MI Downing Managed Funds

Transcription

1 MI Downing Managed Funds Interim Reort 30 November 2017

2 MI Downing Managed Funds Contents Page Directory MI Downing Diversified Global Managers Investment Objective and Policy Investment Manager s Reort Portfolio Statement Comarative Tables Statement of Total Return Statement of Change in Net Assets Attributable to Shareholders Balance Sheet Certification of the Interim Reort by the Authorised Cororate Director General Information

3 MI Downing Managed Funds Directory Authorised Cororate Director (ACD) & Registrar Maitland Institutional Services Ltd Sringfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Telehone: Fax: Website: (Authorised and regulated by the Financial Conduct Authority) Customer Service Centre Sringfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Telehone: Fax: (Authorised and regulated by the Financial Conduct Authority) Directors of the Authorised Cororate Director R. Ackermann J. Clark (aointed 21 December 2017) P.J. Foley-Brickley S. Georgala D. Jones R.W. Leedham (retired 19 December 2017) G. Kok (aointed 30 November 2017) Investment Manager Downing LLP 6th Floor, St Magnus House, 3 Lower Thames Street, London EC3R 6HD (Authorised and regulated by the Financial Conduct Authority) Deositary Northern Trust Global Services Ltd 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) Indeendent Auditor KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square, Canary Wharf, London E14 5GL MI Downing Managed Funds 1

4 MI Downing Diversified Global Managers Investment Objective and Policy The investment objective of the Fund is to rovide medium to long term caital growth on a medium risk basis. It is intended that this objective will be achieved by the Fund investing rimarily in a diversified ortfolio of units/shares of collective investment schemes, (including, but not restricted to, Exchange Traded Funds, unregulated funds such as hedge funds, collective investment schemes which themselves invest in roerty and/or the shares of roerty comanies, and index-linked collective investment schemes), and transferable securities (including, but not restricted to, shares in investment comanies including investment trusts which themselves invest in equities, roerty and/or the shares of roerty investment comanies and equity linked transferable securities and fixed interest securities) on a global basis. The Fund is also ermitted to invest in money market instruments, government and ublic securities, cash and near cash, warrants and deosits as ermitted for Non-UCITS Retail Schemes in accordance with COLL. It is intended that the assets of the Fund will be managed so that it is eligible for quotation within the Investment Association s Flexible Investment sector. Further details may be found via the IA s website at The Fund may only invest in derivatives and forward transactions for the uroses of hedging. Investment Manager s Reort for the eriod ended 30 November 2017 Along with almost all other investors, we have been questioning how long can this bull market continue?. Certainly, we have been surrised by the strength and resilience of markets. Esecially as interest rates are finally on the rise after nearly a decade of record lows. The Fed in the US, which arguably looks after the world s currency, has now raised rates three times in 2017 to a target range of 1.25% to 1.5%. The Bank of England has started to follow suit, increasing the cost of borrowing from 0.25% to 0.5%. Although these rate rises are modest by historical standards, they do aear to signal the end of free money, but after crying wolf for so long, only time will tell how the world s economies will resond. As ever, we are not targeting a secific macro outcome but have looked to balance our diverse sources of alha over the long term. We do not attemt to call the markets. Indeed, we believe one of the strengths of our investment roosition is that we hold aroximately 20% of the assets in alternative investments. We consider these holdings to lowly correlate with equities and are likely to remain relatively stable or even make gains in the event of a stock market correction. This allows us to hold our equity ositions, which not only lowers trading costs but also reduces the need to time markets allowing us the oortunity to benefit from our managers ability to exloit ricing anomalies over time. The Fund returned 3.23% over the six month eriod ending 30 November 2017 and this comrised of individual holding returns that were evenly sread between -4.3% to 12.9%, giving us confidence that we have reduced the ortfolio s correlation risks further since the introduction of a airing strategy. In terms of changes since our last reort in May, there have been a number, artly to increase airing of comlementary funds and artly to allocate to more diversified assets. From June 2017 to November 2017 we relaced Schroder Tokyo Z Accumulation with Yuki Jaan Rebounding Growth. A move from a close index erformer to an unconstrained boutique manager who is local to their investments. MI Downing UK Micro- Ca Growth (which Downing LLP is also the investment manager for) was switched to Ennismore Euroean Smaller Comanies to make the Portfolio wholly unfettered and imrove long run liquidity. We have dee knowledge of the smaller comanies sace and have sent eighteen months researching a small ca combination that works for us culminating with the selection of the Tosca and Ennismore funds. Two further highlights were the introduction of Magallanes Value Iberian Equity (value) to comlement our existing holding in Juiter Euroean Oortunities Trust (growth). Time Commercial Freehold was added to our alternatives allocation. This ground rent fund, with inflation ulifts built-in, is now one of our largest allocations because it is a rudent asset that is comletely uncorrelated to equity markets and managed by an accomlished team. Following the comletion of our USA review, we sold the remains of our stake in Vanguard US Equity Index. Following these changes during the eriod we believe that the Fund continues to be well-ositioned to take advantage of what the global equity markets can offer over the long run and at the same time rotect caital on the downside in market stresses. 2 MI Downing Diversified Global Managers

5 MI Downing Diversified Global Managers Portfolio Statement as at 30 November 2017 Market % of total value net assets Holding Security 2017 United Kingdom 15.68% (13.47%) 312,475 Aurora Investment Trust 632, ,370,747 Time Commercial Freehold M Gross Accumulation* 1,697, ,240 Tosca Micro Ca UCITS GBP Institutional* 981, ,312, Asia Pacific 8.20% (8.39%) 13,158 Alquity Asia Y Accumulation* 1,732, Euroe 14.97% (8.06%) 8,030 Ennismore Euroean Smaller Comanies* 999, ,102 Juiter Euroean Oortunities Trust 620, ,924 Magallanes Value Iberian Equity I* 814, ,945 Melchior Euroean Absolute Return 17 (Hedged) Accumulation* 726, ,161, Global 11.82% (13.23%) 127,567 Fundsmith Equity I Accumulation* 457, ,488 Polar Caital Global Convertible I Hedged GBP Accumulation* 1,385, ,215 Polar Caital Global Insurance I GBP Accumulation* 653, ,497, Jaan 13.86% (12.96%) 9,719 Arcus Jaan Fund Relative I JPY Accumulation* 1,190, ,843 Arcus Jaan Value Relative Unit Series , ,380 Yuki Jaan Rebounding Growth* 1,097, ,927, North America 14.63% (17.49%) 8,113 Conventum Lyrical I Accumulation* 1,528, ,803 Edgewood L Select - US Select Growth I Accumulation* 1,560, ,089, Emerging Markets 15.80% (13.93%) 970,561 MI Somerset Emerging Markets Small Ca B Accumulation* 1,471, ,704 Overstone Emerging Markets Equity A* 1,865, ,337, Secialist 3.15% (4.03%) 1,000 Kriticos Strategy Global Short Only Fund 664, Investment assets 20,721, Net other assets 399, Net assets 21,121, All investments are ordinary shares or stock units on a regulated securities market unless otherwise stated. The ercentages in brackets show the equivalent % holdings as at Unregulated * Collective Investment Schemes ermitted under COLL, not listed on any exchange. Total urchases for the eriod: 6,146,812 Total sales for the eriod: 2,998,847 MI Downing Diversified Global Managers 3

6 MI Downing Diversified Global Managers Comarative Tables Change in net assets er share A Income Oening net asset value er share Return before oerating charges^ Oerating charges Return after oerating charges^ Distributions Closing net asset value er share ^After direct transaction costs of Performance Return after charges 3.23% 20.72% -5.13% 7.85% Other information Closing net asset value 3,739,734 3,877,622 3,379,099 4,157,675 Closing number of shares 2,501,775 2,677,882 2,817,181 3,270,958 Oerating charges* 1.95% 1.95% 1.47% 2.04% Direct transaction costs 0.00% 0.06% 0.00% 0.00% Prices Highest share rice Lowest share rice A Accumulation Oening net asset value er share Return before oerating charges^ Oerating charges Return after oerating charges^ Distributions Retained distributions on accumulation shares Closing net asset value er share ^After direct transaction costs of Performance Return after charges 3.23% 20.72% -5.14% 7.85% Other information Closing net asset value 17,382,010 14,586,552 14,205,653 16,413,436 Closing number of shares 11,338,261 9,822,619 11,548,533 12,657,971 Oerating charges* 1.95% 1.95% 1.47% 2.04% Direct transaction costs 0.00% 0.06% 0.00% 0.00% Prices Highest share rice Lowest share rice * The Investment Manager currently rebates the Fund s oerating charges in order for them not to exceed 1.95% of the average net asset value of the Fund. Oerating charges include indirect costs incurred in the maintenance and running of the Fund, as disclosed (but not limited to) the detailed exenses within the Statement of Total Return. The figures used within this table have been calculated by annualising the exenses incurred against the average Net Asset Value for the accounting eriod. The return after charges is calculated as the closing net asset value er share lus the distributions on income shares minus the oening net asset value er share as a % of the oening net asset value er share. The Fund invests in Collective Investment Schemes, the exenses incurred by these schemes in relation to the Fund (synthetic ongoing charge) are included within the oerating charges. Direct transaction costs include fees, commissions, transfer taxes and duties in the urchasing and selling of investments, which are offset (where alicable) against any dilution levies charged within the accounting eriod. The figures used within the table have been calculated against the average Net Asset Value for the accounting eriod. 4 MI Downing Diversified Global Managers

7 MI Downing Diversified Global Managers Comarative Tables continued Risk and reward rofile The risk and reward indicator table demonstrates where the Fund ranks in terms of its otential risk and reward. The higher the rank the greater the otential reward but the greater the risk of losing money. It is based on ast data, may change over time and may not be a reliable indication of the future risk rofile of the Fund. The shaded area in the table below shows the Fund s ranking on the risk and reward indicator. Tyically lower rewards, Tyically higher rewards, lower risk higher risk The Fund is ranked 4 because funds of this tye have exerienced average rises and falls in value in the ast. Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffer severe losses in all cases. The indicator does not take into account the following risks of investing in this Fund: The Fund invests into other funds which themselves invest in assets such as bonds, comany shares, cash and currencies. The objectives and risk rofiles of these underlying funds may not be fully in line with those of this Fund. Investing in other funds may exose investors to increased risk due to restrictions on withdrawals, less strict regulations and the use of derivatives. The Fund may invest in bond funds which will be imacted by change in interest rates, inflation and any decline in creditworthiness of the underlying bond issuers. The Fund may invest in roerty funds and unregulated schemes which can be less liquid than other asset classes. Investing overseas can bring additional returns and sread risk to different markets. There are risks, however, that changes in currency exchange rates may cause the value of your investment to decrease and increase. Emerging markets or less develoed countries may face more olitical, economic or structural challenges than develoed countries. This means your money is at greater risk. Smaller comany shares can be riskier as they may be more difficult to buy and sell and their share rice may fluctuate more than that of larger comanies. For further risk information lease see the rosectus. Risk warning An investment in a non-ucits retail scheme Oen Ended Investment Comany, should be regarded as a medium to longterm investment. Investors should be aware that the rice of shares and the revenue from them can fall as well as rise and investors may not receive back the full amount invested. Past erformance is not a guide to future erformance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. MI Downing Diversified Global Managers 5

8 MI Downing Diversified Global Managers Statement of Total Return for the eriod ended 30 November Income Net caital gains 666,226 2,051,289 Revenue 57, ,013 Exenses (93,113) (90,726) Interest ayable and similar charges (180) Net (exense)/revenue before taxation (36,144) 34,287 Taxation (199) 21 Net (exense)/revenue after taxation (36,343) 34,308 Total return before distributions 629,883 2,085,597 Distributions (3,744) Change in net assets attributable to Shareholders from investment activities 629,883 2,081,853 Statement of Change in Net Assets Attributable to Shareholders for the eriod ended 30 November Oening net assets attributable to Shareholders 18,464,174 17,584,752 Amounts receivable on issue of shares 3,256, ,755 Less: Amounts ayable on cancellation of shares (1,228,330) (2,058,948) 2,027,688 (1,618,193) Dilution levy 631 Change in net assets attributable to Shareholders from investment activities (see Statement of Total Return above) 629,883 2,081,853 Closing net assets attributable to Shareholders 21,121,745 18,049,043 The oening net assets attributable to shareholders for the current eriod do not equal the closing net assets attributable to shareholders for the comarative eriod as they are not consecutive eriods. 6 MI Downing Diversified Global Managers

9 MI Downing Diversified Global Managers Balance Sheet as at 30 November 2017 ASSETS Fixed Assets Investments 20,721,770 16,905,727 Current Assets Debtors 160,814 1,326,890 Cash and bank balances 470, ,699 Total current assets 631,566 2,236,589 Total assets 21,353,336 19,142,316 LIABILITIES Investment liabilities Creditors Bank overdrafts (189,517) (646,993) Other creditors (42,074) (31,149) Total creditors (231,591) (678,142) Total liabilities (231,591) (678,142) Net assets attributable to Shareholders 21,121,745 18,464,174 The interim financial statements have been reared under the historical cost basis, as modified by the revaluation of investments and in accordance with FRS 102 and the Statement of Recommended Practice (SORP) for Financial Statements of UK Authorised Funds issued by the Investment Association (IA) in May The interim financial statements have been reared on the same basis as the audited financial statements for the year ended 31 May The financial statements have been reared on the going concern basis. Certification of the Interim Reort by the Authorised Cororate Director This reort has been reared in accordance with the requirements of the Financial Conduct Authority s Collective Investment Schemes sourcebook ( the COLL Sourcebook ) and the Statement of Recommended Practice issued by the Investment Association. R. Ackermann D. Jones Directors Maitland Institutional Services Ltd 23 January 2018 Maitland Institutional Services Ltd oerates as ACD and AIFM for the uroses of the AIFM directive 22 July MI Downing Diversified Global Managers 7

10 MI Downing Managed Funds General Information Authorised Status MI Downing Managed Funds (the Comany ) is structured as an Investment Comany with Variable Caital ( ICVC ), under regulation 12 (Authorisation) of the OEIC Regulations (Oen-Ended Investment Comanies Regulations 2001 (SI 2001/1228)). The Comany does not intend to have an interest in immovable roerty. The Comany is authorised and regulated in the UK by the Financial Conduct Authority ( FCA ) as a non-ucits Retail Scheme under the COLL Sourcebook. The Comany was incororated in England and Wales on 30 July 2007 under registration number IC The Shareholders are not liable for the debts of the Comany. The Comany currently has 1 Sub-fund, which is detailed below: MI Downing Diversified Global Managers Head Office Sringfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Address for Service The Head Office is the address in the United Kingdom for service on the Comany of notices or other documents required or authorised to be served on it. Base Currency The base currency of the Comany is Pounds Sterling. Share Caital The minimum share caital of the Comany is 1 and the maximum is 100,000,000,000. Shares in the Comany have no ar value. The share caital of the Comany at all times equals the sum of the net asset value of the Fund. Classes of Shares The Instrument of Incororation allows each Fund to issue different classes of shares in resect of any Fund. The Fund currently has the following classes of shares available for investment: A Income A Accumulation The Comany may issue both Income and Accumulation Shares. Holders of Income shares are entitled to be aid the revenue attributable to such shares in resect of each annual accounting eriod in the currency of the relevant share class. Holders of Accumulation shares are not entitled to be aid the revenue attributable to such shares, but that revenue is retained and accumulated for the benefit of shareholders and is reflected in the rice of shares. Valuation Point The scheme roerty of the Comany and each Sub-Fund will normally be valued at 12:00 on each dealing day for the urose of calculating the rice at which shares in the Comany may be issued, sold, reurchased or redeemed. For the urose of the ricing of shares, a business day is defined as a day on which the dealing office of the ACD is oen for the buying and selling of shares. The ACD may at any time during a business day carry out an additional valuation of the roerty of the Fund if the ACD considers it desirable to do so, with the Deositary s aroval. 8 MI Downing Managed Funds

11 MI Downing Managed Funds General Information continued Buying, Redeeming and Switching of Shares The Authorised Cororate Director will accet orders for the urchase, sale and switching of shares on normal business days between 08:30 and 16:30. Instructions to buy or sell shares may either be in writing to: Sringfield Lodge, Colchester Road, Chelmsford, Essex CM2 5PW Or by telehone to: The Authorised Cororate Director has the right to establish facilities for recording telehone calls made or received on this telehone line. A contract note giving details of the shares urchased will be issued no later than the next business day after the business day on which an alication to urchase shares is received and instrumented by the ACD. Certificates will not be issued in resect of shares. Ownershi of shares will be evidenced by an entry on the register of shareholders. Pricing Basis There is a single rice for buying, selling and switching shares in a Fund which reresents the Net Asset Value of the Fund concerned. The share rice is calculated on a forward ricing basis, that is at the next Valuation Point after the urchase or redemtion is deemed to be acceted by the ACD. The rices of shares are ublished daily on Neither the ACD nor the Comany can be held resonsible for any errors in the ublication of the rices. The shares in the Comany will be issued and redeemed on a forward ricing basis which means that the rice will not necessarily be the same as the ublished rice. Other Information The Instrument of Incororation, Prosectus, Key Investor Information Document and the most recent interim and annual reorts may be insected at the office of the ACD which is also the Head Office of the Comany. Coies may be obtained free of charge uon alication. They are also available from the website of the ACD, the details of which are given in the directory of this reort. Shareholders who have comlaints about the oeration of the Comany should in the first instance contact the ACD, or, following that, may make their comlaint direct to the Financial Ombudsman Service, Exchange Tower, London E14 9SR. Risk Warning An investment in a non-ucits retail scheme Oen Ended Investment Comany, should be regarded as a medium to longterm investment. Investors should be aware that the rice of shares and the revenue from them can fall as well as rise and investors may not receive back the full amount invested. Past erformance is not a guide to future erformance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. MI Downing Managed Funds 9

12 Registered in England No Authorised and regulated by the Financial Conduct Authority.