FUND UPDATE FOR THE NZAM FUNDS SCHEME

Transcription

1 FUND UPDATE FOR THE NZAM FUNDS SCHEME NZAM Global Growth Fund Quarter ended 31 December 2017 First made publicly available on 5 February 2018 What is the purpose of this update? This document tells you how NZAM Global Growth Fund (Fund) has performed and what fees were charged. The document will help you to compare the fund with other funds. NZAM Funds Limited (Manager) prepared this update in accordance with the Financial Markets Conduct Act This information is not audited and may be updated. Description of this fund The Fund is a growth oriented fund of funds with an emphasis on equity managers. The equity managers we select must use strategies that are consistent with our absolute return philosophy, as explained in the product disclosure statement (PDS). The Fund also includes some managers whose strategies are deliberately independent of equity markets, referred to as diversifying fund managers. Total value of the fund $41,974,743 The date the fund started April 2008 Market update The final quarter of 2017 saw trends cement themselves across global market asset classes. The US Dollar finished the year on a weak note a particularly interesting result given how bullish sentiment had been going into One of the big surprises of the year was that it turned out to be one of the world s worst performing currencies. Commodities had a very strong run, with the oil price up over 15%, and the price of other industrial commodities like copper and iron ore also increasing. Equity markets were generally strong around the globe, with Europe the notable laggard. The S&P 500 ended 1

2 the year with the rare record of 12 out of 12 positive months, and no drawdown of 5% or more - a remarkably smooth ride. Fixed income markets provided mixed signals, with the flattening of the US yield curve the most interesting trend. The phenomenon of short term interest rates rising, while long term interest rates remain static (or fall), has been something of a concern for market participants, as it implies a lower assumption around future economic growth and inflation certainly something to watch. Meanwhile on the fringes of the mainstream investment world, Bitcoin continued its parabolic rise, another interesting barometer of the global investment environment. What are the risks of investing? Risk indicator for NZAM Global Growth Fund POTENTIALLY LOWER RETURNS POTENTIALLY HIGHER RETURNS LOWER RISK MEDIUM HIGH The risk indicator is rated from 1 (low) to 7 (high). The rating reflects how much the value of the fund s assets goes up and down. A higher risk generally means higher potential returns over time, but more ups and downs along the way. To help you clarify your own attitude to risk, you can seek financial advice or work out your risk profile at sorted.org.nz/calculators/investment-planner. Note that even the lowest category does not mean a risk-free investment, and there are other risks that are not captured by this rating. This risk indicator is not a guarantee of a fund s future performance. The risk indicator is based on the returns data for the five year period ending on the 31 st December While risk indicators are usually relatively stable, they do shift from time to time. The risk indicator will continue to be updated in future fund updates. See the PDS for more information about the risks associated with investing in this fund. 2

3 How has the fund performed? Average over past 5 years Past year Annual return 2.58% -2.06% (after deductions for charges and tax) Annual return 3.63% -1.07% (after deductions for charges but before tax) Market index annual return (reflects no deduction for charges and tax) - - We are currently working with the FMA in relation to determining an appropriate approach to market indexes for alternative investments. This shows the return after fund charges and tax for each year ending 31 March since the fund started. The last bar shows the average annual return since the fund started, up to 31 Dec Important: This does not tell you how the fund will perform in the future. 3

4 Returns in this update are after tax at the highest prescribed investor rate (PIR) of tax for an individual New Zealand resident. Your tax may be lower. What fees are investors charged? Investors in NZAM Global Growth Fund are charged fund charges. In the year to 31 March 2017 these were: % of net asset value Total fund charges 4.18% Which are made up of Total management and administration charges 4.18% Including Manager s basic fee 1.45% Other management and administration charges (Note 1) 2.73% Note 1. The percentage for other charges above includes estimates i of the fees we pay to the fund managers that we invest in (underlying fund managers) as remuneration for their expertise. This includes management fees, performance fees and expenses of underlying fund managers. The Fund does not charge performance fees. Investors are not charged individual action fees for specific actions or decisions (for example, for withdrawing from or switching funds). Small differences in fees and charges can have a big impact on your investment over the long term. Example of how this applies to an investor Charlotte had $100,000 in the fund at the start of the year and did not make any further contributions. At the end of the year, Charlotte incurred a loss after fund (and underlying 4

5 fund) charges were deducted of $4,180 (that is 4.18% of her initial $100,000). This gives Charlotte a total loss after tax of $2,060 for the year. What does the fund invest in? This shows the types of assets that the fund invests in: Actual investment mix Target investment mix 5

6 Top 10 investments Name Country Type Value Selwood AM Credit Fund Ltd Other (Diversified global funds) 16.39% Kapstream Premier Absolute Return Australia International Fixed Interest 9.32% Income fund Tewksbury Investment Fund Limited Bermuda Other (Diversified global funds) 7.61% Ennismore Smaller Companies Plc Ireland International equities funds 7.13% MAGA Smaller Companies Fund Limited International equities funds 5.65% Senrigan Japan Fund Interval Offshore Fund ISAM Systematic International equities funds 5.5% International equities funds 5.16% Other (Diversified global funds) 4.65% Cumulus Fund Other (Diversified global funds) 4.14% Perinvest Whistler Bermuda International equities funds 4.02% The total value of these 10 underlying funds is 69.57% of the net asset value of the Fund. The target hedging levels at 31 December 2017 were US dollar 100% (actual level 100%), GBP 25% (actual level 25%), Australian dollar 70% (actual level 79%) and Euro 75% (actual level 75%). Key personnel Simon Tompkins Alan McChesney James Caughey* Director Director Portfolio Manager In the position for 5 years and 3 months In the position for 5 years and 3 months 6 In the position for 4 months Previously NZAM Senior Research Analyst for 6 years

7 Further information You can also obtain this information, the PDS for NZAM Global Growth Fund, and some additional information from the offer register at business.govt.nz/disclose. i NOTES: Fees paid to underlying fund managers have been estimated by sourcing management fee rates from offering documents, then weighting those rates to obtain an average. Assumptions are made that (a) fees are accrued for the (New Zealand) disclosure year to which they relate and (b) minor variations in portfolio holdings through the disclosure year would not materially affect the average. Performance fees are calculated for each share class of each fund, monthly and weighted using monthly opening values. Estimated annual expenses have been obtained from each fund manager and weighted using monthly opening values. 7