FP Brompton Global Income Fund

Transcription

1 FP Brompton Global Income Fund Short Report for the year ended 31 July 2016 Investment Objective and Policy To achieve an income with potential for some capital growth by investing in markets in both the UK and overseas. The Fund will principally invest in Collective Investment Schemes, exchange traded funds and unregulated Collective Investment Schemes (which include limited partnerships). The Fund may also invest in investment trusts (and similar instruments) and other transferable securities, moneymarket instruments, fixed income instruments, deposits and foreign exchange contracts. Investments will not be confined to any particular sector. The Fund may also hold, on a temporary basis, all or part of its assets in cash or other ancillary liquid assets. The Fund may utilise derivatives for the purposes of efficient portfolio management. Fund Facts Risk Profile Interim/Annual Accounting End Dates 31 January 31 July Ex-dividend (xd) Dates 01 February 01 August Income / Accumulation Dates 31 March 30 September 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 Operating Charges as at Operating Charges as at Share Class A 1 n/a n/a 2.38% 2.47% Share Class B 2.00% 0.75% 1.63% 1.72% Share Class I 0.00% 1.00% 1.88% 1.97% Share Class P % 0.50% 1.38% n/a 1 Share Class A Income closed on 11 February Share Class P Income launched on 19 July Page 1

2 s/accumulations s payable 30/09/16 paid 30/09/15 paid 31/03/16 paid 31/03/15 Share Class A Income 1 n/a Share Class B Income Share Class I Income Share Class P Income n/a n/a n/a 1 Share Class A Income closed on 11 February Share Class P Income launched on 19 July Comparative Tables Performance Record Change in net assets per Share A Income 31/07/14 B Income 31/07/14 Opening net asset value per Share Return before operating charges* (2.33) Operating charges (1.44) (2.85) (3.00) (1.88) (1.97) (2.13) Return after operating charges (3.77) s on income Shares (1.57) (3.74) (3.37) (3.40) (3.74) (3.54) Closing net asset value per Share * after direct transaction costs of : Performance Return after operating charges (3.29%) 5.00% 3.85% 8.00% 5.97% 4.76% Other information Closing net asset value ,176 8,404,457 7,224,451 2,235,741 Closing number of Shares ,043 6,937,620 6,264,657 1,990,055 Operating charges 2.38% 2.47% 2.64% 1.63% 1.72% 1.89% Direct transaction costs 0.14% 0.09% 0.06% 0.14% 0.09% 0.06% Prices Highest Share price Lowest Share price Share Class A Income closed 11 February The change in net assets per Share and performance figures are shown to closure date with other information showing at 31 July Page 2

3 Comparative Tables (continued) Performance Record (continued) Change in net assets per Share I Income 31/07/14 P Income Opening net asset value per Share Return before operating charges* Operating charges (2.19) (2.30) (2.45) (0.05) Return after operating charges s on income Shares (3.45) (3.64) (3.52) - Closing net asset value per Share * after direct transaction costs of : Performance Return after operating charges 7.86% 5.71% 4.41% 1.04% Other information Closing net asset value 430, ,145 3,910,572 1,384,307 Closing number of Shares 352, ,029 3,437,904 1,370,000 Operating charges 1.88% 1.97% 2.14% 1.38% Direct transaction costs 0.15% 0.09% 0.06% 0.14% Prices Highest Share price Lowest Share price Share Class P Income was launched 19 July Opening net asset value per Share shown is the Share Class launch price. Major Holdings Top 10 Holdings % of Fund as at Trojan Income Newton Global Income 8.07 M&G Global Dividend 7.08 ishares UK Dividend 6.18 Templeton Global Bond 4.37 Templeton Emerging Markets Bond 4.33 ishares Global Inflation Linked Government Bond 4.29 Henderson Fixed Interest Monthly Income 3.95 F&C Property Growth & Income 3.84 ishares Core UK Gilts 3.78 Top 10 Holdings % of Fund as at PFS Chelverton UK Equity Income 8.68 ishares UK Dividend 8.17 Artemis Global Income 7.86 Schroder European Alpha 6.68 Aberdeen Property 6.30 WisdomTree Europe SmallCap Dividend 6.19 Henderson Fixed Interest Monthly Income 5.76 Threadneedle UK Property 4.76 JO Hambro UK Equity Income 4.08 ishares USD Treasury Bond 1-3yr 4.07 Page 3

4 Portfolio Information Breakdown by Investment type % % % % 0 Collective Investment Schemes [60.93%] Exchange Traded Funds [27.08%] Investment Trusts [3.86%] Net other assets [8.13%] Comparative figures shown above in square brackets relate to 31 July Investment Manager s Report Investment Review The FP Brompton Global Income Fund gained 8.66% 1 over the year to 31 July 2016 while the IA Mixed Investment 20-60% Shares index gained 5.89% 1. The portfolio ended the year with a higher equity weighting than at 31 July 2015 and a significant exposure to emerging market equity and bonds. Its year-end historic yield was 2.59% 1. The MSCI AC World Total Return Index gained 17.68% 1 in sterling terms over the year but sterling weakness was the main contributor to this performance, with the weak pound, which fell 17.53% 1, 18.96% 1 and 42.0% 1 respectively against the dollar, euro and yen, inflating the performance of overseas assets on translation. In August, the Fund s direct US equity holdings were sold and Newton Global Higher Income was bought to increase the portfolio s overall yield while maintaining some US equity exposure. In late September, the ishares UK Dividend exchange-traded fund (ETF) holding was replaced by a holding in Trojan Income, a higher-yielding UK equity income fund. These changes were made during a period when investors were concerned about global economic growth, China s economic growth slowdown and rising risks of deflation. In October, as investor sentiment improved, the Fund reduced its Newton Global Higher Income holding and took profits from MI Chelverton UK Equity Income, investing the proceeds in more market-sensitive holdings such as the ishares UK Dividend ETF. Page 4

5 Investment Manager s Report (continued) Investment Review (continued) Ahead of December s Federal Reserve (Fed) interest rate decision, the equity allocation was reduced through the sale of the ishares UK Dividend ETF as a result of concerns about an adverse market reaction to the expected change in Fed policy. In January 2016, dollar strength, renminbi weakness and oil price falls increased deflation concerns. In response, the portfolio s equity allocation was further reduced and profits were taken on longer dated government bond holdings. In the spring, the portfolio invested in emerging market equity and debt funds to benefit from renewed dollar weakness and a recovery in oil prices. The Brexit referendum result in late June provided opportunities as stockmarkets fell to increase the portfolio s equity allocation. Towards the end of the year, the Fund received significant inflows so various purchases were made to maintain a stable allocation. M&G Global Dividend and Newton Global Higher Income were bought. The ishares Core S&P 500 ETF was sold, however, having been purchased the previous afternoon with the aim of maintaining equity exposure overnight. Market Overview Global equities rose 17.68% 1 in sterling terms over the year under review. This rise, however, was driven by sterling weakness with global equities rising by only 0.13% 1 in local currency terms. In December 2015, Federal Reserve members voted to raise interest rates in the first tightening of US monetary policy since After seven years of exceptional measures, members considered the change in policy justified by the improvement in employment and the steady expansion of the US economy. In June 2016, pollsters, bookmakers and investors were wrong-footed when the UK electorate voted to leave the European Union. Predictions that a Brexit vote would precipitate sustained falls in risky asset prices proved unfounded as many equity markets rallied strongly after the initial move lower. UK investors overseas equity market gains were fuelled by sterling weakness as the pound fell following the result. After recovering from a low reached in February, oil prices ended the year 25.52% 1 lower in sterling terms. The recoveries in prices for oil and other commodities over the spring and summer of 2016 and receding prospects of early US interest rate rises and some respite from dollar strength contributed to rises in emerging market equities. Page 5

6 Investment Manager s Report (continued) Outlook Political events such as the US presidential election are likely to influence returns for the rest of The shift in monetary conditions in early 2016 is positive for equities and bonds. Emerging market assets, particularly equities, may recover further given their low relative valuations. Improvements in the current account balances of many developing economies may also underpin recoveries in their currencies, particularly against sterling, which could weaken further if Brexit talks prove difficult. There is also further capacity for monetary easing, with India likely to cut interest rates if food inflation eases following the monsoon season. The Fund has maintained significant holdings in emerging markets. Central banks in aggregate continue to pursue supportive monetary policies and although the Fed is expected to raise rates further the rate of increase is likely to be slow. Interest rate expectations adjusted swiftly following the Brexit vote as the prospect of monetary tightening receded. Weak May US employment data and downward revisions to data for the two preceding months had already pushed bond yields lower. The Bank of England signalled it would provide increased support to the UK economy. In August, the Bank s Monetary Policy Committee cut the Bank Rate for the first time since 2009, taking it from 0.5% to 0.25%. Renewed quantitative easing and measures to encourage bank lending were also announced and interest rates may be reduced further if UK economic conditions worsen. Sources: 1 Thompson Reuters 31 July 2016 Investment Manager Brompton Asset Management LLP 8 September 2016 Significant Information Under the Alternative Investment Fund Managers Directive ("AIFMD"), acting as the Alternative Investment Fund Manager ("AIFM"), Fund Partners is required to disclose how those whose actions have a material impact on the Fund 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. Page 6

7 Significant Information (continued) 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 Fund are remunerated. July 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 44 1,822,671 1,822, Remuneration paid to employees of the AIFM who have a material impact on the risk profile of the AIF 8 548, , 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, Head of Product Management and Client Relations and the Head of Finance. 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: Depositary BNY Mellon Trust & Depositary (UK) Ltd 160 Queen Victoria Street, London, EC4V 4LA Investment Manager Brompton Asset Management LLP 1 Knightsbridge Green, London, SW1X 7QA Authorised and regulated by the FCA Authorised and regulated by the FCA Authorised and regulated by the FCA Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors' instructions Auditor Deloitte LLP Chartered Accountants and Statutory Auditor Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2DB Page 7