MI Bespoke Funds ICVC

Transcription

1 MI Bespoke Funds ICVC Interim Report 30 September 2018

2 MI Bespoke Funds ICVC Contents Page Directory Basis of Accounting Certification of the Interim Report by the Authorised Corporate Director Investment Objective and Policy Investment Manager s report Portfolio Statement Comparative Tables Statement of Total Return Statement of Change in Net Assets Attributable to Shareholders Balance Sheet General Information

3 MI Bespoke Funds ICVC Directory Authorised Corporate Director (ACD) & Registrar Maitland Institutional Services Ltd Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Telephone: Fax: Website: (Authorised and regulated by the Financial Conduct Authority) Customer Service Centre Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Telephone: Fax: (Authorised and regulated by the Financial Conduct Authority) Directors of the Authorised Corporate Director R. Ackermann J. Clark P.J. Foley-Brickley S. Georgala D. Jones G. Kok Investment Manager Lowes Financial Management Ltd Fernwood House, Clayton Road, Jesmond, Newcastle Upon Tyne NE2 1TL (Authorised and regulated by the Financial Conduct Authority) Fund Managers Paul Milburn Doug Millward Depositary BNP Paribas Securities Services 10 Harewood Avenue, London NW1 6AA (Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority) Independent Auditor KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square, Canary Wharf, London E14 5GL MI Bespoke Funds ICVC 1

4 MI Bespoke Funds ICVC Basis of Accounting The interim financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in accordance with FRS 102 and the Statement of Recommended Practice (SORP) for Financial Statements of UK Authorised Funds issued by the Investment Association (IA) in May The interim financial statements have been prepared on the same basis as the audited financial statements for the year ended 31 March The financial statements have been prepared on the going concern basis. Certification of the Interim Report by the Authorised Corporate Director This report has been prepared in accordance with the requirements of the Financial Conduct Authority s Collective Investment Schemes sourcebook ( the COLL Sourcebook ) and the Statement of Recommended Practice issued by the Investment Association. R. Ackermann D. Jones Directors Maitland Institutional Services Ltd 27 November MI Bespoke Funds ICVC

5 Investment Objective and Policy The investment objective of the is to achieve long term capital growth. The Sub-fund intends to meet its objectives through exposure to a combination of equities, fixed interest and structured products. The majority of the Sub-fund's exposure will be to equities. It may also have exposure to property. With the exception of structured products, this exposure will be through investment in OEICs, unit trusts, investment trusts, Exchange Traded Funds and other collective investment schemes across several management groups. It may also invest in equities from the world's major markets, bonds and other transferable securities. The Sub-fund has no specific limits on exposures to any asset class, geographic area, industry or economic sectors. Investment Manager s Report for the period ended 30 September 2018 Performance Review For the period from 31 March 2018 until 28 September 2018 the total return of the C Accumulation share class was 6.06% at valuation point, compared to 5.88% for the IA Flexible Investment sector average. The Fund is ranked 73rd out of 157 funds available over the six months, and 49th out of 133 since launch, placing it in the second quartile of its sector for both periods. The total return of the B share class was 5.58%. Source: FE Analytics. Total return. Bid to bid. Market Review The Federal Reserve raised interest rates a further two times and began the process of removing the money pumped into the US economy over the last decade through Quantitative Easing. The Bank of England continued to maintain its balance sheet at existing levels, but did follow the US with one interest rate rise, taking the base rate to 0.75% in August. Donald Trump continued with his confrontational rhetoric about unfair trade agreements, bringing into effect trade tariffs, especially against China, with the threat of more to come in the future. These were met with reciprocal tariffs, targeted against sections of the US economy which were seen to be core to the US President s political support. In the UK, Brexit continued to dominate the political landscape, with the government as yet failing to reach an agreement with the rest of Europe over the terms of the separation. With the date of our leaving set as 29 March 2019, this failure increased the possibility of no deal being in place when we exit, leading to an increase in uncertainty amongst businesses. The FTSE 100 started the period strongly, rising from 7, to reach a new high of 7, on 22 May, before falling back to 7, on 28 September giving a return of 6.43% (Capital Return) over the six months. This positive performance was mirrored by most of the main indices around the world, with the MSCI World Index returning 7.9%, but this wasn t universal. The MSCI Emerging Markets Index, for example, fell by 5.18% over the same period, and the fixed interest market, as measured by the iboxx UK Sterling Corporate (All Maturities) Index, fell by 2.52%. Portfolio Activity The portfolio continues to provide a broad range of asset classes and geographical allocations. In April we adjusted our European allocation by selling the holdings in the Jupiter European Special Situations and Threadneedle European Smaller Companies funds, reinvesting the proceeds into the Schroder European Alpha Plus fund. May saw us increase our allocation to US Smaller Companies, whilst at the same time switching our holding from the Schroder US Smaller Companies fund to the Artemis US Smaller Companies fund for better potential returns. Although not the primary reason for the switch, the change of fund reduced the charges incurred by this tranche of capital. We also switched our holding in the Artemis Pan European Absolute Return fund to the Carmignac Portfolio Long-Short European Equities fund after it failed to protect as we had expected in a downward market. We added to our Structured Product portfolio in June and July with the purchase of three new contracts. Two issued by Morgan Stanley, the first linked to the FTSE 100 and S&P500 indices and the second linked only to the FTSE 100. The third contract was linked to the FTSE 100 and EuroStoxx 50 indices and issued by the Canadian Imperial Bank of Commerce (CIBC). A final contract was added in September, again linked to the FTSE 100 only but this time issued by Société Générale to provide some diversification in counterparties. All four contracts were purchased in the secondary market, at terms more favourable than when they originally launched, and give the fund exposure to the relative stockmarkets whilst providing a level of downside protection. 3

6 Investment Manager s Report continued All other activity within the Fund was additions to existing holdings to help maintain and adjust the asset and geographical allocations within the portfolio. This was funded from cash as we continued to see positive inflows during the period. Outlook Volatility has returned to investment markets in 2018 compared to the calmer conditions which were witnessed throughout Politics remains at the forefront of investors minds, non-more so than in the UK where we are fast approaching the deadline for any Brexit deal to be achieved. Issues also remains in Europe, with Angela Merkel seeing her dominance in German politics fade and Italy at war with the European Union over their budget plans. In the US the mid-term elections saw the control of the two houses separated. Trade wars look set to continue, particularly those instigated by the US, and it remains to be seen if the tariffs which have already been imposed are just the start of many more, or whether parties can come together and compromises can be reached. Economies around the world continue to expand but the synchronisation of this growth, which was a feature of last year, appears for now to have receded. The growth does, however, continue to support corporate earnings and therefore whilst volatility has raised its head equities continue to have the potential to perform. The Fund therefore continues to have a high weighting to this asset class, with regional preference for Europe, Japan and Emerging Markets, where we feel valuations are not as stretched. The US Federal Reserve appears resolute in its interest rate hiking cycle and therefore fixed income remains a difficult asset class. Opinions are divided as to the outlook for inflation, so we are diversified across funds deploying different investment strategies. Whilst favouring equities, we are conscious that we are potentially late in this investment and economic cycle and therefore balance our holding with positions in cash and more defensive assets, including targeted absolute return funds. 4

7 Portfolio Statement as at 30 September 2018 Market % of total value net assets Holding Security 2018 STRUCTURED PRODUCTS 5.61% (2.29%) Structured Products 5.61% (2.29%) 218,718 Canadian Imperial Bank 9.4% Convertible , ,223 Citigroup 0% , ,000 Morgan Stanley 0% , ,903 Morgan Stanley 0% , ,354 Morgan Stanley Preference , ,000 Société Générale 8Y Autocall in GBP , EQUITIES 0.54% (0.72%) 1,383, Far East 0.54% (0.72%) 36,478 Edinburgh Dragon Trust 132, FUNDS* 84.07% (88.63%) Bond Funds 12.65% (13.59%) 40,723 Gam Star Credit Opportunities - GBP Accumulation 645, ,271 Invesco Perpetual Tactical Bond - Z Accumulation 777, ,441 Janus Henderson Strategic Bond - I Income 782, ,662 MI Twentyfour Dynamic Bond - I Net Accumulation 913, ,118, Emerging Markets 4.78% (5.71%) 48,366 Baillie Gifford Emerging Markets Growth - B Accumulation 366, ,012 Goldman Sachs Emerging Markets Core Equity - R Income 481, ,462 Janus Henderson Emerging Markets Opportunities Fund - I Accumulation 330, ,178, Europe 8.31% (9.84%) 3,685 Carmignac Portfolio Long-Short European Equities Fund - GBP Accumulation 472, ,205 Janus Henderson European Smaller Companies - I Accumulation 216, ,625 Jupiter European - I Accumulation 800, ,891 Schroder European Alpha Plus Fund - Z Accumulation 560, ,049, Far East 4.83% (4.80%) 254,299 First State Asia Focus - B Accumulation 456, ,798 Old Mutual Asia Pacific - R Accumulation 733, ,189, Global 12.44% (12.90%) 714,893 AHFM Defined Returns - B Accumulation 1,002, ,204 Goldman Sachs Global Core Equity Portfolio - R GBP 996, ,654 Invesco Perpetual Global Targeted Returns - Z Accumulation 619, ,343 Invesco Perpetual Smaller Companies - Z Accumulation 447, ,066,

8 Portfolio Statement continued Market % of total value net assets Holding Security 2018 Japan 6.83% (6.91%) 7,625 Baillie Gifford Japanese Smaller Companies - B Income 373, ,433 First State Japan Focus - B Accumulation 676, ,015 Man GLG Japan Core Alpha - A Accumulation 248, ,208 Schroder Tokyo - Z Accumulation 385, ,683, United Kingdom 21.55% (23.49%) 351,991 Franklin UK Mid Cap - Z Accumulation 833, ,438 Janus Henderson UK Absolute Return Fund - I Accumulation 761, ,241 LF Miton UK Smaller Companies Fund - B Accumulation 443, ,878 Liontrust Special Situations - A Income 979, ,263 Old Mutual UK Smaller Companies Focus - R Income 556, ,676 Schroder Recovery - Z Accumulation 864, ,830 SVM UK Growth - B Accumulation 871, ,312, United States of America 12.68% (11.39%) 428,150 Artemis US Absolute Return Fund - I Accumulation 486, ,770 Artemis US Smaller Companies Fund - I Accumulation 369, ,515 Fidelity American Special Situations - W Accumulation 677, ,797 Old Mutual North American Equity - R Accumulation 932, ,555 Vanguard US Equity Index - A Income 660, ,125, Investment assets 22,240, Net other assets 2,410, Net assets 24,651, All investments are ordinary shares or stock units on a regulated securities market unless otherwise stated. The percentages in brackets show the equivalent % holdings as at * Collective Investment Schemes permitted under COLL, not listed on any exchange. Total purchases for the period: 5,776,172 Total sales for the period: 1,468,247 6

9 Comparative Tables Change in net assets per share B Income p p p p Opening net asset value per share Return before operating charges^ Operating charges Return after operating charges^ Distributions Closing net asset value per share ^After direct transaction costs of Performance Return after charges 5.22% 4.77% 17.90% 4.09% Other Information Closing net asset value 785, , , ,534 Closing number of shares 621, , , ,541 Operating charges 2.12% 2.11% 2.04% 2.48% Direct transaction costs 0.01% 0.02% 0.07% 0.04% Prices Highest share price Lowest share price B Income launched on 04 September C Income p p p p Opening net asset value per share Return before operating charges^ Operating charges Return after operating charges^ Distributions Closing net asset value per share ^After direct transaction costs of Performance Return after charges 5.69% 5.70% 18.97% -2.25% Other Information Closing net asset value 4,297,385 4,068,331 4,224,039 3,720,618 Closing number of shares 3,349,637 3,351,628 3,650,459 3,811,450 Operating charges 1.22% 1.21% 1.14% 1.58% Direct transaction costs 0.01% 0.02% 0.07% 0.04% Prices Highest share price Lowest share price C Income launched on 06 May

10 Comparative Tables continued Change in net assets per share (continued) C Accumulation p p p p Opening net asset value per share Return before operating charges^ Operating charges Return after operating charges^ Distributions Retained distributions on accumulation shares Closing net asset value per share ^After direct transaction costs of Performance Return after charges 5.70% 5.68% 18.97% -2.28% Other Information Closing net asset value 19,568,075 13,563,459 5,557, ,293 Closing number of shares 15,064,091 11,037,258 4,778, ,679 Operating charges 1.22% 1.21% 1.14% 1.58% Direct transaction costs 0.01% 0.02% 0.07% 0.04% Prices Highest share price Lowest share price C Accumulation launched on 22 May Operating charges include indirect costs incurred in the maintenance and running of the Sub-fund, as disclosed (but not limited to) the detailed expenses within the Statement of Total Return. The figures used within this table have been calculated by annualising the expenses incurred against the average Net Asset Value for the accounting period. The Sub-fund invests in Collective Investment Schemes, the expenses incurred by these schemes in relation to the Sub-fund (synthetic ongoing charge) are included within the operating charges. The return after charges is calculated as the closing net asset value per share plus the distributions on income shares minus the opening net asset value per share as a % of the opening net asset value per share. Direct transaction costs include fees, commissions, transfer taxes and duties in the purchasing and selling of investments, which are offset (where applicable) against any dilution levies charged within the accounting period. The figures used within the table have been calculated against the average Net Asset Value for the accounting period. 8

11 Comparative Tables continued Risk and reward profile The Risk and Reward Indicator table demonstrates where the Sub-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 Sub-fund. The shaded area in the table below shows the Sub-fund s ranking on the Risk and Reward Indicator. Typically lower rewards, lower risk Typically higher rewards, higher risk The Sub-fund is ranked at 4 because funds of this type have experienced average rises and falls in value in the past. 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. The indicator does not take into account the following risks of investing in this Sub-fund: Counterparty risk: The Sub-fund can conclude various transactions with contractual partners. If a contractual partner becomes insolvent, it can no longer or can only partly settle unpaid debts owed to the Sub-fund. Market risk: External factors can cause an entire asset class to decline in value which would result in a decrease in the value of investments. Currency risk: As the Sub-fund invests in overseas securities, movements in exchange rates, when not hedged, may cause the value of investments to increase or decrease. Risk from use of derivatives: Investments in derivatives may result in gains or losses that are greater than the original amount invested. For further risk information please see the prospectus. Risk warning An investment in an Open Ended Investment Company should be regarded as a medium to long-term investment. Investors should be aware that the price of shares and the revenue from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. 9

12 Statement of Total Return for the period ended 30 September to to Income Net capital gains 1,041, ,266 Revenue 103,569 72,885 Expenses (44,075) (34,535) Interest payable and similar charges (60) Net revenue before taxation 59,494 38,290 Taxation Net revenue after taxation 59,494 38,290 Total return before distributions 1,100, ,556 Distributions 13, Change in net assets attributable to Shareholders from investment activities 1,114, ,566 Statement of Change in Net Assets Attributable to Shareholders for the period ended 30 September to to Opening net assets attributable to Shareholders 18,412,838 10,639,444 Amounts receivable on issue of shares 5,652,306 3,386,514 Less: Amounts payable on cancellation of shares (528,107) (631,499) 5,124,199 2,755,015 Change in net assets attributable to Shareholders from investment activities (see Statement of Total Return above) 1,114, ,566 Closing net assets attributable to Shareholders 24,651,076 13,875,025 The opening net assets attributable to shareholders for the current period do not equal the closing net assets attributable to shareholders for the comparative period as they are not consecutive periods. 10

13 Balance Sheet as at 30 September 2018 ASSETS Fixed Assets Investments 22,240,799 16,874,043 Current Assets Debtors 359, ,982 Cash and bank balances 2,159,764 1,462,664 Total current assets 2,519,750 2,045,646 Total assets 24,760,549 18,919,689 LIABILITIES Investment liabilities Creditors Bank overdrafts (96,703) Distribution payable (31,311) Other creditors (12,770) (475,540) Total creditors (109,473) (506,851) Total liabilities (109,473) (506,851) Net assets attributable to Shareholders 24,651,076 18,412,838 11

14 MI Bespoke Funds ICVC General Information Authorised Status MI Bespoke Funds ICVC (the Company ) is structured as an Investment Company with Variable Capital ( ICVC ), under regulation 12 (Authorisation) of the OEIC Regulations (Open-Ended Investment Companies Regulations 2001 (SI 2001/1228)). The Company does not intend to have an interest in immovable property. The Company is authorised and regulated in the UK by the Financial Conduct Authority ( FCA ) as a UCITS Retail Scheme and Umbrella Company under the COLL Sourcebook. The Company was incorporated in England and Wales on 18 March 2015 under registration number IC The Shareholders are not liable for the debts of the Company. MI Bespoke Funds ICVC is structured as an umbrella company. Provision exists for an unlimited number of Sub-funds, and at the date of this Report one sub-fund, the MI Bespoke Funds ICVC - is authorised. Head Office Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Address for Service The Head Office is the address in the United Kingdom for service on the Company of notices or other documents required or authorised to be served on it. Base Currency The base currency of the Company is Pounds Sterling. Share Capital The minimum share capital of the Company is 1,000 and the maximum is 100,000,000,000. Shares in the Company have no par value. The share capital of the Company at all times equals the sum of the net asset value of the Sub-fund. Classes of Shares The Instrument of Incorporation allows each Sub-fund to issue different classes of shares in respect of any Sub-fund. The Company may issue both Income and Accumulation Shares. Share Class Sub-fund B Acc B Inc C Acc C Inc * *This share class has no investment at the date of this report. Holders of Income shares are entitled to be paid the revenue attributable to such shares in respect of each annual accounting period in the currency of the relevant share class. Holders of Accumulation shares are not entitled to be paid the revenue attributable to such shares, but that revenue is retained and accumulated for the benefit of shareholders and is reflected in the price of shares. Valuation Point The scheme property of the Company and each Sub-Fund will normally be valued at 12:00 on each dealing day for the purpose of calculating the price at which shares in the Company may be issued, sold, repurchased or redeemed. For the purpose of the pricing of Shares, a business day is defined as a day on which the dealing office of the ACD is open for the buying and selling of shares. The ACD may at any time during a business day carry out an additional valuation of the property of the Sub-fund if the ACD considers it desirable to do so, with the Depositary's approval. 12 MI Bespoke Funds ICVC

15 MI Bespoke Funds ICVC General Information continued Buying, Redeeming and Switching of Shares The ACD will accept orders for the purchase, sale and switching of shares on normal business days between 08:30 and 16:30. Instructions to buy or sell shares may either be in writing to: Springfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Or by telephone to: The ACD has the right to establish facilities for recording telephone calls made or received on this telephone line. A contract note giving details of the shares purchased will be issued no later than the next business day after the business day on which an application to purchase shares is received and instrumented by the ACD. Certificates will not be issued in respect of shares. Ownership of shares will be evidenced by an entry on the register of shareholders. Pricing Basis There is a single price for buying, selling and switching shares in a Sub-fund which represents the Net Asset Value of the Sub-fund concerned. The share price is calculated on a forward pricing basis, that is at the next Valuation Point after the purchase or redemption is deemed to be accepted by the ACD. The prices of shares are published daily on Neither the ACD nor the Company can be held responsible for any errors in the publication of the prices. The shares in the Company will be issued and redeemed on a forward pricing basis which means that the price will not necessarily be the same as the published price. Other Information The Instrument of Incorporation, Prospectus, Key Investor Information Document and the most recent interim and annual reports may be inspected at the office of the Company which is also the Head Office of the Company. Copies may be obtained free of charge upon application. They are also available from the website of the Company, the details of which are given in the directory of this report. Shareholders who have complaints about the operation of the Company should in the first instance contact the ACD, or, following that, may make their complaint direct to the Financial Ombudsman Service, Exchange Tower, London E14 9SR. Risk Warning An investment in an Open Ended Investment Company with Variable Capital should be regarded as a medium to long-term investment. Investors should be aware that the price of shares and the revenue from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. MI Bespoke Funds ICVC 13

16 Registered in England No Authorised and regulated by the Financial Conduct Authority.