Threadneedle Global Bond Fund

Transcription

1 Annual Short Report 7 March 2017 Fund Managers Report Dave Chappell Adrian Hilton Performance of Income Class 1 Shares* Over the twelve months to 7 March 2017, the published share price of the Threadneedle Global Bond Fund has risen from 60.96p to 66.85p. Looking at the sterling performance within its peer group, the total return on the fund for the twelve months ending 28 February 2017, including net reinvested income, is +7.50% as compared to a median return of % over the same period. The fund return equates approximately to % gross of tax and charges**. For information the JPM GBI Global (Traded) Index (prior to 31/07/2012 JPM Global ex Japan) gave a total return of % for the same period. Market Overview and Portfolio Activity Overall, the global bond market generated positive returns over the 12 months under review. In the first half of the period, developed government bonds strengthened only modestly in aggregate, while their emerging-market counterparts enjoyed strong gains as did corporate bonds. With core yields at very low levels investors were tempted further out the risk spectrum in the search for higher income. Gilts were among the notable exceptions to this trend, returning over 11% as measured by the FTSE Actuaries UK Gilts All Stocks index; after the UK s shock decision to leave the EU, gilt yields fell to record lows on the correct assumption that the Bank of England would respond by cutting interest rates. Global government bonds were especially weak and volatile toward the end of 2016, though corporate yields also rose. In the US, domestic economic data remained solid. Anticipation of a 25 basis point rate hike increased as the quarter progressed and was proved correct at the December meeting. However, the main catalyst for the sell-off in bonds was Donald Trump s election victory. Investors anticipated that his policies would drive up growth and inflation, thereby prompting a sharper trajectory for US interest rates. Moving into 2017, the main focus for investors was President Trump s first weeks in office, during which he signed a raft of executive orders. These included moves to cut regulation, boost infrastructure spending and oil production, and promote US steel. On the whole, the initiatives lifted equities but weighed on bond prices. In February, however, the US Federal Reserve s relatively dovish meeting and the lack of detail on President Trump s tax-reform plans put downward pressure on yields. Eurozone bonds had a weak start to 2017 amid stronger-than-expected growth, inflation and bond issuance. Eurozone GDP grew 0.4% in the fourth quarter (Q4) while annual inflation spiked to 1.8% in January, a near fouryear high. UK inflation and growth were also higher than expected, with annual CPI inflation hitting 1.8% in January and Q4 GDP growing 0.7%. The fund continued to hold a diversified portfolio of mostly developedmarket sovereign bonds, but also selective corporate and emerging-market sovereign bonds. We took advantage of relative weakness over the first half of the period to increase exposure to Japanese and US sovereign debt, and although effective durations (interest-rate risks) increased in both cases, they remained short of the benchmark. However, overall US duration was more neutral to long, due to our holdings in US-denominated supranational debt and high-quality credit. By contrast, we began the period with long duration positions in Australian and UK government bonds; we lowered exposure to both during the first six months of the year, moving less long in Australia and modestly short duration in the UK, where gilt yields had plumbed record lows. Towards the end of 2016, we added to our holdings of government bonds issued by the UK, Australia and Germany. We rotated our holdings within Treasuries and Japanese government bonds as some of our existing holdings matured. We also closed our positions in Portuguese and Irish sovereign debt. In the corporate bond space, we trimmed our exposure to Huntington National Bank. Near the end of the period, we added to our holdings of sovereign debt issued by France, Australia and to a small extent, Japan. We reduced our exposure to gilts. The Bank of Japan s transition to yield-curve control (and, thus, an implicit reduction of asset purchases) and speculation that the European Central Bank may taper its stimulus programme have led markets to question the large QE premium embedded into core bond markets. Simultaneously, the prospect of fiscal stimulus is gaining some credibility, especially since the election of Donald Trump as US president. While our long-term view of low real rates remains intact, there is an increasing risk of near-term corrections to somewhat higher yield levels as markets adjust to changes in the desired policy mix. Fund Facts Fund Accounting and Distribution Dates Accounting Dates Payment Dates 7 March 7 May 7 September 7 November Ongoing Charges Figure The Ongoing Charges Figure (OCF) is the European standard method of disclosing the charges of a share class of a fund based on the financial year s expenses and may vary from year to year. It includes charges such as the fund s annual management charge, registration fee, custody fees and distribution cost but ordinarily excludes the costs of buying or selling assets for the fund (unless these assets are shares of another fund). Where published, the Key Investor Information Document (KIID) contains the current OCF. For a more detailed breakdown please visit columbiathreadneedle.com/fees. Share class 7 March March 2016 Class 1 Income shares 1.42% 1.42% Class 1 Accumulation shares 1.42% 1.42% Class 1 Gross income shares 1.42% 1.42% Class 1 Gross accumulation shares 1.42% 1.42% Class 2 Income shares 0.81% 0.81% Class 2 Gross accumulation shares 0.81% 0.81% Class X Gross accumulation shares¹ 0.06% Class Z Income shares 0.63% 0.63% Class Z Gross income shares 0.63% 0.63% Class Z Gross accumulation shares 0.63% 0.63% The Ongoing Charges Figure is annualised based on the fees incurred since commencement date. 1 Commenced 16 March *In pound Sterling and against UK peer group. **Gross performance is calculated in Factset using daily cash flows and daily global close valuations.

2 Summary of Fund Performance Performance History (%) Share class Class 1 Income shares Class 1 Accumulation shares Class 1 Gross income shares Class 1 Gross accumulation shares Class 2 Income shares Class 2 Gross accumulation shares Class X Gross accumulation shares Class Z Income shares Class Z Gross income shares Class Z Gross accumulation shares To 28 February Commenced 16 March Commenced 28 September Commenced 24 September Source: Morningstar and Threadneedle. Bid to bid prices are quoted (i.e. not including any initial charge) with net income reinvested for a UK basic rate tax payer and gross income reinvested for a non-uk resident. Performance data is quoted in sterling, unless otherwise stated. Past performance is not a guide to future investment performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Net Asset Value (NAV) As at Share class NAV ( ) NAV pence per share Number of shares in issue 7 March 2017 Class 1 Income shares 3,221, ,854,365 7 March 2016 Class 1 Income shares 3,220, ,317,830 7 March 2015 Class 1 Income shares 7,570, ,382,593 7 March 2017 Class 1 Accumulation shares 1,566, ,499,225 7 March 2016 Class 1 Accumulation shares 1,357, ,400,935 7 March 2015 Class 1 Accumulation shares 1,040, ,995,738 7 March 2017 Class 1 Gross income shares 321,806, ,001,074 7 March 2016 Class 1 Gross income shares 254,376, ,501,071 7 March 2015 Class 1 Gross income shares 140,655, ,021,671 7 March 2017 Class 1 Gross accumulation shares 43,108, ,616,704 7 March 2016 Class 1 Gross accumulation shares 32,632, ,402,664 7 March 2015 Class 1 Gross accumulation shares 29,989, ,379,918 7 March 2017 Class 2 Income shares 11,449, ,591,331 7 March 2016 Class 2 Income shares 6,557, ,834,438 7 March 2015 Class 2 Income shares 2,423, ,910,118 7 March 2017 Class 2 Gross accumulation shares 41,414, ,553,598 7 March 2016 Class 2 Gross accumulation shares 105,988, ,183,678 7 March 2015 Class 2 Gross accumulation shares 38,699, ,010,940 7 March 2017 Class X Gross accumulation shares 15,049, ,483,929 7 March 2017 Class Z Income shares 19,440, ,281,456 7 March 2016 Class Z Income shares 20,025, ,654,643 7 March 2015 Class Z Income shares 7,037, ,450,033 7 March 2017 Class Z Gross income shares 390, ,813 7 March 2016 Class Z Gross income shares 129, ,881 7 March 2015 Class Z Gross income shares 82, ,844 7 March 2017 Class Z Gross accumulation shares 101, ,657 7 March 2016 Class Z Gross accumulation shares 96, ,153 7 March 2015 Class Z Gross accumulation shares 77, ,547 Only available to eligible investors.

3 Distribution History/Share Price Range Threadneedle Global Bond Fund Highest share price (pence) Lowest share price (pence) Year to Share class Pence per share 7 March 2017 Class 1 Income shares March 2016 Class 1 Income shares March 2015 Class 1 Income shares March 2017 Class 1 Accumulation shares March 2016 Class 1 Accumulation shares March 2015 Class 1 Accumulation shares March 2017 Class 1 Gross income shares March 2016 Class 1 Gross income shares March 2015 Class 1 Gross income shares March 2017 Class 1 Gross accumulation shares March 2016 Class 1 Gross accumulation shares March 2015 Class 1 Gross accumulation shares March 2017 Class 2 Income shares March 2016 Class 2 Income shares March 2015 Class 2 Income shares March 2017 Class 2 Gross accumulation shares March 2016 Class 2 Gross accumulation shares March 2015 Class 2 Gross accumulation shares March 2017 Class X Gross accumulation shares¹ March 2017 Class Z Income shares March 2016 Class Z Income shares March 2015 Class Z Income shares March 2017 Class Z Gross income shares March 2016 Class Z Gross income shares March 2015 Class Z Gross income shares March 2017 Class Z Gross accumulation shares March 2016 Class Z Gross accumulation shares March 2015 Class Z Gross accumulation shares Commenced 16 March Past performance is not a guide to future performance.

4 Classification of Investments 7 March 2017 vs 7 March % 29% 7 March March % 19% 14% 9% 4% -1% AAA Aaa Aaau AA+ Aa1 Aa1u AA Aa2 Aa2e Aa2u AA- A+ A1 A A2 A- A3 BBB+ Baa1 BBB Baa2 Baa2u BBB- BB+ Ba1 Not rated Derivatives Net other assets Portfolio Information Top Five Holdings % as at 7 March 2017 of Fund United States Treasury Note/Bond 0.875% 15/05/ United States Treasury Note/Bond 1.875% 28/02/ Australia Government Bond 1.75% 21/11/ United States Treasury Note/Bond 2.125% 30/11/ Japan Government 0.2% 20/06/ Top Five Holdings % as at 7 March 2016 of Fund United States Treasury Note/Bond 0.375% 31/01/ United States Treasury Note/Bond 0.625% 15/12/ Australia Government Bond 3.25% 21/10/ United States Treasury Note/Bond 0.5% 31/01/ Japan Government Thirty Year Bond 1.5% 20/12/

5 Investment Objective and Policy To achieve a total return comprising primarily income with some capital growth. The ACD s investment policy is to invest the assets of the Fund in a managed portfolio of fixed income securities worldwide. Key Investor Information Document (KIID) Subscription requirements The KIID is a pre-contractual document and investors have to confirm that they have read the latest KIID before making a subscription. Threadneedle has the right to reject a subscription if the investor does not confirm that they have read the latest KIID at the time of application. Investors can obtain the latest KIID from columbiathreadneedle.com. Changes to the management of the ACD The following changes have been made to the directors of the ACD: Appointment of Ms. Kath Cates (non-executive director) on 29 March 2016 Resignation of Mr. Campbell Fleming on 29 April 2016 Appointment of Ms. Laura Weatherup on 11 July 2016 Appointment of Mr. Dominik Kremer on 22 July 2016 Resignation of Mr. Tim Gillbanks on 31 March 2017 Changes to the Prospectus During the period from 8 March 2016 to 7 March 2017 the following changes were made to the Prospectus of the Threadneedle Investment Funds ICVC (the Company): Change to the investment policy for the UK Growth & Income Fund Increase to the depositary s fee effective from 1 October 2016 (from 0.008% per annum to 0.01% per annum) Updates to risk factors Updated disclosures required in relation to the depositary and remuneration following implementation of the UCITS V Directive Updates to list of directors and funds managed by the ACD Updates to taxation section Correction to investment and borrowing powers section for the UCITS funds to improve clarity and for consistency with the COLL rules Updated address of the auditor Changes to the Instrument of Incorporation The Instrument of Incorporation of the Company was amended on 8 March 2016, when income equalisation was introduced for certain funds. For more information, please refer to columbiathreadneedle.co.uk/income-equalisation. Increase to the Depositary s fee From 1 October 2016, the fee payable to the Depositary was increased from 0.008% to 0.01% per annum. This was agreed as a result of additional services to be performed by the Depositary as a result of the implementation of EU Directive 2014/91/EU (UCITS V). Changes to the share class names With effect from 6 April 2017, all payments from the Funds will be paid gross of UK tax, following changes to the way savings and investments are taxed in the UK. As a result of the change, the word net has been removed from the names of all the share classes that were previously net paying shares. Introduction of income equalisation for certain funds of the Company The ACD has decided to introduce income equalisation for certain funds of the Company with effect from 8 March Further information on income equalisation can be found at columbiathreadneedle.co.uk/income-equalisation. Key Risks Investment Risk: The value of investments can fall as well as rise and investors might not get back the sum originally invested. Currency Risk: Where investments are in assets that are denominated in multiple currencies, or currencies other than your own, changes in exchange rates may affect the value of the investments. Issuer Risk: The Fund invests in securities whose value would be significantly affected if the issuer refused, was unable to or was perceived to be unable to pay. Liquidity Risk: The fund holds assets which could prove difficult to sell. The fund may have to lower the selling price, sell other investments or forego more appealing investment opportunities. Inflation Risk: Most bond and cash funds offer limited capital growth potential and an income that is not linked to inflation. Inflation is likely to affect the value of capital and income over time. Interest Rate Risk: Changes in interest rates are likely to affect the fund s value. In general, as interest rates rise, the price of a fixed rate bond will fall, and vice versa. Derivatives for EPM/Hedging Risk: The investment policy of the fund allows it to invest in derivatives for the purposes of reducing risk or minimising the cost of transactions. Further risks applicable to the fund can be found in the Prospectus. Risk and Reward Profile As at 7 March 2017 the figure for the risk and reward profile disclosed in the most recent KIID representing this fund is 4. The fund is in this specific category because historically it has shown a medium level of volatility (how much the value of the fund went up and down compared to other categories). It is based on past performance data in pound sterling. If your investment in the fund is not in pound sterling, please check the figure for the risk and reward profile disclosed on our website (columbiathreadneedle.com) according to the currency of your investment in the fund.

6 General Information The information in this report is designed to enable shareholders 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. For further information, please contact Threadneedle Investment Services Limited. The Long Form Report and Financial Statements is available free of charge on request from the ACD and on our website. For more information about the activities and performance of the Company during the period and previous periods, please contact the ACD at the administration address noted below, or visit our website at columbiathreadneedle.com. Important information: changes to the way we distribute this document A recent consultation by the Financial Conduct Authority (FCA), identified that Short Form Reports have not met their original aim of providing clear and focused fund information. As a result, as of 22 November 2016, we are no longer obliged by regulation to produce Short Form Reports. We believe that a lot of the information contained within the reports is important for investors, so instead of discontinuing them, we will be changing the way we distribute them. This is the last version that we will be printing and sending out in the mail, moving forward they will be available on our website If you require a printed copy, please call us on * or * and we will arrange to send a copy to you. Contacts: Registered Office Cannon Place 78 Cannon Street London EC4N 6AG Authorised Corporate Director (ACD) Threadneedle Investment Services Limited Cannon Place 78 Cannon Street London EC4N 6AG Registrar Threadneedle Investment Services Limited Delegated to: International Financial Data Services (UK) Limited (Authorised and regulated by the Financial Conduct Authority (FCA)) St Nicholas Lane Basildon Essex SS15 5FS Investment Manager Threadneedle Asset Management Limited Cannon Place 78 Cannon Street London EC4N 6AG Authorised Corporate Director Client Services Details UK Investors Address: Threadneedle Investment Services Limited PO Box Chelmsford Essex CM99 2AL Telephone (dealing & customer enquiries): * Fax (dealing): (enquiries): questions@service.columbiathreadneedle.co.uk Asian Investors Address: Threadneedle Investment Services Limited International Financial Data Services 47, avenue JF Kennedy L-1855 Luxembourg Telephone (dealing & customer enquiries): * Fax (dealing): (enquiries): threadneedleenquiries@statestreet.com *Calls will be recorded. All Other Investors Address: Threadneedle Investment Services Limited International Financial Data Services 47, avenue JF Kennedy L-1855 Luxembourg Telephone (dealing & customer enquiries): * Fax (dealing): (enquiries): questions@service.columbiathreadneedle.co.uk Website: columbiathreadneedle.com Depositary Citibank Europe plc, UK branch (Authorised by the Prudential Regulatory Authority (PRA) and regulated by the FCA and PRA) Citigroup Centre 33 Canada Square Canary Wharf London E14 5LB Legal Advisers Eversheds LLP One Wood Street London EC2V 7WS Baum Financial Services Law Team Grosser Burstah Hamburg Germany Independent Auditor PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX Paying and Information Agent in Belgium J.P. Morgan Chase Bank Brussels 1, Boulevard du Roi Albert II 1210 Brussels Belgium Representative and Paying Agent in Switzerland BNP Paribas Securities Services, Paris, succursale de Zurich Selnaustrasse Zurich Switzerland To find out more visit columbiathreadneedle.com Threadneedle Investment Services Limited, ISA Manager, Authorised Corporate Director and Unit Trust Manager. Registered No Registered in England and Wales. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com