INVESTMENTS BNY Mellon Global Real Return Fund
Introduction The main objective of investing is to increase wealth... Traditional investing is based on the assumption that your focus is on long-term return. Most managed funds assume that you are comfortable with this. The fund manager focuses on the longer-term, assuming that as an investor you can stay in during periods of short-term volatility (when investment values can rise and fall). This fund management approach is not suitable for everyone. For some, the journey is as important as the final destination. While all investors are interested in long-term growth, some often find it difficult to stay invested during periods of significant market falls and want an approach that is conscious of this, where their investment can be managed a little more cautiously. The BNY Mellon Global Real Return Fund, from New Ireland Assurance is an investment fund that aims to provide this approach: Maximise investors return while at the same time manage short-term risk Over time the Fund aims to generate smoother, consistent investment results.
How the Fund achieves its aim Multi-asset investment approach spread across a wide range of global asset classes A focus on risk management that uses both investment skill and clear & transparent derivative strategies designed to protect the Fund in times of significant market falls Strong Investment Manager with proven track record and the flexibility to make large moves across and between asset classes when they believe necessary Expert stock picking supported by a strong investment process Benchmark Style Aims to deliver a long-term return that exceeds Cash (1-month EURIBOR) +4% p.a. over a rolling 5 year period (gross of tax and charges)). It is important to understand the value of your investment may still fall as well as rise and that you may receive back less than you originally invested. Actively managed Strong flexibility flexibility to make large moves across and between asset classes when it is believed necessary asset Mix Investment is spread across a wide array of assets (multi-asset) Managed by Newton Investment Management, one of BNY Mellon Asset Management s specialist asset managers Risk Medium Risk 1
the Fund Manager BNY Mellon asset Management BNY Mellon Asset Management is a global investment leader. In February 2010, total assets under management exceeded 814bn worldwide. The company operates a multi-boutique model with a number of expert boutique investment managers. This allows BNY Mellon benefit from international scale yet harness the skill of world-class specialists, including for example, Newton Investment Management. Each investment manager employs their own unique investment philosophy and proprietary investment management process and each are leaders in their field. The BNY Mellon structure provides these boutique investment managers with access to the resources and financial backing of a global investment firm. This allows them to stay ahead of market trends and to be at the forefront of investment management. Newton Investment Management (Newton) Newton Investment Management has over 30 years investment experience. The company is a dedicated fund manager with a proven track record and excellent reputation. Newton employ a top-down approach to investing, building a picture of the world based on a series of global themes. Put simply, these themes represent Newton s collective views on the likely forces of change in the world. They are developed and continuously refined by a specialist global research team at Newton. Newton s investment approach and strong research focus has delivered impressive results and external recognition. 2
an award winning investment manager... April 2009 Newton s Private Investment Management division won two major awards for Best Growth Wealth Manager May 2009 Newton won three key awards at the FT Pensions and Investment Provider 2009 Awards. 1. Best Active European Equity (ex-uk), 2. Best Active UK Equity and 3. Best Asset Allocation (for their multi-asset investment capabilities). July 2009 Investment Week Fund Manager of the Year Awards 2009. Newton Balanced Fund Newton won best fund in the Balanced Managed sector. October 2009 Winner of the UK Asset Management Equity Manager of the Year award at the Financial News Excellence in Institutional Asset Management Awards 2009 With a proven performance track record The table below shows the performance of the Newton Real Return Fund. This is a sterling fund that employs similar strategies to and is managed by the same team that manage the BNY Mellon Global Real Return Fund (the Fund). The inclusion of the table below is for the sole purpose of showing how the Newton Real Return Fund (the sterling fund) has performed relative to the average sterling performance of UK Absolute Return funds and UK Managed Funds. A Euro fund was not available during this period to illustrate this point. If a Euro fund had been the available, returns would have been lower as a result of the fall in value of Sterling versus the Euro over the time frames: Fund name Newton Real Return Fund average uk absolute Return Fund average uk Managed Fund 1 Year 14.8% 4.7% 18.4% 3 Year 7.6% p.a. 3.4% p.a. -3.5% p.a. 5 Years 9.4% p.a. 6.2% p.a. 3.8% p.a. Source: Lipper. Figures are as at 30th June 2010. Performance figures are after tax and charges (excludes initial charge). NB: This fund is a sterling fund. This data is for information purposes only. It is not an indication of likely perofmance of the BNY Mellon Global Real Return Fund. 3
Fund overview The Fund aims to generate smooth, consistent investment returns over the longer term. Returns This means that when markets are falling the fund manager s ongoing focus on risk aims to protect the investment. In a rising market, the Fund aims to capture the majority of the upside potential. Performance Benchmark Cash (1-month EURIBOR) +4% p.a. over a rolling 5 year period (gross of tax and charges). It is important to understand that the value of your investment may still fall as well as rise and that you may receive back less than you originally invested. Multi-asset The Fund invests in both traditional assets as well as a wide range of alternatives. These may include: Company shares Infrastructure Government bonds Forestry Corporate bonds Emerging markets etc. Commodities i.e. gold, oil, copper Currencies and cash Agriculture active Management The fund manager has a high degree of flexibility to move investment across and between asset classes quickly unlike a traditional managed fund. This is supported by a strong research process and risk controls. Over short periods of time, the mix of assets can vary significantly. However, this will always be in line with the Fund s aim and risk profile. experienced team The team managing the BNY Mellon Global Real Return Fund have 15 years average investment experience. Risk Management approach Risk is managed in a number of ways across the Fund: the multi-asset approach Spreads the investment across a range of assets, reducing the overall potential risk of the portfolio, as the impact of any one asset class on the Fund is reduced. Risk Guidelines Ensure that investment risk is reduced, for example, no more than 20% of the Fund may be held in any global sector and no more than 5% of the Fund in any one company. Strong Risk Management Process and Reviews (within both Newton and BNY Mellon Asset Management) to ensure that only an appropriate level of risk is undertaken in line with the Fund s objectives. downside Protection The Fund can use clear & transparent derivatives to help reduce risk in the Fund during periods of market falls. Specific risk controls are in place vis-à-vis the use of derivatives. 4
Investment approach At the heart of Newton s successful track record is their investment philosophy and process. Newton believes that no company, market, or economy can be considered in isolation - they must be understood in a global context. To achieve this the manager spends a lot of time and resource understanding key global themes that will shape financial markets and economies, to anticipate change and who will most likely benefit. This is a continuous process and themes evolve over time, old ones cease to be relevant and new ones emerge as the investment backdrop changes. Because these global themes are about change the process is much less likely to be caught out by change. This view of the world informs how Newton identifies the types of assets, asset mix, country mix etc. that they believe will benefit in this type of environment. Only investments that Newton believes are capable of delivering a potentially strong positive return or providing protection against certain risks, will be held at any particular time. Newton s investment process Proprietary Global Research Quality People with a global perspective Determines Investment Decisions Informs Newton s Global Thematic Continuous active Management The fund manager has a high degree of flexibility. Newton makes decisions for the Fund in accordance with their beliefs to take advantage of opportunities and reduce risk. This leads to an actively managed fund, where the exposure to stock-markets, and the individual assets held, can vary greatly depending on the fund manager s view. 5
approach to risk management Risk management is an integral part of the investment process at Newton. The is achieved through the use of strong research and investment skill combined with more modern techniques such as stock-market futures and options. Risk is controlled primarily through careful stock selection and asset allocation - this also generates most of the upside for the Fund. To further reduce risk, investments are spread across a wide range of assets (multi-asset approach) and the Fund can also utilise clear and transparent derivative strategies. Specific risk controls are in place vis-à-vis the use of derivatives. A wide range of internal guidelines are in place to ensure risk is both spread and carefully controlled, e.g. no more than 20% of the Fund may be held in any global sector and no more than 5% of the Fund in any one company. The risk of the Fund is regularly reviewed within both Newton and BNY Mellon Asset Management to ensure that only the appropriate level of risk is undertaken in line with the Fund s objectives. Successful track record in managing risk illustrated by Newton s performance over the last 5 years Newton has a track record of managing volatility in the Newton Real Return Fund (a sterling fund) which is demonstrated in the chart below. The sole purpose of this chart is to show how the Newton Real Return Fund (the sterling fund) has performed relative to its benchmark and a global basket of company shares (as measured by the FTSE World Index (Sterling)). A Euro fund was not available during this period to illustrate this point. If a Euro fund had been the available, returns would have been lower as a result of the fall in value of Sterling versus the Euro over the relevant period. A key feature of this chart is the performance during 2008 when the sterling fund avoided the significant falls experienced by global markets as a result of the worldwide credit crunch: 100 80 Newton Real Return GBP Inc FTSE World TR GBP Libor GBP 1 Month Plus 4% 60 40 20 0 2004 2005 2006 2007 2008 2009 2010 Source Lipper. Figures are as at 30th June 2010. Performance includes income net of UK tax and annual charges, but excludes initial charge. All figures are in GBP terms. This data is for illustrative purposes only and is not an indication of likely outcome of the BNY Mellon Global Real Return Fund. 6
Product availability The BNY Mellon Global Real Return Fund is available to investors through the following New Ireland products: SmartFunds SmartFunds Saver Select Savings Plan Personal Retirement Plan Executive Retirement Plan Trustee Investment Plan Approved Retirement Fund (ARF) Approved Minimum Retirement Fund (AMRF) Personal Retirement Bond Charges Normal product charges and allocation rates for these products apply, with the exception that the fund management charge for the BNY Mellon Global Real Return Fund is 0.35% per annum higher than on standard funds. Risk Rating a Medium Risk Fund At New Ireland we classify our wide range of funds into 5 different risk categories to help you better understand the risks to your original investment. We rate the BNY Mellon Global Real Return Fund as a Medium risk investment fund and this type of fund is explained in more detail below: Medium risk investments offer the potential for returns in excess of deposits but do not promise a minimum return at any time Medium risk investments tend to invest in a range of assets, which would normally include lower risk assets such as government bonds and investment grade corporate bonds However, they can also invest in other assets such as stocks, property and alternatives (e.g. commodities). At times these investments may be a significant portion of the fund Investors capital is less exposed to market fluctuations than most other investments but investors may get back less than they originally invested. 7
to find out more About the BNY Mellon Global Real Return Fund please contact: Your Financial Adviser, Independent Broker or New Ireland representative or Visit our online Fund Centre at www.newireland.ie or Call us on 1890 405 905 8
Warning: the value of your investment may go down as well as up. Warning: this fund may be affected by changes in currency exchange rates. Warning: Past Performance is not a reliable guide to future performance. For service, verification and training purposes incoming and outgoing calls may be recorded. Call charges may vary depending on your service provider. Terms and conditions apply. Where relevant life assurance tax applies. While great care has been taken in its preparation, this document is of a general nature and should not be relied on in relation to specific issues without appropriate financial, insurance, investment or other professional advice. The content of this document is for information purposes only and does not constitute an offer or recommendation to buy or sell any investment or to subscribe to any investment management or advisory service. While the information has been taken from sources we believe to be reliable, we do not guarantee their accuracy or completeness and any such information may be incomplete or condensed. All opinions and estimates constitute best judgement at the time of publication and are subject to change without notice. Please note that mention of specific stocks/shares or investments is not a recommendation to trade in those stocks/shares or investments. In the event of any changes in taxation or legislation, New Ireland may amend the terms and conditions of the relevant contract to take account of any such changes. The details shown above relating to this Fund and its composition are as at the date of this document, and may change over time. If there is any conflict between this document and the Policy Conditions, the Policy Conditions will apply. New Ireland Assurance Company plc is regulated by the Financial Regulator. A member of Bank of Ireland Group. BNY Mellon Global Real Return Fund is a Sub-Fund of BNY Mellon Global Funds, plc. BNY Mellon Global Funds, plc is an open-ended umbrella type investment company with variable capital (ICVC) and segregated liability between sub-funds, incorporated with limited liability under the laws of Ireland. It qualifies and is authorised in Ireland by the Financial Regulator as an undertaking for collective investment in transferable securities pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (S.I. No 211 of 2003), as amended. The Manager of BNY Mellon Global Funds, plc is BNY Mellon Global Management Limited. BNY Mellon Global Management Limited, 33 Sir John Rogerson s Quay, Dublin 2, Ireland. The Manager is approved as a management company and regulated by the Irish Financial Regulator under the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, 2003 (SI No 211 of 2003), as amended. The Global (ex. US) Distributor of BNY Mellon Global Funds, plc is BNY Mellon Asset Management International Limited. BNY Mellon Asset Management International Limited, BNY Mellon Global Management Limited (BNY MGM), Newton and any other BNY Mellon entity mentioned are all ultimately owned by The Bank of New York Mellon Corporation. July 2010
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