Legal & General Multi Manager Income Trust Interim Manager s Short Report for the period ended 15 July Distribution Number 37

Transcription

1 Legal & General Multi Manager Income Trust Interim Manager s Short Report for the period ended 15 July 2017 Distribution Number 37

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3 Investment Objective and Policy With effect from 6 June 2017, the Trust s Investment Objective and Policy has changed (please see Significant Changes section on page 10). Prior to 6 June 2017 The investment objective is to achieve a high income with some potential for capital growth. The Trust aims to invest in a wide range of Collective Investment Schemes including unregulated Collective Investment Schemes and will pursue an active asset allocation policy across all countries, currencies and sector representations. The Trust may also invest directly in transferable securities, money market instruments, derivatives and forward transactions, near cash, cash and deposits. From 6 June 2017 The investment objective is to achieve a high income with some potential for capital growth. The Trust aims to invest in a wide range of Collective Investment Schemes including unregulated Collective Investment Schemes and will pursue an active asset allocation policy across all countries, currencies and sector representations. The Collective Investment Schemes that the Trust invests in may be actively or passively managed and may include the Collective Investment Schemes of the Manager. The Trust may also invest directly in transferable securities, money market instruments, derivatives and forward transactions, near cash, cash and deposits. The Trust will use derivatives for efficient portfolio management purposes only. 1

4 Risk Profile Credit Risk This Trust is invested in Collective Investment Schemes which may directly invest in financial securities such as bonds. With these investments, there is a risk of suffering loss due to a party not meeting its financial obligations. Market Risk Market risk arises mainly from uncertainty about future prices. It represents the potential loss the Trust may suffer through holding market positions in the face of market movements. The Manager adheres to the investment guidelines and in this way, monitors and controls the exposure to risk from any type of security, sector or issuer. Currency Risk This Trust is invested in Collective Investment Schemes that invest in overseas financial securities. The performance of the Trust may therefore be affected by changes in exchange rates, through its holdings in these funds. Interest Rate Risk This Trust is invested in interest distributing funds. The performance of the Trust may therefore be affected by changes in interest rates, through its holdings in these funds. Trust Facts Period End Dates for Distributions: 15 Jan, 15 Apr, 15 Jul, 15 Oct Distribution Dates: 15 Mar, 15 Jun, 15 Sep, 15 Dec Ongoing Charges Figures: 15 Jul Jan 17 R-Class 1.76% 1.75% F-Class 1.67% 1.75% I-Class 1.37% 1.36% The Ongoing Charges Figure (OCF) is the ratio of the Trust s total discloseable costs (excluding overdraft interest) and all costs suffered through holdings in underlying Collective Investment Schemes, to the average net assets of the Trust. The OCF is intended to provide a reliable figure which gives the most accurate measure of what it costs to invest in a trust and is calculated based on the last period s figures. 2

5 Risk and Reward Profile Lower risk Higher risk Potentially lower rewards Potentially higher rewards This risk and reward profile is based on historical data which may not be a reliable indication of the Trust's risk and reward category in the future. The category is based on the rate at which the value of the Trust has moved up and down in the past. This Trust is in category four because it invests, through other funds, in a variety of investments. A mixture of higher risk investments and lower risk investments has a balancing effect. Company shares and sub-investment grade bonds generally provide higher rewards and higher risks whereas investment grade bonds generally provide lower rewards and lower risks. This Trust has a lower proportion of investments in company shares than other mixed investment funds. The Trust's category is not guaranteed to remain the same and may change over time. Even a trust in the lowest category is not a risk free investment. Distribution Information R-Class The distribution payable on 15 September 2017 is p per unit for distribution units and p per unit for accumulation units. F-Class The distribution payable on 15 September 2017 is p per unit for distribution units and p per unit for accumulation units. I-Class The distribution payable on 15 September 2017 is p per unit for distribution units and p per unit for accumulation units. 3

6 Net Asset Values and Units in Issue Net Asset Net Asset Units Value per Class Value ( ) in Issue Unit (p) R-Class Distribution Units 3,056,243 4,787, Accumulation Units 43,487,846 53,171, F-Class Distribution Units 43,335 67, Accumulation Units 13,783 16, I-Class Distribution Units 102,353, ,123, Accumulation Units 10,349,558 12,403, Past performance is not a guide to future performance. The price of units 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. 4

7 Portfolio Information The top 10 holdings and their associated weighting at the current period end and preceding year end were: Top 10 Holdings at Top 10 Holdings at 15 July January 2017 Percentage of Percentage of Holding Net Asset Value Holding Net Asset Value JPM Global Corporate Bond Fund GBP (hedged) 'C' Inc 13.85% Artemis Income Fund 'I' Inc 9.91% Legal & General US Index Trust 'I' Inc 7.43% Legal & General All Stocks Gilt Index Trust 'I' Inc 7.09% Nordea Global High Yield Bond Fund HBI GBP Acc 6.96% Legal & General Emerging Markets Government Bond (US$) Index Fund 'L' Inc 6.90% J O Hambro Capital Management Japan Fund 'A' Inc 4.79% Invesco Perpetual High Income Fund Inc 4.00% Blackrock European Dynamic Fund Acc 4.00% Neuberger Berman Global Bond Absolute Return Fund 'I5' Acc 3.79% JPM Global Corporate Bond Fund GBP (hedged) 'C' Inc 14.58% Artemis Income Fund 'I' Inc 9.31% Legal & General All Stocks Gilt Index Trust 'I' Inc 7.68% Legal & General US Index Trust 'I' Inc 7.26% Legal & General Emerging Markets Government Bond (US$) Index Fund 'L' Inc 7.09% Nordea Global High Yield Bond Fund HBI GBP Acc 6.54% Invesco Perpetual High Income Fund Inc 5.26% Blackrock European Dynamic Fund Acc 3.86% Neuberger Berman Global Bond Absolute Return Fund 'I5' Acc 3.66% MI Dynamic Bond Fund 'I' Inc 3.60% 5

8 Trust Holdings as at 15 July % 40% 41% 36% 30% 20% 16% 10% 7% 0% Funds investing in overseas fixed interest securities Funds investing in overseas shares Funds investing in UK shares Funds investing in UK fixed interest securities Trust Holdings as at 15 January % 40% 41% 35% 30% 20% 16% 10% 8% 0% Funds investing in overseas fixed interest securities Funds investing in overseas shares Funds investing in UK shares Funds investing in UK fixed interest securities 6

9 Manager s Investment Report During the period under review, the bid price of the Trust s R-Class accumulation units rose by 3.78% compared to the IA Mixed Investment 20-60% Shares sector average return, on a Total Return basis, of 2.98% (Source: Lipper, using selling prices, net income reinvested, in Sterling terms, no initial charge). 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. Market/Economic Review Politics dominated the headlines during the review period, starting with the official inauguration of President Trump in the US, to Dutch voters rejecting right-wing populism by voting centre-right Mark Rutte s VVD Party to be victorious in the Netherlands, to business friendly Emmanuel Macron defeating the right wing Marine Le Pen in the French presidential election, and, here in the UK, Theresa May s gamble failing to pay off when her decision to call a snap general election resulted in a hung parliament. Against this backdrop, these six months were characterised in particular by historically low levels of volatility, and where positive economic data helped global equity markets move higher, with the MSCI World Index (in Sterling terms) outperforming cash and government bonds. In this environment, Emerging Markets outperformed Developed markets, aided by a cyclical upturn in the Chinese economy. Within commodities, WTI Oil was a key underperformer over the review period, falling 11.1% over the six months on the back of the higher inventory data; US production picking up faster than expected and the market questioning the effectiveness of the major producer supply curb. Policy tightening in the US kept the pressure up on Gold, which rose by 2.6% over the period to end at $1,228.7/oz. Trust Review The Trust outperformed the sector over the review period, being positively impacted by fund selection but negatively impacted by asset allocation. In terms of the former, the Trust benefitted from its holdings in Artemis Income, Old Mutual UK Mid Cap, BlackRock European Dynamic, Veritas Global Equity Income, Nordea Global High Yield Bond and Lazard Global Listed Infrastructure Equity, although these gains were offset somewhat by the holdings in Guinness Global Energy and JO Hambro Capital Management Japan. With regards to asset allocation, the Trust suffered from its underweight position in European equities, although the underweight position in Cash proved positive to relative performance. Portfolio activity was minimal during the review period. We took a new position in a European Utilities ETF, in order to provide some exposure to an inflation-protected cashflow, and also re-invested in 7

10 Manager s Investment Report continued Goldman Sachs India Equity; a fund which we have held in the past. Outlook The core investment views of the Asset Allocation team have remained largely unchanged over the review period. Our New Political Paradigm theme, which is recognition that politics now matters enough to have a first order impact on markets, continues to be alive and well, with UK politics following the June election looking about as polarised as that of the US. Investors obsessions with opinion polls and elections is warranted given the surprises over the last thirteen months, and implies that political shocks are likely to drive episodes of volatility going forwards. We continue to believe that interest rates are likely to be held down by the burden of poor demographics and heavy debt burdens, which gives us a bias to hold relatively stable, income-generating assets. We also believe that policy divergence between the US and the rest of the developed world is likely to persist. The Federal Reserve has already hiked interest rates four times since tightening began in December 2015, while other central banks remain committed to easing, acting as a headwind to both commodities and emerging market equities. Elsewhere, we continue to remain positive on India, based on the medium-term benefits of reforms. Prime Minister Modi s continued success in polls and state elections provide us with confidence that reform progress will stay broadly on track, even if news flow around new initiatives is likely to slow as we get closer to the next general election in In contrast, we expect growth to slow in China in the second half of this year, as a lagged impact from the earlier monetary tightening begins to take effect. Legal & General Investment Management Limited (Investment Adviser) 31 July

11 Manager s Report and Accounts Copies of the most recent Interim and Annual Long Form Manager s Reports are available free of charge by telephoning , by writing to the Manager or are available on the internet at Call charges will vary. We may record and monitor calls. Dual Pricing Arrangement The Manager s fixed dual pricing arrangement has a set spread to account for the costs of transacting in a particular Trust. Where the Manager operates a box through which unit subscriptions and unit redemptions are netted into a single trade instruction to the Trustee, the netting reduces the actual transaction costs and this generates a revenue to the Manager. The revenue generated from this activity is calculated on a monthly basis and returned to the Trust in the form of a payment from the Manager. This provides an enhanced return to the Trust, though the size of any return will be dependent on the size of subscriptions and redemptions. Minimum Investment Amounts The minimum initial lump sum investment amounts for each class are as follows: R-Class 500 F-Class 500 I-Class 1,000,000 In addition, monthly contributions can be made into the R-Class with a minimum amount of 10, and F-Class with a minimum amount of 50 per month. F-Class units are only available to: i) investors who have received advice from authorised intermediaries and platforms in relation to their investment in units in the Trust and ii) authorised intermediaries or distributers who the Manager reasonably considers will adequately bear the costs of marketing to and acquiring investors at no or limited cost to the Manager, and to whom the Manager has confirmed that such distributer or investor meets the criteria for investment in such units. Other Information The information in this report is designed to enable unitholders to understand how the Trust has performed during the period under review and how it is invested at the period end. Further information on the activities and performance of the Trust can be obtained by telephoning or by writing to the Manager. 9

12 Significant Changes Change to Investment Policy As disclosed on page 1, the Trust changed its investment policy on 6 June Change of FMF for F-Class With effect from 6 June 2017, the Fund Management Fee (FMF) has been reduced for the F-Class from 1.18% to 1.03%. Removal of Performance Fee Prior to this change, a performance fee applied to R-Class only, however, this performance fee will no longer apply from 6 June The performance fee was an additional charge payable from the property of the Trust, if the Trust met specific performance targets. The removal of this fee will simplify our charges. Removal of the Initial Charge for R-Class With effect from 6 June 2017, the initial charge for R-Class units has been removed. Prior to this change, the initial charge was 5%. The removal of the initial charge will provide better value for investors, as there is no longer a cost of setting up the investment. Removal of Initial Commission With effect from 6 June 2017, initial commission will no longer be paid on the Trust. The initial commission was intended to reflect the costs incurred by the product provider and the intermediary for setting up and selling the business, however, Legal & General no longer consider it appropriate to continue to pay commission on such transactions. 10

13 Authorised Fund Manager Legal & General (Unit Trust Managers) Limited Registered in England and Wales No Registered office: One Coleman Street, London EC2R 5AA Telephone: Authorised and regulated by the Financial Conduct Authority Call charges will vary. We may record and monitor calls. Trustee Northern Trust Global Services Limited 50 Bank Street, Canary Wharf, London E14 5NT Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority Independent Auditors PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT 11

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16 Authorised and regulated by the Financial Conduct Authority Legal & General (Unit Trust Managers) Limited Registered in England and Wales No Registered office: One Coleman Street, London EC2R 5AA MMI