FP Verbatim Portfolio 5 Growth Fund

Transcription

1 FP Verbatim Portfolio 5 Growth Fund Short Report for the year ended 31 December 2015 Investment Objective and Policy The Fund will use a broadly cautious balanced strategy with the aim of achieving capital growth over the medium to longer term. The Fund will seek to achieve its objective through investment in Collective Investment Schemes (regulated and unregulated) as well as directly held transferable securities, derivatives, cash, deposits, warrants and money market instruments. Investment may be made globally but foreign currency exposure through non UK investments may be hedged back into Sterling. The Fund may also gain exposure (directly and indirectly) to alternatives, including but not limited to, property, commodities, hedge funds, private equity, infrastructure and loans, through investment in Collective Investment Schemes and transferable securities. Use may also be made of stock lending, borrowing, cash holdings and derivatives. It is intended that derivatives will be used for investment purposes as well as for efficient portfolio management but the ACD does not anticipate that such use of derivatives will have any significant adverse effect on the risk profile of the Fund. In particularly volatile markets, the Manager may temporarily hold more than 10% in cash provided it is in accordance with the investment objective of the Fund. As the Manager has the discretion to borrow up to 10% of the value of the property of the Fund, this facility may be used to help manage liquidity. Fund Facts Interim/Annual Accounting End Dates 30 June Ex-dividend (xd) Dates Income Distribution/ Accumulation Dates 31 December 01 January 28 February Risk Profile Please refer to the Full Prospectus for details of all the risks. The Fund has exposure to credit, counterparty and usual market risks. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. You should always regard investments in the Fund as medium to long term. Charges Share Class Initial Charge Annual Management Charge as at Total Expense Ratios as at Total Expense Ratios as at Share Class A Accumulation 5.00% 1.40% 2.08% 1.92% Share Class B Accumulation 5.00% 0.65% 1.33% 1.17% * From 1 April 2015 the AMC rebate was withdrawn. Page 1

2 Distributions/Accumulations Distributions Distribution payable 28/02/16 Distribution paid 28/02/15 Share Class A Accumulation Share Class B Accumulation Comparative Tables Performance Record Change in net assets per Share A Accumulation 31/12/13 B Accumulation 31/12/13 Opening net asset value per Share Return before operating charges* Operating charges (2.08) (1.92) (2.06) (1.33) (1.17) (1.31) Return after operating charges* Closing net asset value per Share Retained distributions on accumulation shares * after direct transaction costs of: Performance Return after operating charges 3.07% 5.11% 12.57% 7.09% 2.27% 16.59% Other information Closing net asset value 14,634,125 26,437,000 32,798,586 65,062,600 41,178,004 18,661,127 Closing number of Shares 10,802,636 20,114,633 26,230,092 46,248,409 30,396,081 14,577,679 Operating charges 2.08% 1.92% 2.06% 1.33% 1.17% 1.31% Direct transaction costs 0.00% 0.00% 0.01% 0.00% 0.00% 0.01% Prices Highest Share price Lowest Share price Major Holdings Top 10 Holdings % of Fund as at BlackRock UK Equity Tracker 9.20 Legal & General UK Property 7.29 BlackRock North American Equity Tracker 6.94 Vanguard US Equity Index 6.92 Vanguard U.K. Short-Term Investment Grade Bond Index 6.85 Invesco Perpetual Corporate Bond 6.76 CF Woodford Equity Income 5.98 AXA Global High Income 5.96 BlackRock UK Gilts All Stocks Tracker 4.93 BlackRock Corporate Bond Tracker 4.63 Top 10 Holdings % of Fund as at AXA Sterling Corporate Bond 8.42 CF Woodford Equity Income 8.13 BlackRock Corporate Bond Tracker 8.11 First State Asia Pacific Leaders 6.97 Vanguard US Equity Index 6.45 BlackRock North American Equity Tracker 6.45 Legal & General UK Property 5.36 Invesco Perpetual Corporate Bond 5.02 Threadneedle UK 4.78 BlackRock UK Equity Tracker 4.64 Page 2

3 Portfolio Information Breakdown by Investment type % Collective Investment Schemes [85.77%] 8.95% Offshore Funds [8.46%] 2.01% Net other assets [5.77%] Comparative figures shown above in square brackets relate to 31 December Investment Manager s Report Investment Review The FP Verbatim Portfolio 5 Growth Fund rose 3.4% over the period and Japanese and European equity holdings were a key driver of returns; while UK small cap equities and UK property were also supportive. Fixed income in general dragged on performance; in particular the funds allocation to sterling corporate bonds and global high yield bonds. At an underlying fund level the Franklin UK Smaller Companies Fund returned 24.7% placing it in the first quartile of its peer group, the Investment Association (IA) UK Smaller Companies sector. The CF Woodford Equity Income Fund achieved a return of 16.7% over the year, placing it in the first quartile of its peer group, the IA sector UK Equity Income. The Schroder Tokyo Fund which returned 15.6% which sits in the IA Japan sector was also supportive over the period. Elsewhere, the AXA Global High Income Fund was down 4.3% over the period, sitting in the fourth quartile of the IA High Yield Bond sector. The Vanguard Pacific ex Japan Stock Index Fund also weighed on returns down 3.5% over the year. The notable asset allocation change over the period was the increase in fixed income and the increased allocation to UK Equities and the decrease in our cash holdings. Over the period we sold the BlackRock Emerging Markets Fund and the M&G Global Emerging Markets Fund due to a change in asset allocation which saw our position in emerging markets reduced to zero. We also sold the inprop UK Commercial Property Fund as we wanted to rotate into our preferred holding the L&G UK Property Fund. At mid-year we sold two UK equity funds: the SSgA UK Equity Tracker Fund and the Threadneedle UK Equity Fund. Page 3

4 Investment Manager s Report (continued) Investment Review (continued) Additions to the Fund included: the AXA Global High Income Fund and the Vanguard UK Short-Term Investment Grade Bond Index Fund. We introduced the BlackRock Mid Cap UK Equity Tracker Fund into the portfolio to provide exposure to higher risk UK equities as we became more constructive on continued improvement in UK data at the beginning of In the second half of the year we bought Artemis Capital believing this fund will benefit from any pick up in the UK economy. Other funds we bought were the BlackRock Asia Special Situations Fund and the Fidelity Money Builder Dividend Fund which is a UK income fund which aims to provide exposure to attractive companies with a strong yield. Discrete performance Verbatim Portfolio 5 Fund 3.4% 5.5% 12.4% 9.7% -5.6% Source: Morningstar Direct performance data as at , calculated in sterling. We calculate return figures using a single pricing basis, with income reinvested. Outlook 2015 was a big year for central bank action and we believe that they will continue to have a major impact on all asset classes and especially currencies. We think that the divergence theme will play throughout 2016, with investors being drawn to regions where quantitative easing is in place such as Europe and Japan, as opposed to regions where financials conditions are tightening like the US. The British exit (or Brexit ) debate and referendum could bring higher levels of uncertainty which may unsettle investors coupled with renewed focus on the guidance from the Bank of England in anticipation of the first rise in UK interest rates. We will be considering the balance between sterling and overseas assets as a partial hedge against a Brexit, and also the make-up of equity portfolios, given the strong outperformance of mid cap equities. The US has some positive signals: interest rates have started moving along the path to more normal levels, the country is moving towards full employment and consumer confidence is rising. There are potential events that could derail this more positive outlook of course: inflationary pressures are beginning to build, and the spill over from the latest China worries could have a knock on affect to any recovery to this normalisation. Europe has seen a slow but steady pace of recovery and we still expect growth to remain steady, supported by low oil prices, weaker exchange rates and better domestic and fiscal conditions. We remain constructive towards Japan as continued improvements in corporate governance and structural reform should ensure continued equity performance as we expect earnings growth to continue and liquidity to remain positive. Page 4

5 Investment Manager s Report (continued) Outlook (continued) Asia may experience two dominant challenges in 2016: China s deceleration, and US monetary policy normalisation. Yet the region still includes some of the world s most promising growth markets. China can expect to see more deceleration in growth and the devaluation of the yuan. The stock market has borne the brunt of the unease in the first few trading days of the year. Emerging markets are heading into 2016 facing similar challenges to 2015 and we remain cautious amid a continued decline in earnings, and the possibility that a weak and uneven recovery could weigh on global growth. Attractive valuations in the region do offer a welcome cushion if there was to be a glimmer of a recovery. Investment Manager Architas 15 January 2016 Significant Information On 22 July 2014, Fund Partners Limited was authorised by the FCA as an Alternative Investment Fund Manager ( AIFM ). Under the Alternative Investment Fund Managers Directive ("AIFMD"), acting as the AIFM, Fund Partners is required to disclose how those whose actions have a material impact on the Funds are remunerated. The remuneration strategy across Fund Partners is governed by the Remuneration Committee, a committee appointed by the Fund Partners' Board. The Remuneration Committee has established an AIFM Remuneration Policy designed to ensure the AIFM Remuneration Code in the UK Financial Authority handbook is met proportionately for all AIFM Remuneration Code Staff. Fund Partners considers its activities as non complex due to the fact that regulation limits the AIF strategies conducted and the scope of investment in such a way that investor risk is mitigated. The discretion of Fund Partners and the portfolio manager is strictly controlled within certain pre-defined parameters as determined in the prospectus of each Alternative Investment Fund. In its role as an AIFM, Fund Partners deems itself as lower risk due to the nature of the activities it conducts. Fund Partners does not pay any form of variable remuneration currently. Therefore Fund Partners has provided a basic overview of how staff whose actions have a material impact on the Funds are remunerated. December 2015 Number of Beneficiaries Total remuneration paid Fixed remuneration Variable remuneration paid Carried interest paid by the AIF Total remuneration paid by the AIFM during the financial year 49 1,548,527 1,548, Remuneration paid to employees of the AIFM who have a material impact on the risk profile of the AIF 5 375, , Page 5

6 Significant Information (continued) Due to the size and structure of Fund Partners, it is determined that employees of the AIFM who have a material impact on the risk profile of the AIF include the Board and the Head of Risk and Compliance. The delegated investment manager is subject to regulatory requirements on remuneration that Fund Partners deem to be equally as effective as those detailed in the AIFMD, which would include the Capital Requirements Directive or Markets in Financial Instruments Directive. The information in this report is designed to enable shareholders to make an informed judgment on the activities of the Fund during the period it covers and the result of those activities at the end of the period. The long Report and Accounts are available free of charge on request. For more information about the activities and performance of the Fund during the period and previous periods, please contact: Authorised Corporate Director Fund Partners Limited Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset, BH21 7SB Customer Service Centre: Authorised and regulated by the Financial Conduct Authority (FCA) Depositary Northern Trust Global Services Ltd 50 Bank Street, Canary Wharf, London, E14 5NT Authorised by the Prudential Regulation Authority (PRA) and regulated by the FCA and the PRA Investment Manager Architas Multi-Manager Limited 5 Old Broad Street, London, EC2N 1AD Authorised and regulated by the FCA Auditor Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors' instructions Deloitte LLP Chartered Accountants and Statutory Auditor Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2DB Page 6