select Monthly Income Fund (2.5%) Alcentra European Floating Rate (2.0%) TwentyFour Dynamic Bond (1.9%) Starwood European Real Estate Finance (1.7%) NB Global Floating Rate Income (1.7%) Amedeo Air Four Plus (1.6%) DP Aircraft Ltd (1.4%) CVC Credit Partners European Opportunities (1.1%) Longbow Senior Secured UK Property (1.0%) GCP Infrastructure Income (0.9%) Conservative equity HSBC 8.3% DJ Eurostoxx Defensive Autocall (4.3%) Oaktree Non-US Convertible (4.2%) Polar Global Convertibles (4.0%) Jupiter Absolute Return (3.9%) Alma US Convertibles(3.9%) SG Collateralised FT % Def Autocall(3.4%) CS 7.02% FTSE 100 Defensive Autocall (2.9%) BlackRock European Absolute Alpha (2.3%) Melchior European Absolute (2.3%) CS Eurostoxx 2015 Dividends (2.1%) BNY Mellon Absolute Return Equity (2.0%) Polar Capital Global Insurance (2.0%) Conygar 2019 ZDP (1.7%) Santander 6 yr Emerging Markets Autocall 10.5% (1.5%) Damille 2 (0.5%) Inland Homes ZDP (0.4%) Each holding has been categorised to help you identify the types of asset that the Premier Multi-Asset Conservative Growth Fund is invested in. The pie chart shows the asset allocation of the Fund through analysis of the underlying securities in each holding. 10 = New holding. Data as at Please note that the asset allocation may be above or below 100% due to rounding.

11 Glossary of terms Alternative assets Non traditional investments which could include hedge funds and commodities for example and which are designed to help diversify a portfolio as they tend not to move in the same direction as the stockmarket. Bonds These are like loans to governments/companies in return for a fixed rate of interest. Capital growth The increase in value of your original investment. Caps Refers to a company s market capitalisation, normally small, mid and large. Equities Another name for company shares. Fixed income/interest Another term used for corporate and government bonds. Floating rate debt These are bonds which do not have a fixed rate of interest. Gilts A bond issued by the UK government. Hedge fund A fund that is not normally permitted to be offered to the public as its borrowing, structure or investments, do not comply with relevant requirements. High yield bonds/corporate bonds A bond that provides a higher income, (or yield) but is rated below investment grade bonds as it has a higher risk of default. Historic yield The Historic Yield reflects distributions declared over the past twelve months as a percentage of the mid-market unit price of the fund, as at the date shown. IA Mixed Investment 20%-60% Shares sector Funds in this sector are required to have a range of different investments. The fund must have between 20% and 60% invested in company shares (equities). At least 30% of the fund must be in fixed income investments (for example, corporate and Government bonds) and/or cash investments. Cash can include investments such as current account cash, short-term fixed income investments and certificates of deposit. IA sectors To help with comparisons between the thousands of funds available, they are categorised into different groups, organised and reviewed by the Investment Association (IA). Investment grade bond A bond which is considered relatively safe and unlikely to default on its debt repayment obligations and has been assigned a high credit rating. Investment Association (IA) The IA is the trade association that represents the UK investment management industry. Sharpe Ratio Calculates the level of a fund s return over and above the return of a notional riskfree investment, such as cash or Government bonds. The difference in returns is then divided by the fund s standard deviation - its volatility, or risk measurement. The resulting ratio is an indication of the amount of excess return generated per unit of risk. The higher the Sharpe ratio, the better the portfolio s risk adjusted performance. Structured products/structured investments A type of product designed to combine the upside in market performance whilst limiting falls and are usually linked to the performance of an index or other underlying asset. 11

12 Important information Risk of investments Past performance is not a guide to the future. The price of shares and any income from them may go down as well as up and you may get back less than you invested. Movements in exchange rates may also affect the value of your investment. Please remember that these investments are typically intended as either medium or long term investments. Disclaimer Whilst every effort has been made to ensure the accuracy of the information contained within this document, we regret that we cannot accept responsibility for any omissions or errors. The information given and opinions expressed are subject to change and should not be interpreted as investment advice. Reference to any particular stock does not constitute a recommendation to buy or sell the stock. All data is sourced to Premier Asset Management unless otherwise stated. Persons who do not have professional experience in matters relating to investments should not rely on the content of this document. Should you need advice, or if you would like to know more about this Fund, please contact your financial adviser in the first instance. A free, English language copy of the Fund s full prospectus, the Key Investor Information Document and Supplementary Information Document, which include all the important information you need to consider before making an investment decision, are available on the Premier website, or you can request copies by calling us on For your protection, calls may be monitored and recorded for training and quality assurance purposes. Source & Copyright: CITYWIRE. The fund manager is rated by Citywire for his 3 year risk adjusted performance to the date shown on this document. Citywire information may not be copied and Citywire excludes any liability arising out of its use. The methodology and calculations used by the companies or organisations that provide the fund or fund manager awards and ratings are not verified by Premier Asset Management and we therefore are unable to accept responsibility for their accuracy. Ratings and awards should not be relied upon for making an investment decision, nor are they an indication, promise or guarantee of future performance of a fund or fund manager. Source: FTSE International Limited ( FTSE ) FTSE FTSE is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and / or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and / or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE s express written consent. Issued by Premier Asset Management. Premier Asset Management is the marketing group for Premier Fund Managers Ltd and Premier Portfolio Managers Ltd, who are authorised and regulated by the Financial Conduct Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS CK For more information