Income Fund. in UK Blue Chip Equities. Fund presentation. May For Professional advisers only. Not to be shown or given to any retail investors

Transcription

1 HC Charteris Premium Income Fund A innovative An i ti strategy t t investing i ti in UK Blue Chip Equities Fund presentation May 2018 For Professional advisers only. Not to be shown or given to any retail investors

2 Key Points 3 Why Invest? Top Down Macro Analysis Fundamentals & Stock Selection Technical Analysis writing options in practice Performance Risk Management The Investment Team 16 For professional intermediaries only 2

3 Only invests in UK Blue Chip Equities (or cash up to 10%) Blue Chip means UK Top 100 companies by market capitalisation Targets growth stocks within this group, not traditional income stocks which usually underperform. Growth stocks tend to be the more volatile & therefore deliver higher option premiums than income stocks Tops up the dividends received by writing covered call options Target Dividend yield of 4-6% a year includes option premium received Looks to write options for only 4 to 5 months (approx) out of 12 months in any calendar year leaving the Fund unencumbered by options for 7 to 8 months (approx) of the year & thus free to make potential capital gains as well. A full 3 month option on a growth stock can be higher than a 6 month option on an Income stock (see slides 10 & 11) Top Quartile performance Calendar Years 2007/2008/2010/2016/ *(as at 30 th April 2018) *(Source FE) UK ICVC Daily Valuations & daily dealing UCITS Fund Suitable for regular savings, SIPPs, SSAS, ISAs, ISA transfers & JISAs Financial Express 2 crown Rating* *(as at 30 th April 18) For professional intermediaries only 3

4 Potentially boosts the income from a portfolio of Blue Chip Equities enabling the investor to benefit from higher income whilst not necessarily missing out on capital gains. Income boosted as the premium generated from the writing of call options is added to dividends. Different to other call option funds because options are only written during periods of the year when certain technical and fundamental investment criteria are met. Many option funds continuously write options and consequently run the risk of missing out on strongly rising markets. For professional intermediaries only 4

5 The holdings in the portfolio are selected by a combination of top down thematic strategy and bottom up stock selection. Technical analysis is used extensively to help time investment decisions including writing covered call options. As dividends id d can be cut the option proceeds are arguably a more reliable source of income. Unlike traditional income funds stock selection is not limited to high yielding stocks and the uncertainty as to whether the dividend will be maintained. The three month option premium onhigher volatility shares can exceed orbe equal to the annual dividend yield on high income low volatility shares i.e. as at the 3 rd Feb 2016 a full three month at the money call on BHP Billiton would have raised 8.67% which is double the annual dividend yield on National Grid which is approx 4.3%. (see pages 10 & 11) ) For professional intermediaries only 5

6 Study of Global economic fundamentals Comprehensive use of all types of technical analysis including Elliot Wave & Fibonacci to determine option timing Real expertise of long term market cycles [as distinct from economic cycles] Thematic Sector allocation For professional intermediaries only 6

7 The Characteristics We Prefer Targeting absolute returns over a 3 5 year time horizon Companies with the ability to grow earnings at an above average rate Strong base of recurring revenues & significant market share Strongly financed companies with low capital requirements Scalable business model few inhibitions to growth Highly profitable companies are defined by superior operating ratios with high returns on capital employed For professional intermediaries only 7

8 Example The Fund holds Vodafone shares valued at 175p on 1 January. The Fund writes a full three month covered call option with a 175p strike at 8p per share (4.5%). Scenarios over three months Share price at option expiry Impact on fund value Fund performance Rises to 2 (+14%) Appreciates by 8p instead of 25p if no option had been written Relative underperformance and absolute return Rises to 1.80 (+2.8%) Appreciates by 8p (8p option proceeds) versus Absolute and relative outperformance only 5p if no option written Unchanged at 1.75 Appreciates by 8p (option proceeds) Absolute and relative outperformance Falls to 1.70 ( 2.9%) Appreciatesby 3p (option proceeds offsets 5p Absolute and relative outperformance fall in share price) Falls to 1.50 ( 14%) Depreciates by 17p versus a market fall of 25p if no option had been written (25p loss minus 8p option proceeds) Relative outperformance but capital loss Irrespective ofthe performance ofthe shares the Fund keeps the option premium of8p (4.5%) and this is available for distribution. The Fund also maintains its entitlement to the dividend on the shares unless or until the option is exercised. For professional intermediaries only 8

9 {Source CQG} This Chart has a moving average overlay which serves to highlight the overbought & oversold condition of the UK Equity market. Optimum option writing occurs when the market becomes technically overbought For professional intermediaries only 9

10 (2013) (2014) (2015) (2016) The Four charts highlight hli h the seasonal pattern of the UKEquity Market for years 2013, 2014, 2015 and 2016 with an overbought / oversold envelope. At the bottom of each chart is a Chaikin Oscillator which confirms the sell signals. For professional intermediaries only {Source Bloomberg} 10

11 {as at 7 th Apr 17} Data taken on 7 th April 2017 showing live option prices for National Grid. Showing that t an approx SIX MONTH (Sept 2017) at the money option would raise 31.25p in premium (3.06%) For professional intermediaries only {Source Pro Quote} 11

12 {as at 7 th Apr 17} Data taken on 7 th April 2017 showing live option prices for BHP Billiton. Showing that approx TWO MONTH (June 2017) at the money option would raise 79p in premium (6.27%) For professional intermediaries only {Source Pro Quote} 12

13 {Source FE Total Return %} {as at 30 th Apr 18} For professional intermediaries only 13

14 Antofagasta 7.20% National Grid 6.03% Fresnillo 5.97% Randgold 5.60% Lloyds Bank 5.55% Persimmon 4.34% Prudential 4.11% SSE 3.94% WPP 3.78% Centrica 3.68% {as at 30 th April 18) For professional intermediaries only 14

15 Stock holdings Fundamental research Qualitative bottom up analysis and objectivity Diversification Sector / industry limit Position i limiti Cash Limit Max 40% 10% 10% Covered Calls Options Covered Call options on specific stocks in portfolio Risk management Independent verification All positions of Fund are constantly monitored by the compliance team at Host Capital [ACD] of the Fund as well as compliance team at Citibank Dil Daily Review Information systems Dil Daily reporting and dil daily review of Fund Bloomberg, Pro Quote, FE, Research For professional intermediaries only 15

16 Ian Williams Chartered FCSI, Chartered Wealth Manager, Chairman and CEO Ian has spent the past 35 years trading equities, commodities and G7 government bonds, covering sales, research, market making and proprietary trading. He was a member of the London Stock Exchange for many years before joining Chase Manhattan Bank (now JP Morgan). He then worked for Dresdner Kleinwort Benson and Guinness Mahon (now Investec) before becoming Chairman & Chief Executive of Charteris Treasury Portfolio Managers. Ian is the lead manager of the HC Charteris Gold & Precious Metals Fund (which was the top Fund in the country across all sectors in calendar year 2016) and the newly launched dhc Charteris Strategic t Bond Fund d& & The HC Charteris Premium Income Fund. A Charteris managed Gilt fund was the top UK Gilt Fund in 2007 & 2009 & 2013*. Ian Williams awarded Trustnet Alpha Manager in 2011 & accomplished a CityWire A rating in 2009, 2010 & He has been a regular contributor to the national written press and various television networks including Bloomberg, CNBC, RT and Thomson Reuters. Colin Robertson MA, MCSI Investment Manager Colin Robertson has over 32 years investment management and financial experience. He has held important and influential positions at some of the largest names in the financial sector including Aberdeen Asset Management, Cornelian, Gillespie MacAndrew LLP and Brown Shipley. He has managed clients both on a discretionary and advisory basis in that time, across global markets and all sectors. Colin graduated from Aberdeen University i with a MA in accountancy and went on to acquire further qualifications i including the London Stock Exchange exams as well as the LSE Private client futures and options exams. Nick Taylor Chartered FCSI & Head of Research Nick Taylor has 38 years of international investment management experience, gained at Morgan Grenfell, Invesco, and was Managing Director at Cigna International Investment Advisors and Matheson Investment Management. An award winning manager, Nicholas has run equity portfolios for a broad range of investors, including institutional pension funds, such as the Cadbury Schweppes Pension Fund alongside running several million pounds of private client portfolios and investment trusts. Nick is also a Chartered Fellow of the Chartered Securities Institute. Mark Williams Director Mark graduated from Surrey University with a BA in 2005 and began his career in Investment Management with Forsyth Partners as well as doing work experience for brokerage houses RP Martin and WH Ireland. He joined Charteris in November 2008 as a Junior Fund Manager assisting with the management of both individual private client portfolios as well as the management of the in house Charteris funds. He has hl helped oversee terrific fund performance including the HC Charteris Gold ld& Precious Metals fund dbi being best fund din the UK for calendar year 2016, going up %. Mark was also chosen to be on the front cover of Citywire WM Magazine (issue 386) with in depth feature analysing the performance. For professional intermediaries only 16

17 For professional intermediaries only 17

18 IA Sector : IA UK ALL COMPANIES SECTOR A Income : Bloomberg HCCPIAI LN EQUITY : Thomson Reuters LP : ISIN: GB00BYZKJ052 A Accumulation : Bloomberg HCCPIAA LN EQUITY : Thomson Reuters LP : ISIN: GB00BYZKHT09 Institutional Income : Bloomberg HCCPIII LN EQUITY : Thomson Reuters LP : ISIN: GB00BYZKJ383 Institutional Accumulation: : Bloomberg HCCPIIA LN EQUITY : Thomson Reuters LP : ISIN: GB00BYZKJ276 CUSTODIAN Authorised Corporate Director and Registrar: Auditor : Citibank : Host Capital : Deloitte s : RETAIL AMC 1.5% : INSTITUTIONAL AMC 1% For professional intermediaries only 18

19 For all enquiries Ian Williams E. T. +44 (0) London Office 8-9 Lovat Lane, London, EC3R 8DW T: +44 (0) Fax: +44 (0) Exeter Office Tel: +44 (0) Find us across Social Media YouTube: YT.com/user/charteristreasuryPM Facebook: facebook.com/charteristreasurypm/ LinkedIN: linkedin.com/company/charteris-treasury-portfolio-management-ltd Authorised and regulated by the Financial Conduct Authority For professional intermediaries only 19

20 This presentation is issued by Charteris Treasury Portfolio Management Ltd which is authorised and regulated by the Financial Conduct Authority Past performance is not a guide to future performance and investors may not get back the full amount invested The price of shares and any income from them may fall as well as rise On redemption of holdings investors may not receive back the full amount invested. Management and other fees may reduce the capital invested The information provided does not constitute advice or a personal recommendation for which the duty of suitability would be owed by us and you should seek your own advice as to the suitability of any investment matter mentioned here Professional advisers should be aware that this document is intended for their use only and this document is not to be shown or given to any retail investors The presentation is made on the basis of our current understanding of United Kingdom Tax laws, which may be subject to change in the future For professional intermediaries only 20