PIER Portfolio News Summer 2017

Transcription

1 PIER Portfolio News Summer 2017 Investment Committee The Investment Committee meeting of PIER Financial Investments Limited ( PIER ), attended by Thesis Asset Management plc ( Thesis ) and Antrams Financial Services LLP ( Antrams ), met in March 2017 to review performance of the PIER Portfolio, and the introduction of the new PIER Multi-Asset model. The PIER Portfolios have been in existence now for four years and their performance relative to the active industry has been predominantly in the top quartile since inception in PIER 50, 60, 70 and 80 have all outperformed their respective fund-industry peers in every listed time period below, an admirable performance by any standard, especially when you consider the wellregarded Star managers that populate these spaces. PIER 90, taking into account its 10% exposure to bonds, has performed well, only lagging the IA Global sector equity funds (which are typically populated by 100% equity funds) by just over 3% since inception and doing so with 10% less relative volatility. PIER 100 has beaten the IA Global sector in most time periods, while PIER Zero has beaten its benchmark in all of its available time periods, except for 6 months when the 100% gilt benchmark performed more defensively. This was because the bond market sold off at the end of last year, given the UK inflation outlook and US interest rate hikes. The Committee s decision to include an equalweighted US exposure, whilst maintaining a credible long-term philosophy for its inclusion, has lagged very slightly in the short period since its inclusion. The equal-weighted ETF has returned +9.4% whilst the fund it replaced, Blackrock North America Index has returned +9.7%. This small lag is due in part to the continuing outperformance of the tech-giants such as Apple which makes up a sizable portion of the traditional S&P 500 index. Another of the Committee s decisions was to maintain a rigid allocation of 25% to UK equities. This has benefits to investors; diversification away from the US (which makes up around 60% of the world index), home-alignment (having more exposure and therefore correlation to the economy in which you live) and reducing currency exposure. Since the switch into this rigid home-bias, the FTSE All-Share has outperformed the S&P 500 by +2.1%. However, weakening Sterling would have been added to the overseas returns so some return would have been missed out on by adopting this slight diversification away from the US, but we believe that the philosophy to maintain a home-bias remains appropriate.

2 Equity The equity portion of the portfolios has been generally in line over 3 & 6 months, but slightly behind over 12. This underperformance over 12 months is due in the main part to the gradually increasing Dollar currency hedge on our US equity allocation. The purpose of this has been progressively to protect the gains and take profits made through the weakening Sterling. Over this period, the Dollar hedge has increased from 25% to 75% of our exposure, as the appreciation of the Dollar has continued by a further 12% in Pound Sterling terms. Over the last 3 months the Dollar hedge has increased performance as the Pound has started to re-strengthen. In absolute terms: PIER 50 returned +5.16% & % over 6 & 12 months respectively till the end of Q PIER 100 returned % & % over 6 & 12 months respectively till the end of Q Fixed Interest Over 6 months, a period in which bond markets have suffered a minor to moderate sell-off, the Committee s previous decision to convert our benchmark-duration exposures to short-dated has benefited portfolios through their more defensive nature. PIER Zero made a loss of -1.08% which would have been greater had the change to short-duration not been made. By comparison alternative benchmarks such as Iboxx UK Overall Bond & BBg Barc Global Aggregate Bond hedged lost -1.66% and -2.36% respectively over the same period. New PIER Multi-Asset Model The PIER Multi-Asset model which was introduced at a further Investment Committee meeting in June 2017 is a mandate aiming to embody Modern Portfolio Theory; a method of achieving risk reduction by using multiple asset classes. The main portfolio diversification is achieved utilising three cornerstone assets: equities, government bonds and gold; other asset classes may be incorporated into portfolio construction to enhance returns or to further reduce volatility. In keeping with the PIER philosophy, all assets are passive ; that is to say index-tracking, highly-liquid, usually low-cost funds and Exchange Traded Funds. The service aims to achieve returns above inflation over the long-term whilst suffering as little volatility as possible. The purpose of equity in the mandate is to drive long-term returns, being one of the most highly productive asset classes over countless decades. Government bonds inclusion aims to allow for steady, cash-beating returns whilst also providing a small hedge against equity markets; this is due to government bonds tending to be a safe alternative into which investors can flee in times of market-crisis. In a similar vein, gold has classically acted as one of the strongest hedges against stockmarkets, often rapidly growing in value during times of market crashes, hence its inclusion, if to a lesser extent in portfolios. PIER Zero returned -1.08% & +3.33% over 6 & 12 months respectively till the end of Q1 2017

3 PIER 40, 50 and 60 Models versus IMA Mixed Investments Time Period: 1st March 2017 to 30th June 2017 Peer Group (5-95%): Open End Funds IMA Sector Mixed Investment 20-60% Shares Currency: Pound Sterling Source Data: Total Return Source: Morningstar Direct. Thesis constructed models performance and risk data is simulated. It is calculated on a total return basis including underlying fund fees, and manager fees. This information is intended to be illustrative of performance for portfolios constructed according to this specific strategy; however, it should not be considered a reliable indicator of future performance.

4 PIER Performance data to 30th June 2017 Performance Highlights The highlights to 30th June 2017 are: PIER 100 over the past 12 months has grown by 23.60% PIER 100 s average annual performance since launch has been 15.33% PIER Zero has seen a negative move in performance only achieving growth of 0.27% over the past year PIER Portfolios have over 53 million under management as at June 2017 These Portfolios continue to be exclusive to Antrams Financial Services LLP Group/Investment 3 Year Standard Deviation 6 Months 1 Year 2 Years 3 Years 01/03/2013 Inception to Date PIER Zero: Pure Fixed Interest PIER Zero 2.70* PIER 40 to 90: Blends PIER PIER PIER PIER PIER PIER PIER 100: Pure Equity PIER *PIER Zero only has a two-year track record so the average standard deviation has been used in this instance. Source: Morningstar Direct. Thesis constructed models performance and risk data is simulated. It is calculated on a total return basis including underlying fund fees, and manager fees. This information is intended to be illustrative of performance for portfolios constructed according to this specific strategy; however, it should not be considered a reliable indicator of future performance.

5 Composition of the PIER Portfolios June 2017 Equity Regions Region Market Weight FTSE Index UK 25.00% FTSE All Share North America 44.23% FTSE North America Asia Pacific ex Japan 3.40% FTSE Dev AP ex Japan Japan 6.63% FTSE Japan Europe ex UK 11.38% FTSE Dev Eur ex UK Emerging Markets 8.37% FTSE Emerging Markets 8.37% Cash Total % September 2016 Fixed Interest Allocations Fixed Interest component Market Weight Markit iboxx index Global Bonds 33.00% Global Bonds Conventional Gilts 38.08% Conventional Gilts Index-Linked Gilts 14.23% Index-Linked Gilts GBP Corporate Bonds 13.69% GBP Corporate Bonds 1.00% Cash Total % Source: Thesis Asset Management PLC. For illustrative purposes.

6 PIER Zero Asset and Sector Allocations data to 30th June 2017 PIER 100 Asset and Sector Allocations data to 30th June 2017 Source: FE Analytics Portfolio breakdown and holdings are based on latest published data for each constituent which may have different publication dates. The value of investments and the income from them can go down as well as up, and you may not get back the amount you invest. PIER Financial Investments Limited does not give advice. This brochure is an exempt financial promotion issued by Antrams Financial Services LLP. It is not an offer document and should be regarded merely as an advertisement. Its content has not been approved by any person authorised and regulated under the Financial Services and Markets Act It is an exempt financial promotion for the purposes of s21 of that Act by reason of its being a promotion made only to investment professionals, as defined in accordance with article 19 of that Order. Persons who are not investment professionals should place no reliance on this document for any purposes. Please remember that past performance is not a guide to the future. Investment consultancy and management provided by Thesis Asset Management plc. Head Office: Exchange Building, St John s Street, Chichester PO19 1UP. Authorised and regulated by the Financial Conduct Authority, registration number Antrams Financial Services LLP, Old Steine, Brighton, East Sussex BN1 1NH. Authorised and regulated by the Financial Conduct Authority, registration number: Name & Registered Office: PIER Financial Investments Limited 46 Old Steine Brighton BN1 1NH Company No