Artemis Global Equity Income Fund

Transcription

1 Artemis Global Equity Income Fund Manager s Short Report For the period from 3 June 2015 to 31 August 2015 Investment objective and policy The Artemis Global Equity Income Fund (the sub-fund ) aims to achieve income combined with long-term capital growth. The sub-fund invests principally in a portfolio of equities selected on a global basis. The authorised corporate director ( ACD ) actively manages the portfolio in order to achieve the objective. The ACD will not be restricted in respect of choice of investments either by company size, industry, or the geographical split of the portfolio. The sub-fund may also invest in other transferable securities, fixed interest securities, derivative instruments, units of collective investment schemes, money market instruments, warrants, cash and near cash. The sub-fund may also use derivatives and other techniques for efficient portfolio management. Risk and reward profile Typically lower rewards Lower risk Typically higher rewards Higher risk This indicator is based on historical data and may not be a reliable indication of the future risk profile of the sub-fund. The sub-fund is in the category shown because it invests in the shares of a wide range of companies in emerging markets, which carries a degree of risk. The risk category shown is not guaranteed and may change over time. A risk indicator of 1 does not mean that the investment is risk free. The indicator is not a measure of the possibility of losing your investment. The risks of investing in the sub-fund include: The price of shares, and the income from them, can fall and rise because of stock market and currency movements. Stock market prices, currencies and interest rates can move irrationally and can be affected unpredictably by diverse factors, including political and economic events. The sub-fund s assets will be invested in new, emerging markets. Investment in emerging markets can involve greater risk than that usually associated with more established markets. This means that aboveaverage rises and falls in share prices can be expected. The sub-fund s assets will primarily be invested in a currency other than the sub-fund s accounting currency (sterling). The value of these assets, and the income from them, may decrease if the currency falls in relation to sterling, in which the subfund is valued and priced. Investments in fixed interest securities are subject to market and credit risk and will be impacted by movements in interest rates. Interest rate movements are determined by a number of economic factors, in particular market expectations of future inflation. The sub-fund may hold derivatives with the aim of profiting from falling prices. If the related assets rise in value the sub-fund will lose money. Fund information Launch date 3 June 2015 Share types I distribution EUR * I distribution GBP * I distribution USD * I accumulation EUR * I accumulation GBP * I accumulation USD * R accumulation EUR ** R accumulation USD ** IA sector IA Global Historic yield *** - Accounting dates 31 August & Last day in February Distribution date 31 October & 30 April * Launched 3 June ** Launched 30 July *** As it is less than 12 months since the launch of the sub-fund, no historic yield is presented. ART/GEI/1015 1

2 Artemis Global Equity Income Fund Manager s Short Report Investment review We launched the fund on 3 June A period of increased volatility in global markets followed. The fund fell by 9.8%* vs a 8.2%* decline in its benchmark. Performance A difficult start... We launched the Artemis Global Equity Income Fund on 3 June. Our goal is to seek income and capital growth by investing in companies that generate high levels of free cashflow worldwide. The fund s investment process and portfolio replicate those of Artemis existing global equity income strategy which has been in place since 2010 and has significantly outperformed the benchmark and every strategy in its peer group over that time. The fund s launch was followed by a period of extreme volatility in global financial markets. The result was that the fund fell by 9.8%.* Review A recordbreaking summer... In the short period since the fund s launch, financial markets have set some dismal records. But if the severity of the collapse in emergingmarket currencies, stock markets and commodities set records so, in some cases, did the recoveries. The Shanghai Composite had its worst day in eight years but also enjoyed its biggest rally in seven years. Shortly after the end of the reporting period, meanwhile, crude oil found itself, technically speaking, in a bull market, having rebounded significantly from its August lows. Perhaps this volatility should not have been a surprise. With the benefit of hindsight, there were warning signs. Emerging-market currencies, for example, had been falling for some time. So had the price of copper, a crude but useful measure of the global economy. Spreads on high-yield bonds (the premium their issuers must pay to borrow relative to the risk-free rate) had widened. And while the downtrend in oil prices was established last year it has become increasingly clear that it is not simply a consequence of increased supply from OPEC. Instead, it seems that demand has dropped as growth has slowed. So, how to respond to this extraordinary volatility? Clearly, leading indicators are signalling that global growth is slowing. And in a signal that investors believe that earnings growth remains in short supply, growth continued to outperform value as an investment style. That, in turn, will have important implications for interest rates. That is not to say that the Federal Reserve won t raise rates at some point over the next 12 months, but it does seem likely to be more cautious than it would have been before the turmoil in China. With that in mind, we have moderated the portfolio s exposure to industrials and banks. This does not reflect a judgement that there is no prospect of higher interest rates or of a steepening of the yield curve (which would help banks lending margins). But the probabilities have declined. So we have reduced the portfolio s exposure to Mitsubishi UFJ in Japan and to JP Morgan Chase & Co. in the US. At the same time, however, we have retained our exposure to European lenders, notably Intesa Sanpaolo and Danske Bank. In both cases, there is enough company specific self-help to outweigh a less-supportive interest-rate environment. That the outlook for the global economy is not as strong as it once seemed has also encouraged us to reduce the portfolio s exposure to US industrials. We also continued selectively to reduce holdings in the main problem areas energy, mining and emerging markets. On the other side of this trade, we added to holdings in less economically sensitive sectors, such as tobacco and utilities. Outlook The hunt for income continues... Although we have responded to the changing economic environment, the volatility seen in markets over the summer has not turned us into bears. Recessions end bull markets and there is no immediate prospect of that. And while equities may look expensive relative to their own history they are reasonably priced next to the alternatives. Bonds are expensive as are classic cars, fine art, prime real estate... It might be that the price of every asset needs to fall not just equities. Whether that will happen soon is unclear. Central bankers in the US and UK are no longer pumping liquidity into the system, but quantitative easing continues apace in Japan and Europe. Furthermore, two or three pieces of good economic news from the US would be likely to prompt investors to position their funds for recovery again. To us, the big surprise (and latent opportunity) is that cheaper oil and lower commodity prices have not spurred consumer spending in the way that might have been expected not yet, at least. A significant amount of pent-up demand has yet to be transformed into spending. Amid all this uncertainty, we take solace in the income stream that we intend to provide to our investors. We can t read Janet Yellen s mind. Nor can we predict what China s politicians will do next. But we can look for sustainable sources of dividends. The strong returns that the strategy which this fund mirrors has produced since its launch just over five years ago has not been a consequence of superior macroeconomic forecasting on our part but rather of identifying a diverse range of outperforming (and dividendpaying) stocks worldwide. We believe that approach will pay off for this fund too, whatever the global economy throws at us next. Jacob de Tusch-Lec and Frederik Lerche-Lerchenborg Fund managers * Source: Lipper Limited, class I accumulation GBP shares, mid to mid in sterling with net income reinvested to 31 August Benchmark is MSCI All Country World Index (GBP). 2

3 Investment information Portfolio split 31 August 2015 Valuation % of net assets United States of America Germany 8.68 Italy 8.04 United Kingdom 8.01 Spain 5.88 Denmark 5.69 China 4.18 Bermuda 3.71 Japan 3.19 Switzerland 3.17 Israel 2.66 Portugal 2.33 Norway 1.96 Australia 1.77 France 1.72 Cayman Islands 1.61 Singapore 1.59 Ireland 1.56 Finland 1.13 New Zealand 1.02 Hong Kong 0.96 Netherlands 0.95 Cyprus 0.64 Luxembourg 0.59 Greece 0.56 Jersey 0.39 Isle of Man 0.28 Sweden 0.13 Net other assets 0.03 Net assets Ten largest long equity positions Investment 31 August 2015 % of net assets DFDS A/S 2.68 Danske Bank A/S 2.58 Apple, Inc AbbVie, Inc Intesa Sanpaolo SpA 2.42 CTT-Correios de Portugal SA 2.33 Bezeq The Israeli Telecommunication Corp. Ltd Euskaltel SA 2.13 Ferrovial SA 1.96 Northrop Grumman Corp

4 Artemis Global Equity Income Fund Manager s Short Report Comparative tables Fund sizes & net asset values Date Net asset value of sub-fund ( ) 31 August ,076,347 Net asset value per share Shares in issue I distribution EUR 88.94c 2,840,028 I distribution GBP 89.55p 10,000 I distribution USD 90.16c 566,106 I accumulation EUR 89.47c 46,452,190 I accumulation GBP 90.13p 19,680,832 I accumulation USD 90.75c 24,853,322 R accumulation EUR 91.61c 10,000 R accumulation USD 94.29c 30,000 Net revenue distribution & share price range Year Net revenue per share Highest price Lowest price I distribution EUR 2015* c c 85.40c I distribution GBP 2015* p p 85.77p I distribution USD 2015* c c 88.20c I accumulation EUR 2015* c c 85.40c I accumulation GBP 2015* p p 85.81p I accumulation USD 2015* c c 88.24c R accumulation EUR 2015** c c 87.45c R accumulation USD 2015** c c 91.68c Net revenue includes all amounts paid and payable in each calendar year. * From 3 June 2015 to 31 August ** From 30 July 2015 to 31 August Ongoing charges Class 31 August 2015 I distribution EUR 1.00% I distribution GBP 1.00% I distribution USD 1.00% I accumulation EUR 1.00% I accumulation GBP 1.00% I accumulation USD 1.00% R accumulation EUR 1.75% R accumulation USD 1.75% Ongoing charges shows the current operating expenses of each share class as a percentage of the net assets of that class. Fund performance Since launch * 1 month Artemis Global Equity Income Fund (9.8) (4.4) MSCI All Country World Index (GBP) (8.2) (4.7) Sector average (7.9) (4.6) Position in sector 26/32 13/33 Quartile 4 2 * Data from 3 June Source: Lipper Limited, class I accumulation GBP shares, mid to mid in sterling with net income reinvested to 31 August All performance figures show total return percentage growth. Sector is IA Global, universe of funds is those reporting net of UK taxes. Value of 1,000 invested at launch to 31 August , MSCI All Country World Index Artemis Global Equity Income Fund (class I accumulation GBP shares) Jun 2015 Jul 2015 Aug

5 General information Report & accounts This document is the Short Report of the Artemis Global Equity Income Fund for the period from 3 June 2015 to 31 August The Half-Yearly Report for Artemis Investment Funds ICVC which incorporates the financial statements of each of the underlying sub-funds can be obtained from the ACD s website artemis.co.uk, by contacting the Client Services team on or by writing to the ACD s address below. Authorised Corporate Director Artemis Fund Managers Limited * Cassini House 57 St James s Street London SW1A 1LD Dealing information: Unit Trust Department Artemis Fund Managers Limited PO Box 9688 Chelmsford CM99 2AE Telephone: Website: artemis.co.uk Investment adviser Artemis Investment Management LLP * Cassini House 57 St James s Street London SW1A 1LD Depositary National Westminster Bank Plc 135 Bishopgate London EC2M 3UR Registrar International Financial Data Services (UK) Limited * IFDS House, St Nicholas Lane Basildon Essex SS15 5FS Auditor Ernst & Young LLP Ten George Street Edinburgh EH2 2DZ * Authorised and regulated by the Financial Conduct Authority (FCA), 25 The North Colonnade, Canary Wharf, London E14 5HS. Authorised by the Prudential Regulation Authority (PRA), 20 Moorgate, London EC2R 6DA and regulated by the PRA and the FCA. 5

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8 Keep up to date with the performance of this and other Artemis funds throughout the year on Artemis website Monthly fund commentaries and factsheets Artemis Filmclub videos by our fund managers Market and fund insights Fund briefings and research articles The Hunters Tails, our weekly market newsletter Daily fund prices Fund literature artemis.co.uk 8