Update on charity funds

Transcription

1 Newton charity seminar 2016 Update on charity funds Jeremy Wells June 2016 For Professional and Retail Charity clients only Please read the important information at the back of this material The opinions expressed in this document are those of Newton and should not be construed as investment advice.

2 Newton s investment philosophy Global thematic investing since 1978 We believe in Global Themes Analysis Conviction Thinking globally, evaluating each idea in a global context Using themes to understand the forces driving global change Conducting rigorous fundamental analysis incorporating ESG considerations Constructing investment portfolios incorporating our highest conviction ideas Source: Newton, 2016 Our primary objective is delivering results for our clients 1

3 World markets 10 year performance 10 year Sterling returns (%) 31 March 2006 to 31 March Index levels re-based to 100 (GBP total returns) Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 MSCI Emerging Markets FTSE Japan FTSE All Share FTSE Europe ex-uk FTSE North America FTSE Asia Pacific ex-japan Source: Datastream, as at 31 March 2016 Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. 2

4 World markets One year performance 1 year Sterling returns (%) 31 March 2015 to 31 March 2016 Gilt (All Stocks) Overseas Bonds Unhedged (JP Morgan) BOFAML Non-Gilts Last 12 months mostly challenging for equity markets; all regions decline in local currency terms except North America LIBID 7-Day Notice UK All Share Index Safe haven bonds and gold deliver best returns North America [0.42] Europe (ex UK) [-11.51] Overseas returns boosted by sterling weakness Japan [-12.21] Pacific Basin (ex Japan) [-7.35] Emerging Markets [-7.36] Gold [3.94] (%) (Local currency returns [ ] are those of the underlying indices) Indices: FT Government All Stocks, JPMorgan WGBI ex UK, BofA ML Non-Gilts, LIBID 7-Day, FTSE All Share, FTSE AW North America, FTSE World Europe ex UK, FTSE Japan, FTSE World Asia Pacific ex Japan, MSCI Emerging Markets, Gold Bullion per troy ounce Source: Datastream, as at 31 March 2016 (total returns) Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. 3

5 World markets 2016 year to date YTD Sterling returns (%) Gilt (All Stocks) Overseas Bonds Unhedged (JP Morgan) Recovery in risk assets most notable in Asia and EM BOFA ML Non-Gilts 4.42 LIBID 7-Day Notice UK All Share Index Safe-haven assets performed strongly with gold leading the way North America [3.66] Europe (ex UK) [-2.33] Sterling weakness boosted overseas assets Japan [-10.68] Pacific Basin (ex Japan) [2.32] 3.57 Emerging Markets [1.91] 3.70 Gold [14.30] (%) (Local currency returns [ ] are those of the underlying indices) Indices: FT Government All Stocks, JPMorgan WGBI ex UK, BofA ML Non-Gilts, LIBID 7-Day, FTSE All Share, FTSE AW North America, FTSE World Europe ex UK, FTSE Japan, FTSE World Asia Pacific ex Japan, MSCI Emerging Markets, Gold Bullion per troy ounce Source: Datastream, as at 31 May 2016 (total returns) Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. 4

6 Investment performance to 31 May 2016 Newton Growth & Income Fund for Charities 31 May May May May May May May May May May YTD Newton Growth & Income Fund for Charities 1-2.1% 27.0% 8.1% 12.4% 1.6% 2.8% Comparative index 2-1.8% 21.6% 6.3% 10.0% -1.7% 2.8% 31 May May May May 16 Since inception 5 Newton Growth Fund for Charities Comparative index May May May May May May May May May May 16 Since inception 6 Newton SRI Fund for Charities Comparative index Notes: 1 Offer to offer, net of fees as at 31 May 2016 based on close of business prices against end of day benchmark values. 2 A composite of 20% FTA Government All Stocks, 50% FTSE All Share, 25% FTSE World (ex UK) and 5% GBP 7 Day LIBID is used as a comparative index for this strategy. The strategy does not aim to replicate either the composition or the performance of the comparative index 3 Offer to offer, net of fees as at 31 May 2016 based on close of business prices against end of day benchmark values. 4 A composite of 20% FTA Government All Stocks, 37.5% FTSE All Share, 37.5% FTSE World (ex UK) and 5% GBP 7 Day LIBID is used as a comparative index for this strategy. The strategy does not aim to replicate either the composition or the performance of the comparative index 5 Inception date 07 February Inception date 17 May 2010 Source: Newton, as at 31 May 2016 Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. 5

7 Investment performance to 31 May 2016 Newton Growth & Income Fund for Charities Short term Long term (annualised) Performance (%) Performance (%) May May May May May May May May May May YTD years 5 years Since inception¹ Fund 2 Comparative Index 3 Notes: 1 Inception date 12 November Offer to offer, net of fees as at 31 May 2016 based on close of business prices against end of day comparative index values. 3 A composite of 20% FTA Government All Stocks, 50% FTSE All Share, 25% FTSE World (ex UK) and 5% GBP 7 Day LIBID is used as a comparative index for this strategy. The strategy does not aim to replicate either the composition or the performance of the comparative index. Please refer to slide 9 for full performance history. Source: Newton, as at 31 May 2016 You should read the Prospectus and the Key Investor Information Document (KIID) for each fund in which you want to invest. The Prospectus and KIID can be found at Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. 6

8 Newton Growth & Income Fund for Charities current position As at 31 May 2016 Current asset allocation Equities 80% Bonds 17% Cash 3% UK North America Europe Japan Pacific Emerging 44% 20% 15% 0% 1% 0% Equity allocation by industry (%) Consumer services Health care Technology Utilities Telecoms Basic materials Industrials Financials Oil & gas Consumer goods Fund Comparative index¹ Note: 1 A composite of 20% FTA Government All Stocks, 50% FTSE All Share, 25% FTSE World (ex UK) and 5% GBP 7 Day LIBID is used as a comparative index for this strategy. The strategy does not aim to replicate either the composition or the performance of the comparative index Source: Newton, as at 31 May

9 Healthcare environment Change in the ratio of the working-age population (15 to 64-year-olds) to the total population between 2010 and 2050 Africa India Lat AM & Carribean Asia World Brazil United States Western Europe Russian Federation China Eastern Europe Japan For illustrative purposes only Source: UN World Bank Population Projects, % -15% -10% -5% 0% 5% 10% (%) Healthcare spending per capita (US$) Health Expenditure per Capita (current US$) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,000-2,000 India China Europe USA 0 10,000 20,000 30,000 40,000 50,000 60,000 For illustrative purposes only Source: The World Bank, 2013 GDP per Capita (Current US$) Healthcare an area of structural growth 8

10 Investment performance to 31 May 2016 Newton charity funds Newton Growth Fund for Charities (annualised) Newton SRI Fund for Charities (annualised) Performance (%) Performance (%) May May May May 16 Since inception¹ May May May May May May May May May May 16 Since inception² Fund 3 Comparative Index 4 Notes: 1 Inception date 07 February Inception date 17 May Offer to offer, net of fees as at 31 May 2016 based on close of business prices against end of day benchmark values. 4 A composite of 20% FTA Government All Stocks, 37.5% FTSE All Share, 37.5% FTSE World (ex UK) and 5% GBP 7 Day LIBID is used as a comparative index for this strategy. The strategy does not aim to replicate either the composition or the performance of the comparative index. Please refer to slide 9 for full performance history. Source: Newton, as at 31 May 2016 Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. 9

11 Economic outlook Growth in China continues slowing Mixed data on UK and US growth European and Japanese quantitative easing programs at full throttle Brexit adds to uncertainty Global trade positive but subdued Oil prices recovered slightly but remains in long term down trend? Valuations generally stretched Source: Newton, June 2016 Challenging environment 10

12 Global growth continues to disappoint World trade volumes remain subdued 25% 20% World trade, volume SA (YOY%) 15% 10% 5% 0% -5% -10% -15% -20% -25% Source: Bloomberg, June 2016 Nominal growth has fallen 11

13 2016 Newton Charity Investment Survey result: If the UK did vote to leave the EU, what do you think the impacts would be on your charity s investment activity? 60% 56% 50% 40% 30% 20% 16% 22% 10% 5% 0% Significant impact in both short & long term Significant impact in short term, less of an impact in long term Not much of an impact in short term, but significant in long term No or negligible impact Note: Results gathered from 55 participants Source: Newton, 2016 Newton Charity Investment Survey, June

14 2016 Newton Charity Investment Survey result: Do you think the UK will remain a member of the EU? 70% 60% 63% 50% 40% 30% 28% 20% 10% 5% 4% 0% Yes No Don't know Would rather not say Note: Results gathered from 57 participants Source: Newton, 2016 Newton Charity Investment Survey, June

15 Brexit - Uncertainty regardless of outcome Referendum on the UK s European Union membership to be held on 23 June, result very uncertain Opinion polling (rolling average of previous eight polls) Business confidence not as strong as it was Purchasing managers indices (PMI) Expansion (%) Index level Contraction Mar-15 May-15 Jul-15 Sep-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Remain Leave Source: Survation, Ipsos MORI, TNS, ICM, ComRes, YouGov, The Times, BMG Research, Panelbase, ORB, Pew Research Center, Populus, Opinium, TNS-BMRB, GQRR, June 2016 Source: Bloomberg, June Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 PMI manufacturing PMI services PMI construction Sterling weakness is Brexit priced in? Large presence of foreign investors in UK equities and gilts markets GBPUSD exchange rate Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 % of Foreign ownership of UK Assets 60% 50% 40% 30% 20% 10% 0% UK listed shares Gilts Source: Bloomberg, April 2016 Source: ONS - Office of National Statistics and DMO - Debt Management Office, December

16 Thank you 15

17 Important information This is a financial promotion. This document is issued in the UK by Newton Investment Management Limited, The Bank of New York Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England No Newton Investment Management is authorised and regulated by the Financial Conduct Authority. The Newton Growth and Income Fund for Charities is an unit trust authorised by the Financial Conduct Authority as Non-Ucits retail scheme and is operated by BNY Mellon Fund Managers Limited (BNY MFM). The Newton Growth Fund for Charities is an unit trust authorised by the Financial Conduct Authority as Non-Ucits retail scheme and is operated by BNY Mellon Fund Managers Limited (BNY MFM). The Newton SRI Fund for Charities is an authorised unit trust. BNY Mellon Fund Managers Limited (BNY MFM) is the Manager. BNY MFM, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No Authorised and regulated by the Financial Conduct Authority. Where an index is used as a comparative index, this strategy does not aim to replicate either the composition or the performance of the comparative index. Where representative data is used this is for illustrative purposes only. As an initial charge may be imposed on a purchase of units in a Sub-Fund an investing charity selling its units may not realise the amount originally invested. An investment in a Sub-Fund will involve exposure to those risks normally associated with investment in stocks and shares. Changes in rates of exchange may affect the value of investments. Compared to more established economies, the value of investments in Emerging Markets may be subject to greater volatility due to differences in generally accepted accounting principles or from economic or political instability. The Trust is structured as an umbrella fund with segregated liability between its Sub-Funds. The assets of one Sub-Fund will not be available to meet the liabilities of another. A Sub-Fund may invest in illiquid securities, which means that there is a possibility that such securities cannot be readily converted into cash when required. The entire market of an asset class may decline thus affecting the prices and value of the assets. Investing charities should bear in mind the risk that an issuer or counterparty to an investment transaction undertaken by a Sub-Fund may default leading to losses. There is a risk of loss of assets held in custody if a custodian or sub-custodian becomes insolvent or acts negligently or fraudulently. Sub-Funds may, where so provided in the Full Prospectus, use derivatives for efficient portfolio management purposes. Fixed interest securities are particularly affected by trends in interest rates and inflation. If interest rates go up, the value of capital may fall, and vice versa. Inflation will also decrease the real value of capital. Smaller companies may be riskier and less liquid than larger companies. This means that their share prices may be more volatile. Issued as at 21/06/2016. CP /09/2016 (3m) Newton Investment Management Limited, Investment Manager BNY Mellon Centre 160 Queen Victoria Street London EC4V 4LA Tel: Registered in England No BNY Mellon Fund Managers Limited, Management Company BNY Mellon Centre 160 Queen Victoria Street London EC4V 4LA Tel: Registered in England No Registered office: as above. Both firms are authorised and regulated by the Financial Conduct Authority, are members of the IA and are Bank of New York Mellon Companies SM 16