Elite LJ Active Portfolio Fund

Transcription

1 Elite LJ Active Portfolio Fund Short Report for the year ended 30 April 2015 Investment Objective and Policy The objective of the Fund is to achieve a total positive return in all market conditions, over a rolling period of 3 years, through active investment in a diversified portfolio of transferable securities (including investment trusts), collective investment schemes, warrants, cash or near cash, deposits, money market instruments and derivatives. Capital invested in the Fund is at risk and there is no guarantee that the investment objective will be met over a 3 year rolling period or in respect of any other period. Subject to the requirements of the Regulations, the portfolio will normally remain fully invested. There will, however, be no restrictions on the underlying content of the investments held, in terms of investment type, geographical or economic sector, other than those imposed by the Regulations, meaning that the Investment Adviser has the absolute discretion to weight the portfolio towards any investment type or sector at any time. The maximum holding of cash will be 50% of the Fund s total net assets. Unregulated collective investment schemes may be used up to the full extent permitted by the Regulations. The portfolio will be actively managed and the Fund may invest in derivatives for investment purposes as well as for efficient portfolio management purposes (including hedging). It is not intended that the use of derivatives in this way will change the risk profile of the Fund. Borrowing will be permitted under the terms of the Regulations. Subject to the above, the Fund may invest in any asset class and adopt any investment technique or strategy permitted under the rules in COLL as such rules are applied to Non-UCITS retail schemes. Fund Facts Interim/Annual Accounting End Dates Ex-dividend (xd) Dates 31 October 30 April 01 May 30 June Income Distribution/ Accumulation Dates Risk Profile Please refer to the Full Prospectus for details of all the risks. The Fund has exposure to credit, counterparty and usual market risks. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. You should always regard investments in the Fund as long term. Page 1

2 Charges Share Class Initial Charge Annual Management Charge 30/04/15 Total Expense Ratios 30/04/15 Total Expense Ratios 30/04/14 B Accumulation 6.00% 1.00% 1.73% 1.97% C Accumulation 6.00% 1.50% 2.23% 2.47% Distributions/Accumulations The distribution for B Accumulation Share Class is p per share, payable 30 June At the year end, expenses exceeded revenue on share class C Accumulation, generating a shortfall position. Therefore there will be no distribution on this Share Class. Comparative Tables Net Asset Value Net Asset Value Net Asset Value Date of Share Class ( ) Shares in issue per Share (p) Share Class B Accumulation 30/04/13 9,635,518 9,128, /04/14 10,262,123 9,326, /04/15 12,569,720 10,087, Share Class C Accumulation 30/04/13 5,534 5, /04/14 80,335 77, /04/15 40,588 34, Price and Revenue History Calendar Highest Published Lowest Published Net Revenue Year Share price (p) Share price (p) per Share (p) Share Class B Accumulation Share Class C Accumulation From 19 April to 31 December 2013 From 1 January to 30 April 2015 Share Class C Accumulation was launched on 25 February However, the first dealing was on 19 April 2013 Page 2

3 Comparative Tables (continued) Major Holdings Top 10 Holdings % of Fund 30/04/15 ishares Core S&P 500 UCITS ETF 6.73 Digital Stars Europe 5.72 ishares UK Dividend UCITS ETF 5.67 Rathbone Global Opportunities 5.10 Edinburgh Dragon 4.89 CF Lindsell Train UK Equity 4.62 Polar Capital Global Insurance 4.43 Unicorn Outstanding British Companies 4.36 Franklin UK Smaller Companies 4.27 Herald Investment 4.13 Top 10 Holdings % of Fund 30/04/14 Baillie Gifford Overseas Growth American 6.93 Digital Stars Europe 5.96 ishares MSCI Emerging Markets UCITS ETF 5.95 Rathbone Global Opportunities 5.15 Edinburgh Dragon 5.15 Unicorn Outstanding British Companies 4.94 Franklin UK Smaller Companies 4.83 Herald Investment 4.81 CF Lindsell Train UK Equity 4.75 Scottish Mortgage Investment 4.66 Portfolio Information Breakdown by Geographical Region % 26.81% % 11.56% 10.52% 6.73% % 0 United Kingdom [20.03%] Global [25.57%] Emerging Markets [15.66%] Asia [13.02%] Europe [10.63%] United States of America [8.23%] Net other assets [5.45%] Comparative figures shown above in square brackets relate to 30 April Sector % of Fund as at 30/04/15 % of Fund as at 30/04/14 Russia Page 3

4 Investment Manager s Report Investment Review In the 12 months to 30 April 2015, the Elite LJ Active Portfolio Fund B Accumulation shares increased by 13.01%*. Unicorn UK Income had performed strongly since being purchased and received significant inflows into the fund. However, historically it had a small cap bias and with its increasing size it was beginning to buy larger stocks. The fund was sold to switch into Aberforth Smaller Companies Trust, which invests in UK small cap stocks and this strategy should not be distorted by inflows as it is in a closed ended Investment Trust structure. Cavendish Technology was sold to reduce exposure to technology companies due to concerns over whether they can maintain earnings growth and the proceeds were used to buy ishares UK Dividend UCITS ETF because this provides exposure to higher yielding UK equities that should remain in demand with interest rates likely to remain at low levels. JPMorgan Emerging Markets was switched into JPMorgan Global Emerging Markets Income Trust to switch to more dividend focused companies, which tend to have more shareholder focused management teams and has led the fund to outperform its sector and benchmark since launch in Also, because JPMorgan Global Emerging Markets Income Trust is an Investment Trust it has a stable capital base so the investment strategy should not be adversely affected by capital inflows or outflows in changing market conditions. The Russian equity market and currency experienced high volatility during the period due to sanctions adversely affecting the economy and threats of capital controls, therefore, the db x-trackers MSCI Russia Capped Index UCITS ETF was sold. Biotech Growth was bought to diversify the portfolio and gain exposure to a sector that is expected to continue its recent growth. The benefits of the sector are that healthcare is benefitting from strong demographic and secular trends such as an ageing population, expanding insurance coverage, growing middle-class around the world and new more efficient product launches. The sector performance is volatile, though, so only a small weighting will be held in the Fund. Baillie Gifford American was switched into the ishares Core S&P500 UCITS ETF because the US market has proven difficult to outperform and this exchange traded fund was launched with a particularly low management charge. The ishares MSCI Emerging Markets UCITS ETF was also switched into a cheaper version introduced by the same manager which should help improve the returns due to the similar index that is being tracked. The UK Gilt Inflation Linked 0.125% Bonds 22/03/2029 issue was bought to provide inflation protection for the portfolio and to provide a hedge should equity markets suffer a correction following the rally over the last few years. *Source: Financial Express Page 4

5 Investment Manager s Report (continued) Market Overview Equity markets have performed strongly over the period of review with most regions increasing. Equities have broadly trended higher due to economic growth appearing to improve with unemployment in the US falling and also helped by the European Central Bank ( ECB ) reducing interest rates and beginning purchases of asset backed securities to add stimulus to the region. However, concerns over the continued weakness of many European economies pushed down European Equity prices in the first half of the review. Equity markets fell in September and October due to a variety of different factors combining to affect investor sentiment. Instability in equity markets was caused by divisions in the European Central Bank on the best way to implement plans for economic growth in the Eurozone, concerns over global growth and of the impact of the US Federal Reserve s decision to end its quantitative easing ( QE ) program six years on from the financial crash of However, sentiment was helped when the Bank of Japan surprised markets by announcing an expansion to its asset purchasing program to support growth and increase the monetary base, which caused Japanese equities to surge. Further support occurred in January 2015 when the European Central Bank announced a large scale expansion of its asset purchase programme. Contrary to many investor predictions, developed market government bonds have performed relatively strongly over the period of review as interest rates have remained at low levels and the falling oil price has reduced inflationary pressures. Combined with EU quantitative easing this resulted in many European government bond prices rising so high that they were trading at negative yields. In currency markets, the US Dollar strengthened against Sterling as the US economy wound down its quantitative easing programme following improvements in its economy and the uncertainty surrounding the Scottish referendum and the UK election didn t help sentiment for Sterling assets. The Japanese Yen and Euro both fell against Sterling following their continuation of quantitative easing. Outlook With economic growth in the US lower than expected at the start of 2015 and signs that growth is improving in Europe, there are indications that global economic growth is becoming more balanced, which should be supportive for risk assets. Expectations of interest rate increases in the US, which had helped strengthen the US Dollar, have been put back and when added to continuing stimulus in Europe and Japan may help to prolong the benign conditions of moderate growth and low inflation. However, there is the possibility that the weak US growth was caused by temporary disruptions such as the weather and if structural reforms in Europe and Japan begin to help the real economy growth may pick up again. Also, once last year s falling energy prices work their way out of inflation data there is the potential for inflation to increase from their low levels and this may cause market volatility with the US looking to increase interest rates at a time when monetary policy is loose in Europe and Japan, which will cause the US dollar to strengthen. Page 5

6 Investment Manager s Report (continued) Outlook (continued) Many developed market government bonds are trading at historically low yield levels and should inflation creep upwards there is a risk that investors are exposed to capital losses should the outlook for interest rate rises change significantly. Other risks include China looking like it might miss its growth target, although this will be mitigated by further stimulus, and conflicts in Ukraine and the Middle East still have the potential to deliver surprises to oil supply. Also, negotiations between Greece and its creditors still remain precarious. Therefore, the portfolio will remain widely diversified geographically to help reduce the volatility of the portfolio. Brunswick Investment Management Limited Investment Adviser to the Fund 11 May 2015 Significant Information Investment Manager From 7 April 2015, the Investment Adviser of the Company moved from Lewis Jarrett & Co Limited to Brunswick Investment Management Limited. On 22 July 2014, WAY Fund Managers Limited was authorised by the FCA as an Alternative Investment Fund Manager ('AIFM'). The information in this report is designed to enable shareholders to make an informed judgment on the activities of the Fund during the period it covers and the result of those activities at the end of the period. The long Report and Accounts are available free of charge on request. For more information about the activities and performance of the Fund during the period and previous periods, please contact: Authorised Corporate Director WAY Fund Managers Limited Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset, BH21 7SB Customer Service Centre: Authorised and regulated by the Financial Conduct Authority (FCA) Depositary State Street Trustees Limited. 20 Churchill Place, London, E14 5HJ From 16 June 2014 Northern Trust Global Services Limited 50 Bank Street, Canary Wharf London, E14 5NT Authorised by the Prudential Regulation Authority (PRA) and regulated by the FCA and the PRA Investment Manager Lewis Jarret & Co Limited 62a Spixworth Road, Norwich, Norfolk, NR6 7NF From 7 April 2015 Brunswick Investment Management Limited 62a Spixworth Road, Norwich, Norfolk, NR6 7NF Authorised and regulated by the FCA Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors' instructions Auditor Grant Thornton UK LLP 30 Finsbury Square, London, EC2P 2YU Page 6