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PSG Global Equity Feeder Fund Class A Minimum Disclosure Document as at 30 June 2017 FUND FACTS FUND CHARACTERISTICS This fund feeds all investments directly to the PSG Global Equity SubFund, a fund which invests in equi�es. This fund aims to produce the highest real (above infla�on) MSCI Daily Total Return Net World USD Index (in ZAR) returns over the longterm. The fund sits at the top end of the risk/return spectrum No and investors should be comfortable with stock market fluctua�ons and should have an investment horizon of seven years and longer. Please refer to the Minimum Philipp Wörz and Greg Hopkins Disclosure Document of the PSG Global Equity SubFund for full informa�on on the fund. Sector Global Equity General Benchmark Regula�on 28 compliant Fund Managers Fund Launch Date 3 May 2011 Fund Size (ZAR) 135,722,030 Month end NAV Price (cpu) 225.18 Minimum Investment RISK CLASSIFICATION R2000 lump sum or R250 monthly debit order Distribu�on Frequency February Latest Distribu�on (cpu) 28 Feb 17 0.00c Max. Adviser Fee % (incl. VAT) 2.28 Annual Management Fee % (incl. VAT) 0.86 Total Expense Ra�o % (incl. VAT) 2.40 For a breakdown of the Total Investment Charge, please refer to page 2. INVESTMENT OBJECTIVE INVESTMENT POLICY The fund aims to outperform the average of the world's equity markets, as The PSG Global Equity Feeder Fund is a Rand denominated Equity Feeder Fund, represented by the MSCI Daily Total Return Net World USD Index (in ZAR) (the feeding solely into the PSG Global Equity SubFund, denominated in US Dollars and a "Benchmark"). subfund of PSG Global Funds Sicav plc. The por�olio’s investment strategy will a�empt to reduce the compara�ve risk of loss over an investment period of four or more years. The por�olio aims to achieve capital growth over the long term, with the genera�on of income not being a main objec�ve of the por�olio. REGIONAL ALLOCATION TOP 10 EQUITY HOLDINGS % United States 40 United Kingdom 16 Europe Brookfield Asset Management Inc Cisco Systems Inc Yahoo Japan Corp Berkshire Hathaway Inc AIA Group Ltd Glencore plc Colfax Corp Discovery Holdings Ltd Union Pacific Corp Babcock Interna�onal Group plc 2 Asia 14 Canada 8 Singapore 1 Cash 16 Africa 3 Total 100 HOW THE FUND HAS PERFORMED SINCE 3 May 2011 (Cumula�ve) ANNUALISED PERFORMANCE % (a�er fees) 350.0 300.0 250.0 200.0 150.0 50.0 2011 2012 PSG Global Equity Feeder Fund A (Performance) 2013 2014 2015 2016 2017 MSCI Daily Total Return Net World USD in ZAR (Benchmark) Return 100.0 24.0 22.0 20.0 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 22.4 20.4 17.9 14.9 14.1 12.8 11.4 8.7 6.7 5.8 1 year 2 years 3 years PSG Global Equity Feeder Fund A (Performance) 5 years Incep�on MSCI Daily Total Return Net World USD in ZAR (Benchmark) Performance Sta�s�cs % (annualised) Return Best Month Worst Month YTD (not annualised) 3.77 3.04 1.72 2016 2015 2014 2013 2012 3.47 10.95 13.17 14.74 10.94 7.30 10.59 3.62 4.02 17.01 16.04 13.17 16.69 16.04 13.17 MANAGEMENT COMPANY: PSG Collec�ve Investments (RF) Limited, 1st Floor, Alphen Office Park, Constan�a Main Road, Constan�a, 7806 Tel: +27 (21) 799 8000, Email: [email protected], Website: www.psg.co.za/assetmanagement Date issued: 14 July 2017 PSG Global Equity Feeder Fund Quarterly Portfolio Commentary as at 30 June 2017 by Philipp Wörz and Greg Hopkins Current context Given the backdrop of elevated market valuations, global stocks continued their strong performance during the second quarter, with the MSCI World Index delivering a positive return of 9.43% (11.01% including dividends) year to date. The tech-heavy Nasdaq index outperformed comfortably (+14.67%), while an acceleration in European growth, coupled with a market-friendly election outcome in France and dollar weakness, drove European stocks 15.91% higher. Emerging markets also ended two years of underperformance and returned 18.55% year to date. (All returns quoted in US dollars.) This does not necessarily mean that all markets and all market sectors had an easy year. Value stocks, which outperformed last year on the back of higher growth, inflation and interest rate expectations post Donald Trump’s election, underperformed the broader market as the likelihood of effective policies to drive US growth diminished significantly. Continued threats of disruption (both perceived and real) by online retailers and lower-cost competitors have also driven the prices of US retailers down by 7% at an index level. In addition, while most emerging markets have seen their currencies and stock markets appreciate considerably this year, countries such as Brazil and South Africa continue to excel at scoring political own goals. Markets in both these countries have underperformed both emerging and global market peers. Our perspective We inherently like to buy high-quality companies with attractive growth prospects, at attractive valuations. We do not consider very expensive stocks that are deemed to be defensive as low-risk investment opportunities, and we expect muted long-term performance from such stocks. Rather, we think the risk is lower (and the opportunity better) in quality assets that are currently out of favour, yet offer excellent long-term prospects. This is reflected in the construction of the portfolio. In fact, the divergence in valuations between the most expensive parts of the markets relative to the cheapest is still as extreme as it was during the dot-com bubble (as shown in the charts below). This warrants caution, but also presents stock-picking opportunities away from the popular crowd. Global price-to-book (cheap/expensive) 0.300 0.250 0.200 0.150 0.100 0.050 Source: Bernstein Research, PSG Asset Management 2016/04 2015/01 2013/10 2012/07 2011/04 2010/01 2008/10 2007/07 2006/04 2005/01 2003/10 2002/07 2001/04 2000/01 1998/10 1997/07 1996/04 1995/01 1993/10 1992/07 1991/04 1990/01 0.000 Global composite value: P:E, dividend yield, price/book (cheap/expensive) 2016/11 2015/09 2014/07 2013/05 2012/03 2011/01 2009/11 2008/09 2007/07 2006/05 2005/03 2004/01 2002/11 2001/09 2000/07 1999/05 1998/03 1997/01 1995/11 1994/09 1993/07 1992/05 1991/03 1990/01 0.5 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 Source: Bernstein Research, PSG Asset Management Portfolio positioning Our portfolios are constructed from the bottom up and are diversified across regions, industries and currencies. We continue to have strong conviction in our large portfolio holdings, namely Brookfield Asset Management, Cisco Systems, Yahoo Japan and AIA Group. We are also well exposed to some high-quality cyclical companies on low levels of earnings. Finally, while cognisant of the risks, we are finding great opportunities in the United Kingdom, emerging markets and areas such as agricultural commodity producers. Complacency and significant amounts of greed in some parts of the market have allowed us to reallocate capital out of securities where valuations have approached or exceeded our estimates of intrinsic value, into investment opportunities where fear and uncertainty have driven prices to attractive valuation levels. We have exited or significantly reduced our positions in Apple, Mastercard, Microsoft, Sainsbury’s and J.P. Morgan, while allocating capital to companies such as Discovery (an outstanding global opportunity in our view), The Mosaic Company (the world’s largest potash and phosphate producer) and Babcock International (the UK’s leading defence and engineering outsourcer). A backdrop of rising asset prices and expensive valuations for the world’s best companies informs the fund’s current cash holding. The world remains an uncertain place, with the impacts of US policy changes, balance sheet normalisation by central banks, geopolitical tensions and many other factors, yet unknown. The securities in the fund are trading at a significant margin of safety and we are ready to deploy additional firepower once further high-conviction investment opportunities become available. PSG Global Equity Feeder Fund Class A Minimum Disclosure Document as at 30 June 2017 Who should invest in the PSG Global Equity Feeder Fund? Total Expense Ra�o (TER) The total expense ra�o (TER) is the annualised percentage of the Fund’s average The fund is suitable for investors who: assets under management that has been used to pay the Fund’s actual expenses over the past three years. The TER includes the annual management fees that have seek an equityfocused por�olio that has outstanding growth poten�al been charged, other expenses like audit and trustee fees and VAT. As unit trust aim to maximise poten�al returns within a moderate risk investment expenses vary, the current TER cannot be used as an indica�on of future TERs. A focus on a longterm investment horizon higher TER ra�o does not necessarily imply a poor return, nor does a low TER imply a good return. The TER and other funds’ TERs should then be used to evaluate Feeder Fund whether the Fund performance offers value for money. The Annual Management Fee A Feeder Fund is a por�olio which, apart from assets in liquid form, invests in a of the PSG Global Equity SubFund is included in the TER. single por�olio of a collec�ve investment scheme, which levies its own charges and which could result in a higher fee structure for the feeder fund. Transac�on costs Transac�on costs are shown separately. Transac�on costs are a necessary cost in General informa�on and risks administering the Financial Product and impacts Financial Product returns. They Collec�ve Investment Schemes (CIS) in securi�es are generally medium to longterm should not be considered in isola�on as returns may be impacted by many other investments. The value of par�cipatory interests (units) or the investment may go factors over �me including market returns, the type of Financial Product, the down as well as up and past performance is not a guide to future performance. investment decisions of the Fund Manager and the TER. Fluctua�ons or movements in the exchange rates may cause the value of underlying interna�onal investments to go up or down. CIS are traded at ruling prices and can Total investment charge engage in borrowing and script lending. The Fund may borrow up to 10% of its The sum of the TER and transac�on costs is shown as the Total Investment market value to bridge insufficient liquidity. Where foreign securi�es are included in Charge. Since Fund returns are quoted a�er the deduc�on of these expenses, the a por�olio, the por�olio is exposed to risks such as poten�al constraints on liquidity TER and Transac�on costs should not be deducted again from published returns. and the repatria�on of funds, macroeconomic, poli�cal, foreign exchange, tax, se�lement and poten�al limita�ons on the availability of market informa�on. The Total Investment Charge annualised for the period 1/7/2014 to 30/6/2017 por�olios may be capped at any �me in order for them to be managed in accordance Annual Management Fee and other costs (incl. VAT) 2.40% with their mandate. Excessive withdrawals from the por�olio may place the por�olio Total Expense Ra�o (incl. VAT) 2.40% under liquidity pressures and in such circumstances a process of ringfencing of Transac�on Costs (incl. VAT) 0.47% withdrawal instruc�ons and managed payouts over �me may be followed. PSG Total Investment Charge (incl. VAT) 2.87% Collec�ve Investments (RF) Limited does not provide any guarantee either with respect to the capital or the return of the por�olio. Cutoff �mes The cutoff �me for submi�ng investment transac�ons is 14h30 daily, with the Performance excep�on of the PSG Money Market Fund which is 11h00. All performance data for a lump sum, net of fees, includes income and assumes reinvestment of income on a NAV to NAV basis. Annualised performances show Company details longer term performance rescaled over a 12 month period. Individual investor PSG Collec�ve Investments (RF) Limited is registered as a CIS Manager with the performance may differ as a result of ini�al fees, the actual investment date, the Financial Services Board, and a member of the Associa�on of Savings and date of reinvestment and dividend withholding tax. Performance is calculated for the Investments South Africa (ASISA) through its holding company PSG Konsult Limited. por�olio and individual investor performance may differ as a result thereof. The The management of the por�olio is delegated to PSG Asset Management (Pty) Ltd, por�olio is valued at 15h00 daily. Income distribu�ons are net of any applicable an authorised Financial Services Provider under the Financial Advisory and taxes. Actual annual figures are available to the investor on request. Prices are Intermediary Services Act 2002, FSP no 29524. PSG Asset Management (Pty) Ltd and published daily and available on the website www.psg.co.za/assetmanagement and PSG Collec�ve Investments (RF) Limited are subsidiaries of PSG Konsult Limited. PSG in the daily newspapers. Figures quoted are from Morningstar Inc Collec�ve Investments (RF) Limited and can be contacted on +27 (21) 799 8000; (toll free) 0800 600 168, via email [email protected]. Pricing Forward pricing is used. Unit trust prices are calculated on a net asset value (NAV) Conflict of Interest Disclosure basis, which is the market value of all assets in the Fund including income accruals The Fund may from �me to �me invest in a por�olio managed by a related party. less permissable deduc�ons divided by the number of units in issue. PSG Collec�ve Investments (RF) Limited or the fund manager may nego�ate a discount in fees charged by the underlying por�olio. All discounts nego�ated are re Fees invested in the Fund for the benefit of the investors. Neither PSG Collec�ve A schedule of fees and charges and maximum commissions is available on request Investments (RF) Limited nor PSG Asset Management (Pty) Ltd retains any por�on of from PSG Collec�ve Investments (RF) Limited. Commission and incen�ves may be such discount for their own accounts. The Fund Manager may use the brokerage paid and, if so, are included in the overall costs. Different classes of Par�cipatory services of a related party, PSG Securi�es Ltd. Interest can apply to these por�olios and are subject to different fees, charges and possibly dividend withholding tax and will thus have differing performances. Trustee The Standard Bank of South Africa Limited, Main Tower, Standard Bank Centre, 2 Hertzog Boulevard, Cape Town, 8001. Tel: +27 (21) 401 2443. Email: compliance [email protected]. Addi�onal informa�on Addi�onal informa�on is available free of charge on the www.psg.co.za/asset management and may include publica�ons, brochures, applica�on forms and annual reports. MANAGEMENT COMPANY: PSG Collec�ve Investments (RF) Limited, 1st Floor, Alphen Office Park, Constan�a Main Road, Constan�a, 7806 Tel: +27 (21) 799 8000, Email: [email protected], Website: www.psg.co.za/assetmanagement Date issued: 14 July 2017 Disclaimer ESTOR DETAILSVESTOR DETAILS The information and content of this publication is provided by PSG as general information about its products. The information does not constitute any advice and we recommend that you consult with a qualified financial adviser before making investment decisions. For further information on the funds and full disclosure of costs and fees please refer to the Minimum Disclosure Documents on our website. Disclaimer: Collective Investment Schemes in Securities (CIS) are generally medium- to long-term investments. The value of participatory interests (units) or the investment may go down as well as up and past performance is not a guide to future performance. CIS are traded at ruling prices and can engage in borrowing and script lending. The Funds may borrow up to 10% of the market value to bridge insufficient liquidity. Fluctuations or movements in the exchange rates may cause the value of underlying international investments to go up or down. Where foreign securities are included in a portfolio, the portfolio is exposed to risks such as potential constraints on liquidity and the repatriation of funds, macroeconomic, political, foreign exchange, tax, settlement and potential limitations on the availability of market information. The portfolios may be capped at any time in order for them to be managed in accordance with their mandate. Excessive withdrawals from the fund may place the portfolio under liquidity pressures and, in certain circumstances a process of ring-fencing withdrawal instructions may be followed. PSG Collective Investments (RF) Limited does not provide any guarantee either with respect to the capital or the return of the portfolio. Fees and performance: Prices are published daily and available on the website www.psg.co.za and in the daily newspapers. A schedule of fees and charges and maximum commissions is available on request from PSG Collective Investments (RF) Limited. Commission and incentives may be paid and, if so, are included in the overall costs. Forward pricing is used. Different classes of Participatory Interest can apply to these portfolios and are subject to different fees, charges and possibly dividend withholding tax and will thus have differing performances. Performance is calculated for the portfolio and individual investor performance may differ as a result thereof. All performance data for a lump sum, net of fees, include income and assumes reinvestment of income on a NAV-NAV basis. Income distributions are net of any applicable taxes. Annualised performance show longer term performance rescaled over a 12 month period. Individual investor performance may differ as a result of initial fees, the actual investment date, the date of reinvestment and dividend withholding tax. . Unit Trust prices are calculated on a net asset value (NAV) basis, which is the market value of all asses in the fund including income accruals less permissible deductions divided by the number of units in issue. Actual Annual Figures are available to the investor on request. Source of performance: Figures quoted are from Morningstar Inc. Cut-off times: The cut-off time for processing investment transactions is 14h30 daily, with the exception of the PSG Money Market Fund, which is 11h00. The portfolio is valued at 15h00 daily. Additional information: Additional information is available free of charge on the website and may include publications, brochures, application forms and annual reports. Company details: PSG Collective Investments (RF) Limited is registered as a CIS Manager with the Financial Services Board, and a member of the Association of Savings and Investments South Africa (ASISA) through its holding company PSG Konsult Limited. The management of the portfolios is delegated to PSG Asset Management (Pty) Limited, an authorised Financial Services Provider under the Financial Advisory and Intermediary Services Act 2002, FSP no 29524. PSG Asset Management (Pty) Limited and PSG Collective Investments (RF) Limited are subsidiaries of PSG Konsult Limited. Trustee: The Standard Bank of South Africa Limited, Main Tower, Standard Bank Centre, 2 Hertzog Boulevard, Cape Town, 8001. Tel: +27 (21) 401 2443. Email: [email protected]. Conflict of Interest Disclosure: The Fund may from time to time invest in a portfolio managed by a related party. PSG Collective Investments (RF) Limited or the Fund Manager may negotiate a discount in fees charged by the underlying portfolio. All discounts negotiated are re-invested in the Fund for the benefit of the investor. Neither PSG Collective Investments (RF) Limited nor PSG Asset Management (Pty) Limited retains any portion of such discount for their own accounts. The Fund Manager may use the brokerage services of a related party, PSG Securities Ltd. MANAGEMENT COMPANY: PSG Collective Investments (RF) Limited 1st Floor, PSG House Alphen Park Constantia Main Road, Constantia 7806 Toll-free Tel: Email: Website: 0800 600 168 +27 (21) 799 8000 [email protected] www.psg.co.za/asset-management Date issued: 14 July 2017