WAY MA Cautious Portfolio Fund

Transcription

1 WAY MA Cautious Portfolio Fund Short Report for the year ended 31 March 2016 Investment Objective and Policy The objective of the Fund is to seek capital growth, achieved through investment in a portfolio of Collective Investment Schemes, investment trusts, other transferable securities including listed securities, cash or near cash, deposits and money market instruments. Subject to the requirements of the Regulations, the portfolio will normally remain fully invested. There will, however, be no restrictions on the underlying content of the investments held, in terms of investment type, geographical or economic sector, other than those imposed by the Regulations, meaning that the investment adviser has the absolute discretion to weight the portfolio towards any investment type or sector, including cash, at any time. The Fund may also invest in unregulated Collective Investment Schemes (where investment in such funds is consistent with the investment objective and policy of the Fund). The portfolio will be actively managed. The use of derivatives and/or hedging transactions will be permitted in connection with the efficient portfolio management of the Fund. Borrowing will be permitted in accordance with the Regulations. On giving 60 days notice to Shareholders, the Fund may, in addition to its other investment powers, use derivatives and forward transactions for investment purposes. It is not intended that the use of derivatives in this way will change the risk profile of the Fund. Subject to the above, the Fund may invest in any asset class and adopt any investment technique or strategy permitted under the rules in COLL as such rules are applied to Non-UCITS retail schemes. Fund Facts Interim/Annual Accounting End Dates Ex-dividend (xd) Dates 30 September 31 March 01 April 31 May Income Distribution/ Accumulation Dates 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. Page 1

2 Charges Share Class Initial Charge Annual Management Charge as at Total Expense Ratios as at Total Expense Ratios as at Share Class B 5.25% 1.45% 2.38% 2.36% Share Class E 2.00% 0.95% 1.88% 1.86% Share Class S 2.00% 0.95% 1.88% 1.86% Share Class T 2.00% 1.25% 2.18% 2.16% Distributions/Accumulations Distributions Distribution payable 31/05/16 Distribution paid 31/05/15 Share Class B Retail Accumulation Share Class B Retail Income Share Class E Accumulation Share Class E Income Share Class S Income Share Class T Income Comparative Tables Performance Record B Retail Accumulation B Retail Income Change in net assets per Share Opening net asset value per Share Return before operating charges* (0.96) (0.96) Operating charges (3.21) (3.09) (3.17) (3.20) (3.09) (3.17) Return after operating charges* (4.17) (4.16) Distributions on income Shares Closing net asset value per Share Retained distributions on accumulation shares * after direct transaction costs of: Performance Return after operating charges (3.01%) 7.81% 1.86% (3.01%) 7.81% 1.86% Other information Closing net asset value 1,717,675 1,998,384 2,188,566 12,049,775 13,631,612 13,642,405 Closing number of Shares 1,279,679 1,443,946 1,704,937 8,986,419 9,859,787 10,638,318 Operating charges 2.38% 2.36% 2.48% 2.38% 2.36% 2.48% Direct transaction costs 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Prices Highest Share price Lowest Share price Page 2

3 Comparative Tables (continued) Performance Record E Accumulation E Income Change in net assets per Share Opening net asset value per Share Return before operating charges* (0.81) (0.82) Operating charges (2.18) (2.08) (2.15) (2.16) (2.08) (2.15) Return after operating charges* (2.99) (2.98) Distributions on income Shares (0.53) (0.29) Closing net asset value per Share Retained distributions on accumulation shares * after direct transaction costs of: Performance Return after operating charges (2.52%) 8.36% 2.69% (2.53%) 8.07% 3.05% Other information Closing net asset value 51, ,973 47, , , ,510 Closing number of Shares 44, ,384 43, , , ,066 Operating charges 1.88% 1.86% 1.98% 1.88% 1.86% 1.98% Direct transaction costs 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Prices Highest Share price Lowest Share price S Income T Income Change in net assets per Share Opening net asset value per Share Return before operating charges* (0.74) (0.82) Operating charges (1.98) (1.90) (1.99) (2.48) (2.39) (2.46) Return after operating charges* (2.72) 8.36 (0.03) (3.30) Distributions on income Shares (0.09) (0.46) Closing net asset value per Share * after direct transaction costs of: Performance Return after operating charges (2.52%) 8.36% (0.03%) (2.82%) 8.03% 2.06% Other information Closing net asset value 3,739,263 2,678, ,679 6,840,237 6,291,561 4,387,554 Closing number of Shares 3,559,025 2,483, ,766 6,022,145 5,383,120 4,048,475 Operating charges 1.88% 1.86% 1.98% 2.18% 2.16% 2.28% Direct transaction costs 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Prices Highest Share price Lowest Share price Page 3

4 Comparative Tables (continued) Major Holdings Top 10 Holdings % of Fund as at Jupiter European 6.60 Pictet Total Return Kosmos 5.50 Goldman Sachs US$ Liquid Reserves 4.96 ishares Core FTSE TM Sanditon UK Select 4.76 Absolute Insight Credit ('B1p') 4.27 Kames UK Equity Absolute Return 4.27 CF Lindsell Train UK Equity 4.17 JO Hambro Continental European 4.11 Fidelity Index US 3.98 Top 10 Holdings % of Fund as at Jupiter European 5.60 ishares Core FTSE Goldman Sachs US$ Liquid Reserves 4.75 Absolute Insight Credit ('B1p') 4.47 Kames UK Equity Absolute Return 4.18 JO Hambro Continental European 4.14 AXA Framlington American Growth 4.01 Old Mutual UK Alpha 3.92 Pictet Total Return Kosmos 3.89 GLG Japan CoreAlpha Equity 3.84 Portfolio Information Breakdown by Geographic Region % % % 17.05% % % 1.38% 0 United Kingdom [29.50%] Europe [18.44%] United States of America [15.80%] Global [20.37%] Asia [9.60%] Emerging Markets [2.09%] Net other assets [4.20%] Comparative figures shown above in square brackets relate to 31 March 2015 Page 4

5 Investment Manager s Report Investment Review The last 12 months have been a volatile period for equities and other asset classes, with several major spikes in volatility along the way. This was a tough backdrop for the portfolio, which posted a return of -3.2% 1 over the period under review. That should be seen in the context of a stronger second half to the year however, with the fund up 3.3% 1, buoyed by stronger equity markets in the fourth quarter of 2015 and from mid-february this year. Looking back to 2015, rather than changing our outlook in response to short-term events, we used the volatility surrounding August s Black Monday to add to some of our favoured equity funds in the UK, Europe and emerging markets (CF Lindsell Train UK Equity, Jupiter European and Aberdeen Emerging Markets). We also added passive exposure to Asia and Europe. After the upheaval of summer, the fourth quarter was positive for equities overall: the MSCI World was up 8.4% 2 in sterling terms over the three months, taking it into positive territory for the year, up 4.9% 2. Overall however, 2015 was a fairly wild ride for equities and the record highs in many markets in spring seemed a distant memory by the end of the year. The net result was an asset class that generated only modest returns in 2015 and against that backdrop, Societe Generale branded the year the hardest in which to make money in close to eight decades. So far in 2016, policy action has dominated and created a market torn between demand for safe haven and risk assets, seemingly based on faith in central governments. The ECB s March announcement proved well beyond expectations and softer comment from Fed chair Janet Yellen has made the four rate hikes predicted at the end of 2015 look increasingly unlikely. These events helped drive a strong end to the review period for equities although ongoing instability in January and February meant these gains were not enough to avoid a flat first quarter overall. With ten-year gilts yielding less than 1.5% 3 and the Bank of England having a 2% 3 inflation target, the potential negative real return from many bonds is not attractive long term and we remain underweight relative to our target allocation. In the search for alternative sources of return, we have invested in go-anywhere strategic bond funds to complement our traditional fixed income allocation and also increased weightings in hedge and absolute return funds rather than leave excessive amounts in very low yielding cash deposits. Market Overview Familiar concerns have dogged markets for much of the last 12 months, leading to fairly flat returns overall interspersed with spikes in volatility. Going back to mid-2015, the phrase Fed Fatigue was coined to describe waning patience with the debate surrounding interest rate rises. Grexit and a slowing China also loomed large among concerns, although some relief on the former was enough to create a better backdrop over summer. This came to a halt in August as fears about China escalated and sparked a so-called Black Monday as equities fell around the world. Amid ongoing volatility, the fourth quarter s key event came when the US Federal Reserve finally enacted a longawaited rate rise on 16 December. This broke months of Fed Fatigue and was enough to coerce a short-term bounce out of markets battered by plunging oil prices. So far, 2016 has continued in a similar vein: global markets suffered their worst start to a year in two decades and many indices including the FTSE 100 fell into bear territory. In the midst of this, central banks have been forced into evasive action, including softer rhetoric from the Fed, another major package from the ECB and Japan becoming the latest country to engage a negative interest rate policy. Such accommodative policy contributed to stronger markets in March, with emerging markets able to post their strongest gains in four years and a nascent commodities recovery. Page 5

6 Investment Manager s Report (continued) Market Overview (continued) While equity markets clearly looked healthier at the end of Q than in the early weeks of the year where several indices dropped into bear territory plenty of concerns remain. The OECD issued a gloomy economic prognosis in February for example, cutting its forecast for global growth in 2016 from 3.3% to 3.0%, and citing substantial risks of financial instability. Rising demand for so-called safe haven assets has continued against this backdrop, pushing down government bond yields on both sides of the Atlantic. At the end of the review period, the yield on 10-year US treasuries was back below the 1.8% 4 level and gold has also fared well rising close to 16% 4 over the quarter. Meanwhile, the oil price managed to stage a small recovery over the quarter, rising to the $40 level, with hopes of a deal to freeze production. China s economic slowdown and transformation has been a factor in oil s decline from its peak of well over $100 a barrel. But this fall also reflects a price war in which traditional lower cost oil producers are trying to win market share from new, higher tech and higher cost entrants. A fall in the oil price is akin to a global cut in taxation to corporates and individuals, the magnitude of which neither governments nor their central banks could possibly replicate. Lower energy costs clearly supports the consumer, and in particular the western consumer. This dynamic slowing emerging market growth contributing to lower energy prices, which in turn boost developed market consumption has led to the prospect of a de-synchronised global economy. But it should clearly yield investment opportunities in certain areas. With respect to the commodities asset class itself, ongoing price weakness shows this remains a contrarian trade, but one we think could be worth consideration for investors willing to accept the accompanying volatility. Elsewhere, Brexit and the US elections loom large. In the long run, political risk typically has little effect on financial markets but that may be little compensation for investors increasingly anxious over the potential for Brexit. The difficulty for voters is to know what the consequences of leaving would be: for starters, the unwinding sounds like an unprecedented, daunting, and costly prospect. As the vote approaches, the ramifications will surely be felt increasingly by other asset classes: bond rating agencies and professional investors will no doubt be trawling through balance sheets at both the government and company level for downgrades. This will have implications at both sector and stock level. With globalisation continuing to unravel, we continue to foresee a period ahead of modest global economic growth and rising inflation, albeit at a pedestrian pace. Against a backdrop of many central banks still looking to loosen rather than tighten policy, traditional asset classes are not considered cheap but there is relative value for active managers, particularly in equities. We retain a long-term underweight allocation to fixed income, preferring to get diversification via low-correlation alternative and absolute return funds. We continue to see select opportunities in equities. In today s market, bargains are more likely to be found in Asia and global emerging markets, with the regions having underperformed the broader global equity benchmark as a result of a stronger dollar. Source: 1 Lipper, Liontrust, total return, in sterling terms 2 Bloomberg on a gross basis 3 Bloomberg 4 Bloomberg in USD Investment Manager Liontrust Investment Partners LLP 20 April 2016 Page 6

7 Significant Information Under the Alternative Investment Fund Managers Directive ("AIFMD"), acting as the Alternative Investment Fund Managers ("AIFM"), WAY Fund Managers are required to disclose how those whose actions have a material impact on the Fund are remunerated. The remuneration strategy across WAY Fund Managers is governed by the Remuneration Committee, a committee appointed by the WAY Fund Managers 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 proportionality for all AIFM Remuneration Code Staff. WAY Fund Managers 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 WAY Fund Managers 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, WAY Fund Managers deems itself as lower risk due to the nature of the activities it conducts. WAY Fund Managers does not pay any form of variable remuneration currently. Therefore WAY Fund Managers has provided a basic overview of how staff whose actions have a material impact on the Fund are remunerated. March 2016 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 , , Remuneration paid to employees of the AIFM who have a material impact on the risk profile of the AIF 4 159, , Due to the size and structure of WAY Fund Managers, 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 WAY Fund Managers 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. From 12 November 2015, the auditor for this Company changed from Grant Thornton LLP to Deloitte LLP. This brings the Company in line with other Companies operated within the ACD's group. 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 WAY Fund Managers 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 State Street Trustees Limited. 20 Churchill Place, London E14 5HJ Authorised and regulated by the FCA Investment Manager Liontrust Investment Partners LLP 2 Savoy Court, London WC2R 0EZ Authorised and regulated by the FCA Auditor Grant Thornton UK LLP 30 Finsbury Square, London EC2P 2YU From 12 November 2015 Deloitte LLP Chartered Accountants and Statutory Auditor Saltire Court, 20 Castle Terrace, Edinburgh EH1 2DB Page 7 Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors' instructions