Global Equity Unconstrained Fund - Standard Life Investments

Global Equity Unconstrained Fund - Standard Life Investments

Nov 2017 Global Equity Unconstrained Fund 30 November 2017 The fund aims to provide long term growth by investing in a diversified portfolio of globa...

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Nov 2017

Global Equity Unconstrained Fund 30 November 2017 The fund aims to provide long term growth by investing in a diversified portfolio of global equity assets. The investment team will maintain a diverse asset mix at country, sector and stock level, with the regional, country and sector weightings within the portfolio being a by-product of the underlying stock exposure. Their primary focus is on stock selection to try to take advantage of opportunities they have identified. Due to the unconstrained nature of the fund investors must be willing to accept a relatively high degree of stock specific risk. Past performance is not a guide to future returns and future returns are not guaranteed. The price of assets and the income from them may go down as well as up and cannot be guaranteed; an investor may receive back less than their original investment. The fund may use derivatives to reduce risk or cost, or to generate additional capital or income at low risk. Usage of derivatives is monitored to ensure that the fund is not exposed to excessive or unintended risks. The value of assets held within the fund may rise and fall as a result of exchange rate fluctuations.

Fund Manager Fund Manager Start Launch Date IA Sector Benchmark Current Fund Size

Mikhail Zverev 1 Jul 2010 16 Nov 1998 IA Global IA Global Sector £259.3m

Base Currency No. of Holdings


Equity Fund


GBP 48

This document is intended for use by individuals who are familiar with investment terminology. To help you understand this fund and for a full explanation of specific risks and the overall risk profile of this fund and the shareclasses within it, please refer to the Key Investor Information Documents and Prospectus which are available on our website – Standard Life Investments has not considered the suitability of investment against your individual needs and risk tolerance. If you are in any doubt as to whether this fund is suitable for you, you should seek advice. An adviser is likely to charge for advice. We are unable to provide investment advice.

Fund Information * Composition by Sector

Top Ten Holdings Fund %

Information Technology Consumer Discretionary Financials Industrials Health Care Energy Consumer Staples Materials Real Estate Utilities Telecommunication Services

19.7 15.2 15.2 12.4 11.5 8.3 7.5 4.4 2.2 2.1 1.5

Stocks Infineon United Healthcare Ferguson Samsung Electronics Dollar Tree Ryanair Couche-Tard JXTG Holdings ASR Nederland First Republic Bank Assets in top ten holdings

Fund % 3.0 3.0 2.8 2.6 2.6 2.5 2.5 2.5 2.5 2.5 26.5

Composition by Country Fund % USA UK Ireland Japan Germany Denmark Korea Canada

45.5 10.6 6.9 5.7 5.5 5.4 4.1 2.5

Fund % Netherlands France Sweden Brazil China Hong Kong Australia

2.5 2.4 2.2 2.1 2.0 1.5 1.1

Fund Performance * Price Indexed 200

The performance of the fund has been calculated over the stated period using bid to bid basis for a UK basic rate tax payer. The performance shown is based on an Annual Management Charge (AMC) of 0.80%. You may be investing in another shareclass with a higher AMC. The charges for different share classes are shown on the next page. For details of your actual charges please contact your financial adviser or refer to the product documentation.

190 180 170 160 150 140 130

Source: Standard Life Investments (Fund) and Morningstar (Sector)

120 110 100

Global Equity Unconstrained













IA Global Sector

Year on Year Performance Source: Standard Life Investments (Fund) and Morningstar (Sector) Year to 30/09/2017 (%)

Year to 30/09/2016 (%)

Retail Fund Performance



Institutional Fund Performance


Platform One IA Global Sector

Year to 30/09/2015 (%)

Year to 30/09/2014 (%)

Year to 30/09/2013 (%)


















Cumulative Performance Source: Standard Life Investments (Fund) and Morningstar (Sector)

6 Months (%)

1 Year (%)

3 Years (%)

5 Years (%)

Retail Fund Performance





Institutional Fund Performance





Platform One





IA Global Sector





Note: Past Performance is not a guide to future performance. The price of shares and the income from them may go down as well as up and cannot be guaranteed; an investor may receive back less than their original investment. For full details of the fund's objective, policy, investment and borrowing powers and details of the risks investors need to be aware of, please refer to the prospectus. For a full description of those eligible to invest in each share class please refer to the relevant prospectus.

Investment Review and Outlook Market review Global equities finished in positive territory in November, propelled by a positive corporate reporting season and the ongoing improvement in the world’s economy. Progress over tax reform in the US was seen as a positive, which if passed could see the corporate tax rate slashed from 35% to 21%. This caused a rotation out of this year’s best-performing tech stocks (which already pay low corporate taxes) and into banks and financials. Elsewhere, US consumers stocks were in favour after retailers reported a relatively successful Black Friday. Meanwhile, oil hit its highest price in two years due to supply concerns. By contrast, Eurozone equites retreated despite the ongoing strength in the economy and unemployment hitting a near nine-year low. The negative performance was a result of profittaking after a good year and the strong euro. Politics also weighed on sentiment after Angela Merkel was unable to form a coalition government in the wake of the country’s inconclusive election. Politics also played a part in the UK, with concerns mounting about the impact Brexit is starting to have on the country’s economy. Indeed, rising inflation due to a weaker pound led the Bank of England to raise interest rates in November for the first time in more than 10 years, taking borrowing costs to 0.5%. Global emerging market (GEM) equities were flat in November, falling a little short of returns from developed market equities despite GEM currency strength and the rising oil price. Fundamental reasons behind the performance, which continued into December, are so far confined to apparent moderate disappointment over iPhone X orders, plus a potential (probably related) peak in planar NAND flash prices. However, China and Hong Kong were notable standouts thanks to a raft of positive third-quarter earnings results. Elsewhere, Latin America was a

notable laggard, as political difficulties resurfaced in Brazil and Chile.

Activity We continued to build the position in JXTG Holdings. We believe consolidation in the Japanese refining industry will structurally improve margins in the sector, which is not priced in by the market. This overall conviction in the refining industry - and in JXTG in particular - has been bolstered by recent company meetings. We bought Mastercard, the US-listed operator of the global payment network. We are positive on the outlook and profitability enhancement driven by the growth of e-commerce in the business mix, mobile point-of-sale, business-to-business payments and opportunities in emerging markets. Scale and longevity of these opportunities is not fully priced in despite a premium multiple. In other activity, we sold Yamaha, the Japanese manufacturer of musical instruments and audio equipment. Our original case centred on improved pricing in its instruments business. This has been playing out and the stock has been in the ascendency. However, we are concerned by its retail channel disruption in some markets, as buyers switch to e-commerce and inventory management becomes an issue. This reduces our level of conviction in Yamaha, so we sold our holding. Meanwhile, we took profits from our long-held position in Visteon. The company produces infotainment and instrument clusters for cars, and has performed strongly thanks to an increase in content per vehicle. It has also solidified its market position, with investors increasingly recognising the company’s strategic strength as a supplier. These factors are all in line with our investment case.

Performance The Fund finished in marginally down, but beat its benchmark.

Shares in Newell Brands, the US consumer staple group, fell after it released disappointing results. This was due to weak ‘back-to-school’ demand and an inventory correction at one of Newell’s larger customers. The company consequently reduced guidance for the year and also stepped back from its longer-term revenue projections. Given this new data, we are currently reassessing our investment case. On a more positive note, US listed discount retailer Dollar Tree performed well after it reported solid results that confirmed ongoing strength in samestore sales. There has also been some traction at its recently purchased Family Dollar brand. Going forward, we see margins improving ahead of expectations as synergies form the deal start to come through. A position in semiconductor group Cavium also bolstered Fund performance. The company’s share price climbed after it received a takeover bid from Marvell Technology. Wirth the stock currently trading close to offer price, we are therefore currently evaluating the prospects of the combined entity before deciding what to do with the holding. Additional highlights included UnitedHealth Group, CSX and Alimentation Couche-tard.

Outlook & Strategy We remain confident about the outlook for global equities. The economic backdrop is supportive, which is feeding through into corporate earnings. Central banks have started to withdraw monetary stimulus, although any future moves will be measured and data-dependent. There will be challenges around geopolitics and potential policy missteps, but overall the outlook is encouraging. As for the Fund, we still believe our fundamental bottom-up investment approach remains the best way to generate robust long-term returns and we continue to shape the portfolio with as much stock-specific risk as possible.

Other Fund Information

Lipper Bloomberg ISIN SEDOL

Retail Acc 60011521 STIEQGR LN GB0004483540 448354


Institutional Acc 60011520 STIEQGI LN GB0004482807 448280

Institutional Inc n/a n/a n/a n/a

Lipper Bloomberg ISIN SEDOL

Platform One Acc 68165248 SLGRPLA LN GB00B6915J97 B6915J9

Platform One Inc n/a n/a n/a n/a

Reporting Dates XD Dates Payment Dates (Income)

Interim 31 Aug n/a n/a

Annual 28 (29) Feb 28 (29) Feb 30 Apr

Valuation Point Type of Share ISA Option

7:30 am Accumulation Yes

Initial Charge Annual Management Charge Ongoing Charges Figure

Retail 4.00% 1.35% 1.38%

Institutional 0.00% 0.80% 0.91%

Platform One 0.00% 0.85% 1.01%

The Ongoing Charge Figure (OCF) is the overall cost shown as a percentage of the value of the assets of the Fund. It is made up of the Annual Management Charge (AMC) shown above and the other expenses taken from the Fund over the last annual reporting period. It does not include any initial charges or the cost of buying and selling stocks for the Fund. The OCF can help you compare the costs and expenses of different funds.

*Any data contained herein which is attributed to a third party ("Third Party Data") is the property of (a) third party supplier(s) (the “Owner”) and is licensed for use by Standard Life Aberdeen**. Third Party Data may not be copied or distributed. Third Party Data is provided “as is” and is not warranted to be accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, Standard Life Aberdeen** or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Past performance is no guarantee of future results. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to which Third Party Data relates. **Standard Life means the relevant member of the Standard Life Aberdeen group, being Standard Life Aberdeen plc together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time. “FTSE®”, "FT-SE®", "Footsie®", [“FTSE4Good®” and “techMARK] are trade marks jointly owned by the London Stock Exchange Plc and The Financial Times Limited and are used by FTSE International Limited (“FTSE”) under licence. [“All-World®”, “All- Share®” and “All-Small®” are trade marks of FTSE.] The Fund is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited (“FTSE”), by the London Stock Exchange Plc (the “Exchange”), Euronext N.V. (“Euronext”), The Financial Times Limited (“FT”), European Public Real Estate Association (“EPRA”) or the National Association of Real Estate Investment Trusts (“NAREIT”) (together the “Licensor Parties”) and none of the Licensor Parties make any warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE EPRA NAREIT Developed Index (the “Index”) and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated by FTSE. However, none of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index and none of the Licensor Parties shall be under any obligation to advise any person of any error therein. “FTSE®” is a trade mark of the Exchange and the FT, “NAREIT®” is a trade mark of the National Association of Real Estate Investment Trusts and “EPRA®” is a trade mark of EPRA and all are used by FTSE under licence.”

Useful numbers Investor Services 0345 113 69 66. Standard Life Investments Limited is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Standard Life Investments Limited is authorised and regulated by the Financial Conduct Authority.    Calls may be monitored and/or recorded to protect both you and us and help with our training. © 2017 Standard Life Aberdeen

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