Download 1 climate assets fund quarterly update - q1 2017

CLIMATE ASSETS FUND
QUARTERLY UPDATE - Q1 2017
APRIL 2017 - FOR ExISTING INvESTORS ONLY
quiltercheviot.com
Registered in England Number 01923571. Registered Office: One Kingsway, London, WC2B 6AN
CLIMATE ASSETS FUND (B-SHARE, ACC) – Q1 2017 - OVERVIEW
• Your fund’s return over the first quarter of 2017 was +4.39%, outperforming the FTSE UK Private Investor Balanced Index’s
return of +3.64%.
• Your fund saw strong performance over the twelve month period, driven by asset allocation and good stock selection, as well
as sterling depreciation, with an impressive return of +19.99%.
• Since launch (1st March 2010) your fund has comfortably outperformed its benchmark by returning +89.97% compared to
+83.78% for the FTSE UK Private Investor Balanced Index. This performance places the fund in the 1st quartile among the
average balanced fund in the UK, as defined by the IA Mixed Investment 40%-85% Sector (+66.59%).
FUND PERFORMANCE
3 months %
1 year %
Since launch %
Climate Assets Fund - B Accumulation
4.39
19.99
89.97
IA Mixed Investment 40%-85% Shares Sector Average
3.78
17.11
66.59
FTSE UK Private Investor Balanced Index
3.64
19.51
83.78
(TO 31ST MARCH 2017)
Launch Date 1st Mar 2010. B Accumulation share class performance, inclusive of charges, in GBP with net income reinvested. The performance of other
share classes may differ. The share price performance data uses an extended track record based on the Climate Assets A-Acc (donor share) up until
24th June 2012. Source: Financial Express 31/03/2017. Past performance is not a guide to future performance and future returns are not guaranteed.
MARKET REVIEW
The modest acceleration in global economic growth that began last autumn continued in the first three months of 2017.
Exceptionally buoyant sentiment measures are probably overstating the upturn so estimates of 2.8% and 3.2% global real
GDP growth in 2017 and 2018 are unchanged. Headline inflation has surprised on the upside but – excluding energy – core
inflation and wage growth remain low and relatively stable. Another small rise in US interest rates doesn’t alter the
exceptionally accommodative global monetary policy providing a favourable background for improving corporate
profitability. Sterling remains depressed on a trade weighted basis but US dollar weakness helped cable recover a little to
$1.25. Having risen sharply following the US election, global bond yields have traded in a narrow range with the US and UK
10-year yields at 2.4% and 1.2%. Equity markets have performed strongly over the last three months and finished the quarter
around new highs. Asian and emerging markets were the top-performers and the very strong rotation experienced over
the previous quarter out of the defensive so called “bond proxy” sectors into cyclicals shares reversed to some extent.
The momentum in markets has slowed a bit in recent weeks as political rhetoric meets economic reality. On balance we
believe the US has the financial capacity to support a ‘reflation trade’ but that the timescale has been pushed out beyond
initial expectations so a period of consolidation in share prices is to be expected. However one of the main supports for
markets is that after a couple of years of slightly disappointing profit outcomes corporate earnings are set to recover
strongly in 2017. Some of the improved earnings outlook is already discounted in current share prices but with reasonable
valuations of 16x forward price global earnings and a prospective dividend yield of 2.5% - rising to 4% in the UK - further
modest gains in equity indices are anticipated.
FUND MANAGER COMMENT
During the quarter, stock selection continued to benefit the fund’s performance. European equities were the largest contributors
to overall performance with North American and UK equities coming a close second and third. At an individual stock level, the
largest positive contributors were Kingspan (the Irish based building materials group, which continues to display impressive
growth in low energy building solutions and insulation products); Sabesp (the Brazilian water, sewage and industrial wastewater
systems provider and operator); and Waters Corp (the leading player in the life sciences and analytical instruments market). NovoNordisk (Danish pharmaceutical company specialising in diabetes care) was the largest negative contributor as pricing headwinds
in the US diabetes market and generic completion continue to drag on the share price.
Over the quarter there were no major changes to the portfolio in the fixed interest or “alternative investments” allocations within
the fund; there were, however, a number of rebalancing trades within the global equity allocation. After significant share price
appreciation in the UK, we trimmed our exposure to defensive sectors by selling some of our holding in water company Severn
Trent. We also reduced the holding in industrial conglomerate Smiths Group.
Aided by the strength of the dollar it was a similar story in the US where we trimmed holdings in industrial manufacturer Emerson
Electric, life sciences and analytical instruments producer Waters Corp. and medical waste manager Stericycle. Following these
sales, some of the proceeds were used to add to our existing holdings in Boskalis Westminster (Netherlands, coastal protection)
as well as initiating a new holding in GEA Group within the fund.
•
GEA provides manufacturing technology and mechanical equipment to the general processing, climate control and agriculture
industries. It is set to benefit from increasing imbalances between food demand and supply and increasing application of more
efficient technologies across the food processing, industrial and pharmaceutical value chains.
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CLIMATE ASSETS FUND QUARTERLY UPDATE - Q1 2017
The fund’s c. 5% allocation to gold was a strong positive contributor to performance as increased global inflation expectations
lifted the spot gold price.
References to specific securities are not recommendations to buy or sell those securities.
OUTLOOK
Going forward, 2017 offers the prospect of stronger US – and therefore potentially global - economic growth. This is likely
to be accompanied by an end to deflationary pressures as the additional stimulus proposed by President Trump comes at
a time of already low unemployment. The Federal Reserve has already started to normalise rates and next year will see
this trend accelerate. Markets will likely regard these as ‘good’ rate rises until there is evidence the strength of the dollar is
starting to curtail economic activity. The already improving US economy means there will be less necessity for controversial
policy implementation but the potential for uncertainty will dampen global trade prospects. Asia and emerging markets
will still benefit from the US upturn although China has a delicate balancing act to achieve on all fronts. Europe will likely
make continued steady progress even though politics will be an increasing distraction. The UK market is heavily influenced
by global events so concerns over Brexit may matter less to the foreseeable outcome than international events. Having
been wrong-footed over the US election, markets have probably over-reacted the other way in the short-term. Overall,
however, we envisage an environment likely to favour equities over bonds, and cyclical over defensive companies.
ASSET ALLOCATION
Alternative
Investments 14.00%
Cash 4.55%
INVESTMENT THEMES
Cash 4.55%
Fixed Interest
13.89%
Water
14.02%
Energy
15.84%
Health 20.04%
Resources
37.52%
Food 8.03%
Equities 67.56%
QUILTER CHEVIOT
• One of the UK’s largest discretionary investment
firms which can trace its heritage to 1771.
• The firm is based in thirteen locations across the
UK, Jersey and Ireland and has total assets
under management of £20bn (as at 31
December 2016).
• Performance driven investment process with
track record from 1995.
• Our investment managers have an average of 19
years’ investment experience.
CONTACT DETAILS
Quilter Cheviot
One Kingsway
London WC2B 6AN
Claudia Quiroz - Fund Manager
Claudia is the Lead Fund Manager of our award
winning sustainable investment strategy, the Climate
Assets Fund. She also manages the Old Mutual
Ethical Fund and segregated portfolios on behalf of
private clients, pensions and charities with a focus on
sustainable investment. Claudia holds an MBA from
Cass Business School in London and joined Quilter
Cheviot from Henderson Global Investors in 2009.
She has over 15 years’ experience in Sustainable,
Ethical & Responsible Investment and is a member of
the Chartered Institute for Securities & Investment.
At Quilter Cheviot, she sits on the International
Equities Investment and Responsible Business
Committees.
William Buckhurst - Fund Manager
William joined the company in 2006, having
previously worked at UBS Wealth Management
and Laing & Cruickshank. He manages
discretionary portfolios for private clients, trusts,
and charities, and is the co-manager of the Libero
Balanced Fund and the Climate Assets Fund. He
also sits on Quilter Cheviot’s Collective Funds
Committee. He is a member of the Chartered
Institute for Securities & Investment and a
graduate of Newcastle University.
Claudia Quiroz
[email protected]
t: 020 7150 4749
William Buckhurst
[email protected]
t: 020 7150 4160
RISK WARNING: The value of investments and the income from them can go down as well as up. You may not recover what you invest. There are risks involved with this type of
investment. Please refer to the Prospectus and Key Investor Information documents for further details, available free of charge from the Authorised Corporate Director (‘ACD’)
Thesis Unit Trust Management Ltd, Exchange Building, St John's Street, Chichester, West Sussex, PO19 1UP. These documents are only available in English.
IMPORTANT INFORMATION This document is for general information purposes only and does not take into account the specific investment objectives, financial situation or
individual requirements of any particular person. It is not a personal recommendation and it should not be regarded as a solicitation or an offer to buy or sell any securities or
instruments mentioned in it. Quilter Cheviot recommends that potential investors independently evaluate investments, and encourages investors to seek the advice of a financial
advisor. Currency movements may also affect the value of investments. The Climate Assets Fund is a sub-fund of the Sun Portfolio Fund which is an open ended investment
company authorised and regulated by the Financial Conduct Authority.
Quilter Cheviot Limited is registered in England with number 01923571, registered office at One Kingsway, London WC2B 6AN. Quilter Cheviot Limited is a member of the
London Stock Exchange and authorised and regulated by the UK Financial Conduct Authority.
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