HANSA TRUST Annual General Meeting 21 st July 2014

Transcription

1 Annual General Meeting 21 st July 2014

2 Agenda Transition update/ New funds bought Performance review Market outlook 2

3 Transition Update/ New Funds Bought 3

4 Performance Review 4

5 Key Market Highlights (YTD end June 2014/ ) Source: Bloomberg / Morningstar 5

6 Performance to end June YTD Financial Q1 1 Year 3 years 5 years 10 years Performance (NAV) 8.2% 3.7% 23.8% 5.2% 82.2% 224.5% Benchmark 1.6% 0.8% 3.3% 11.2% 22.3% 55.8% A Ordinary Share 13.7% 6.4% 23.6% 2.2% 62.0% 211.1% Ordinary Share 15.8% 8.1% 27.2% 1.6% 58.9% 213.7% MSCI ACWI + FM 6.2% 2.5% 23.0% 34.1% 94.8% 104.9% FTSE All Share 1.7% 1.3% 13.5% 31.1% 101.4% 139.0% 400 NAV cum income % Benchmark % 500 Ord.Share % A Ord.Share % FTSE All Share % MSCI ACW + FM % Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 0 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Source: Hansa Trust internal, unaudited, data: Morningstar, FTSE 6

7 Performance Analysis Funds Eight Core Regional Funds have been purchased since March In addition, the Trust has exposure to the Technology sector through the Herald Investment Trust which has been a longterm holding since June The charts show the performance of the funds over a two yearperiod,aswellasfortheperiod since the Trust invested in each fund. It is difficult to judge a manager on short term performance, but it provides an indication of how the holdings have contributed to the Trust s performance. Two year performance to end June 2014 Performance since purchase this year to end June % 10% 50% 8% 40% 6% 30% 4% 2% 20% 0% 10% 2% 0% Adelphi European Select Equity Findlay Park Prince Street American Institutional Offshore Ltd BlackRock European Hedge Fund Select Equity Offshore JOHCM Vulcan Value Japan GBP Equity Hdg CF Odey Absolute Return Herald Investment Trust 4% Adelphi European Select Equity Findlay Park American Prince Street Institutional Offshore Ltd BlackRock European Hedge Fund Select Equity Offshore JOHCM Japan GBP Hdg Vulcan Value Equity CF Odey Absolute Return Performance Performance relative to benchmarks Performance Performance relative to benchmarks * Benchmarks and purchase dates are listed in Appendix Source: Morningstar 7

8 Performance Analysis Ocean Wilsons Holdings Wilson Sons has been delivering consistent operating improvements, demonstrating that the sizeable investment programme over the last six years is bearing fruit. This was borne out by a 40% increase in operating profit on the back of an 8% rise in sales for the year ending 31 December Following the completion of the current investment cycle, annual capital expenditure should normalise over the next three years at approximately U$100m on organic growth and capital maintenance, which will see a big increase in free cash flow. The Board declared a full year dividend of 60 cents per share, a 43% increase over the previous year. The dividend policy has been adjusted to approximately 50% earnings pay out (previously 25%), demonstrating Wilson Sons confidence in delivering free cash flow this year after a long investment period in all business divisions. 8

9 Performance Analysis Ocean Wilsons Holdings Ocean Wilsons +20.0% YTD Wilson Sons +19.9% YTD (measured in GBP) rally of +46.5% since end February Source: Bloomberg 9

10 Pipeline 1) Theme: Market Neutral / Non Correlated Hudson Bay founded in 2006 by Sander Gerber, the Fund has $2.1bn in assets ($56m internal capital) and employs a diverse set of catalystdriven absolute return strategies, with a significant emphasis on de correlation. Excellent track record. Laurion Capital founded in 2005 by two ex JP Morgan Partners, and seeded with $100m from Columbia Endowment, the Global Macro Fund invests across asset classes with a relative value focus, and aims to achieve low beta and minimal correlation to markets. Excellent track record. Overland founded in 2010 by Derek Dunn, the Fund invests across asset classes, with a focus on relative value trades across five main strategies: capital structure arbitrage, special situations, convertible bonds, events and derivatives. Low volatility and strong track record. 2) Theme: Technology GAM Star Technology invests with a bottom up stock picking approach combined with technical analysis to build a long only portfolio of technology related companies. Coatue concentrated, fundamental long only technology Fund launched in 2013 and managed by well experienced and high profile investor, Philippe Lafonte, who manages $9bn across several technology Funds. 3) Theme: Japan Nikkei 400 ETFs the Nikkei 400 is a new Index launched in January It was developed jointly by Japan Exchange Group, Tokyo Exchange Group and Nikkei, and is composed of companies that meet certain investor friendly criteria. Active funds we are also considering a number of actively managed Japan funds. These include Ichigo, UMJ Kotoshiro, Aberdeen Japan and Schroder Japanese Equity. 10

11 Market Outlook 11

12 Current Portfolio Positioning Source: Hansa Trust internal, unaudited 12

13 Macro Backdrop.developed economies continue to recover but at a slower rate versus historical levels 13

14 Macro Backdrop economic growth is surprising on the upside in developed markets but continues to disappoint in emerging markets Global GDP forecast to rise by 3.3% in

15 Macro Backdrop global liquidity is now being withdrawn with the exception of Japan (and possibly Europe?) 15

16 Valuations..whilst equity markets have risen they are not expensive versus past history PE (x ) US Japan Europe ex UK Asia x Japan The World Emerging Markets AC world France Germany Italy Netherlands Spain Sweden Switzerland China India Brazil Russia Mexico South Africa Turkey Korea UK Max/Min price/earnings range over the past 20 years versus current p/e Source: HSBC Plc

17 Risks.geopolitical risks remain high 17

18 Risks..European inflation is dangerously low 6% 4% 2% 0% -2% -4% UK inflation US inflation Europe Inflation Japan Inflation Source: HSBC Plc 18

19 Risks..despite risks, investors remain remarkably complacent 19

20 Bonds.developed market government bonds remain at multicentury highs Deeply unattractive to long term investors such as ourselves in light of current valuations but there is an argument that yields will not rise as far as some believe 20

21 Credit unlikely to come under significant pressure in an improving economic backdrop but unattractive versus equity 21

22 Fund Thoughts.the technology sector came under pressure in H1 but we remain positive Valuations acceptable versus both other sectors and past history Growth robust compared to other sectors 22

23 Fund Thoughts Japan has been a rare laggard this year but again we remain positive Key Drivers Progress with Abe s three arrows : Monetary easing Fiscal policy Restructuring The BoJ appears fully committed to achieving the 2% inflation target with inflation rising by 3.7% in May and wage and property inflation coming through A shift in the government s pension fund allocations from debt to equity Cuts in corporation tax Deregulating inefficient industries and companies improving ROE Stock market valuations attractive versus other global markets Corporate earnings improving Key Risks Structural problems have not gone away: Huge levels, sitting at 243% of GDP Poor demographic position Arguably the easy bit of Abe s three arrows has been done (monetary and fiscal) but the structural changes are much more challenging Impact of the recent (and planned) increase in consumption tax Territorial disputes with China 23

24 Fund Thoughts increasingly thinking about uncorrelated investments Phases of a stock market cycle we re now in the growth phase Source: Goldman Sachs 24

25 Appendix Benchmarks and purchase dates of funds Fund Benchmark Date of purchase Adelphi European Select Equity MSCI Europe NR 27/03/2014 Findlay Park American Russell 1000 NR 27/03/2014 Prince Street Institutional Offshore Ltd MSCI EM NR 01/04/2014 BlackRock European Hedge Fund HFRI Equity Hedge (Total) Index 30/05/2014 Select Equity Offshore S&P 500 TR 01/05/2014 JOHCM Japan GBP Hdg TOPIX TR 17/04/2014 Vulcan Value Equity S&P 500 TR 28/04/2014 CF Odey Absolute Return HFRI Equity Hedge (Total) Index 22/04/2014. Performance shown from 1 May (monthly index) Herald Investment Trust Russell 1000/Technology TR June 2007 (not shown on chart) 25