Advanced Beta UK Equity Fund

Transcription

1 Schroder Advanced Beta UK Equity Fund Interim Report and Accounts December 2017

2 Contents Schroder Advanced Beta UK Equity Fund Fund Information Investment objective and policy Financial highlights Fund information Ongoing charges figure Total purchases and sales Review of Investment Activities Risk Profile Risk and reward indicator Specific risks Net Asset Value and Comparative Tables Unit price range Net revenue Net asset value Fund performance Portfolio Statement Summary of Portfolio Transactions Largest purchases Largest sales Statement of the Manager s Responsibilities Statement of Total Return (unaudited) Statement of Change in Net Assets Attributable to Unitholders (unaudited) Balance Sheet (unaudited) Notes to the Accounts (unaudited) Basis of preparation Accounting policies General Information Authorisation Initial management charge Collectively these comprise the Manager s report.

3 Fund Information Investment objective and policy The Schroder Advanced Beta UK Equity Fund (the fund ) seeks to provide capital growth and income through investment in a portfolio of the equities and equity related securities of UK companies. At least 80% of the fund s assets (excluding cash) will invest in equities and equity related securities of companies listed, incorporated or headquartered in the UK or companies that derive a significant proportion of their revenues from their UK business. These companies will have value, quality or low volatility characteristics. Value investing involves evaluating indicators such as operational cash flow and share price to determine those securities that the Manager believes have been undervalued by the market. Quality investing involves evaluating indicators such as profitability and borrowing. Low volatility investing involves evaluating indicators such as share price movement and historical performance to determine those securities that the Manager believes will experience smaller price movements than the global equity markets on average. The fund has not been designed to have a bias to any particular sector or industry. The fund may also invest in other transferable securities, deposits, collective investment schemes, warrants and money market instruments and may hold cash. The fund may use derivative instruments for investment purposes as well as for efficient portfolio management. Financial highlights Dealing price % change I Accumulation units 62.25p 62.19p 0.10 X Accumulation units 62.42p 62.31p 0.18 Fund information Launch date 23 March 2016 Launch price 50.00p per I Accumulation unit 50.00p per X Accumulation unit Interim Final Accounting dates 10 December 10 June Revenue allocation date 10 August 3

4 Fund Information (continued) Ongoing charges figure For the period For the period to to I Accumulation units 0.18% % 1 X Accumulation units % % 1 1 The Ongoing charges figure is annualised based on the fees incurred during the accounting period. 2 The Annual management charge for X Accumulation units is invoiced directly to unitholders and is therefore not included in the Ongoing charges figure for that unit class. Total purchases and sales For the period For the period to to s 000 s Total purchases 72, ,575 Total sales 87, ,715 4

5 Review of Investment Activities From 9 June 2017 to 8 December 2017, the price of I Accumulation units on a dealing price to dealing price basis rose 0.10%. In comparison, the FTSE Index generated a total return of 0.36% 2. UK equities were slightly up over the period, lagging global equities which performed well against a background of stable economic growth. This disguises earlier solid gains from the third quarter, which were largely erased in November as UK stocks struggled in the face of strengthening sterling following positive developments in Brexit negotiations. UK equities recorded positive returns early on, helped by supportive macro economic conditions. However, the Bank of England then indicated it would begin to normalise base rates. The subsequent appreciation in the currency negatively weighed on the UK market resulting in relatively poor performance vs. global equities. Nonetheless, during this period the resources sectors performed well. Mining outperformed in line with higher industrial metal prices with news of resilient Chinese growth in the first half of Industrial metal prices were also supported by supply side constraints and weakness in the US dollar. Meanwhile, the oil & gas sector performed very well against the backdrop of higher crude oil prices. Fund Manager: Advanced Beta Investment Team The Schroders Advanced Beta Investment Team was established in 2011 and manages in excess of 4.8 billion (as at 31 December 2017) across a range of quantitative equity and fixed income strategies. The team consists of 7 members based in London and leverages the ongoing risk premia and factor investing research of more than 85 investment professionals across Schroders Multi-Asset Investments. Later in the period, UK equities started to lose ground. In addition to an appreciating currency, there were further headwinds for more domestic focused areas of the market, which performed poorly amidst a loss of earnings momentum and growing concerns around the outlook for the UK consumer. Looking forward, aforementioned impact on sterling aside, progress in Brexit negotiations and broader positive market sentiment should provide support for UK equities. The fund management responsibilities transferred from Peter Weidner to the Advanced Beta Investment Team on 26 October FTSE International Limited ( FTSE ) FTSE. FTSE is a trade mark of London Stock Exchange plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE s express written consent. 2 Source: Thomson Reuters Datastream. 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 The risk category was calculated using simulated performance data and may not be a reliable indicator of the fund s future risk profile. 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. 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. Specific risks The fund is index unconstrained and has the potential for greater volatility. The fund invests predominantly in the securities of a particular country. There may be a greater risk than investing in funds that hold securities in a range of countries. The fund may invest in a wide range of derivatives in order to meet its investment objectives and for leverage. The use of leverage can increase gains as well as losses and expose the fund to increased risk. The fund may use derivatives for specific investment purposes. This involves a higher degree of risk and may lead to a higher volatility in the unit prices of the fund. 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 Financial period to 10 June I Accumulation units X Accumulation units Unit price range Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p Financial period to 10 December Net revenue I Accumulation units X Accumulation units Financial period to 10 June pence per unit pence per unit Financial period to 10 December 2017 Nil Nil Net asset value Net asset Net asset value value per unit Number of As at 10 June 000 s p units in issue 2017 I Accumulation units 334, ,220,444 X Accumulation units 3, ,206, at 10 December I Accumulation units 308, ,117,729 X Accumulation units 7, ,106,769 Fund performance Net asset Net asset value per unit value per unit p p as at as at % change I Accumulation units X 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. 7

8 Portfolio Statement Holding at Market Value % of net s assets Oil & Gas 14.11% ( %) BP 2,990,989 14, Nostrum Oil & Gas 45, Petrofac 387,813 1, Royal Dutch Shell B 1,178,834 28, , Basic Materials 9.48% ( %) Anglo American 250,279 3, BHP Billiton 384,457 5, Centamin 1,211,704 1, Croda International 4, Evraz 619,801 1, Ferrexpo 654,732 1, Glencore 1,137,850 3, Mondi 121,799 2, Polymetal International 188,849 1, Rio Tinto 197,417 6, Vedanta Resources 214,824 1, Victrex 9, , Industrials 10.46% ( %) AA 1,094,277 1, Aggreko 18, BAE Systems 194,633 1, Bodycote 140,134 1, Capita 432,705 2, CRH 60,521 1, Diploma 28, DS Smith 35, Electrocomponents 107, Equiniti Group 53, Experian 26, Ferguson 63,072 3, Howden Joinery Group 423,775 1, IMI 158,958 1,

9 Portfolio Statement (continued) Holding at Market Value % of net s assets Industrials (continued) Intertek Group 23,299 1, IWG 897,863 1, Kier Group 109,785 1, Meggitt 35, Mitie Group 358, Morgan Advanced Materials 85, Pagegroup 329,699 1, Polypipe Group 98, Renishaw 32,318 1, Rolls-Royce Holdings 65, Rolls-Royce Holdings C 2,558, Royal Mail 462,497 2, Senior 300, Smiths Group 141,437 2, Spectris 77,742 1, Spirax-Sarco Engineering 3, , Consumer Goods 17.13% ( %) A.G. Barr 26, Associated British Foods 5, Berkeley Group Holdings 58,863 2, British American Tobacco 274,097 13, Britvic 201,100 1, Burberry Group 151,256 2, Diageo 268,361 7, Galliford Try 106,841 1, Imperial Brands 175,981 5, Persimmon 101,833 2, PZ Cussons 107, Reckitt Benckiser Group 63,570 4, Redrow 149, Tate & Lyle 288,138 1, Taylor Wimpey 1,238,708 2, Unilever 169,773 7, ,

10 Portfolio Statement (continued) Holding at Market Value % of net s assets Health Care 8.25% ( %) AstraZeneca 139,031 6, GlaxoSmithKline 797,194 10, Indivior 514,711 1, Shire 79,440 2, Smith & Nephew 244,489 3, Spire Healthcare Group 420,561 1, UDG Healthcare 19, , Consumer Services 11.01% ( %) 888 Holdings 625,303 1, Auto Trader Group 608,904 2, Booker Group 210, Card Factory 61, Cineworld Group 24, Compass Group 126,348 1, Dixons Carphone 579, Dunelm Group 22, Go-Ahead Group 38, Greene King 30, Greggs 59, InterContinental Hotels Group 58,808 2, International Consolidated Airlines Group 26, ITV 1,326,445 2, J Sainsbury 69, JD Sports Fashion 306,136 1, Marks & Spencer Group 773,292 2, Marston s 488, Mitchells & Butlers 125, Moneysupermarket.com Group 504,047 1, National Express Group 43, Next 57,478 2, Playtech 230,486 1, RELX 51, Sky 138,121 1, SSP Group 33, Stagecoach Group 570,

11 Portfolio Statement (continued) Holding at Market Value % of net s assets Consumer Services (continued) Tesco 224, Thomas Cook Group 706, WH Smith 90,541 2, Wizz Air Holdings 56,048 1, WPP 84,743 1, , Telecommunications 2.41% ( %) BT Group 555,447 1, Vodafone Group 2,679,544 6, , Utilities 1.89% ( %) National Grid 298,516 2, SSE 253,388 3, , Financials 23.86% ( %) 3i Group 305,907 2, Admiral Group 111,310 2, Alliance Trust 102, Ashmore Group 264,622 1, Aviva 856,733 4, Barclays 1,415,252 2, Beazley 33, BGEO Group 18, Brewin Dolphin Holdings 46, British Land 25, Close Brothers Group 11, Direct Line Insurance Group 632,195 2, Edinburgh Investment Trust 22, Finsbury Growth & Income Trust 35, Hansteen Holdings 1,178,008 1, Hargreaves Lansdown 129,510 2, Hastings Group Holdings 202, HICL Infrastructure 100,

12 Portfolio Statement (continued) Holding at Market Value % of net s assets Financials (continued) HSBC Holdings 2,804,615 20, IG Group Holdings 251,801 1, Jardine Lloyd Thompson Group 34, Jupiter Fund Management 316,977 1, Land Securities Group 184,651 1, Legal & General Group 1,382,222 3, Lloyds Banking Group 12,352,490 8, London Stock Exchange Group 4, LondonMetric Property 258, NewRiver REIT 179, Old Mutual 1,429,499 2, OneSavings Bank 314,470 1, Paragon Banking Group 215,530 1, Prudential 254,328 4, RDI REIT 556, Safestore Holdings 37, Savills 59, St James s Place 13, Standard Chartered 159,232 1, Standard Life Aberdeen 37, Tritax Big Box REIT 655, UK Commercial Property Trust 176, UNITE Group 24, Witan Investment Trust 41, , Technology 0.37% ( %) Computacenter 19, FDM Group Holdings 39, Fidessa Group 15, Softcat 42, , Sterling Denominated Derivatives 0.01% ( %) FTSE 100 Index Futures December

13 Portfolio Statement (continued) Market Value % of net 000 s assets Portfolio of investments 313, Net other assets 3, Net assets attributable to unitholders 316, Unless otherwise stated the above securities are ordinary shares or common stock and admitted to official stock exchange listings. 13

14 Summary of Portfolio Transactions Largest purchases Largest sales Cost For the six months ended 10 December s Lloyds Banking Group 3,610 Aviva 3,360 Royal Dutch Shell B 3,314 Rio Tinto 3,262 Anglo American 2,826 British American Tobacco 2,800 Micro Focus International 2,384 Tate & Lyle 2,343 Berkeley Group Holdings 2,250 Petrofac 2,016 Proceeds For the six months ended 10 December s BT Group 3,439 Centrica 3,208 British American Tobacco 2,855 Micro Focus International 2,733 Berendsen 2,557 Barratt Developments 2,553 St James s Place 2,280 HSBC Holdings 2,130 Electrocomponents 1,718 William Hill 1,675 14

15 Statement of the Manager s Responsibilities The Financial Conduct Authority 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 losses 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 10 December 2017 were signed on 5 February 2018 on behalf of the Manager by: J.A. Walker-Hazell Directors R.E. Stoakley 15

16 Statement of Total Return (unaudited) For the six months ended 10 December 2017 For the period to Income 000 s 000 s 000 s 000 s Net capital (losses)/gains (5,954) 26,931 Revenue 6,483 10,053 Expenses (284) (389) Net revenue before taxation 6,199 9,664 Taxation (8) (12) Net revenue after taxation 6,191 9,652 Total return before distributions ,583 Distributions (274) (334) Change in net assets attributable to unitholders from investment activities (37) 36,249 Statement of Change in Net Assets Attributable to Unitholders (unaudited) For the six months ended 10 December 2017 For the period to s 000 s 000 s 000 s Opening net assets attributable to unitholders 337, Amounts receivable on issue of units 3, ,217 Amounts payable on cancellation of units (25,310) (22,742) (21,639) 283,475 Dilution adjustment Change in net assets attributable to unitholders from investment activities (37) 36,249 Closing net assets attributable to unitholders 316, , 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 Balance Sheet (unaudited) As at 10 December s 000 s Assets Investments 313, ,852 Current assets Debtors 1,469 2,446 Cash and bank balances 1,819 2,000 Total assets 316, ,298 Liabilities Creditors Other creditors (68) (330) Total liabilities (68) (330) Net assets attributable to unitholders 316, ,968 17

18 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 10 June 2017 and are described in those annual accounts. 18

19 General Information Manager Schroder Unit Trusts Limited 31 Gresham Street London EC2V 7QA Authorised and regulated by the Financial Conduct Authority Registrar Schroder Unit Trusts Limited 31 Gresham Street London EC2V 7QA Authorised and regulated by the Financial Conduct Authority Investment Adviser Schroder Investment Management Limited 31 Gresham Street London EC2V 7QA 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 Administration Details Schroders FREEPOST RLTZ-CHSY-HBUT PO Box 1102 Chelmsford Essex CM99 2XX Investor Services Dealing Fax Independent Auditors PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX Authorisation Initial management charge 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 scheme for the purpose of the categorisation of the COLL. The issue price of I Accumulation units reflects an initial management charge of 10% of the dealing price. This is retained by the Manager. 19

20 For further literature please contact Schroder Investor Services on or at or visit our website at Issued in February 2018 by Schroder Unit Trusts Limited, 31 Gresham Street, London EC2V 7QA. Registered No: England. Authorised and regulated by the Financial Conduct Authority. W35641