Premier Liberation Absolute Growth Fund. Fund Update - Second Quarter 2013

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1 Premier Liberation Absolute Growth Fund Fund Update - Second Quarter 2013

2 The Premier Liberation Absolute Growth Fund Need to Know The Fund s Four Essential Characteristics: Targeting returns of cash +2% per year over rolling three year periods. Emphasis on low volatility and capital preservation. Returns in the form of capital growth rather than income generation. Not reliant on rising stock markets to produce a positive return. Contents 2. The Premier Liberation Absolute Growth Fund 3. Performance Summary 4. Asset Class Performance 5. Performance Drivers - Asset Allocation 6. Performance Drivers - Holdings 7. Activity - Asset Allocation 8. Activity - Holdings 9. The Complete Portfolio 10. Glossary 11. Important Information Please refer to our Glossary of Terms on page 10 for an explanation of terminology. 2

3 Performance Summary After a stellar run over the past year, stock markets took a tumble in May and June. The cause was most likely the proposed withdrawal of Quantitative Easing (QE) by the US Federal Reserve, although concerns over China s economic health also worsened investors mood. Most asset classes sold-off in response, including supposedly safe havens such as gilts or gold. This Fund is conservative by nature, so it was pleasing to see it hold up well in a rocky quarter for financial markets. Good performance was as much about what we don t hold as much as what we do. So our alternative exposure proved helpful, while avoiding gilts, emerging market debt, gold and commodities proved just as important. The longer-term track record looks how it should do too, having generated a decent return with relatively little volatility. Total Returns 1 year Since Launch Fund 7.7% 40.1% LIBOR GBP 3m +2% 2.6% 15.4% Last Quarter Total Return (%) Returns versus Volatility Since Launch Total Return (%) Volatility (annualised) Premier Liberation Absolute Growth LIBOR GBP 3m +2% Premier Liberation Absolute Growth UK Equities UK Gilts 3 Chart source: FE Analytics, bid to bid, total return, UK sterling basis. The Fund was launched on All performance data returns to Past performance is not an indication of future returns.

4 Asset Class Performance Last Quarter - Market Returns (Sterling) Gold UK Corporate Bonds Gilts UK Equities Cash Global Equities UK Commercial Property Global equity markets started the period strongly, but wobbled in May and June on the prospect of US Quantitative Easing being tapered back. At a global level, marginally positive returns for the quarter were only achieved after an eleventh-hour rebound. UK equities underperformed their international peers. The British stock market has a relatively heavy weighting of mining and natural resource companies, which were hit hard over the quarter as worries over China s economic health continued to mount. UK small caps stayed out of harm s way, helped by a lighter exposure to commodity companies than found on the large cap dominated main market. As a touted safe haven, gilts had a notably rough three months. Commentators are split as to the causes, with some suggesting it indicates a coming rise in inflation, while others think it s down to the likely withdrawal of buying by the Bank of England. Higher-quality, investment-grade bonds also lost ground during the quarter, while emerging market bonds were hit particularly hard. Another safe haven that proved neither safe nor a haven over the three months was Gold: Its price plummeted by 23%, with the withdrawal of QE the most commonly cited cause of its sell-off % 4 Source: FE Analytics, bid to bid, total return, UK sterling basis, to Past performance is not an indication of future returns.

5 Performance Drivers - Asset Allocation Relative to Peer Group Helped No gilt exposure No exposure to low yielding interest sensitive corporate bonds Zero weighting in gold and gold mining shares Outperforming conservative equity holdings Strong relative performance from fund of hedge funds Hurt Modest position in trend following hedge funds No exposure to commercial property Fund Breakdown at Start of Quarter* Alternative Assets 31.1% Cash 8.9% Conservative Equity 51.3% Specialist Bonds 8.7% 5 Data as at Please note that the Fund breakdown may be above or below 100% due to rounding.

6 Performance Drivers - Holdings Notable Contributors Juridica Investments It has been a very good year so far for both our corporate litigation finance holdings with Juridica s shares continuing to rise following a positive set of results announced in March. Dexion Trading Liquidity The performance of this London Listed fund of hedge funds has been very strong since we purchased it earlier in the year with the shares responding positively to the Board s proposals to help narrow the discount to net asset value (NAV). Santander 6yr DJ EuroStoxx Defensive Autocall The risk/reward characteristics of this structured investment are very attractive and the shares put in a positive performance in what was a choppy quarter for European equities. Inland Homes ZDP This property backed zero has one of the highest redemption yields in the sector and having lagged in the first quarter, the shares have played a degree of catch up over the last three months. Notable Detractors BlueCrest BlueTrend This London listed hedge fund was hurt along with a number of other trend following funds following the sudden change in market direction towards the end of May. Damille 2 Although there has been little movement in the value of the underlying equity portfolio of late, the shares fell back in the second quarter negating the strong gains achieved earlier in the year. Santander 6 Year Emerging Market Defensive Autocall Although this structured investment has a good deal of in built protection, the shares fell in line with the broader emerging market universe during the last quarter. 6

7 Activity - Asset Allocation Previous Qtr End Latest Qtr End Change Conservative Equity 51.3% 48.6% -2.7% Specialist Bonds 8.7% 10.0% 1.3% Alternative Assets 31.1% 33.5% 2.4% Cash 8.9% 7.9% -1.0% With equity prices falling during the quarter, we took the opportunity to top up our exposure to the conservative end of these markets. To this end, we added a convertible bond fund in June. These hybrid investments include some of the safety of bonds, with some equity-like potential for upside, making them ideal for this portfolio. Valuations in this asset class are also appealing, making it a good time to introduce some exposure here. Also in conservative equities we added a couple of new absolute return funds, which we think will generate suitably conservative returns for the Fund going forward. Unlike some of our conservative peers, we do not hold any gold or gilts in this Fund, which are classically considered to be safe assets. However, they had become crowded trades in recent years, making them risky in our eyes. And despite their recent sharp price falls, we think this remains the case, so we are staying clear of these assets. Please note that the data has been rounded. 7

8 Activity - Holdings Additions Aviva Morley Global Convertibles Fund BlackRock European Absolute Alpha Fund CVC Credit Partners European Opportunities Ferox Salar Convertible Absolute Return Complete Disposals HICL Infrastructure Elders 16a Capital Accumulation 2 Shares 8

9 The Complete Portfolio Alternatives Absolute Progression 2 (3.1%) Acencia Debt Strategies (2.6%) Alternative Investment Strategies (2.5%) Bluecrest Bluetrend (3.2%) Burford Capital (1.4%) CATCo Reinsurance Opportunities (2.0%) DCG Iris (2.0%) Dexion Absolute (2.7%) Dexion Trading Liquidity (2.5%) Ferox Salar Convertible Absolute Return (3.2%) FRM Diversified Alpha (0.1%) JPM Global Merger Arbitrage (3.3%) Juridica (1.3%) Polar European Market Neutral (2.5%) SG Inflation Plus Accrual Notes (1.2%) Specialist Bonds CVC Credit Partners European Opportunities (1.1%) GCP Infrastructure Income (0.3%) Kames Absolute Return Bond (4.1%) Schroder GAIA CQS Credit Hedge (3.1%) Starwood European Real Estate Finance (1.6%) Alternative Assets 33.5% Cash 7.9% Specialist Bonds 10.0% Conservative Equity 48.6% Each holding has been categorised to help you identify the types of asset that the Premier Liberation Absolute Growth Fund is invested in. The pie chart shows the asset allocation of the Fund through analysis of the underlying securities in each holding. Conservative Equity Aberforth Geared Income ZDP (1.0%) Acorn Income ZDP (3.2%) Aviva Morley Global Convertibles (3.5%) BlackRock European Absolute Alpha (3.3%) CS Eurostoxx 2015 Dividends (2.7%) Damille 2 (1.0%) Ecofin Water + Power Opportunities ZDP (2.0%) EFG 6% DJ Eurostoxx Defensive Autocall Collateralised (2.5%) Electra Private Equity ZDP (2.9%) F&C Private Equity ZDP (1.7%) F&C Water & Agriculture (2.4%) HSBC 8% DJ Eurostoxx Defensive Autocall (2.3%) Inland Homes ZDP (2.2%) JPM Private Equity 2015 ZDP (0.9%) Jupiter 2nd Split ZDP (1.6%) MS FT Synthetic Zero Accrual (1.5%) Picton 2016 ZDP (1.7%) Premier Energy & Water ZDP (0.9%) Santander 6 yr Emerging Market Autocall (1.7%) Santander 6 yr DJ Eurostoxx Defensive Autocall (2.5%) SG 12 FTSE Defensive Autocall (1.1%) Symphony FTSE Synthetic ZDP (0.6%) Symphony Asia (ex-japan) (0.6%) Utilico 2016 ZDP (1.7%) Utilico 2014 ZDP (3.2%) 9 = New Holding. Data as at Please note that the asset allocation may be above or below 100% due to rounding.

10 Glossary 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. IMA 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. IMA Sectors To help with comparisons between the thousands of funds available, they are categorised into different groups, organised and reviewed by the Investment Management Association (IMA). 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 Management Association (IMA) The IMA is the trade association that represents the UK investment management industry. 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. 10

11 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 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. Issued by Premier Fund Managers Limited. Premier Portfolio Managers Ltd and Premier Fund Managers Ltd are ISA managers, authorised and regulated by the Financial Conduct Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS and are members of the Premier and Premier Asset Management marketing groups. 11 Call: clientservices@premierfunds.co.uk Web: Premier, Eastgate Court, High Street, Guildford, Surrey GU1 3DE

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