Schroder Managed Balanced Fund Interim Report and Accounts August 2018

Transcription

1 Interim Report and Accounts August 2018

2 August 2018 Contents Fund Information 1 3 Investment objective and policy 3 Financial highlights 3 Fund information 3 Ongoing charges figure 4 Total purchases and sales 4 Review of Investment Activities 1 5 Risk Profile 1 6 Risk and reward indicator 6 Specific risks 6 Net Asset Value and Comparative Tables 1 7 Unit price range 7 Net revenue 8 Net asset value 9 Fund performance 10 Portfolio Statement 1 11 Summary of Portfolio Transactions 1 15 Largest purchases 15 Largest sales 15 Statement of the Manager s Responsibilities 16 Statement of Total Return (unaudited) 17 Statement of Change in Net Assets Attributable to Unitholders (unaudited) 17 Balance Sheet (unaudited) 18 Notes to the Accounts (unaudited) 19 Basis of preparation 19 Accounting policies 19 General Information 1 20 Authorisation 20 Other information 20 1 Collectively these comprise the Manager s report. 2

3 Fund Information Investment objective and policy The s (the fund ) investment objective is to give a balanced exposure to UK and overseas equities and fixed income securities through a range of underlying authorised unit trusts, recognised schemes and collective investment schemes. The proportionate percentage to be invested in each underlying scheme will be decided by the investment adviser in light of current economic and other circumstances and may include a proportion in cash. Efficient portfolio management techniques will be utilised when considered appropriate. Financial highlights Dealing price % change A Accumulation units p p 2.46 H Income units 84.42p 83.67p 0.90 H Accumulation units 99.82p 97.01p 2.90 I Income units p p 0.86 I Accumulation units 1,058.00p 1,028.00p 2.92 Z Income units 64.20p 63.59p 0.96 Z Accumulation units 68.77p 66.91p 2.78 Fund information Launch date 17 July 1998 Launch price p per I Income unit p per I Accumulation unit Launch date 13 November 2006 Launch price p per A Accumulation unit Launch date 2 January 2007 Launch price 50.00p per H Income unit 50.00p per H Accumulation unit Launch date 25 October 2013 Launch price 50.00p per Z Income unit 50.00p per Z Accumulation unit Interim Final Accounting dates 23 August 23 February Revenue allocation date 23 April 3

4 Fund Information (continued) Ongoing charges figure For the period For the year to to A Accumulation units 1.69% % H Income units % % H Accumulation units % % I Income units 0.60% % I Accumulation units 0.60% % Z Income units 0.94% % Z Accumulation units 0.94% % 1 The Ongoing charges figure is annualised based on the fees incurred during the accounting period. 2 The expenses of the H Income unit class and H Accumulation unit class have been capped during the period. Total purchases and sales For the period For the year to to s 000 s Total purchases 178, ,584 Total sales 201, ,175 4

5 Review of Investment Activities From 23 February 2018 to 23 August 2018, the price of I Accumulation units on a dealing price to dealing price basis rose 2.92%. In comparison, the Investment Association Mixed Investment 40-85% Shares Sector Average generated a total return of 4.66% 1. Global Head of Multi-Asset Investments: Johanna Kyrklund 1 Source: Thomson Reuters Datastream. Political risk returned to markets with President Trump ramping up trade tensions by imposing US tariffs on steel and aluminium and implementing tariffs on imports from China. Markets have seen this as disruptive to trade and growth with the result that bond yields have eased lower and the US dollar has strengthened, with emerging markets being particularly hard hit. Within equities, we moved in a more cautious direction by reducing our positive bias toward more neutral levels. We continue to favour the US and added to large caps over the period. The region remains the most resilient economy and we expect strong earnings growth to continue offsetting potential risk de-rating. Emerging markets, both equities and debt, generated the largest losses as these markets were hit hardest by fears of increasing global protectionism which led to a strengthening of the US dollar. Despite these losses in recent months, we are comfortable that economic fundamentals are still intact and we are over the worst. We continue to be cautious about eurozone equities, taking into account global trade tensions and tightening financial conditions. We implemented a short position in large cap futures, taken overall exposure underweight versus the benchmark. In fixed income, we sought to diversify government bond exposure by adding US and Australian treasury futures. A weak domestic economy, lack of inflation pressures and a wide output gap continue to support Australian 10-year duration. For now, we are patiently waiting for better opportunities, focusing on maintaining a diversified stance. Joined Schroders in March 2007 and is based in London Johanna leads the Multi-Asset Investments division, is a member of the Group Management Committee (GMC) and Chairs Global Asset Allocation Committee Responsible for investments on behalf of Multi-Asset clients globally and is the lead portfolio manager of the Schroder Diversified Growth Strategy Prior to joining Schroders, Johanna specialised in tactical asset allocation strategies From 2005 she worked at Insight Investment where she managed an unconstrained global macro absolute return fund. From 1997 to 2005 she worked at Deutsche Asset Management where she was Head of Asset Allocation in the UK and fund manager of the Deutsche tactical asset allocation fund CFA Charterholder Degree in Philosophy, Politics & Economics from Oxford University Johanna is a member of the Cambridge University Investment Board Multi-Asset Fund Manager: Remi Olu-Pitan Joined Schroders in 2006 and is based in London Remi is responsible for Multi-Asset Income and Diversified Growth mandates. Remi is the lead fund manager of the Schroder ISF Global Multi-Asset Income and Co-fund manager of the Schroder Diversified Growth Fund She is a member of the Equity risk premium team of the Strategic Investment Group Multi-Asset (SIGMA) and a member of the Global Asset Allocation Committee CFA Charterholder Masters in Statistics, London School of Economics. Bachelors in Business Finance, Durham University Please remember that past performance is not a guide to future performance and it might not be repeated. The value of investments and the revenue from them may go down as well as up and investors may not get back the amount originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money. 5

6 Risk Profile Risk and reward indicator Lower risk Potentially lower reward Higher risk Potentially higher reward The risk category was calculated using historical performance data and may not be a reliable indicator of the fund s future risk profile. The fund s risk category is not guaranteed to remain fixed and may change over time. A fund in the lowest category does not mean a risk free investment. The fund is in this category because it can take higher risks in search of higher rewards and its price may rise and fall accordingly. Specific risks The fund invests in assets which are exposed to currencies other than sterling. Exchange rates may cause the value of overseas investments and the revenue from them to rise or fall. The fund invests in emerging markets and the Far East. This involves a high degree of risk and should be seen as long term in nature. The fund is index unconstrained and has the potential for greater volatility. The fund may invest in unregulated collective investment schemes, which involves a higher degree of risk as they are not regulated by the Financial Conduct Authority (FCA). The funds may not be readily realisable and priced less frequently than listed shares or authorised unit trusts, and therefore price swings may be more volatile. The fund invests in higher yielding bonds (non-investment grade). The risk of default is higher with non-investment grade bonds than with investment grade bonds. Higher yielding bonds may also have an increased potential to erode your capital sum than lower yielding bonds. The fund may invest in a wide range of derivatives in order to meet its investment objectives. For these reasons, the purchase of units should not normally be regarded as a short term investment. 6

7 Net Asset Value and Comparative Tables Unit price range Financial year to 23 February A Accumulation units H Income units Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p Financial period to 23 August Financial year to 23 February H Accumulation units I Income units Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p Financial period to 23 August Financial year to 23 February I Accumulation units Z Income units Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p , Financial period to 23 August , , Financial year to 23 February Z Accumulation units Highest dealing p Lowest dealing p Financial period to 23 August

8 Net Asset Value and Comparative Tables (continued) Net revenue A Accumulation units H Income units Financial year to 23 February pence per unit pence per unit Financial period to 23 August 2018 Nil Nil H Accumulation units I Income units Financial year to 23 February pence per unit pence per unit Financial period to 23 August 2018 Nil Nil I Accumulation units Z Income units Financial year to 23 February pence per unit pence per unit Financial period to 23 August 2018 Nil Nil Financial year to 23 February Z Accumulation units pence per unit Financial period to 23 August 2018 Nil 8

9 Net Asset Value and Comparative Tables (continued) Net asset value Net asset Net asset value value per unit Number of As at 23 February 000 s p units in issue 2016 A Accumulation units 6, ,524,410 H Income units 1, ,713,018 H Accumulation units 499, ,197,468 I Income units 17, ,722,492 I Accumulation units 593, ,301,278 Z Income units ,421,857 Z Accumulation units 16, ,310, A Accumulation units 7, ,272,917 H Income units 2, ,601,582 H Accumulation units 676, ,548,669 I Income units 20, ,581,997 I Accumulation units 670, ,312,177 Z Income units ,384,027 Z Accumulation units 17, ,183, A Accumulation units 6, ,464,225 H Income units 2, ,512,663 H Accumulation units 759, ,912,790 I Income units 22, ,839,939 I Accumulation units 681,810 1, ,279,231 Z Income units 1, ,620,939 Z Accumulation units 19, ,242, at 23 August A Accumulation units 5, ,998,887 H Income units 2, ,529,542 H Accumulation units 815, ,543,332 I Income units 24, ,941,842 I Accumulation units 693,162 1, ,349,858 Z Income units 1, ,677,281 Z Accumulation units 22, ,329,046 9

10 Net Asset Value and Comparative Tables (continued) Fund performance Net asset Net asset value per unit value per unit p p as at as at % change A Accumulation units H Income units H Accumulation units I Income units I Accumulation units 1, , Z Income units Z Accumulation units Please remember that past performance is not a guide to future performance and it might not be repeated. The value of investments and the revenue from them may go down as well as up and investors may not get back the amount originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money. 10

11 Portfolio Statement Collective Investment Schemes 92.07% (91.65%) Absolute Return Funds 0.00% (1.81%) Holding at Market Value % of net s assets Asia Pacific ex Japan Equity Funds 4.88% (5.17%) Schroder Asian Alpha Plus Fund A Accumulation GBP^ 51,734,690 76, , Cash Funds 0.00% (2.28%) Chinese Equity Funds 0.91% (0.00%) Schroder China A Fund I Accumulation USD^ 192,725 14, , Emerging Markets Equity Funds 3.18% (3.53%) Schroder Global Emerging Markets Fund A Income GBP^ 26,202,978 49, , Emerging Markets Fixed Interest Funds 5.38% (5.54%) Schroder Emerging Markets Debt Absolute Return Fund I Accumulation USD^ 2,896,081 84, , Emerging Markets Multi-Asset Funds 1.39% (1.50%) Schroder Emerging Multi-Asset Income Fund I Accumulation USD^ 272,380 21, , European Equity Funds 14.07% (14.42%) Schroder European Fund I Accumulation GBP^ 8,581, , Schroder European Large Cap Fund I Accumulation EUR^ 92,945 30, ,

12 Portfolio Statement (continued) Holding at Market Value % of net s assets Global Equity Funds 8.41% (8.09%) Schroder Global Equity Fund I Accumulation GBP^ 6,243,121 67, Schroder QEP Global Active Value Fund I Accumulation USD^ 306,747 64, , Global Fixed Interest Funds 9.08% (8.65%) Schroder Global Corporate Bond Fund I Accumulation USD^ 6,483,595 68, Schroder Global High Yield Fund I Accumulation USD^ 1,752,495 73, , Global Property Funds 2.12% (1.85%) Schroder Global Cities Real Estate Fund I Accumulation USD^ 203,730 33, , Japanese Equity Funds 3.33% (3.47%) Schroder Tokyo Fund A Accumulation GBP^ 14,232,886 52, , UK Equity Funds 22.91% (22.82%) Schroder Income Fund A Income GBP^ 11,279, , Schroder UK Alpha Plus Fund A Income GBP^ 67,995, , Schroder UK Equity Fund A Income GBP^ 9,982,064 91, , UK Fixed Interest Funds 2.56% (2.65%) Schroder All Maturities Corporate Bond Fund I Accumulation GBP^ 14,107,500 39, ,

13 Portfolio Statement (continued) Holding at Market Value % of net s assets US Equity Funds 13.85% (9.87%) Schroder US Large Cap Fund I Accumulation USD^ 669, , Vanguard S&P 500 UCITS ETF USD 2,428, , , Collective Investment Schemes total 1,440, Government Bonds 2.30% (5.12%) United Kingdom 2.30% (5.12%) UK Treasury Bill 0% 08/10/ ,000,000 35, , Government Bonds total 35, Forward Foreign Currency Contracts (0.38)% ((0.26)%) Buy USD 40,476,000 Sell GBP 31,266,995 29/08/2018 USD 40,476, Sell USD 535,043,000 Buy GBP 407,863,121 29/08/2018 USD (535,043,000) (6,594) (0.42) Sell USD 494,567,000 Buy GBP 383,234,651 27/09/2018 USD (494,567,000) Forward Foreign Currency Contracts total (5,946) (0.38) Futures 0.24% ((0.01)%) Australia 10 Year Bond September EURO STOXX 50 Index September 2018 (896) FTSE 100 Index September 2018 (203) Long Gilt September , MSCI Emerging Markets Index September 2018 (715) 1, Nikkei 225 Index September 2018 (100)

14 Portfolio Statement (continued) Holding at Market Value % of net s assets Futures (continued) S&P 500 E-Mini Index September US 2 Year Note September (7) 0.00 Futures total 3, Portfolio of investments 1,473, Net other assets 90, Net assets attributable to unitholders 1,564, The comparative percentage figures in brackets are as at 23 February Unless otherwise stated, all securities are admitted to official stock exchange listings or are permitted collective investment schemes. ^ Unlisted, suspended or delisted security. A related party to the fund. 14

15 Summary of Portfolio Transactions Largest purchases For the six months ended 23 August 2018 Cost 000 s Schroder US Large Cap Fund I Accumulation USD 108,469 UK Treasury Bill 0% 08/10/ ,895 Schroder China A Fund I Accumulation USD 16,548 Schroder Global Cities Real Estate Fund I Accumulation USD 5,856 Schroder Global High Yield Fund I Accumulation USD 4,017 Schroder Emerging Markets Debt Absolute Return Fund I Accumulation USD 3,085 Schroder Global Corporate Bond Fund I Accumulation USD 1,886 Schroder QEP Global Active Value Fund I Accumulation USD 1,506 Schroder European Large Cap Fund I Accumulation EUR 838 Schroder Emerging Multi-Asset Income Fund I Accumulation USD 817 Largest sales For the six months ended 23 August 2018 Proceeds 000 s Vanguard S&P 500 UCITS ETF USD 62,155 UK Treasury Bill 0% 09/07/ ,488 Schroder Offshore Cash Fund A Accumulation 34,098 Schroder Multi-Asset Strategies Fund I Accumulation USD 28,574 UK Treasury Bill 0% 09/04/ ,000 UK Treasury Bill 0% 11/06/ ,099 A related party to the fund. 15

16 Statement of the Manager s Responsibilities The FCA s Collective Investment Schemes sourcebook (COLL) requires the Manager to prepare accounts for each annual and half yearly accounting period, in accordance with United Kingdom Generally Accepted Accounting Practice, which give a true and fair view of the financial position of the fund and of its net revenue and the net capital gains on the property of the fund for the period. In preparing the accounts the Manager is required to: select suitable accounting policies and then apply them consistently; comply with the disclosure requirements of the Statement of Recommended Practice (SORP) for UK Authorised Funds issued by the Investment Management Association (IMA (now the Investment Association (IA))) in May 2014; follow generally accepted accounting principles and applicable accounting standards; prepare the accounts on the basis that the fund will continue in operation unless it is inappropriate to do so; keep proper accounting records which enable it to demonstrate that the accounts as prepared comply with the above requirements; make judgements and estimates that are prudent and reasonable. The Manager is responsible for the management of the fund in accordance with its Trust Deed, the Prospectus and the COLL, and for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law or regulations. The Manager s report and accounts for the period ended 23 August 2018 were signed on 17 October 2018 on behalf of the Manager by: J.A. Walker-Hazell Directors R.E. Stoakley 16

17 Statement of Total Return (unaudited) For the six months ended 23 August s 000 s 000 s 000 s Income Net capital gains 22,627 46,542 Revenue 30,746 27,573 Expenses (4,210) (3,775) Net revenue before taxation 26,536 23,798 Taxation (2,251) (2,336) Net revenue after taxation 24,285 21,462 Total return before distributions 46,912 68,004 Distributions 118 (4) Change in net assets attributable to unitholders from investment activities 47,030 68,000 Statement of Change in Net Assets Attributable to Unitholders (unaudited) For the six months ended 23 August s 000 s 000 s 000 s Opening net assets attributable to unitholders 1,494, ,395,632 Amounts receivable on issue of units 46,927 39,827 Amounts payable on cancellation of units (23,913) (34,271) 23,014 5,556 Dilution adjustment 0 1 Change in net assets attributable to unitholders from investment activities 47,030 68,000 Closing net assets attributable to unitholders 1,564,149 1,469, The Opening net assets attributable to unitholders for the current period do not equal the Closing net assets attributable to unitholders for the comparative period as they are not consecutive periods. 17

18 Balance Sheet (unaudited) As at 23 August s 000 s Assets Investments 1,480,546 1,446,533 Current assets Debtors 3,592 7,044 Cash and bank balances 92,726 52,918 Total assets 1,576,864 1,506,495 Liabilities Investment liabilities (6,601) (4,727) Creditors Bank overdrafts (2,067) 0 Distributions payable 0 (531) Other creditors (4,047) (7,132) Total liabilities (12,715) (12,390) Net assets attributable to unitholders 1,564,149 1,494,105 18

19 Notes to the Accounts (unaudited) Basis of preparation The accounts have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with the SORP for UK Authorised Funds issued by the IMA in May 2014 and in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 (The Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS 102)). Accounting policies The accounting policies applied are consistent with those of the annual accounts for the year ended 23 February 2018 and are described in those annual accounts. 19

20 General Information Manager 1 Schroder Unit Trusts Limited 1 London Wall Place London EC2Y 5AU Authorised and regulated by the Financial Conduct Authority Investment Adviser 1 Schroder Investment Management Limited 1 London Wall Place London EC2Y 5AU Authorised and regulated by the Financial Conduct Authority Trustee J.P. Morgan Europe Limited Chaseside Bournemouth BH7 7DA Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority Registrar 1 Schroder Unit Trusts Limited 1 London Wall Place London EC2Y 5AU Authorised and regulated by the Financial Conduct Authority Administration Details Schroders FREEPOST RLTZ-CHSY-HBUT PO Box 1102 Chelmsford Essex CM99 2XX Investor Services investorservices@schroders.com Dealing Fax Independent Auditors PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX 1 With effect from 4 September 2018, Schroder Unit Trusts Limited and Schroder Investment Management Limited changed address, previously it was 31 Gresham Street, London EC2V 7QA. Authorisation The fund is an authorised unit trust and is constituted pursuant to the COLL and is structured as a trust. The fund is a UCITS retail scheme for the purpose of the categorisation of the COLL. Other information The Prospectus, the Key Investor Information Document and details of investment charges and costs are available on request or can be downloaded from our website 20

21 Issued in October 2018 by Schroder Unit Trusts Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number England. Schroder Unit Trusts Limited is an authorised corporate director, authorised unit trust manager and an ISA plan manager, and is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped and monitored.