BCUHB Portfolio Review

Transcription

1 BCUHB Portfolio Review 30 th April 2014

2 Contents Sections 1 Investment approach and your team 2 2 Our understanding 5 3 The portfolios 8 4 Important information 12 1

3 1. Investment approach and your team

4 Investment approach 1. Investment approach and your team Philosophy Our starting point is wealth preservation, exemplified by our firm s investment philosophy: to preserve and grow the real value of our clients wealth Wealth preservation is in the DNA of our firm, and permeates all elements of our investment approach It takes a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires ten times as much wit to keep it. Nathan Mayer Rothschild ( ) Principles With wealth preservation always in mind, the following investment principles inform our approach: Active vs. Passive: in our view, great investors are proof that investment success can be attributed to talent, rather than luck. We believe in active investing where costs are reasonable and the investment process is proven and sustainable. We use passive investments where appropriate Diversification vs. Conviction: diversification is important to limit the impact of investment mishaps. Nevertheless, investments need to be sufficient in size to have a meaningful performance impact when they are successful Long-Term: high levels of turnover have been shown to reduce investment performance. As a general rule, all of our investments have a minimum expected time horizon of one year, often substantially more Unconstrained: we do not limit our investment universe. We invest globally, using both funds and segregated securities, and do not have the conflicts of interest presented by a menu of in-house funds, allowing us to buy investments for clients, not sell them products Margin of Safety: to preserve wealth we must seek to avoid permanent capital loss (as distinct from short-term volatility). Our process is designed to achieve this by avoiding overpaying (a focus on valuation); avoiding investing in fundamentally unsound securities and funds (research); and avoiding leverage 3

5 Client team biographies 1. Investment approach and your team Hugh Giltrow T: James Fenwick T: Annick Crisford T: Victor Balfour T: Samantha McTaggart T: Hugh Giltrow Client Advisor Annick Crisford Client Advisor Samantha McTaggart Administrator After graduation, Hugh began his investment management career with Lloyds, before moving to Kleinwort Benson in 1987 where he had specific responsibility for the management of its Private Unit Trusts and the development of this area of its offering. Hugh joined Rothschild in November 2004, where he is responsible for advising individuals, families and trusts. Annick is responsible for advising wealthy clients, families and trusts. She was educated at Durham University and the Institute d Études Politiques in Aix en Provence. She was a senior product development manager at Barclays Wealth, before joining Rothschild in 2007 from Fidelity International. She holds the Private Client Investment Advice & Management certificate and the certificate in financial planning. James Fenwick Client Advisor Victor Balfour Analyst Jill Byrne Administrator After graduating from Exeter University where he read Theology, James joined Rothschild in He has spent most of his career as an Investment Banker advising PLCs, private equity houses and private companies on a wide range of corporate finance transactions both in the UK and internationally. In 2008, James moved to Wealth Management to assist with the development of its UK business. Victor is an Analyst at Rothschild, responsible for the day to day servicing of private clients, families, trusts and charities. Prior to joining Rothschild in 2012, Victor worked at PSigma Wealth where he assisted in the management of Discretionary and Advisory clients. Victor studied Biochemistry at the University of Bristol. He holds the Private Client Investment Advice & Management certificate and is a member of the CISI. Jill Byrne T: jill.byrne@rothschild.com Samantha is a Manager on the client administrator team, responsible for day to day administration of all client accounts. Before joining Rothschild in 2008, Samantha spent 4 years at JM Finn & Co, on the administration team, and prior to that worked within the cash team at Barclays Bank. Jill is responsible for day to day administration of all client accounts. Before joining Rothschild in 2012, Jill spent 2 years at HSBC Private Bank, and prior to that she worked at Anglo Irish Bank in Dublin. She graduated from University College Dublin in 2007 where she gained a Batchelor of Commerce degree. 4

6 2. Our understanding

7 Our understanding We have summarised our understanding of your requirements based on our meetings and discussions with you. 2. Our understanding A Cautious portfolio is intended to achieve a positive total return over the long term but with limited risk of capital loss in nominal terms and typically moderate levels of volatility. The likely level of return will be commensurate with the moderate risk approach adopted. Inflation may also have an adverse impact on portfolio returns over time. 6 Background Income and Tax Return objective and risk Currency Comparators Constraints Reporting Charity details: The Betsi Cadwaladr University Health Board charity is a UK registered NHS charity covering the whole of North Wales. The overall objective of the charity is to provide additional support for the benefit of staff and patients within the Betsi Cadwaladr University Health Board, in accordance with the wishes of donors. Source of wealth: Donations and fundraising, legacies and investment income. Attitude to the charity assets: The Trustees aim to maintain and, if possible enhance the real value of the invested funds. Diversification is important, as is the minimisation of losses. Other wealth: The Trust holds approximately 1m in sterling cash earmarked for distribution. In addition to the Rothschild portfolios, the charity has substantial other assets including approximately 2m held in short term deposits and cash, and some property. Income: There is no specific income requirement from the investment portfolios, although this will depend on the generation of new funds and expenditure commitments. Tax: As a registered charity, the funds are not subject to income tax or CGT. VAT payable on investment management fees can be reclaimed back by the charity. Return: The Trustees wish to preserve the real value (after inflation) of the portfolios and to generate a balance of capital growth and income. Risk: A cautious portfolio strategy is suitable for the Trustees risk profile. Time Horizon: Long-term time horizon (10 years+). Ongoing: We recommended reviewing your return objectives and risk tolerance on a regular basis, and confirm that nothing is set in stone. The reference or base currency for the portfolio is Pounds Sterling. The portfolios will be reviewed against a range of indices. No direct investment is permitted into areas which may be in conflict with the principles of the BCUHB. Specifically this excludes direct investment in to the following areas: Armament and weapon production, child labour, tobacco and alcohol, pornography and prostitution and companies known to cause substantial environmental damage. We understand that a number of the Trustees have changed and therefore we will require updated due diligence in respect of any new signatories. Contract notes, audited quarterly valuations, fee invoices and an annual tax pack are currently sent to Helen Simpson at Wrexham Maelor hospital. Monthly and quarterly valuations are also uploaded to eaccess for Rebecca Hughes.

8 2. Our understanding Reviewing your return objectives and risk tolerance This, and other slides have been presented to the Trustees at previous meetings to help review and consider the return objectives and risk tolerance adopted for the BCUHB portfolios. Return objective and risk Return: The Trustees wish to preserve the real value (after inflation) of the portfolios and to generate a balance of capital growth and income. Risk: The portfolios have a medium risk profile and a Cautious investment portfolio strategy has been adopted. Time Horizon: Long-term time horizon (10 years+). Low RISK High A Cautious approach to risk aims to generate positive returns and limit volatility. However, returns may be negatively impacted by inflation over time. A Balanced approach aims to achieve returns in excess of inflation, however such an investment approach will be more volatile over shorter time periods. Low Risk A portfolio which is intended to minimize the risk of capital loss and ensure a low level of volatility. Consequently, returns achieved will typically be low over most periods. Over the long term, there is a risk that inflation will mean that the portfolio does not generate a positive real return. Cautious A portfolio which is intended to achieve a positive total return over the long term but with limited risk of capital loss in nominal terms and typically low levels of volatility. The likely level of return will be commensurate with the lower risk approach adopted. Inflation may also have an adverse impact on portfolio returns over time. Balanced A portfolio which is intended to achieve steady growth over the long term through a diversified approach to investment. Attention is paid to avoiding the worst of the downside and capturing some but not all of the upside of financial market returns. Capital preservation in real terms over a long time horizon is the primary objective, and some volatility is acceptable in order to achieve this Equity Risk A portfolio which is intended to achieve growth in capital and income over the long term commensurate with equity investment. This will typically involve the risk of capital loss and high levels of volatility. Over long time periods, returns from such a portfolio may be superior, reflecting the higher level of risk associated with this approach. 7

9 3. The portfolios

10 Performance The table below show the performance of the BCUHB portfolios compared to various indices and measures. 3. The portfolios Facing Page 9 Performance as at 30 th April 2014 Year to Date ( ) 2011 ( ) Annualised Since Inception ( ) Annualised Since Inception ( ) BCUHB Main Portfolio -0.67% +8.20% +5.46% % % BCUHB re Ron and Margaret Smith Portfolio -1.25% % +7.35% +4.21% % - Combined Performance -0.86% +8.51% +5.55% Cash Index +0.16% +0.49% +0.63% +0.17% +0.22% +0.57% +0.59% Inflation +0.47% +2.00% +2.71% +0.66% +1.33% +2.27% +2.54% Bond Index +3.08% -4.09% +2.73% +4.33% +6.57% +2.27% +3.12% UK Equity Index +1.51% % % +9.46% +7.66% % % World Equity Index +0.19% % % +9.94% +5.62% % % BCUHB Main Portfolio Value as at 30th April ,244,656 BCUHB re Ron and Margaret Smith Portfolio Value as at 30th April ,661 BCUHB Main No. 2 (Cash)* Portfolio Value as at 30th April ,970 Total 8,741,287 Source: Rothschild, Bloomberg Notes 1 Past performance is not indicative of future performance and the value of investments and income from them can fall as well as rise. Returns may increase or decrease as a result of currency fluctuations. 2 Portfolio performance is shown after all fees. Performance shown is total return, combining income and capital growth. 3 Indices used are: Cash (UK 1m LIBOR); Inflation (UK CPI EU Harmonised NSA); Bond Index (Citi UK Govt Bonds All Maturities total return); UK Equity Index (FTSE All Share - total return); World Equity Index (MSCI World All Countries Net GBP total return). 4 Inception performance data (annualised) is taken as follows: BCUHB Main - 6 th September 2011; BCUHB re Ron and Margaret Smith 3 rd October * Cash is held at the instruction of the Trustees and is earmarked for distribution. No fee is applied to the No. 2 portfolio.

11 3. The portfolios Performance Chart Inception Performance: 31 st October 2011 to 30 th April Historical Daily Volatility BCUHB Main 4.7% BCUHB R&M 4.0% MSCI World 10.9% Citi UK Govt Bonds 6.1% Maximum Drawdown BCUHB Main -6.36% BCUHB R&M -4.87% MSCI World % Citi UK Govt Bonds -7.33% % +16.3% +13.2% +5.7% 90 BCUHB Main BCUHB R&M MSCI World Citi UK Govt Bonds 9 Source: Rothschild, Bloomberg Notes 1 Past performance is not indicative of future performance and the value of investments and income from them can fall as well as rise. Returns may increase or decrease as a result of currency fluctuations. 2 Portfolio performance is shown after all fees. Performance shown is total return, combining income and capital growth. 3 Indices used are: Citi UK Govt Bonds All Maturities total return; MSCI World All Countries Net GBP total return. 4 Volatility is calculated as the annualised standard deviation of daily returns. 5 Combined portfolio inception date is taken as 31 st October 2011.

12 Asset allocation The charts below show the current asset allocation for the individual BCUHB portfolios. 3. The portfolios Facing Page 10 BCUHB Main Portfolio 30 th April 2014 Alternative Strategies, 6.4% Gold, 3.4% Portfolio Protection, 4.0% Cash, 15.7% BCUHB R & M Smith Portfolio 30 th April 2014 Gold, 2.6% Alternative Strategies, 3.2% Portfolio Protection, 0.6% Cash, 22.1% Fixed Income, 17.6% Equities, 51.5% Fixed Income, 20.0% Equities, 52.8% Source: Rothschild Notes 1 Percentages may not sum to 100% due to rounding. 2 The above shows a summary of your asset allocation which is subject to change without notice. For a more detailed asset allocation, please rely on your official statement.

13 Currency allocation 3. The portfolios The charts below show the current currency allocation for the individual BCUHB portfolios. BCUHB Main Portfolio 30 th April 2014 BCUHB R & M Smith Portfolio 30 th April 2014 Asia + EM, 6.10% Gold, 3.40% JPY, 0.30% Asia + EM, 5.80% Gold, 2.60% JPY, 0.10% CHF, 2.60% CHF, 3.00% NOK + SEK, 3.50% EUR, 0.40% NOK + SEK, 2.90% EUR, 0.50% USD, 23.10% GBP, 60.80% USD, 20.70% GBP, 64.20% The largest active currency allocation outside of Sterling is the US Dollar. We have hedged both the Yen and Euro exposure. 10 Source: Rothschild Notes 1 Percentages may not sum to 100% due to rounding. 2 The above currency allocation is net of foreign exchange hedges and is subject to change without notice. 3 For the purposes of more accurately managing currency risk, where appropriate, we reflect the currency exposure of certain funds based on the underlying securities held within the fund, rather than the denomination of the fund. This allocation is reflected in the charts above.

14 Portfolio The table below shows the BCUHB Main portfolio split between return and diversifying assets. 30 th April The portfolios RETURN ASSETS (55.2%) DIVERSIFYING ASSETS (44.8%) Core Special Situation Diversifier Equities - Funds 9.0% Equities - Funds 28.3% Cash 15.7% CC Asia Evolution* 0.7% Aberdeen Asia 1.8% Cash 15.3% HBM Healthcare* 0.9% Allard Growth 1.7% Cash (SFO)* 0.4% JZ Capital* 0.4% Berkshire Hathaway 3.5% Oakley Capital* 0.5% Egerton 4.5% Inflation Linked - Medium-Dated 7.2% Odey European 2.0% Morgan Stanley Global Brands 2.9% UK Index Linked 1.875% % Phoenix UK* 0.8% IVI European 1.8% Technology Basket 2.4% Lansdowne Developed Markets 4.2% Inflation Linked - Long-Dated 4.6% Third Point Offshore 1.3% MW Japan 4.0% UK Index Linked 0.125% % TCI* 3.9% US Index Linked 0.75% % Equities - Companies 9.6% Coach 1.1% Equities - Companies 5.8% Fixed Income / Hard Currency 6.9% DMGT 1.4% American Express 1.7% Gold Bullion Securities 3.4% Ericsson 1.1% John Deere 1.5% Kommunalbanken 3% % Lloyds 1.7% Nestle 1.2% Singapore Govt 0.25% % Loews 1.3% Unilever 1.4% Ryanair 1.4% Alternative Strategies 6.4% Wells Fargo 1.6% Abbey Capital 3.5% Rubicon 2.9% Fixed Income 2.4% RPIC Preferred Income Fund 2.4% Portfolio Protection 4.0% Kohinoor 3.9% DAX Put 0.1% S&P Put 0.1% Currency Hedges EUR -3.6% GBP 7.6% JPY -4.0% 11 Source: Rothschild Notes *Held in the Selected Fund Opportunities vehicle (TCI is also a direct holding). 1 The above holdings illustrate investments made within the portfolio at the discretion of Rothschild Wealth Management UK Limited. They are not shown as a solicitation, recommendation or promotion of any security or fund on a standalone basis. Holdings are subject to change without notice. 2 The above holdings illustrate investments made within the portfolio at the discretion of Rothschild Wealth Management UK Limited. They are not shown as a solicitation, recommendation or promotion of any security or fund on a standalone basis. Holdings are subject to change without notice.

15 4. Important information

16 Important Information 4. Important information This document is strictly confidential and produced by Rothschild for information purposes only and for the sole use of the recipient. Save as specifically agreed in writing by Rothschild, this document must not be copied, reproduced, distributed or passed, in whole or part, to any other person. This document does not constitute a personal recommendation or an offer or invitation to buy or sell securities or any other banking or investment product. Nothing in this document constitutes legal, accounting or tax advice. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment. Past performance should not be taken as a guide to future performance. Investing for return involves the acceptance of risk: performance aspirations are not and cannot be guaranteed. Should you change your outlook concerning your investment objectives and / or your risk and return tolerance(s), please contact your client adviser. Where an investment involves exposure to a foreign currency, changes in rates of exchange may cause the value of the investment, and the income from it, to go up or down. Income may be produced at the expense of capital returns. Portfolio returns will be considered on a total return basis meaning returns are derived from both capital appreciation or depreciation as reflected in the prices of your portfolio s investments and from income received from them by way of dividends and coupons. Holdings in example or real discretionary portfolios shown herein are detailed for illustrative purposes only and are subject to change without notice. As with the rest of this document, they must not be considered as a solicitation or recommendation for separate investment. Although the information and data herein are obtained from sources believed to be reliable, no representation or warranty, expressed or implied, is or will be made and, save in the case of fraud, no responsibility or liability is or will be accepted by Rothschild as to or in relation to the fairness, accuracy or completeness of this document or the information forming the basis of this document or for any reliance placed on this document by any person whatsoever. In particular, no representation or warranty is given as to the achievement or reasonableness of any future projections, targets, estimates or forecasts contained in this document. Furthermore, all opinions and data used in this document are subject to change without prior notice. This document is distributed in the UK by Rothschild Wealth Management (UK) Limited. Law or other regulation may restrict the distribution of this document in certain jurisdictions. Accordingly, recipients of this document should inform themselves about and observe all applicable legal and regulatory requirements. For the avoidance of doubt, neither this document nor any copy thereof may be sent to or taken into the United States or distributed in the United States or to a US person. References in this document to Rothschild are to any of the various companies in the Rothschilds Continuation Holdings AG Group operating / trading under the name Rothschild and not necessarily to any specific Rothschild company. None of the Rothschild companies outside the UK, nor companies within the Rothschild Trust Group are authorised under the UK Financial Services and Markets Act 2000 and accordingly, in the event that services are provided by any of these companies, the protections provided by the UK regulatory system for private customers will not apply, nor will compensation be available under the UK Financial Services Compensation Scheme. If you have any questions on this document, your portfolio or any elements of our services, please contact your client adviser. The Rothschild Group includes the following wealth management and trust businesses (amongst others): Rothschild Wealth Management (UK) Limited. Registered in England No Registered office: New Court, St Swithin s Lane, London, EC4N 8AL. Authorised and regulated by the Financial Conduct Authority. Rothschild Bank (CI) Limited. Registered Office: St Julian s Court, St Julian s Avenue, St Peter Port, Guernsey, GY1 3BP. Licensed and regulated by the Guernsey Financial Services Commission. Rothschild Bank AG. Registered Office: Zollikerstrasse 181, 8034 Zurich, Switzerland. Authorised and regulated by Eidgenössischen Finanzmarktaufsicht FINMA. 13