Download coronation global managed fund

CORONATION GLOBAL MANAGED FUND
Fund Information as at 30 April 2017
WHAT IS THE FUND’S OBJECTIVE?
WHAT COSTS CAN I EXPECT TO PAY?
Global Managed aims to maximise long-term investment growth by
investing in a range of opportunities available in public asset markets from
around the world. Our intent is to outperform an equity-biased benchmark
over all five year periods.
An annual fee of 1.50% is payable.
All fees exclude VAT. Other costs that are incurred in the fund include
administrative, trading, custody and audit charges. All performance
information is disclosed after deducting all fees and other portfolio costs.
We do not charge any fees to access or withdraw from the fund.
WHAT DOES THE FUND INVEST IN?
More detail is available on www.coronation.com.
Global Managed will have a bias towards shares, but can invest in a variety
of assets including listed property, bonds and cash. The fund primarily
invests in developed economies (including the US, Europe and Japan) but
is also mandated to invest in emerging markets.
WHO ARE THE FUND MANAGERS?
The intent is to keep the fund fully invested in foreign assets at all times. Its
exposure will be in a variety of currencies, primarily the US dollar, British
pound, euro and yen.
LOUIS STASSEN
NEIL PADOA
BSc, BCom (Hons), CFA
BEconSc (AcSci), FFA
The fund may use exchange traded funds and other financial instruments
(eg. derivatives) to implement specific investment views.
GENERAL FUND INFORMATION
IMPORTANT PORTFOLIO CHARACTERISTICS AND RISKS
Fund Launch Date
1 March 2010
Class
A
Class Type
Accumulation
Fund Domicile
Ireland
Global Managed will only invest in assets we view as being attractively
valued and that could offer strong long-term investment growth. The fund’s
share selection is the result of rigorous international research conducted by
Coronation’s investment team.
Morningstar Fund Category
USD – Aggressive Allocation
Currency
US Dollar
Benchmark
60% MSCI All Country World Index
and 40% Barclays Bond Aggregate
While shares typically offer superior long-term returns, this comes with
higher levels of risk and volatility. We have a disciplined approach to
reducing risk, but shares can be volatile investments and may suffer capital
losses over the short term. Global currency movements may intensify
investment gains or declines.
Investment Minimum
US$15 000
Bloomberg
CORGMFA
ISIN
IE00B3PR9321
SEDOL
B3PR932
Global Managed aims to achieve the best possible long-term growth for
investors.
Consequently, it will have a sizeable exposure to shares, which typically offer
the best returns over the long run.
HOW LONG SHOULD INVESTORS REMAIN INVESTED?
An investment term of more than five years is recommended.
WHO SHOULD CONSIDER INVESTING IN THE FUND?
Investors who are building wealth, and who
seek a single international investment that will give them access to
some of the best opportunities around the globe;
require investment growth over the long term and accept the
possibility of volatility and the risk of short-term losses;
do not require an income from their investment.
Client Service: 0800 22 11 77
Email: [email protected]
Website: www.coronation.com
Minimum Disclosure Document
Page 1/4
CORONATION GLOBAL MANAGED FUND
CLASS A as at 30 April 2017
Currency
USD
Fund size
Launch date
01 March 2010
NAV
Benchmark
Composite: 60% MSCI All Country World Index
& 40% Barclays Global Bond Aggregate
Total Expense Ratio
1.55% (including a performance fee of 0.10%)
Transaction Costs
0.20%
Portfolio manager/s
US$ 914.07 million
16.49
Louis Stassen and Neil Padoa
PERFORMANCE AND RISK STATISTICS
PORTFOLIO DETAIL
GROWTH OF A $100,000 INVESTMENT
ASSET ALLOCATION EXPOSURE
Sector
30 Apr 2017
Equities
Merger Arbitrage
Property
Commodities
Bonds
Cash
RETURNS VS BENCHMARK
57.0%
2.0%
8.2%
1.9%
9.0%
21.9%
TOP 10 HOLDINGS
Fund
Benchmark
Active Return
As at 31 Mar 2017
% of Fund
64.9%
59.5%
5.3%
Alphabet Inc
2.7%
Since Launch (annualised)
7.2%
6.7%
0.5%
Amazon Com Inc
2.4%
Latest 5 years (annualised)
7.1%
6.1%
1.0%
Facebook Inc.
2.2%
Latest 3 years (annualised)
3.8%
3.4%
0.3%
Pershing Square Holdings
2.1%
Latest 1 year
13.9%
8.0%
5.9%
Blackstone Group
2.0%
Charter Communication A
2.0%
Year to date
9.2%
6.3%
2.9%
Walgreen Co
2.0%
L Brands Inc
1.8%
KKR & Co. LP
1.8%
Liberty Global CL A
1.8%
Since Launch (unannualised)
RISK STATISTICS SINCE LAUNCH
RETURNS VS MSCI ACWI
Fund
64.9%
MSCI ACWI
Since Launch (annualised)
7.2%
10.1%
Latest 5 years (annualised)
7.1%
10.5%
Latest 3 years (annualised)
3.8%
6.1%
Latest 1 year
13.9%
15.1%
Year to date
9.2%
8.6%
Since Launch (unannualised)
99.4%
Fund
Benchmark
Annualised Deviation
Sharpe Ratio
Maximum Gain
Maximum Drawdown
Positive Months
12.7%
0.56
21.7%
(17.4)%
66.3%
8.9%
0.74
9.6%
(11.1)%
59.3%
Fund
Date Range
Highest annual return
22.7%
Jul 2010 - Jun 2011
Lowest annual return
(14.4%)
Mar 2015 - Feb 2016
MONTHLY PERFORMANCE
Fund 2017
Fund 2016
Fund 2015
Jan
Feb
Mar
Apr
3.2%
(6.9)%
(1.5)%
2.6%
2.1%
4.9%
0.2%
8.5%
(2.1)%
2.9%
1.0%
2.4%
Issue date: 2017/05/09
Client Service:
0800 22 11 77
May
0.2%
(0.9)%
Jun
(3.1)%
(0.8)%
Jul
5.7%
(1.4)%
Aug
1.0%
(7.2)%
Sep
0.5%
(4.7)%
Oct
(1.7)%
7.8%
Nov
1.0%
(0.6)%
Dec
1.0%
(2.4)%
YTD
9.2%
8.7%
(7.0)%
Please refer to page 4 of the Comprehensive Fact Sheet for important additional infomation, including change in cost disclosures.
Email:
[email protected]
Website:
www.coronation.com
Minimum Disclosure Document
Page 2/4
CORONATION GLOBAL MANAGED FUND
Quarterly Portfolio Manager Commentary
Please note that the commentary is for the retail class of the fund.
All in all, the first quarter of 2017 was another good one for global asset performance.
Although weakness in the US dollar somewhat flattered returns, almost every asset
class delivered a positive return, with the exception of certain commodities. Gold
reversed its position as the worst-performing asset class of the fourth quarter of 2016
to end at the top of the performance tables in the first quarter of 2017, rising 8.4%. This
reflects heightened geopolitical concerns in various regions of the world, as well as a
slightly more sanguine approach to what US President Donald Trump can or may do
over the next few years.
Global equities were amongst the global asset classes that did well, rising 6.9%, and
thereby continuing its outperformance of bonds (as has been the case since the global
low point in yields seen around the time of the Brexit vote). Within global equities, the
best returns came from the technology sector, which rose 12%. Energy was the only
sector that did not deliver positive performance, falling 5% on the back of lower oil
prices.
In the bond and equity markets, returns appear to have largely followed a pattern
commensurate with asset risk. Therefore, the lower the credit rating, the better the
return. This was illustrated by the fact that despite the US Federal Reserve (Fed) hiking
interest rates in March, emerging market debt (in local currency) performed very
strongly, producing a total return of 6.4%. Additionally, returns were further boosted
by the strength in emerging market currencies, with the Mexican peso, Russian rouble,
and Korean won rising between 8% and 10% against the US dollar over the quarter.
Interestingly, despite a more hawkish Fed, US Treasury yields moved lower over the
quarter, albeit only marginally. In the currency market, the clear trend over the quarter
was that investors’ long-standing preference for the US dollar has declined, with the
greenback underperforming every other major currency during the quarter. Global
bonds returned 1.8% in US dollar terms over the quarter, but their 12-month lagging
return remains negative 1.9% due to the significant correction following the outcome
of the US election in the fourth quarter of 2016.
Global listed property recovered somewhat after the sell-off experienced following the
US election, although the asset class lagged equities by a significant margin. For the
quarter, listed property returned 2.3%, marginally ahead of bonds. The asset class also
performed slightly better than bonds over the last 12-months (up 1.9%), but much
worse than equities (up 15.0%). Over three and five years, however, the returns from
property and equities are very similar.
The fund returned 6.2% over the three-month period, handsomely outperforming its
benchmark return of 4.8%. As we have often argued before, this short-term
performance is purely incidental, given the vagaries of financial markets over shorter
periods of time. Our 12-month lagging return of 11.9% has been materially above the
benchmark return of 8.0%. In fact, we are now ahead of the benchmark over all
meaningful periods and the fund's annualised outperformance since inception stands
at 0.3% p.a. This number puts the fund comfortably in the top quintile of global funds
with a similar mandate.
A very satisfying feature of the past quarter’s performance is that we have
outperformed all the relevant benchmarks in the fund's respective asset class buckets.
In hindsight, the fund's exposure to equities could have been higher, but within the
asset class we comfortably outperformed the benchmark over both the quarter and the
year. Our property holdings did well over the quarter, even though the 12-month
numbers remain negative. Credit performed well over both the quarter and the year,
and our gold holdings added significant alpha to the fund over the last quarter. Over
the longer term, similar comments can be made about our stock/instrument selection
within equity and credit, while the property holdings performed well relative to bonds.
The only negative over the quarter came from a poor return in the merger arbitrage
bucket, which was impacted by continued uncertainty around the Rite Aid deal. We are
monitoring the developments closely, but remain convinced that the potential returns
outweigh the risks, and have added to this position.
Other notable contributors to the positive equity performance over the last year include
Apollo, Estácio/Kroton (featured in previous commentaries), Amazon, and Charter
Communications. We had two material detractors in Limited Brands and Tripadvisor.
We will feature our investment thesis for Limited Brands at the end of this commentary.
In the case of Tripadvisor, it was again a reminder about the importance of
management and their ability to execute strategy that ultimately will be the largest
determinant of success. At the time of investing in Tripadvisor, we also invested in
Priceline, the online travel agency that owns powerful platforms like Booking.com.
While TripAdvisor and Priceline operate in the same sector, and therefore benefit from
the same strong secular drivers, Priceline’s focus on driving simplicity and customer
value has allowed them to significantly outperform TripAdvisor over the last few
quarters, thereby creating exceptional value for shareholders. TripAdvisor, on the other
hand, has been trying to migrate its business model to include other services and
changed value propositions for its customers, in the process losing focus and making
some operational mistakes. We are watching them carefully to see if they can ultimately
monetise the strong brand and content that they are known for.
As equity markets continued to scale new heights, we have become more concerned
about valuation levels. It is clear that markets have been giving Mr Trump the benefit
of the doubt regarding his ability to reflate the economy and kick-start growth in the
US, and ultimately across other regions of the world. We take a more sanguine
approach in that we do not want to be paying for promises, especially coming from a
volatile and inexperienced US administration. As such, we have bought more put
options in the fund as protection against exogenous shocks. We have also reduced the
equity exposure in the fund to around 57%, the lowest level since inception. The world
remains an uncertain place, and while we embrace taking risk when we believe the odds
are tilted in our favour, we have become a little more circumspect in this regard.
We have started adding some exposure to US property stocks for the first time in a
while. These stocks sold off significantly following the correction in long bond rates,
and most of the retail REITs were punished during this quarter as investor concerns
focused on the potential 'death' of the US mall (which we discuss in more detail in the
section on Limited Brands below). While we concur that the internet will continue to
gain market share at the expense of bricks and mortar retailers, our view differs from
that of the market - in our opinion, the listed portfolios of US retail REITs comprise topquality malls which should remain relevant to their tenants even in a more challenged
world.
Investment case for Limited Brands
Limited Brands is the owner of powerful brands like Victoria’s Secret and Bath & Body
Works. When we initially bought the stock, the investment thesis focused on a
continued opportunity in the US for Bath & Body Works and, what we regarded as an
outsized opportunity for Victoria’s Secret in China. Since then, the competitive
landscape (for Victoria’s Secret) has intensified in the US, and coupled with continued
pressure on footfall in conventional retail malls, investors have essentially given up on
the company in terms of its ability to compete in its home market. While short-term
profits have been rebased downwards, we continued to add to our position, such that
Limited Brands is now a top five position in the fund. We regard the brands as very
powerful and relevant for future consumers, and still believe in the longer-term
opportunity in China. In the meantime, we are comfortable paying a 14 to 15 price
earnings multiple for the reduced profit base with continued strong cash generation.
We expect our patience to be handsomely rewarded at some point in the future.
Portfolio managers
Louis Stassen and Neil Padoa
as at 31 March 2017
The highlight of our equity returns over the last quarter was Softbank’s offer to acquire
100% of Fortress Investment Group (at the time a top five equity holding within the
fund). The offer price represented a 60% premium to the undisturbed price, and while
we think it still undervalues the stock by about between 20% and 30%, we recognised
that the majority of the equity is held by management, who were supportive of the
transaction and intended to stay on as part of the larger group. As such, even though
we were a material minority shareholder, we could not influence the transaction
outcome, and hence liquidated the position to invest the proceeds in other promising
opportunities. We continue to believe that the alternative asset management sector
offers interesting investment opportunities, and remain committed investors in stocks
like Blackstone, Apollo, KKR and Carlyle.
Client Service: 0800 22 11 77
Email: [email protected]
Website: www.coronation.com
Minimum Disclosure Document
Page 3/4
CORONATION GLOBAL MANAGED FUND
Important Information
IMPORTANT INFORMATION THAT SHOULD BE CONSIDERED BEFORE INVESTING IN THE CORONATION GLOBAL MANAGED FUND
The Global Managed Fund should be considered a medium- to long-term investment. The value of units may go down as well as up, and is therefore not guaranteed. Past
performance is not necessarily an indication of future performance. The fund is mandated to invest up to 100% of its portfolio into foreign securities and may as a result be exposed
to macroeconomic, settlement, political, tax, reporting or illiquidity risk factors that may be different to similar investments in the South African markets. Fluctuations or movements
in exchange rates may cause the value of underlying investments to go up or down. Coronation reserves the right to close the fund to new investors if we deem it necessary to limit
further inflows in order for it to be managed in accordance with its mandate. Unit trusts are allowed to engage in scrip lending and borrowing. Coronation Global Fund Managers
(Ireland) Limited is authorised in Ireland and regulated by the Central Bank of Ireland. The fund is approved under Section 65 of the Collective Investment Schemes Control Act by
the Financial Services Board of South Africa.
Northern Trust Fiduciary Services has been appointed as the fund’s trustees (www.northerntrust.com; t: +353-1-542-2000), and its custodian is JP Morgan Administration Services
(Ireland) Limited (www.jpmorgan.com; t: +353-1-612-4000). Coronation is a full member of the Association for Savings & Investment SA (ASISA).
HOW ARE UNITS PRICED AND AT WHAT PRICE WILL MY TRANSACTION BE EXECUTED?
Unit trusts are traded at ruling prices set on every business day. Fund valuations take place at approximately 17h00 each business day (Irish Time) and forward pricing is used.
Instructions must reach Coronation before 12h00 (SA Time) one day prior to the dealing date. You can expect to receive withdrawal payouts three business days after the dealing
day. Large investments or redemptions (exceeding 5% of fund value) may be subject to an anti-dilution levy to defray dealing costs and expenses. This levy, where applicable, is
applied fully for the benefit of the fund.
HOW WAS THE PERFORMANCE INFORMATION INCLUDED IN THIS FACT SHEET CALCULATED?
Performance is calculated by Coronation as at the last day of the month for a lump sum investment using Class A NAV prices with income distributions reinvested. All underlying
price and distribution data is sourced from Morningstar. Performance figures are quoted after the deduction of all costs (including manager fees and trading costs) incurred within
the fund. Note that individual investor performance may differ as a result of the actual investment date, the date of reinvestment of distributions and dividend withholding tax,
where applicable. Annualised performance figures represent the geometric average return earned by the fund over the given time period. Unannualised performance represents
the total return earned by the fund over the given time period, expressed as a percentage.
WHAT IS THE TOTAL EXPENSE RATIO (TER) AND TRANSACTION COSTS (TC)?
TER is calculated as a percentage of the average net asset value of the portfolio incurred as charges, levies and fees in the management of the portfolio for a rolling 36-month
period to the last quarter end (December, March, June and September) The TER charged by any underlying fund held as part of a fund’s portfolio is included in the TER figure, but
trading and implementation costs incurred in managing the fund are excluded. A higher TER does not necessarily imply a poor return, nor does a low TER imply a good return. The
current TER may not necessarily be an accurate indication of future TER's.
Transaction costs are a necessary cost in managing a fund and impacts the fund’s return. They should not be considered in isolation as returns may be impacted by many other
factors over time including market returns, the type of fund, the investment decisions of the investment manager and the TER.
ADVICE AND PLATFORM COSTS
Coronation does not provide financial advice. If you appoint an advisor, advice fees are contracted directly between you and the advisor. We will facilitate the collection of advice
fees only upon receiving your instruction, up to a maximum of an initial fee of 3.00% and an ongoing fee of 1.00% per annum (where an initial advice fee of more than 1.50% is
selected, the maximum annual advice fee that we will collect is 0.50%). Advice fees are usually collected through the redemption of units. You may cancel the instruction to facilitate
the payment of advice fees at any time. Advisors will only share in Coronation fees subject to prior approval by and/or disclosure to the investor. A portion of Coronation’s annual
management fee may be paid to administration platforms such as Linked Investment Service Providers (LISPs) as a payment for administration and distribution services.
WHERE CAN I FIND ADDITIONAL INFORMATION?
Additional information such as fund prices, brochures, application forms and a schedule of fund fees and charges is available on www.coronation.com. You will also find additional
information on the considerations pertinent to investing in a fund denominated in a foreign currency and domiciled in an offshore jurisdiction.
IMPORTANT INFORMATION REGARDING TERMS OF USE
This document is for information purposes only and does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe for or purchase any
particular investment. Opinions expressed in this document may be changed without notice at any time after publication. We therefore disclaim any liability for any loss, liability,
damage (whether direct or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use
of or reliance upon the information.
Client Service: 0800 22 11 77
Email: [email protected]
Website: www.coronation.com
Minimum Disclosure Document
Page 4/4