OMNIS INVESTMENTS. OMPS Annual Report April

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1 OMNIS INVESTMENTS OMPS Annual Report April

2 Contact Us

3 OMPS Annual Report Breakdown 02 The Omnis Managed Portfolio Service 03 Chief Investment Officer s viewpoint 04 The year in review 08 The changes we have made 09 Asset allocation charts 12 One-year performance 13 Big plans for the year ahead 16 Appendix - The Omnis funds used in OMPS 17 How to invest in the Omnis Managed Portfolio Service 01

4 The Omnis Managed Portfolio Service The Omnis Managed Portfolio Service (OMPS) launched on 24 April We believe it is important to keep you updated on how we are managing your money and are therefore pleased to share with you our first annual report. This report covers the key changes made by the Omnis Investment team in fine tuning your investment over the past 12 months, while ensuring it stays in line with your agreed attitude to risk. We will put these changes in context given the ever changing economic and political environment which we all live our daily lives in. Whether it is Brexit, Trump or North Korea, one or all of these factors can affect the value of your investment, so we are delighted you have entrusted the management of your financial future to us. Finally, we will update you on what we have planned for the Omnis fund range and the Omnis Managed Portfolio Service over the coming year. You can always keep updated with how your investment is going by contacting your Openwork Financial Adviser. In addition, you can find out more about how OMPS works in our separate brochure, plus keep up to date with every change to the portfolios through our monthly updates, and read news and views on the Omnis Investments website. 02

5 Chief Investment Officer s viewpoint Every year in investment has its challenges and there are always external factors that can influence what happens to your money. My team and I spend all of our working lives monitoring these factors to try to give you the best risk and return profile for your investment. Looking back over the past 12 months, we have had anticipation around the long-term economic impact of Brexit; diplomatic tensions between the US and North Korea; presidential elections in France, Germany and Italy; and China s grand political reshuffle. Keeping track of these events, we think we have delivered on our commitment by managing your investment actively with a well-diversified approach intended to give you good returns over the medium-to-long-term. We will explain what we have done later but I am delighted that all three of our portfolios Cautious, Balanced and Adventurous have produced positive returns with those of you prepared to take higher risk being duly rewarded. I do not take for granted that you have trusted my team and I to manage your money, so I am delighted that, over the next 12 months, we will be launching new Omnis funds to enhance your investment further. Thank you for your support. Toni Meadows Chief Investment Officer 03

6 The year in review The following events have all impacted how we have managed your money over the last 12 months April UK triggers Article 50, officially starting the process of Britain leaving the EU. First-round victory for Emmanuel Macron in the French presidential election pushes the French stock market to a nine-year high. May Macron defeats far-right opponent Marine Le Pen by a decisive margin to become president of France. US president Donald Trump first outlines his highly anticipated tax reform plan. June Snap UK general election ends in a hung parliament, which hits the value of the pound. The FTSE 100 sores to above 7,500 points as it is mostly made of multinationals that benefit from the fall in sterling. US central bank, the Federal Reserve, raises interest rates for the second time in July The second round of Brexit negotiations concludes with EU chief negotiator Michel Barnier claiming fundamental differences exist over expectations for citizen rights. G20 leaders meet for a summit in Hamburg as the US pulls out of the Paris Agreement on tackling climate change. August Markets are volatile as North Korea threatens the US territory of Guam, prompting Trump s stern response of fire and fury like the world has never seen should the aggression continue. Members of world s central banks meet in Jackson Hole, Wyoming, for the one of the most prestigious conferences on the global central banking calendar. September Hurricane Irma follows hurricane Harvey in causing devastation in the Caribbean and the US. The German federal elections result in no definitive result, prompting months of negotiations to form a coalition government. October Voters chose in favour of Catalonia s independence from Spain, but the referendum is declared illegal causing outcry and protests. Various leadership changes to the Communist Party of China are unveiled at the six-day 19th National Congress. November The Bank of England s Monetary Policy Committee raises interest rates for the first time in 10 years, from 0.25% to 0.5%. Higher UK growth forecasts unveiled as part of the chancellor's Autumn Budget, which includes tax and spending initiatives. December Theresa May strikes a deal with the EU for the UK s so-called divorce bill that will amount to an estimated 35bn- 39bn. The Federal Reserve raises US interest rates again by 0.25% to a range of 1.25% to 1.5%. 04

7 2018 January A huge overhaul of the US tax system finally approved by the Senate, including a drop in corporate taxes from 35% to 21%. The US government temporarily shuts down after lawmakers failed to agree on a spending bill. February Volatility returns to markets as both equity and bond markets sell off following stronger growth in US wages, which is interpreted as a sign that US inflation may be strengthening. Data shows eurozone gross domestic product (GDP) grew by 2.5% in 2017, which is the fastest rate in a decade. March After months of uncertainty, a grand coalition finally formed in Germany between the CDU/CSU and SPD parties and the new government takes office. The Italian general election results in a stalemate with populist Five Star Movement and the anti-immigration League making the strongest gains. April The so-called FAANG grouping of US tech stocks Facebook, Apple, Amazon, Netflix and Alphabet (Google) come under more pressure amid signs of greater scrutiny and regulation. Tit-for-tat import tariffs in China and the US lead to worries about a trade war between the two nations, but tensions calm as they agree trade talks. 05

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10 The changes we have made The starting point for the Omnis Managed Portfolio Service is a strategic asset allocation in line with your agreed attitude to risk. This is the framework that we use to split between stock markets around the world, bonds and alternative investments. Research from investment experts has shown that getting the asset allocation right gives you the best chance to get the highest returns on your money. While the strategic asset allocation is reviewed yearly, we can make changes in line with the external drivers and influencers on a day-to-day basis. This means we can be either overweight or underweight each type of investment. Here we give an overview of some of the key times we have put these powers to work, and how the changes have benefited you. 20 June 2017 In June we took the opportunity to rebalance the portfolios. As each of the individual funds in the portfolio perform differently, so the asset allocation can become out of sync. We took the opportunity to take the profit from the best performing funds and reinvest it in those funds that had performed less well. An interesting example was to take the profit from the Omnis European Equity Fund, which had performed well and reinvest it in the Omnis Emerging Market Equity Fund, which had performed not so well. This proved to be the right call at the right time as the Omnis Emerging Markets Equity Fund then began to outperform. 27 October 2017 Our biggest change in the autumn was to move to an overweight position in developed Asian markets across all three portfolios. The thinking behind the trade was to take advantage of attractive Japanese equity valuations, or prices, and our overall positive view on Asian equities. We reduced our cash and bond holdings to make this change. 05 December 2017 In December, Omnis launched two new funds, Omnis UK Equity Income Fund and Omnis Strategic Bond Fund, which we invested in straight away. The Omnis UK Equity Income Fund gave us additional diversification in UK equities, which has the largest allocation in the portfolios, while the Omnis Strategic Bond Fund, which is not used in Adventurous, is an an important diversifier against the threat of rising interest rates. 05 February 2018 A great benefit of the service is being able to trade quickly and dynamically should markets become volatile. Putting this into action, we sold our overweight position in equities on 5 February amid temporary market volatility. We reduced our holdings in Omnis US Equity Fund and Omnis Emerging Markets Equity Fund. 28 March 2018 Despite the on-going volatility, we decided to invest more into the Omnis Emerging Market Equity Fund, reflecting our long-held view that this is an area that will see strong growth over the coming years. We balanced this by investing in the Omnis Alternative Strategies Fund, which typically is a lower-risk option and has a low correlation to equities and bonds. 08

11 Asset allocation charts The following charts show how these changes have come together over the last 12 months. OMPS Cautious Portfolio Since Launch 20/06/17 27/10/17 05/12/17 05/02/18 28/02/ % /04/17 21/05/17 21/06/17 21/07/17 21/08/17 21/09/17 21/10/17 21/11/17 21/12/17 21/01/18 21/02/18 21/03/18 OMNIS UK EQUITY OMNIS INCOME & GROWTH OMNIS UK EQUITY INCOME OMNIS US EQUITY OMNIS EUROPEAN EQUITY OMNIS ASIA PACIFIC EQUITY OMNIS EMERGING MARKETS EQUITY OMNIS UK BOND OMNIS GLOBAL BOND OMNIS STRATEGIC BOND CASH OMNIS ALTERNATIVE STRATEGIES OMPS Balanced Portfolio Since Launch 20/06/17 27/10/17 05/12/17 05/02/18 28/02/ % /04/17 21/05/17 21/06/17 21/07/17 21/08/17 21/09/17 21/10/17 21/11/17 21/12/17 21/01/18 21/02/18 21/03/18 OMNIS UK EQUITY OMNIS INCOME & GROWTH OMNIS UK EQUITY INCOME OMNIS US EQUITY OMNIS EUROPEAN EQUITY OMNIS ASIA PACIFIC EQUITY OMNIS EMERGING MARKETS EQUITY OMNIS UK BOND OMNIS GLOBAL BOND OMNIS STRATEGIC BOND OMNIS ALTERNATIVE STRATEGIES CASH 09

12 Asset allocation charts OMPS Adventurous Portfolio Since Launch 20/06/17 27/10/17 05/12/17 05/02/18 28/02/ % /04/17 21/05/17 21/06/17 21/07/17 21/08/17 21/09/17 21/10/17 21/11/17 21/12/17 21/01/18 21/02/18 21/03/18 OMNIS UK EQUITY OMNIS INCOME & GROWTH OMNIS UK EQUITY INCOME OMNIS US EQUITY OMNIS EUROPEAN EQUITY OMNIS ASIA PACIFIC EQUITY OMNIS EMERGING MARKETS EQUITY OMNIS UK BOND FUND OMNIS GLOBAL BOND CASH 10

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14 One-year performance The Omnis Managed Portfolio Service Cautious, Balanced and Adventurous portfolios have had a solid start, all delivering a positive performance in the first year since launch. As you have seen from earlier in this report, this is against an incredibly busy year in global economics, and bouts of volatility in markets. To reap the full benefits of the service, it is important that you stay invested over the long-term of at least five years. The charts below show the total return performance of the three portfolios over the first year to 24 April 2018, should you have invested 1,000 in each, with comparisons to UK equities, global equities, and UK bonds. However, please contact your Openwork Financial Adviser to determine the performance of your own investment. End value of 1,000 invested one year ago +0.5% 1, % 1, % 1, % 1, % 1, % OMPS CAUTIOUS OMPS BALANCED OMPS ADVENTUROUS UK EQUITIES GLOBAL EQUITIES UK BONDS Source: Financial Express Analytics and Openwork Wealth Services Limited, includes all fees up until 1 February 2018, re-balances and portfolio charges and income reinvested 12 Past performance is not a guide to future performance. Over time, inflation may erode the value of your investments. OMPS is available through multiple platforms and the outcomes for customers may vary as a result of differing operational and investment processes in place at the platforms.

15 Big plans for the year ahead Greater choice We are excited to announce that, subject to approval from the financial regulator, the FCA, and from shareholders, the Omnis Managed Portfolio Service is set to benefit from an expanded Omnis fund range, with a number of new fund launches planned. To begin with in Autumn 2018, the Omnis UK Equity Fund will be split to create two funds, one investing across the UK market, in large, mid and small-sized companies, and another specifically looking at smaller listed companies. This will enable us to access directly smaller, more nimble UK companies who often have a very different investment profile from the big blue chips that make up the FTSE 100 index. We will also be splitting the Omnis Asia Pacific Equity Fund into two, with one fund investing across the region, excluding Japan, and another specifically focused on Japanese equities. The latter fund will give us direct access to one of the world s largest economies which is also home to some of the bestknown and respected multinational companies. Finally, we will be splitting the Omnis UK Bond Fund into one fund that will invest in the relative safe haven that is domestic government bonds, and another investing in corporate bonds, which is debt issued by UK businesses. A discounted service Prior to February 2018, there was an additional charge of 25 basis points (plus VAT) for investing in the Omnis Managed Portfolio Service and benefiting from the daily management of your investment. This was suspended from 1 February 2018 for a period of 12 months, but it will be reintroduced on 1 February However, we are delighted to confirm that the charge for the Omnis Managed Portfolio Service from this date will be reduced to 15 basis points (plus VAT). Your Openwork Financial Adviser will confirm to you when the charge is reintroduced. 13

16 Appendix - The Omnis funds used in OMPS Omnis UK Equity Fund Managed by Franklin Templeton What does it do? The Omnis UK Equity Fund invests across the domestic market with an aim to pick in attractively valued, good-quality businesses which can generate cash. Why we use the fund in OMPS The Omnis investment team recently changed the manager on this fund from Schroders. While this fund has always offered us access across the UK stock market, Franklin Templeton gives us the added dimension of specialist expertise in medium and smaller listed company stocks not just the large FTSE 100 names. Fund manager profile The fund is headed by lead manager Colin Morton, who has 30 years experience investing in the UK market. He joined Franklin Templeton when it acquired Rensburg Fund Management in 2011, having been at Rensburg since He began his career as a stockbroker with Wise Speke & Co in Omnis UK Equity Income Fund Managed by Royal London Asset Management What does it do? The Omnis UK Equity Income Fund looks to superior quality companies with strong business models and sound finances that can deliver sustainable dividend growth, and so greater income. Why we use the fund in OMPS The fund was launched in December 2017, and its ability to deliver meaningful yield to the portfolios means it is a great addition to our armoury. The fund gives the service much greater choice and flexibility in allocating across UK equity holdings, sitting alongside the Omnis UK Equity and Omnis Income & Growth funds. Fund manager profile Martin Cholwill, senior fund manager, joined Royal London Asset Management in February 2005 to focus solely on managing its Equity Income Fund. He began his fund management career in 1983, spending 21 years working for AXA Investment Managers, managing a wide variety of UK equity mandates. Omnis Income & Growth Fund Managed by Woodford Investment Management What does it do? The Omnis Income and Growth Fund is another UK equity fund within our range, providing valuable diversification in what is typically the largest proportion in multi-asset portfolios for UK investors. Why we use the fund in OMPS As well as the diversification benefits of having different UK funds working for us, this fund has the advantage of being able to invest a small amount in unquoted stocks smaller unlisted up-and-coming names that could be the giants of tomorrow. Fund manager profile Neil Woodford established Woodford Investment Management in 2014, and is the lead manager for all its portfolios. He has more than 30 years experience in the UK fund management industry, having previously established his name at Invesco Perpetual. He was appointed a Commander of the Order of the British Empire (CBE) in 2013 for services to the economy. Omnis US Equity Fund Managed by T.Rowe Price What does it do? The Omnis US Equity Fund primarily invests in high-quality US companies, many of which are the largest companies in the world. Why we use the fund in OMPS This fund gives us access to some of the best companies in the world, and the largest stock market. T. Rowe Price s edge is its scale and the quality of the company s 161-strong team of equity analysts. Fund manager profile Jeff Rottinghaus is the portfolio manager and president of the T. Rowe Price US largecap core equity and growth and income equity strategies. He has 17 years of investment experience, 16 of which have been with T. Rowe Price. Prior to joining the firm in 2001, he was a financial consultant with Ernst & Young. 14

17 Omnis European Equity Fund Managed by Jupiter Asset Management What does it do? The Omnis European Equity Fund invests across mainland Europe and, because it does not invest in the UK, the fund can sit well alongside others specialising in investing in the domestic market. Why we use the fund in OMPS Europe is home to some global leading companies, and it is essential that we have access to these in the portfolios. The investment process of this fund is very much about finding the best opportunities, but only at the right prices. Fund manager profile The Omnis European Equity Fund is run by Cédric de Fonclare, who joined Jupiter in 1999 and is currently head of strategy, European opportunities. He manages the Jupiter European Special Situations and European Opportunities funds, as well as institutional assets. Omnis Asia Pacific Equity Fund Managed by Baillie Gifford What does it do? The Omnis Asia Pacific Equity Fund provides a broad exposure to companies listed in mature Asian economies, such as Japan, Hong Kong, Singapore and Australia. Why we use the fund in OMPS This is a good way for us to access the continent through what are considered more mature and less volatile markets, particularly Japan which is one of the largest and most efficient economies in the world. Fund manager profile Iain Campbell has been with Baillie Gifford since He is member of the Japanese specialist team and is responsible for managing various portfolios focusing on developed Asia including Japan. Previously he worked for Goldman Sachs. Omnis Emerging Market Equity Fund Managed by Jupiter Asset Management What does it do? The Omnis Emerging Markets Equity Fund provides access to a host of fast-growing developing markets like Brazil, Russia, India and China, which can be a valuable source of return across the portfolios. Why we use the fund in OMPS Emerging markets are often seen as the spice in multi-asset portfolios, in that they have the potential to offer superb growth, though can be quite volatile. The companies can offer a different risk profile from their developed market peers. Fund manager profiles The Omnis Emerging Markets Equity Fund is managed by Ross Teverson, who joined Jupiter in 2014 and is head of strategy, emerging markets. He manages the company s Global Emerging Markets and China funds and, alongside Charles Sunnucks, the Jupiter Emerging & Frontier Income Trust. He worked for 15 years at Standard Life Investments, where he managed global emerging markets and Asian equity funds. The co-manager is Colin croft, who joined Jupiter Asset Management in 2006 as an analyst, becoming co-manager on its Emerging European Opportunities Fund and Global Fund New Europe in 2011, funds which he still runs today. Omnis UK Bond Fund Managed by Columbia Threadneedle Investments What does it do? The Omnis UK Bond Fund invests in both UK government bonds and UK corporate bonds, providing necessary diversification from equity investments. Why we use the fund in OMPS Bonds should behave differently from equities, and can be considered a lower-risk investment. This fund is an especially important holding for our Cautious portfolio. Fund manager profiles Ian Spreadbury is senior portfolio manager and director at Fidelity International. He started his career in investment management in 1978, and joined Fidelity in Claudio Ferrarese has co-manager responsibility for the company s total return franchise. He joined Fidelity in 2006 as part of the quantitative research team, where his main responsibility was portfolio construction and trade idea generation in credit, rates, FX, structured credit and credit options. Tim Foster is a specialist in money market, inflation linked and total return bond disciplines. He joined the company in 2003 as a quantitative analyst and became a portfolio manager in

18 Appendix - The Omnis funds used in OMPS Omnis Global Bond Fund Managed By Schroders What does it do? The Omnis Global Bond Fund provides exposure to global fixed income and currency markets, providing valuable diversification opportunities. Why we use the fund in OMPS The fund invests in non-sterling denominated government and non-government bonds, and is so a great diversifier as currency markets move against the pound. Again, bonds are a particularly important part of the Cautious portfolio. Fund manager profiles The Omnis Global Bond Fund is co-managed by Bob Jolly, head of global macro strategy, who has been at Schroders since The other co-manager is Paul Grainger, head of global multi-sector, joined Schroders in 2015, having previously founded his own financial technology firm. Omnis Alternative Strategies Fund Managed by Octopus Investments What does it do? The Omnis Alternative Strategies Fund invests across a range of other collectives, or funds, investing in esoteric areas of the market, including property, infrastructure, as well as equities, bonds and cash. Why we use the fund in OMPS The fund has a risk profile that differs from traditional investment areas and so is a great diversifier from equities and bonds. It is not looking to make a huge return, but rather protect investors on the downside. The fund is generally used in the Balanced and Cautious portfolios. Fund manager profile Bish Limbu joined Octopus in 2008 and is lead manager of the fund. He is part of the multimanager team that includes Simon Reynolds and Danial Azmayesh. 16

19 How to invest in the Omnis Managed Portfolio Service The Omnis Managed Portfolio Service is available exclusively through financial advisers who are part of the award-winning Openwork Group, one of the UK s largest financial advice businesses which also includes Omnis Investments. A guide to how the portfolios work is available from your Openwork Financial Adviser or from omnisinvestments.com

20 Openwork Wealth Services Limited is authorised and regulated by the Financial Conduct Authority. Openwork Wealth Services Limited is registered in England and Wales under registration number Registered office: Washington House, Lydiard House, Lydiard Fields, Swindon, Fields, Swindon, Wiltshire, Wiltshire, SN5 8UB. Telephone SN5 8UB. Telephone