PHOENIX UNIT TRUST MANAGERS MANAGER S INTERIM REPORT PUTM EUROPEAN UNIT TRUST. For the half year: 1 October 2016 to 31 March 2017

Transcription

1 PHOENIX UNIT TRUST MANAGERS MANAGER S INTERIM REPORT For the half year: 1 October 2016 to 31 March 2017 PUTM EUROPEAN UNIT TRUST

2

3 Contents Investment review 2-3 Portfolio of investments 4-6 Top ten purchases and sales 7 Statistical information 8-11 Statements of total return & change in net assets attributable to unitholders 12 Balance sheet 13 Distribution table 14 Corporate information

4 Investment review Dear Investor Welcome to the PUTM European Unit Trust interim report for the six months to 31 March Performance Review Over the review period, the PUTM European Unit Trust returned 10.5%. (Source: HSBC, Gross of AMC, GBP, based upon the movement in the Cancellation Price for six months to 31/03/17). This is compared to its benchmark index which returned 12.6%. (Source: Datastream, FTSE Europe ex-uk Total Return, GBP for six months to 31/03/17). In the table below, you can see how the Fund performed against its sector average over the last five discrete one year periods. Standardised Past Performance Mar Mar Mar Mar Mar % growth % growth % growth % growth % growth PUTM European Unit Trust 26.5 (1.1) Sector Average 27.9 (4.2) Source: Lipper, bid to bid, net income reinvested to end March for each year. Past performance is not a guide to future performance. The value of units and the income from them can go down as well as up and is not guaranteed. You may not get back the full amount invested. Please note that all past performance figures are calculated without taking the initial charge into account. 2

5 Investment review Portfolio and Market Review European equities enjoyed a positive six months, with sentiment picking up across the region thanks to the improving economic conditions. However, the period was undoubtedly dominated by Donald Trump s surprise US election win. After initial caution, markets rallied strongly as investors focused on Mr Trump s business-friendly, fiscally expansive agenda. This favoured economically sensitive stocks, commodities and financials, notably banks and insurance firms. By contrast, high-yield defensives suffered. Meanwhile, the US Federal Reserve hiked rates in December and March, with further increases expected as inflation and growth rise under a Trump presidency. Finally, the Eurozone project received a fillip after anti-eu parties failed to gain popular support in the Austrian and Dutch elections. Covestro is a German-listed chemicals firm that focuses on speciality plastics for autos, industrials, construction and other end-market constituents. Positive supply/demand dynamics in a number of its products have boosted margins, while its cost-cutting measures have also been a positive. The stock has performed exceptionally well as a result, meaning we have progressively reduced the holding and banked the profits. Elsewhere, Danske Bank benefited from the steepening yield curve and the prospect of looser regulation after Trump s election win. Additional highlights included ASML, ArcelorMittal and Santander. On the downside, Novo-Nordisk continued to suffer due to concerns over the US pricing environment; Q3 results included a downgrade to long-term guidance. However, the market was quick to re-price the stock, and the firm is now trading at a discount. Nokia s shares fell after Ericcson delivered weak numbers, highlighting the challenging sales environment. Nonetheless, Nokia s results were subsequently better than expected and we therefore think the sell-off was overdone. Positions in Veolia, Unilever and Orkla also disappointed. although not directly competing with Pandora as it has a store within a store offering. This creates scope for a Pandora re-rating. By contrast, we sold out of Italian bank Intesa after it expressed a surprise interest in acquiring insurer Generali. Meanwhile, fears of the continuing overhang of regulation and litigation for investment banks meant we sold UBS. We also exited several highly valued staple companies such as Unilever and Pernod Ricard and reinvested the proceeds in peers with higher growth potential. Market Outlook and Fund Strategy While geopolitical events may cause bouts of turbulence, the strengthening of growth indicators combined with an improving earnings outlook provides a constructive backdrop for European equities. Valuations are supported by rising yields in this environment. Balance sheets are relatively strong and although financing costs are rising, it is from a very low base and still provides potential for M&A. As highlighted, there is considerable political uncertainty ahead (elections in France, Germany and potentially Italy, Brexit negotiations, Trump s policies unfurling). However, the risks are arguably now better appreciated, and to some degree reflected in valuations. Against this backdrop, we believe a bottom-up approach remains the best way to generate robust long-term returns. Turing to activity, we purchased Philips Lighting as we believe the market is overly concerned about the company s growth trajectory, while its valuation and dividend are attractive. We also bought Pandora, a Danish-listed global manufacturer and retailer of jewellery. In particular, we are more positive on its ability to diversify its consumer appeal away from charms by extending its branded jewellery range. In the US, Signet is also looking at this opportunity, 3

6 Portfolio of investments Investments held at 31 March 2017 Market Percentage of value total net assets Holding Investment % Europe (30/09/ %) Alternative Energy (30/09/ %) ,495 Vestas Windsystems 622, Oil & Gas Producers (30/09/ %) ,781 Africa Oil Corporation 183, ,857 Galp Energia 773, ,112 Total 1,491, Oil Equipment & Services (30/09/ %) ,432 Technip-Coflexip 659, Chemicals (30/09/ %) ,153 Akzo Nobel 605, ,754 BASF 1,257, ,637 Covestro 894, ,404 Umicore 427, Construction & Materials (30/09/ %) ,430 Actividades de Construccion y Servicios 338, ,334 Assa Abloy B 1,070, ,805 CRH 885, ,705 Holcim (registered) 363, ,469 Kingspan Group 946, ,898 LafargeHolcim (registered) 325, ,602 Saint Gobain 634, Aerospace & Defence (30/09/ %) ,903 Airbus Group 1,029, ,487 Thales 809, General Industrials (30/09/ %) ,593 ThyssenKrupp 617, Electronic & Electrical Equipment (30/09/ %) ,217 Philips Lighting 256, ,218 Schneider Electric 766, Industrial Engineering (30/09/ %) ,873 Sandvik AB 342, ,211 Wartsila 266, Industrial Transportation (30/09/ %) A P Moller Maersk 453, ,644 Atlantia 550, ,114 Deutsche Post 712, Support Services (30/09/ %) ,690 Securitas B 654, ,412 Wirecard 672,

7 Portfolio of investments Investments held at 31 March 2017 Market Percentage of value total net assets Holding Investment % Automobiles & Parts (30/09/ %) ,311 Michelin 509, Beverages (30/09/ %) ,850 Anheuser-Busch 1,212, Food Producers (30/09/ %) ,249 Glanbia 371, ,225 Nestlé 2,785, ,601 Orkla 437, Personal Goods (30/09/ %) ,420 LVMH 941, ,107 Pandora 717, Healthcare Equipment & Services (30/09/ %) ,119 Essilor International 496, ,229 Fresenius 1,298, ,009 Orpea 913, Pharmaceuticals & Biotechnology (30/09/ %) ,304 Merck Group 485, ,070 Novo Nordisk 638, ,495 Roche Holding 2,993, Food & Drug Retailers (30/09/ %) ,330 Jeronimo Martins 231, ,015 Koninklijke Ahold 845, General Retailers (30/09/ %) ,936 Industria de Diseno Textil 1,085, ,352 Kering 692, ,432 Zalando 334, Travel & Leisure (30/09/ %) ,098 Ryanair 808, Fixed Line Telecom (30/09/ %) ,994 KPN 344, ,428 Orange 821, Mobile Communications (30/09/ %) ,448 Deutsche Telekom 1,054, Electricity (30/09/ %) ,486 Enel 981, Gas Water & Multiutilities (30/09/ %) ,399 Engie 520, ,618 Veolia Environnement 592,

8 Portfolio of investments Investments held at 31 March 2017 Market Percentage of value total net assets Holding Investment % Banks (30/09/ %) ,398 Banca Popolare Milano 312, ,278 Banco Santander 1,372, ,553,155 Bank of Ireland 311, ,929 Bankinter 922, ,440 Danske Bank 1,409, ,484 ING Groep 1,017, ,589 Mediobanca 299, ,604 Nordea 747, ,721 Swedbank A 1,001, Non-Life Insurance (30/09/ %) ,886 AXA 1,341, ,699 Tryg 229, ,199 Zurich Insurance Group 1,113, Life Insurance (30/09/ %) Financial Services (30/09/ %) ,614 Amundi 544, ,207 Investor B 610, ,691 Partners Group 734, Real Estate Investment Trusts (30/09/ %) ,018 Klepierre 279, Software & Computer Services (30/09/ %) ,243 Amadeus IT Group 535, ,639 SAP 1,771, ,938 Scout24 529, ,036 Xing 498, Technology Hardware & Equipment (30/09/ %) ,178 ASML Holding 1,504, ,900 Infineon Technologies 441, ,196 Nokia 785, Industrial Metals (30/09/ %) ,670 Arcelormittal 385, Media (30/09/ %) ,715 Relx 528, Portfolio of investments 59,956, Net other assets 286, Net assets 60,243, All investments are listed on recognised stock exchanges and are approved securities within the meaning of the FCA rules unless otherwise stated. 6

9 Top ten purchases and sales For the half year ended 31 March 2017 Purchases Cost BASF 1,159,314 LVMH 870,157 Nordea 778,637 Partners Group 698,114 ThyssenKrupp 628,753 Essilor International 498,127 Michelin 464,083 Merck Group 446,308 Thales 364,132 Sandvik AB 331,917 Sales Proceeds UBS Group 1,078,813 Unilever 966,618 Intesa Sanpaolo 781,097 Novo Nordisk 714,769 Infineon Technologies 626,675 Renault 578,334 Pernod-Ricard 559,301 NN Group 434,798 CTT Correios de Portugal 404,709 Ingenico 338,844 Total purchases 8,312,375 Total sales 11,062,147 7

10 Statistical information Comparative tables Income 31/03/17 30/09/16 30/09/15 30/09/14 pence pence pence pence Change in net assets per unit Opening net asset value per unit 1, , , , Return before operating charges* Operating charges (7.57) (12.72) (11.86) (11.05) Return after operating charges* Distributions on income units (5.64) (21.22) (12.75) (13.11) Closing net asset value per unit 1, , , , *after direct transaction costs of: Performance Return after charges 11.19% 18.65% 3.66% 3.67% Other information Closing net asset value ( 000) Closing number of units 1,862 1,862 3,862 5,312 Operating charges 1.17% 1.12% 1.06% 1.07% Direct transaction costs 0.05% 0.15% 0.23% 0.23% Prices + Highest unit price (pence) 1, , , , Lowest unit price (pence) 1, , , High and low price disclosures are based on quoted prices. Therefore the opening and closing NAV prices may fall outside the high/low price threshold. 8

11 Statistical information Comparative tables Accumulation 31/03/17 30/09/16 30/09/15 30/09/14 pence pence pence pence Change in net assets per unit Opening net asset value per unit 1, , , , Return before operating charges* Operating charges (10.80) (18.43) (17.26) (16.09) Return after operating charges* Distributions on accumulation units (8.43) (32.77) (18.73) (18.97) Retained distributions on accumulation units Closing net asset value per unit 2, , , , *after direct transaction costs of: Performance Return after charges 11.22% 18.49% 3.65% 3.67% Other information Closing net asset value ( 000) 60,218 56,780 53,911 57,307 Closing number of units 2,896,589 3,037,608 3,417,214 3,764,934 Operating charges 1.10% 1.09% 1.06% 1.07% Direct transaction costs 0.05% 0.15% 0.23% 0.23% Prices + Highest unit price (pence) 2, , , , Lowest unit price (pence) 1, , , , High and low price disclosures are based on quoted prices. Therefore the opening and closing NAV prices may fall outside the high/low price threshold. 9

12 Statistical information Investment objective The objective of the Fund is to maximise the long term return, mainly through capital growth, by investment in a portfolio of selected securities in the countries of Europe, generally excluding the United Kingdom. Investment policy The Fund primarily invests in European equity shares, excluding the United Kingdom. The Fund may hold cash and near cash assets where reasonably necessary to fund redemptions of units, for the Fund. It may borrow, providing such borrowing is on a temporary basis, and does not exceed the limits applicable to the Fund. Revenue distribution and pricing Units of the Fund are available as either Income units (where revenue is distributed to unitholders) or Accumulation units (where revenue is reinvested to enhance the unit price). There will be two potential distributions in each accounting year: an interim distribution as at 31 March and a final distribution as at 30 September. At each distribution the net revenue after deduction of expenses, arising in the preceding six months from the investments of the Fund is apportioned amongst the unitholders. Unitholders receive a tax voucher giving details of the distribution and the Manager s Report no later than two months after these dates. 10

13 Statistical information Risk and reward profile The Risk and Reward Indicator table demonstrates where the Fund ranks in terms of its potential risk and reward. The higher the rank the greater the potential reward but the greater the risk of losing money. It is based on past data, may change over time and may not be a reliable indication of the future risk profile of the Fund. The shaded area in the table below shows the Fund s ranking on the Risk and Reward Indicator. fi Typically lower rewards, Typically higher rewards, lower risk higher risk fi This Fund is ranked at 5 because funds of this type have experienced medium to high rises and falls in value in the past. The above figure applies to the following unit class: Income Accumulation Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffer severe losses in all cases. Please note the Fund s risk category may change in the future. The indicator does not take into account the following risks of investing in this Fund: Investing overseas can bring additional returns and spread risk to different markets. There are risks, however, that changes in currency rates will reduce the value of your investment. The Fund may use derivatives to reduce risk or cost or to generate additional capital or income at low risk, or to meet its investment objective. For more information on the Risk and Reward profiles of our funds, please refer to the most up to date relevant fund and Unit Class Key Investor Information Documents (KIIDs). These are available online at Directors statement This report has been prepared in accordance with the requirements of the Collective Investments Schemes Sourcebook as issued and amended by the Financial Conduct Authority. 25 May 2017 Craig Baker, Director Shamira Mohammed, Director 11

14 Interim financial statements (unaudited) For the half year ended 31 March 2017 Statement of total return 31/03/17 31/03/16 Income Net capital gains 5,999,810 2,846,375 Revenue 605, ,713 Expenses (316,839) (289,189) Interest payable and similar charges (65) (75) Net revenue before taxation 288,395 72,449 Taxation (43,503) 98,919 Net revenue after taxation 244, ,368 Total return before distributions 6,244,702 3,017,743 Distributions (244,892) (171,366) Change in net assets attributable to unitholders from investment activities 5,999,810 2,846,377 Statement of change in net assets attributable to unitholders 31/03/17 31/03/16* Opening net assets attributable to unitholders 56,803,533 53,951,750 Amounts receivable on issue of units 344,800 49,545 Amounts payable on cancellation of units (3,148,821) (3,213,471) (2,804,021) (3,163,926) Change in net assets attributable to unitholders from investment activities 5,999,810 2,846,377 Retained distributions on accumulation units 244, ,042 Closing net assets attributable to unitholders 60,243,449 53,804,243 *Please note that the comparative figures are for the comparative interim period. The brought forward net assets for the current period do not, therefore, equal the carried forward figure in the comparative. 12

15 Interim financial statements (unaudited) As at 31 March 2017 Balance sheet 31/03/17 30/09/16 Assets Fixed assets: Investments 59,956,846 56,701,094 Current assets: Debtors 287, ,387 Cash and bank balances 175, ,909 Total current assets 463, ,296 Total assets 60,419,998 56,944,390 Liabilities: Creditors: Bank overdraft (13) Other creditors (176,431) (140,512) Distribution payable (105) (345) Total liabilities (176,549) (140,857) Net assets attributable to unitholders 60,243,449 56,803,533 Notes to the interim financial statements Accounting policies The interim financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in compliance with FRS102 and in accordance with the Statement of Recommended Practice (2014 SORP) for financial statements of Authorised Funds issued by The Investment Association in May Unless otherwise stated all accounting policies applied are consistent with those of the Annual Report for the year ended 30 September 2016 and are described in those financial statements. 13

16 Distribution table For the half year ended 31 March 2017 Interim distribution in pence per unit Group 1: units purchased prior to 1 October 2016 Group 2: units purchased 1 October 2016 to 31 March pence pence per unit per unit payable paid Income Equalisation 31 May 31 May Income Group Group Accumulation Group Group Equalisation This applies only to units purchased during the distribution period (Group 2 units). It is the average amount of revenue included in the purchase price of all Group 2 units and is refunded to the holders of these units as a return of capital. Being capital it is not liable to income tax but must be deducted from the cost of the units for capital gains tax purposes. 14

17 Corporate information The information in this report is designed to enable unitholders to make an informed judgement on the activities of the Fund during the period it covers and the results of those activities at the end of the period. Phoenix Unit Trust Managers Limited is part of the Phoenix Group. Ignis Investment Services Limited is part of the Standard Life Investments group (Standard Life Investments (Holdings) Limited) and its subsidiaries. Unit prices appear daily on our website Dealing: Administration: Remuneration The Manager has adopted a remuneration policy, up-to-date details of which can be found on These details describe how remuneration and benefits are calculated and identify the committee which oversees and controls the policy. A paper copy of these details can be requested free of charge from the Manager. Following the implementation of UCITS V in the UK on 18 March 2016, all authorised UCITS Managers are required to comply with the UCITS V Remuneration Code from the start of their next accounting year. Under the UCITS V Directive, the Manager is required to disclose information relating to the remuneration paid to its staff for the financial year, split into fixed and variable remuneration. The Manager s Financial Year end is 31 December, it is therefore anticipated that the Manager's Remuneration Policy and associated financial disclosures will be made within the Annual Reports starting from 31 December 2017, following its first full performance period. Prior to this date, and in line with the FCA s guidance on the UCITS V remuneration disclosures, the Manager would be part way through its first performance period and the information available would not be relevant or provide a proper basis for comparison. Risks The price of units and the revenue from them can go down as well as up and investors may not get back the amount they invested, particularly in the case of early withdrawal. Tax levels and reliefs are those currently applicable and may change. The value of any tax relief depends on personal circumstances. Depending on the fund, the value of your investment may change with currency movements. 15

18 Corporate information Manager Phoenix Unit Trust Managers Limited (PUTM) 1 Wythall Green Way, Wythall, Birmingham, B47 6WG Tel: Registered in England No Authorised and regulated by the Financial Conduct Authority Directors Andrew Moss PUTM Director, Chief Executive Phoenix Life; Shamira Mohammed PUTM Director, Finance Director Phoenix Life; Craig Baker PUTM Director, Head of Investment Management Phoenix Life; Mike Urmston Non Executive Director of PUTM Registrar and correspondence address Phoenix Unit Trust Managers Limited PO Box Chelmsford CM99 2EN Authorised and regulated by the Financial Conduct Authority Investment Adviser Ignis Investment Services Limited 1 George Street Edinburgh, EH2 2LL Registered in Scotland No.SC Authorised and regulated by the Financial Conduct Authority Trustee (appointed 1 March 2017) HSBC Bank plc 1-2 Lochside Way Edinburgh Park Edinburgh EH12 9DT Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority Trustee (resigned 28 February 2017) National Westminster Bank Younger Building, 1st Floor 3 Redheughs Avenue Edinburgh EH12 9RH Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority Independent Auditor to the Fund Ernst & Young LLP Ten George Street Edinburgh EH2 2DZ Authorised status This Fund is an Authorised Unit Trust scheme under section 243 of the Financial Services & Markets Act 2000 and is categorised under the Collective Investment Schemes Sourcebook as a UCITS fund. 16

19

20 Contact: Client Services Call: Correspondence Address: PO Box Chelmsford CM99 2EN Visit: phoenixunittrust.co.uk Telephone calls may be monitored and/or recorded for the purposes of security, internal training, accurate account operation, internal customer monitoring and to improve the quality of service. Please note the Key Investor Information Document (KIID), the supplementary Information Document (SID) and the full prospectus are available free of charge. These are available by contacting Client Services on Phoenix Unit Trust Managers Limited does not accept liability for any claims or losses of any nature arising directly or indirectly from use of the data or material in this report. The information supplied is not intended to constitute investment, tax, legal or other advice. Phoenix Unit Trust Managers Limited* is a Phoenix Group Company. Registered in England No Registered office: 1 Wythall Green Way, Wythall, Birmingham B47 6WG. Authorised and regulated by the Financial Conduct Authority. B