Quarterly Range Report

Transcription

1 Quarterly Range Report MyFolio Managed Range - Q OEIC Platform 1 MyFolio Managed Ratings MyFolio is a flexible solution consisting of 25 multi-asset, fund-of-funds, split into five ranges (three growth and two income) incorporating active and passive investment funds. For each range, we offer five individual funds that target a different level of risk. There are five MyFolio Managed Funds, ranging from lower through to higher risk (I to V). Each fund invests mainly in funds managed by Standard Life Investments. Standard Life Investments has considerable experience investing across the major asset classes such as equities, property and bonds. Please note that the number contained in a MyFolio fund name is not related to the synthetic risk and reward indicator contained in the Key Investor Information Document (KIID). Performance (as at 30/06/2018) 100% 50% 0% Jul 13 Oct 14 Jan 16 Apr 17 Jul 18 Standard Life Investments MyFolio Managed I Platform 1 Acc Standard Life Investments MyFolio Managed III Platform 1 Acc Standard Life Investments MyFolio Managed V Platform 1 Acc Standard Life Investments MyFolio Managed II Platform 1 Acc Standard Life Investments MyFolio Managed IV Platform 1 Acc Cumulative performance (as at 30/06/2018) 1 month -0.20% -0.27% -0.34% -0.45% -0.58% 3 months 0.88% 1.78% 2.68% 3.55% 4.57% 6 months -0.79% -0.62% -0.34% -0.28% -0.27% 1 year 1.34% 2.79% 4.52% 5.90% 6.55% 3 years 9.75% 14.26% 18.36% 22.88% 26.68% 5 years 20.12% 29.56% 38.82% 48.07% 55.02% Since launch 36.45% 52.59% 70.16% 81.70% 95.16% Year on year (as at 30/06/2018) 0-12m 1.34% 2.79% 4.52% 5.90% 6.55% 12-24m 5.77% 9.03% 12.31% 15.67% 18.19% 24-36m 2.39% 1.95% 0.83% 0.32% 0.60% 36-48m 4.20% 6.38% 8.06% 9.64% 10.69% 48-60m 5.04% 6.59% 8.53% 9.90% 10.56% Income reinvested, net of fund charges, GBP, sourced from FE 2018 The chart shows the performance of the fund over the period shown. Past performance is not a guide to future returns. The value of this investment and the income from it may go down as well as up and cannot be guaranteed. An investor may receive back less than their original investment. This document is intended for use by individuals who are familiar with investment terminology. To help you understand a fund and for a full explanation of specific risks and the overall risk profile of the fund and the shareclasses within it, please refer to the Key Investor Information Document or Prospectus. 1

2 Market review Following a challenging first quarter, most global equity markets rebounded in Q2, driven by robust US economic data and a raft of better-than-expected corporate earnings results. The former allowed the US Federal Reserve (Fed) to raise rates in June, with two more hikes likely this year. Meanwhile, the oil price surpassed a four-year high in May on supply concerns. Perhaps the biggest talking point, though, was the deterioration in trade relations between the US and China, after each announced a series of new tariffs. Along with the rising US dollar, this meant emerging markets returns were down for the quarter. It was a bumpy period for global government bonds, with prices in the US, Germany and the UK falling on indications that US interest rates could rise more quickly than previously expected. Thereafter, political uncertainty in Italy and Spain fuelled demand for core government bonds, driving prices higher. Corporate bonds began well but struggled to make headway as the quarter progressed, with volatility in financial markets picking up as the spectre of global trade wars returned. UK commercial real estate delivered modest capital growth during the quarter, but there was further divergence in sector performance. While industrials continued to outperform the wider UK real estate market, there was further distress on the high street. Mothercare and House of Fraser were the latest retailers to resort to company voluntary arrangements (CVAs), while others like M&S looked to rationalise their physical portfolios. In this environment, real estate investors remained focused on assets in good locations, offering resilient income. Range commentary We review the Strategic Asset Allocation (SAA) for each of the MyFolio funds every quarter, with the aim of ensuring that we continue to meet investors long-term interests. At the most recent review, we made no changes to the SAA model. Within Tactical Asset Allocation (TAA), we made the following changes (where applicable within each risk level) during the second quarter of Reduced our European equities position to neutral (versus the SAA) Added to our holding in UK equities (while remaining underweight versus the SAA) Reduced our high yield bonds position to neutral Added to emerging market local currency debt Increased our cash position to a small overweight The political situation in Italy reignites memories of prior Eurozone crises; we think this will be an overhang to sentiment in Europe at least, but at worst risks contagion into other countries. Conversely, with the euro already considerably weaker versus the US dollar, an improving situation in Europe may lead to a stronger recovery. This would act as a headwind for European equities. Overall, we believe other markets offer better risk-adjusted returns at this point. This includes US equities, where domestic economic growth has been strong and Q1 data leads us to believe it will remain higher than in other countries. Alongside the euro, sterling has also been weak versus the US dollar. We therefore decided to add to our UK equities position to modify our sterling exposure. High yield bonds have performed well over the year-to-date relative to other asset classes. Two factors have mainly driven this: the rise in oil prices and the slowdown in issuance. Defaults among high yield bonds are currently running at a fairly low 3% but the asset class remains susceptible to higher US interest rates given greater debt levels. While we still expect positive returns, the risks are now more balanced. We therefore prefer to invest in emerging market debt, which gives us exposure to the growth dynamics within emerging markets. Finally, we increased our cash position, which gives us greater flexibility in volatile markets. There were no significant changes made to the underlying holdings over the review period. Market outlook The story of the equity market this year has been the reintroduction of risk and volatility. Higher interest rates and the removal of monetary policy are causing a slow tightening of liquidity conditions, which is creating stress in some emerging market currencies and bond yields. In addition, populist politics are challenging the status quo, threatening global free trade and the euro. However, the most important drivers for stocks economic data and corporate earnings remain solid, providing reasons to remain supportive. As we move through 2018, stock prices will have to be justified by the merits of the underlying company cashflows, rather than by interest-rate-driven valuation. The path and speed of interest rate changes will continue to determine the short-term outlook for bond markets. Central banks have made it clear they believe economic growth and employment levels now argue for an unwinding of emergency monetary policies, despite consistently low inflation. As a result, they are steering towards a tighter monetary policy stance. Meanwhile, the fundamental picture for corporate bonds remains sound, which was reflected in the first quarter earnings season. Uncertainty around the ultimate economic impact of Brexit continues to affect sentiment towards UK commercial real estate. We envisage a period of low returns over the next five years, with the forecast annual total return being slightly below the market income return. With income expected to be the main driver of returns, the degree of income risk from potential tenant default or the ability to maintain income at lease events will be key to performance. Additional information Annual Management Charge 0.225% 0.225% 0.225% 0.225% 0.225% Ongoing Charge Figure* 0.74% 0.78% 0.85% 0.90% 0.92% Yield 1.48% 1.27% 1.23% 1.25% 1.03% Citicode 10EZ 10F0 10F1 10F2 10F3 Fund size in m as at 30/06/ m 1,846.22m 3,695.00m 1,334.48m m *The Ongoing Charge Figure (OCF) shows the annualised operating expenses of the share/unit class as a percentage of the average net asset value of the class over the same period. It is made up of the Annual Management Charge (AMC) and other expenses taken from the class over the last annual reporting period, such as depositary fees, audit fees, investment management fees, and administration fees. It excludes portfolio transaction costs, except in the case of an entry/exit charge paid by the Fund when buying or selling in another collective investment undertaking. The OCF can help you compare the costs and expenses of different Funds/classes. 2

3 Annualised risk and return (as at 30/06/2018) Performance 10% 8% 6% 4% 2% 0% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Volatility Income reinvested, net of fund charges, GBP, Sourced from FE 2018 The chart shows the annualised volatility (risk) and annualised performance based on fund returns over the past three years to the date shown. Key Name Performance Volatility Standard Life Investments MyFolio Managed I Platform 1 Acc 3.15% 3.12% Standard Life Investments MyFolio Managed II Platform 1 Acc 4.54% 4.31% Standard Life Investments MyFolio Managed III Platform 1 Acc 5.78% 5.57% Standard Life Investments MyFolio Managed IV Platform 1 Acc 7.11% 6.96% Standard Life Investments MyFolio Managed V Platform 1 Acc 8.20% 8.14% The table shows the annualised volatility (risk) and annualised performance based on fund returns over the past three years to the date shown. Past performance is not a guide to future returns. The value of this investment and the income from it may go down as well as up and cannot be guaranteed. An investor may receive back less than their original investment. Current asset allocation (as at 30/06/2018) Defensive assets Money Market including Cash 4.30% 1.50% 1.50% 1.50% 1.00% Global Index Linked Bonds 5.50% 5.60% 3.00% - - Short Dated Global IL Bonds 4.00% 4.10% 1.50% - - Sterling Corporate Bonds 12.70% 7.50% 2.60% - - Short Dtd Sterling Corp Bonds 14.20% 7.00% 2.10% - - Global Corporate Bonds 9.00% 7.60% 6.00% 1.20% - Short Dated Global Corp Bonds 3.00% 2.60% 2.00% 0.70% - Absolute Return Bonds 14.30% 10.10% 5.80% 2.00% - Total 67.00% 46.00% 24.50% 5.40% 1.00% Growth assets UK Equities 4.30% 9.20% 13.40% 18.50% 23.40% US Equities 6.50% 10.60% 14.50% 18.90% 24.50% European Equities 2.20% 4.00% 5.80% 7.60% 10.20% Japanese Equities 3.10% 4.40% 5.70% 7.00% 8.65% Asia Pacific Equities 1.80% 2.70% 3.80% 4.80% 5.80% Emerging Market Equities 2.30% 3.20% 4.30% 5.30% 6.30% Global High Yield Bonds 2.00% 2.00% 2.80% 3.60% - Emerging Mkt Local Curr Bonds 1.60% 2.00% 2.40% 2.80% 0.75% UK Real Estate 2.60% 4.50% 6.40% 6.10% - Global REITs 0.90% 1.50% 2.20% 2.00% - Multi Asset Absolute Returns 5.70% 9.90% 14.20% 18.00% 19.40% Total 33.00% 54.00% 75.50% 94.60% 99.00% 3

4 Holdings (as at 30/06/2018) Defensive assets Asset class SLI Absolute Return Global Bond Strategies Absolute Return Bonds 14.32% 9.95% 5.56% 2.05% - SLI Corporate Bond Sterling Corporate Bonds 2.54% 2.69% 1.37% - - SLI Ethical Corporate Bond Sterling Corporate Bonds 7.62% 3.08% 0.40% - - SLI Global Corporate Bond SICAV Fund S Acc Global Corporate Bonds 8.75% 7.58% 5.75% 1.22% - Hedged SLI Global Index Linked Bond Global Index Linked Bonds 5.56% 6.22% 3.59% - - SLI Global Short Dated Corporate Bond Short Dated Global Corporate Bonds 2.82% 2.31% 1.78% 0.70% - SLI Investment Grade Corporate Bond Sterling Corporate Bonds 2.46% 1.56% 0.79% - - SLI Short Dated Corporate Bond Short Dated Sterling Corporate Bonds 3.33% 2.94% 0.80% - - SLI Short Duration Credit Short Dated Sterling Corporate Bonds 4.95% 3.88% 1.16% - - SLI Short Duration Global Inflation Linked Bond Short Dated Global Index Linked Bonds 4.23% 4.09% 1.82% - - Vanguard UK Short-Term Investment Grade Bond Short Dated Sterling Corporate Bonds 5.55% Cash and Other Money Market including Cash 4.73% 1.79% 1.64% 1.64% 1.13% Total 66.86% 46.09% 24.66% 5.61% 1.13% Growth assets Asset class Brookfield Global REITS Global REITs 0.63% 0.93% 1.27% 1.21% - Neuberger Berman EM Debt Local Currency Emerging Market Local Currency Bonds 0.39% 0.46% 0.77% 0.95% - SLI American Equity Income US Equities 0.65% 1.45% SLI American Equity Unconstrained US Equities % 1.87% 3.16% SLI Asian Pacific Growth Asia Pacific Equities % 1.15% SLI Emerging Market Local Currency Debt Emerging Market Local Currency Bonds 1.03% 0.94% 1.43% 1.76% 0.46% SLI Europe ex UK Smaller Companies European Equities % 0.68% SLI European Equity Growth European Equities % 1.09% 1.44% SLI European Equity Income European Equities 2.64% 4.40% 2.85% 3.46% 4.20% SLI European Smaller Companies European Equities % 0.65% 0.93% SLI European Trust European Equities % 1.99% 3.61% SLI Global Absolute Return Strategies Multi Asset Absolute Returns 5.67% 9.24% 13.68% 17.49% 18.87% SLI Global Emerging Markets Equity Emerging Market Equities % 1.03% 1.67% 1.85% SLI Global Emerging Markets Equity Income Emerging Market Equities 2.35% 1.84% 3.08% 3.29% 4.10% SLI Global High Yield Bond Global High Yield Bonds 2.15% 2.59% 3.55% 4.00% - SLI Global REIT Global REITs 0.36% 0.53% 0.84% 0.83% - SLI Japanese Equities Japanese Equities % 1.01% 1.42% 1.71% SLI Japanese Equity Growth Japanese Equities 0.51% 1.54% 1.82% 2.71% 3.24% SLI North American Trust US Equities 1.29% 2.57% 3.57% 4.55% 6.31% SLI UK Equity Growth UK Equities 0.43% 1.08% 1.41% 1.50% 2.65% SLI UK Equity High Alpha UK Equities 0.64% 0.75% 1.60% 1.69% 2.15% SLI UK Equity High Income UK Equities 0.94% 2.40% 2.14% 3.36% 3.17% SLI UK Equity Income Unconstrained UK Equities 1.37% 3.18% 3.72% 6.19% 8.52% SLI UK Equity Unconstrained UK Equities % 2.70% 3.39% SLI UK Real Estate UK Real Estate 2.66% 4.76% 6.05% - - SLI UK Real Estate Fund UK Real Estate % - SLI UK Smaller Companies UK Equities 0.54% 1.27% 2.13% 2.71% 3.32% SLMT American Equity Unconstrained US Equities 2.20% 3.33% 4.37% 5.40% 6.55% SLMT Standard Life Japan Japanese Equities 2.58% 2.01% 2.89% 2.75% 3.65% Standard Life Pacific Basin Trust Asia Pacific Equities 1.65% 2.78% 3.69% 3.39% 4.56% Vanguard US Equity Index US Equities 2.46% 3.80% 5.98% 7.33% 9.20% Total 33.14% 53.91% 75.34% 94.39% 98.87% 4

5 Important information The value of a fund can go down as well as up, and is not guaranteed. You may receive back less than the amount originally invested. Past performance is not a guide to the future. Any data contained herein which is attributed to a third party ( Third Party Data ) is the property of (a) third party supplier(s) (the Owner ) and is licensed for use by Standard Life Aberdeen*. Third Party Data may not be copied or distributed. Third Party Data is provided as is and is not warranted to be accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, Standard Life Aberdeen* or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Past performance is no guarantee of future results. Neither the Owner nor any other third party sponsors, endorses or promotes the fund(s) or product(s) to which Third Party Data relates. *Standard Life Aberdeen means the relevant member of the Standard Life Aberdeen group, being Standard Life Aberdeen plc (SC286832) together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time. This document is provided by Standard Life Investments Limited, registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Authorised and regulated in the UK by the Financial Conduct Authority Standard Life Aberdeen. Images reproduced under licence. 5