Premier UK Money Market Fund

Transcription

1 Premier UK Money Market Fund Fund Update - First Quarter 2013 MONEY MARKET

2 The Premier UK Money Market Fund Need to know The Fund s Four Essential Characteristics: Aims to maximise returns from money market instruments whilst maintaining liquidity. The weighted average maturity (WAM) and the weighted average life (WAL) will not exceed 180 days and 365 days respectively. There will be a minimum of 50% of the portfolio in deposits, repayable within 2 weeks, and transferable securities. A money market vehicle which, importantly, has the added advantage of giving investors quick and easy access to their investment; settlement takes place the next working day. Contents 3. Performance Summary 4. Market Characteristics 5. Performance Drivers - Asset Allocation 6. Performance Drivers - Holdings 7. Activity - Asset Allocation 8. Activity - Sample Holdings 9. The Complete Portfolio 10. The Complete Portfolio continued 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 Over the reporting period, the Fund continued to provide a stable return. Like the previous 12 months, the Fund maintains its top quartile performance when compared to both the IMA Money Market Sector and the IMA Short Term Money Market Sector. It is pleasing to see the Fund s consistent and stable performance recognised; it was the only money market fund included in the Investment Adviser 100 Club Over the 12 months, the Fund achieved significantly greater returns at levels of volatility below both sectors. The Fund maintains a diverse exposure to high quality financial institutions with strong credit metrics. Our exposure to banks from further afield such as Singapore, Australasia, China and North America has helped avoid the turmoil in Europe and maintain the Fund s stability. We continue to deliver a stable cash return when broader financial markets remain unpredictable and volatile. Total Returns to (%) 1 Year 5 year 10 Year Premier UK Money Market IMA Money Market IMA Short Term Money Market Last Quarter Total Returns* Total Return (%) Return versus Volatility** Total Return (%) Volatility (annualised) Premier UK Money Market IMA Money Market IMA Short Term Money Market 3 Charts source: FE Analytics, bid to bid, total return, UK sterling basis. * to ** to Past performance is not an indication of future returns.

4 Market Characteristics Consumer Price Index Chart Percentage increase in prices on a year earlier (%) UK Consumer Price Index (CPI) year on year increased over the quarter to 2.8%. This rise in the inflation figure can be attributed to increasing electricity and gas prices. Recreational goods, Motor Fuels and Air Transport also registered upward prices. March sees a new measure of consumer price inflation being introduced known as CPIH which will also include owner occupiers housing costs. It is still assumed that inflation will remain above 2% for a while and volatility and tough economic conditions will continue _ 3 month GBP LIBOR At the beginning of the fourth quarter, 3 month GBP LIBOR was 0.52% and finished the quarter at 0.51%. Some elevated rates for deposits do remain but at banks with significantly weaker credit metrics, which we prefer not to lend to. However in general, most banks are now awash with liquidity and in some cases are turning depositors away. Yield (%) % 0.40 Dec 31 Jan 31 Feb 28 Mar 31 4 Source: Bank of England and Bloomberg. 3 month GBP LIBOR data from to Past performance is not an indication of future returns.

5 Performance Drivers - Asset Allocation Relative to peer group: Helped Maintaining a long duration, allowing the Fund to lock-in attractive rates as LIBOR fell. Investing in banks with strong credit metrics from further afield such as Singapore, Australasia, China and North America helping to avoid the turmoil in Europe and maintain the Fund s stability. Hurt Good quality banks continue to be less willing to pay attractive rates for deposits as they are now swamped with cash. 5

6 Performance Drivers - Holdings Notable Conributors Bank of China National Bank of Abu Dhabi OCBC Bank Skandinaviska Enskilda Detractors Continued fall in deposit rates These exposures benefited from their relatively small exposure to Southern and Eastern European banks. Through active management we were able to achieve returns in excess of LIBOR, yet with banks considered higher quality than the average; so extra return for less risk. 6

7 Activity - Asset Allocation Previous Qtr End Latest Qtr End Change Certificates of Deposit 58.1% 55.4% -2.7% Floating Rate Note (Financials) 18.0% 21.1% +3.1% Bonds (Financials) 4.4% 4.4% 0.0% Cash Deposits 17.0% 9.5% -7.5% Bonds (Utilities) 2.5% 9.6% +7.1% Certificates of Deposit remain the core asset allocation in the portfolio, enabling liquidity and diversification in banks with strong credit metrics. As holdings matured, we replaced exposures with longer dated deposits and bond purchases, where we increased more noticeably our exposure in Utility bonds. Please note that the data has been rounded. 7

8 Activity - Sample Holdings New holdings National Grid 5.50% 24/07/13 Bank of Nova Scotia FRN 19/01/15 National Bank of Abu Dhabi 0.83% CD 07/03/14 Reducing Skandinaviska Enskilda CD 01/08/13, HPR* 1.74% over 230 days Co-Operative Bank CD 09/08/13, HPR* 2.53% over 222 days Skandinaviska Enskilda CD 24/09/13, HPR* 1.78% over 109 days Matured products Nordea FRN 18/02/13 Standard Chartered 0.85% CD 12/03/13 ING 0.90% CD 19/03/13 Topping up Deutsche Bank FRN 26/02/14 RWE Finance 6.375% 03/06/13 Rabobank FRN 04/02/14 *Holding Period Return. 8

9 The Complete Portfolio Certificates of Deposit ABN AMRO 0.45% CD 04/01/13-04/04/13 (1.42%) Clydesdale Bank 0.74% CD 16/10/12-16/04/13 (1.42%) Lloyds Bank 1.80% CD 25/04/12-25/04/13 (1.42%) Standard Chartered 0.44% CD 04/02/13-07/05/13 (0.43%) Credit Agricole CIB 0.84% CD 10/10/12-10/05/13 (1.42%) Royal Bank of Scotland 1.40% CD 13/07/12-13/05/13 (1.42%) Deutsche Bank 0.55% CD 19/11/12-20/05/13 (0.35%) Bank of Tokyo Mitsubishi 0.49% CD 20/02/13-20/05/13 (2.84%) Standard Chartered 0.00% CD 22/11/12-22/05/13 (1.42%) Bank of China 1.40% CD 29/05/12-29/05/13 (1.42%) Standard Chartered 0.50% CD 13/03/13-13/06/13 (1.42%) Svenska Handelsbanken AB 0.45% CD 18/03/13-17/06/13 (1.42%) Nordea 0.49% CD 25/03/13-25/06/13 (1.42%) Deutsche Bank 0.50% CD 25/03/13-25/06/13 (1.42%) Bank of Tokyo Mitsubishi 0.48% CD 28/03/13-28/06/13 (1.42%) Deutsche Bank 0.57% CD 07/01/13-08/07/13 (1.42%) Standard Chartered 0.55% CD 10/01/13-10/07/13 (1.42%) Clydesdale Bank 0.89% CD 17/10/12-17/07/13 (1.42%) Standard Chartered 1.00% CD 03/08/12-05/08/13 (1.42%) ING Bank NV 0.55% CD 04/02/13-05/08/13 (2.13%) Nordea 0.53% CD 21/02/13-21/08/13 (1.42%) ABN AMRO 0.60% CD 22/02/13-22/08/13 (1.42%) Danske Bank A/S 0.72% CD 27/02/13-27/08/13 (1.42%) JP Morgan 0.48% CD 05/03/13-05/09/13 (1.42%) Certificates of Deposit Barclays Bank 0.90% CD 17/10/12-06/09/13 (0.71%) 55.4% Co-Operative Bank 1.00% CD 06/12/12-09/09/13 (1.42%) Credit Agricole CIB 1.13% CD 01/10/12-01/10/13 (1.42%) Co-Operative Bank 0.87% CD 19/02/13-21/10/13 (1.42%) Co-Operative Bank 0.75% CD 27/03/13-28/10/13 (1.42%) Barclays Bank 0.766% CD 01/02/13-30/10/13 (1.42%) UBS 0.92% CD 05/11/12-05/11/13 (1.42%) Barclays Bank 0.928% CD 12/11/12-11/11/13 (1.42%) UBS 0.86% CD 20/11/12-20/11/13 (1.42%) Fortis 0.64% CD 28/02/13-29/11/13 (1.42%) OCBC Bank 0.50% (zero coupon) CD 25/03/13-27/12/13 (1.42%) Barclays Bank 0.92% CD 03/01/13-27/12/13 (2.13%) Skandinaviska Enskilda 0.73% CD 04/01/13-06/01/14 (1.42%) Credit Suisse 0.67% CD 11/02/13-11/02/14 (1.42%) National Bank Of Abu Dhabi 0.83% CD 07/03/13-07/03/14 (1.42%) 9 Data as at Numbers inside brackets are the weighting within the Fund.

10 The Complete Portfolio continued Floating Rate Notes (Financials) Standard Chartered FRN 08/10/13 (1.42%) National Australia Bank FRN 12/11/13 (1.67%) Rabobank FRN 19/11/13 (2.84%) Svenska Handelsbanken AB FRN 20/01/14 (0.71%) Commonwealth Bank of Australia FRN 20/01/14 (0.36%) Rabobank FRN 04/02/14 (1.16%) Barclays Bank FRN 17/02/14 (2.16%) Deutsche Bank FRN 26/02/14 (2.13%) Westpac FRN 03/06/14 (0.71%) Rabobank FRN 06/06/14 (3.56%) Bank of Nova Scotia FRN 19/01/15 (2.84%) European Investment Bank FRN 30/01/14 (1.42%) European Investment Bank FRN 18/03/14 (0.13%) Bonds (Financials) General Electric Capital Corp 6% 11/04/13 (4.39%) Cash Deposits 9.5% Bonds (Financials) 4.4% Floating Rate Notes 21.1% Bonds (Utilities) 9.6% Cash Deposits Lloyds Bank 1.684% (1.42%) Royal Bank of Scotland 0.97% (1.42%) Lloyds Bank 1.39% (1.42%) Qatar National Bnak 1.180% (1.42%) National Bank Of Abu Dhabi 0.95% (1.42%) Cash (2.38%) Bonds (Utilities) RWE 6.375% 03/06/13 (4.98%) National Grid 5.50% 24/07/13 (4.65%) Each holding has been categorised to help you identify the types of asset that the Premier UK Money Market Fund is invested in. The pie chart shows the asset allocation of the Fund through analysis of the underlying securities in each holding. 10 Data as at Numbers inside brackets are the weighting within the Fund. Please note that the asset allocation may be above or below 100% due to rounding.

11 Glossary of Terms Bonds These are like loans to governments/companies in return for a fixed rate of interest. Floating Rate Notes A note with a variable interest rate. The adjustments to the interest rate are usually made every six months and are tied to a certain moneymarket index. IMA Money Market Sector Funds which invest their assets in money market instruments and comply with the definition of a Money Market fund set out in the COLL Sourcebook of the Financial Services Authority Handbook. 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). IMA Short Term Money Market Sector Funds which invest their assets in money market instruments and comply with the definition of a Short Term Money Market fund set out in the COLL Sourcebook. Investment Management Association (IMA) The IMA is the trade association that represents the UK investment management industry. Liquidity The degree to which an asset or security can be bought or sold in the market without affecting the asset s price. Liquidity is characterized by a high level of trading activity. London Interbank Offered Rate (LIBOR) An interest rate at which banks can borrow funds from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers Association. It is derived from a filtered average of the world s most creditworthy banks interbank deposit rates for larger loans with maturities between overnight and one full year. Transferable Securities A general term used to describe a broad range of investments such as bonds and company shares for example. Weighted Average Life (WAL) The amount of time for the principal on a loan or a mortgage to be paid off. The length of the weighted average life depends on the amount of principal paydowns and how often they are made. Once the WAL is calculated, one can determine how long it will take to pay off half of the remaining principal. Weighted Average Maturity (WAM) The average time until maturity of all the underlying holdings of a Fund. Volatility The frequency and severity with which the price of an investment goes up and down. 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 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 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. 12 Call: clientservices@premierfunds.co.uk Web: Premier, Eastgate Court, High Street, Guildford, Surrey GU1 3DE