United Global Resources Fund

Transcription

1 United Global Resources Fund Semi Annual Report for the half year ended 30 June 2017

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3 MANAGER UOB Asset Management Ltd Registered Address: 80 Raffles Place UOB Plaza Singapore Company Registration No. : Z OPERATIONS ADDRESS 80 Raffles Place #06-00, UOB Plaza 2 Singapore Tel: DIRECTORS OF UOB ASSET MANAGEMENT Lee Wai Fai Cheo Chai Hong Goh Yu Min Thio Boon Kiat TRUSTEE State Street Trust (SG) Limited 168 Robinson Road #33-01, Capital Tower Singapore CUSTODIAN / ADMINISTRATOR / REGISTRAR State Street Bank and Trust Company, acting through its Singapore Branch 168 Robinson Road #33-01, Capital Tower Singapore AUDITORS PricewaterhouseCoopers LLP 8 Cross Street #17-00, PWC Building Singapore SOLICITORS TO THE MANAGER Tan Peng Chin LLC 30 Raffles Place #11-00, Chevron House Singapore SOLICITORS TO THE TRUSTEE Shook Lin & Bok LLP 1 Robinson Road #18-00, AIA Tower Singapore

4 A) Fund Performance 3 mth % Growth 6 mth % Growth 1 yr % Growth 3 yr Ann Comp Ret 5 yr Ann Comp Ret 10 yr Ann Comp Ret Since Inception 29 May 2006 Ann Comp Ret Fund Performance/ Benchmark Returns United Global Resources Fund Benchmark Source: Note: Lipper, a Thomson Reuters Company. The performance returns of the Fund are in Singapore Dollar based on a NAV-to-NAV basis, with dividends and distributions reinvested, if any. The benchmark of the Fund: Since Inception 30 Sep 16: Absolute return benchmark of 6% per annum; 1 Oct Current : composite index of 30% MSCI AC World Materials, 35% MSCI AC World Metals & Mining and 35% MSCI AC World Energy. For the six months ended 30 June 2017, the net asset value of the Fund decreased 11.49%, underperforming the weighted benchmark of -2.86%, in Singapore dollar terms. The benchmark is composed of: 30% MSCI ACWI Material Sector Index (+3.3% over the reporting period); 35% MSCI ACWI Metals & Mining Index (-1.6%); and 35% MSCI ACWI Energy Sector Index (-14.4%), in Singapore dollar terms. The Fund s performance reflected an overweight exposure to Exploration & Production (E&P) companies. E&P companies underperformed as the crude oil price declined. This underperformance also reflected a market preference for companies with low capital expenditures, given investor uncertainty over future global economic growth in an environment of tightening monetary conditions. Prices for Base Metals were generally stronger during the reporting period, albeit with some variation between the different metals. Base metal companies such as Lundin Mining and Trevali Mining produced a variety of base metals and were helped by the upward movement in prices. However, the Fund saw negative contributions from Sandfire Resources and Western Areas, due to concerns over reserve life and the relatively lacklustre performance of nickel prices. Bulk Commodities saw unexpected strength during the reporting period. This was initially driven by weather-related supply shocks in Australia, and then by unexpected strength in the Chinese domestic housing market and continued Chinese supply cuts. The Fund saw positive performances by large diversified miners such as BHP Billiton, Glencore and Rio Tinto. The physical Gold price increased during the review period. The Fund was helped by its holdings in listed Gold and Silver companies such as Evolution Mining, Regis Resources, St. Barbara and Premier Gold, but also had negative contributions from Newmont Mining and Perseus Mining. The Fund saw negative performances from its Energy holdings. Existing producers such as Royal Dutch Shell and Statoil declined despite having very attractive dividend yields and strong operating cashflow. E&P companies such as Hess Energy, Africa Oil and Tullow saw their share prices fall sharply. This was despite reporting excellent ongoing drilling results and having sufficient cash reserves to Fund additional drilling programs over the next eighteen months. As at end-june 2017, the Fund s allocation in the various sectors was: Materials (66.53%), Energy (30.35%) and cash holdings of 3.12%. In terms of asset allocation by geographical regions, the Fund was invested in: Australia (33.44%), Canada (26.46%), United Kingdom (16.75%), United States (12.18%), Switzerland (6.41%), Hong Kong (1.64%) and the remainder (3.12%) in cash. Economic and Market Review The first quarter of 2017 (1Q17) began with elevated expectations for US economic growth, based on the Trump administration s plans to lower corporate tax rates, reduce regulations and invest in domestic infrastructure. This pro-growth agenda saw the US Dollar and US bond yields trading higher, with global equity markets also continuing the rally that had started after Trump s victory in November

5 A) Fund Performance (continued) Expectations of a US reflation trade were positive for commodity prices, with investors anticipating that growing US demand would augment ongoing strength in China and other emerging markets. Chinese economic data was generally supportive, with industrial production, manufacturing purchasing manager s index (PMI) and fixed asset investment all at healthy levels. This triggered a rally in base metal and bulk commodity prices, with coking coal prices particularly strong given weather-related supply disruption in Australia. Anticipation of stronger US economic growth and potentially higher inflation caused the US Federal Reserve ( Fed ) to raise US policy rates again, in March This was despite some divergence in US economic data, with surveys of future expectations painting a bullish outlook compared to a more mixed picture from actual monthly data. Market confidence was shaken in the second quarter as potential political and financial problems emerged. US reflation hopes were hit by growing scepticism on the Trump administration s ability to pass its reform agenda. In particular, delays in formulating tax reform legislation was viewed as a sign of disagreement between the Trump administration and the Republican-controlled legislature. In China, moves to tighten banking regulations prompted concern over wealth management products and their potential to cause a systemic shock to the wider financial system. This coincided with some weakening in Chinese economic data and led to a sharp sell-off in commodity prices. However, these fears proved temporary and Chinese economic data improved into June This enabled most Base Metals and Bulk Commodity prices to finish in positive territory by the end of the reporting period. Prices were helped by closures of low-quality Chinese producers, and by continuing low levels of capital investment across the global mining industry. Energy prices started the reporting period positively following OPEC s agreed production cuts. However, sentiment deteriorated when it became evident that OPEC members had pumped aggressively ahead of the production agreement, pushing inventory levels to multi-year highs. Although the OPEC production cuts were subsequently extended for a further nine months, US inventory levels remained elevated at the end of the reporting period. Oil prices were also negatively affected by a higher US onshore rig count and increased shale production. Investors were unconcerned by continuing tensions between Saudi Arabia and Iran, and by the newer dispute between Saudi Arabia and Qatar. Physical gold started the year at US$1,152/oz and ended the reporting period at US$1,242/oz, increasing by 8%. Movements in the gold price were driven by the US economic outlook and the related potential for US interest rate increases. Gold remaining stable after another US rate increase in June 2017 indicates that some investors believe the Fed may be tightening too aggressively given underlying US economic data. Aggregate holdings by gold exchange-traded funds (ETFs) rose by 7.6% to 2,181 tonnes, with net additions in each month of the reporting period. Central banks remained net buyers of gold, most notably the Russian Central Bank. Retail investment remained strong, with continued reports of buying through the Shanghai Gold Exchange. Outlook and Fund Strategy The outlook for the global economy continues to be positive, and we remain constructive on GDP growth prospects, industrial production and related commodity demand. This constructive view is premised on the expectation that leading central banks will remain data-dependant when setting future monetary policy, and are not committed to normalising monetary conditions regardless of any future softness in economic data. In particular, we expect the Fed to be cautious with regards to further US rate hikes and the size of its balance sheet, and to raise tighten monetary policy only if there is sustained strength in US economic data. Our base-case scenario of stronger global GDP growth also assumes positive economic growth from China, and no economic shocks from continuing efforts to control the shadow banking system. Chinese manufacturing PMI, industrial production, fixed asset investment and housing activity are currently at healthy levels, with the Chinese economy benefiting from stronger domestic demand. The Fund expects Chinese regulators to continue to close domestic aluminium, steel and coal capacity. Such moves will help related commodity prices and boosting capacity utilisation among remaining producers. We expect supply-demand fundamentals to improve across a number of base metals given the sharp reduction in capital expenditure that has occurred since

6 A) Fund Performance (continued) We expect a combination of continued OPEC production cuts, and strong emerging market growth will be supportive of crude oil prices, even assuming higher production from US shale producers. This should be bullish for the Energy sector, and we expect crude oil prices to remain above US$50 per barrel. For this reason, the Fund maintains its E&P exposure. We also believe exposure to higher crude oil prices is appropriate given the continuing potential of geopolitical supply risks. To protect against downside risk, the Fund will continue to invest in companies that have costs in the lowest quartile of their respective commodity product. The Fund invests primarily in companies with strong balance sheets and positive free cash flow yields. The Fund avoids high-cost producers and companies with limited ability to service debt and see through committed capital expenditures. The direction of the Gold price, in USD terms, will continue to be influenced by the Fed s timing of future interest rate increases and the level of real interest rates. Any disappointment in US economic performance or increase in political uncertainty is likely to result in a higher gold price. Gold equities are currently trading at undemanding valuations, with many producers having positive free cash flow and net cash positions on their balance sheets. The Fund s gold-related investments are mainly Australian and Canadian producers, which have low jurisdictional risk. The Fund expects to maintain exposure to gold equites given gold s traditional role as a safe haven asset in periods of elevated financial and political risk. The outlook in Agricultural Commodity prices remains subdued given current high stock-to-use levels. Any upside price movements are likely to be weather-driven - such as the current hot temperatures and subdued rainfall affecting much of the US Midwest. However, elevated global stocks, strong Brazilian production, and generally strong non-us yield expectations still means a prolonged price spike is unlikely. In the event of multiple disruptive weather events, the Fund will position itself to benefit from any resulting increase with agricultural prices. In recent years, we note that commodity movements have been highly volatile. Investors should expect both strong rallies as well as sharp corrections. The direction of globally synchronised monetary policy may have positive or negative implications for manufacturing, industrial production and infrastructure spending. In addition, we believe the lack of capital investment in recent years should benefit low cost producers, who will represent attractive investment targets on any share price correction. -4-

7 B) Investments at fair value and as a percentage of net asset value ( NAV ) as at 30 June 2017 under review classified by i) Country Fair Value (S$) % of NAV Australia 3,848, Canada 3,044, Hong Kong 188, Switzerland 738, United Kingdom 1,928, United States 1,401, Portfolio of investments 11,149, Other net assets/(liabilities) 359, Total 11,509, ii) Industry Fair Value (S$) % of NAV Energy 3,492, Materials 7,657, Portfolio of investments 11,149, Other net assets/(liabilities) 359, Total 11,509, iii) Asset Class Fair Value (S$) % of NAV Quoted equities 11,149, Other net assets/(liabilities) 359, Total 11,509, iv) Credit rating of quoted bonds N/A -5-

8 C) Top Ten Holdings 10 largest holdings as at 30 June 2017 Fair Value (S$) Percentage of total net assets attributable to unitholders % HESS CORP 755, AFRICA OIL CORP 726, GALAXY RESOURCES LTD 611, RIO TINTO PLC 579, ROYAL DUTCH SHELL PLC 553, BHP BILLITON PLC 525, EVOLUTION MINING LTD 509, GLENCORE PLC 462, SINO GAS & ENERGY HOLDINGS LTD 447, FORTESCUE METALS GROUP LTD 413, largest holdings as at 30 June 2016 Percentage of total net assets attributable to Fair Value unitholders (S$) % AFRICA OIL CORPORATION 689, ROYAL DUTCH SHELL PLC - B SHARES 649, RIO TINTO PLC - REG 619, BHP BILLITON PLC 593, NEWMONT MINING CORP (NEW) 526, SINO GAS & ENERGY HOLDINGS LTD 489, EVOLUTION MINING LTD 467, PREMIER GOLD MINES LIMITED 396, FIRST RESOURCES LIMITED 391, GOLDCORP INC 384,

9 D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 30 June 2017 Contract or underlying principal amount Positive fair value % of NAV Negative fair value $ $ $ % of NAV Foreign currency contracts 2, * * denotes amount less than 0.01% ii) There was a net realised loss of SGD 300 on derivative contracts during the financial period from 01 January 2017 to 30 June iii) There was a net unrealised loss of SGD 1 on outstanding derivative contracts marked to market as at 30 June E) Amount and percentage of NAV invested in other schemes as at 30 June 2017 N/A F) Amount and percentage of borrowings to NAV as at 30 June 2017 N/A G) Amount of redemptions and subscriptions for the financial period from 01 January 2017 to 30 June 2017 Total amount of redemptions SGD 1,562,460 Total amount of subscriptions SGD 662,236 H) The amount and terms of related-party transactions for the financial period from 01 January 2017 to 30 June 2017 i) As at 30 June 2017, the Fund maintained current accounts with State Street Bank and Trust Company as follows: Bank balances SGD 409,479 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June 2017 N/A iii) Investment in Initial Public Offerings managed by UOB Group N/A iv) As at 30 June 2017, there was no brokerage income earned by UOB Kay Hian Pte Ltd. -7-

10 I) Expense ratios $ $ Total operating expenses 318, ,212 Average daily net asset value 12,944,907 11,090,191 Expense ratio 2.46% 2.45% Note: The expense ratio has been computed based on the guidelines laid down by the Investment Management Association of Singapore ( IMAS ). The calculation of the Fund s expense ratio at 30 June 2017 was based on total operating expenses divided by the average net asset value respectively for the year. The total operating expenses do not include (where applicable) brokerage and other transaction costs, performance fee, interest expense, distribution paid out to unitholders, foreign exchange gains/losses, front or back end loads arising from the purchase or sale of other funds and tax deducted at source or arising out of income received. The Fund does not pay any performance fee. The average net asset value is based on the daily balances. J) Turnover ratios $ $ Lower of total value of purchases or sales 7,462,176 4,886,713 Average daily net assets value 12,714,039 11,387,791 Turnover ratio 58.69% 42.91% Note: The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective Investment Schemes. The calculation of the portfolio turnover ratio was based on the lower of the total value of purchases or sales of the underlying investments divided by the average daily net asset value. K) Any material information that will adversely impact the valuation of the scheme such as contingent liabilities of open contracts N/A L) For schemes which invest more than 30% of their deposited property in another scheme, the following key information on the second-mentioned scheme ( the underlying scheme ) 1 should be disclosed as well i) top 10 holdings at fair value and as percentage of NAV as at 30 June 2017 and 30 June 2016 N/A ii) expense ratios for the financial period ended 30 June 2017 and 30 June 2016 N/A iii) turnover ratios for the financial period ended 30 June 2017 and 30 June 2016 N/A 1 where the underlying scheme is managed by a foreign manager which belongs to the same group of companies as, or has a formal arrangement or investment agreement with, the Singapore manager, the above information should be disclosed on the underlying scheme. In other cases, such information on the underlying scheme should be disclosed only if it is readily available to the Singapore manager. -8-

11 M) Soft dollar commissions/arrangements UOB Asset Management has entered into soft dollars arrangements with selected brokers from whom products and services are received from third parties. The products and services relate essentially to computer hardware and software to the extent that they are used to support the investment decision making process, research and advisory services, economic and political analyses, portfolio analyses including performance measurements, market analyses, data and quotation services, all of which are believed to be helpful in the overall discharge of UOB Asset Management s duties to clients. As such services generally benefit all of UOB Asset Management s clients in terms of input into the investment decision making process, the soft credits utilised are not allocated on a specific client basis. The Manager confirms that trades were executed on a best execution basis and there was no churning of trades. N) Where the scheme offers pre-determined payouts, an explanation on the calculation of the actual payouts received by participants and any significant deviation from the pre-determined payouts N/A -9-

12 STATEMENT OF TOTAL RETURN For the half year ended 30 June 2017 (Un-audited) 30 June 30 June $ $ Income Dividends 128,657 62,779 Interest 1,534 7,070 Total 130,191 69,849 Less: Expenses Management fee 94,570 84,933 Trustee fee 2,578 2,265 Audit fee 8,407 8,454 Registrar fee 7,939 7,078 Valuation fee 7,880 7,078 Custody fee 4,302 7,139 Transaction costs 34,841 30,075 Other expenses 49,283 31,162 Total 209, ,184 Net income/(losses) (79,609) (108,335) Net gains/(losses) on value of investments Net gains/(losses) on investments (1,418,959) 2,211,611 Net gains/(losses) on financial derivatives (301) - Net foreign exchange gains/(losses) 8,573 12,451 (1,410,687) 2,224,062 Total return/(deficit) for the period before income tax (1,490,296) 2,115,727 Less: Income tax (12,824) (6,028) Total return/(deficit) for the period (1,503,120) 2,109,

13 STATEMENT OF FINANCIAL POSITION As at 30 June 2017 (Un-audited) 30 June 31 December $ $ Assets Portfolio of investments 11,149,831 12,153,278 Receivables 9,372 39,598 Cash and bank balances 409, ,791 Fixed deposits - 1,006,004 Total assets 11,568,682 14,030,671 Liabilities Payables 59, ,133 Financial derivatives at fair value 1 - Total liabilities 59, ,133 Equity Net assets attributable to unitholders 11,509,194 13,912,

14 STATEMENT OF MOVEMENTS OF UNITHOLDERS FUNDS For the half year ended 30 June 2017 (Un-audited) 30 June 31 December $ $ Net assets attributable to unitholders at the beginning of the financial period/year 13,912,538 10,205,588 Operations Change in net assets attributable to unitholders resulting from operations (1,503,120) 3,855,424 Unitholders contribution/(withdrawal) Creation of units 662,236 4,650,384 Cancellation of units (1,562,460) (4,798,858) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (900,224) (148,474) Total increase/(decrease) in net assets attributable to unitholders (2,403,344) 3,706,950 Net assets attributable to unitholders at the end of the financial period/year 11,509,194 13,912,

15 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Holdings at 30 June 2017 Fair value at 30 June 2017 $ Percentage of total net assets attributable to unitholders at 30 June 2017 % By Geography - Primary Quoted Equities AUSTRALIA EVOLUTION MINING LTD 200, , FORTESCUE METALS GROUP LTD 75, , GALAXY RESOURCES LTD 350, , OROCOBRE LTD 60, , PERSEUS MINING LTD 1,350, , REGIS RESOURCES LTD 75, , SANDFIRE RESOURCES NL 60, , SINO GAS & ENERGY HOLDINGS LTD 4,931, , SOUTH32 LTD 100, , SYRAH RESOURCES LTD 100, , TOTAL AUSTRALIA 3,848, CANADA AFRICA OIL CORP 353, , FIRST MAJESTIC SILVER CORP 20, , LUNDIN MINING CORP 50, , METHANEX CORP 3, , NEVSUN RESOURCES LTD 35, , PREMIER GOLD MINES LTD 75, , PRETIUM RESOURCES INC 15, , SEMAFO INC 75, , TECK RESOURCES LTD 15, , TREVALI MINING CORP 100, , VERMILION ENERGY INC 5, , TOTAL CANADA 3,044, HONG KONG CNOOC LTD 125, , SWITZERLAND GIVAUDAN SA ,

16 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Holdings at 30 June 2017 Fair value at 30 June 2017 $ Percentage of total net assets attributable to unitholders at 30 June 2017 % By Geography - Primary (continued) Quoted Equities SWITZERLAND (continued) GLENCORE PLC 90, , TOTAL SWITZERLAND 738, UNITED KINGDOM BHP BILLITON PLC 25, , RIO TINTO PLC 10, , ROYAL DUTCH SHELL PLC 15, , TULLOW OIL PLC 100, , TOTAL UNITED KINGDOM 1,928, UNITED STATES ANADARKO PETROLEUM CORP 2, , HESS CORP 12, , NEWMONT MINING CORP 7, , NOBLE ENERGY INC 4, , TOTAL UNITED STATES 1,401, Total Equities 11,149, Portfolio of investments 11,149, Other net assets/(liabilities) 359, Net assets attributable to unitholders 11,509,

17 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Percentage of total net assets attributable to unitholders at 30 June 2017 % Percentage of total net assets attributable to unitholders at 31 December 2016 % By Geography - Primary (Summary) Quoted Equities Australia Canada Hong Kong Korea Norway Singapore Switzerland United Kingdom United States Portfolio of investments Other net assets/(liabilities) Net assets attributable to unitholders

18 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Fair value at 30 June 2017 $ Percentage of total net assets attributable to unitholders at 30 June 2017 % Percentage of total net assets attributable to unitholders at 31 December 2016 % By Industry - Secondary Quoted Equities Consumer Staples Energy 3,492, Materials 7,657, Portfolio of investments 11,149, Other net assets/(liabilities) 359, Net assets attributable to unitholders 11,509,

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