Allianz Income and Growth - Setting in place opportunities for income and growth - Allianz Global Investors Singapore Limited
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Q4 2017 Issue
Allianz Income
and Growth
Setting in place
opportunities for
income and growth
es
hare class
u lt ip le c urrency s d g e d )
M y-he
in c lu d in g currenc
(
available
• 3 disciplines, 1 goal: income and growth
• Monthly dividends from broadly diversified sources
• Multi-asset tool for protection against volatility
Allianz Income and Growth
Why invest in Allianz Income and Growth (the “Fund”)?
• Despite all the uncertainty in the markets, the fundamentals of US corporations remain solid: balance
sheets are good, leverage is lower and cash levels remain high. US high-yield bonds, convertible bonds and
US equities offer extensive and compelling investment opportunities for investors.
• The Fund adopts a “three-sleeve” approach, with the core holdings invested primarily in a portfolio
consisting of 1/3 US high-yield bonds, 1/3 US convertible bonds and 1/3 US equities/equity securities. It
aims to capture multiple sources of potential income that includes participation in the upside potential of
equities at a potentially lower level of volatility than pure-equity investment.
High-Yield Bonds:
Low default rate and potential income
• The fundamentals in the high-yield market have greatly US High-Yield Bonds Performance Relative to Yield Spreads2
improved since the credit crisis of 2007-2008: balance 80
High Yield Performance
2000
sheets are good, leverage is lower and cash levels High Yield Debt Spreads 1600
High Yield Spreads (basis Points)
60
remain high. Consequently, the main risk associated 1200
Performance (%)
with high-yield bonds – defaults – has diminished in
40 800
400
recent years, to 1.07%1 now. 20
0
• Although high-yield spreads have come down 0 -400
-800
significantly from their recent highs, low spreads have -20
-1200
historically been accompanied by prolonged periods -40 -1600
of favourable high-yield performance as corporate
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Source: BofA Merrill Lynch, Bloomberg. Data as at 30 June 2017.Past performance is not a reliable
fundamentals improve. This causes the price of high- indicator of future results. The performance data shown above relies on figures denominated
yield bonds to rise, which can boost total return. in USD. The return may increase or decrease as a result of currency fluctuations. High Yield
performance is measured using BofA Merrill Lynch High Yield Master II Index. High-yield debt
spreads are equal to the option-adjusted spread of the BofA Merrill Lynch High Yield Master II
Index. Spread is defined as the difference between the yields of two bonds with differing credit
ratings. Yield curve is 10-Year Treasury Bond less 3-Month Treasury Bill. It reflects the additional
yield that could be earned by an investor from a bond which has a higher risk.
Convertible Bonds:
Potential for upside participation and less downside volatility
• Convertible bonds consist of bonds with stock options. Participation Potential, Volatility Cushioning
Investors have the right to exchange the bonds for Busted Total Return/Balanced Equity Sensitive
shares of the company within a fixed period of time. Appreciation
Convertible bonds aim to participate in the upside Protects like
a bond
potential of a stock
potential of the equity markets, while cushioning
Convertible Price
against potential downside volatility. 100
Conversion value
Bond value
Convertible price
0
Stock Price
Source: Allianz Global Investors. For illustrative purpose only. Hypothetical example-not
representative of any specific convertible. Convertibles involve the risk factors of both stocks
and bonds. They fluctuate in value with the price changes of the underlying stock. If interest
rates on the bonds rise, the value of the corresponding convertible will fall. Funds that invest in
convertibles may have to convert the securities before they would otherwise, which may have
an adverse effect on the Fund’s ability to achieve its investment objective.
Equities / Equity Securities:
Potential for upside participation and less downside volatility
• US high quality, large-cap stocks provide capital Cumulative Total Returns: November 2000 to September 2017
appreciation and income potential. In addition, 160
150
140
covered call strategies pair a long position with a 130
120
CBOE S&P 500 BuyWrite Index
S&P 500 Index
short-call option on the same stock. Such strategies 110
100
90
can provide potential additional income from the 80
70
option premium and potentially reduce exposure to 60
50
40
volatility of the equity market. 30
20
10
0
• From November 2000 to June 2017, the CBOE S&P -10
-20
-30
500 BuyWrite Index (BXM) participated in more -40
-50
than 70% of the S&P 500 Index’s upside at lower -60
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
volatilities. During the 2008 Global Financial Crisis, Source: Bloomberg Finance L.P., Factset, Allianz Global Investors. *Based on BXM, a benchmark
index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index.
the BXM suffered lower maximum drawdown than Cumulative and incremental total returns monthly data from November 2000 to September 2017.
the S&P 500 Index (-35.81% vs. -50.95%)*.Fund Features
Potential monthly payout3
The Fund aims to generate long-term capital appreciation and income.
Allianz Income and Growth Class AM (USD) Dis.
Projected dividend per share for the first half of the Fund’s financial year 2017/2018*
USD 0.06600 USD 0.06600 USD 0.06600 USD 0.06600 USD 0.06600 USD 0.06600
per unit per unit per unit per unit per unit per unit
PAID
13 Oct 2017 14 Nov 2017 14 Dec 2017 12 Jan 2018 14 Feb 2018 14 Mar 2018
(record date)
Available Class AM Class AM Class AM Class AM Class AM Class AM Class AM Class AMg2 Class AMg2 Class AMg2 Class AMg2 Class AMg2 Class AMg2
Share (USD) (H2-AUD) (H2-EUR) (H2-GBP) (H2-RMB) (H2-SGD) (H2-CAD) (USD) (H2-AUD) (H2-CAD) (H2-GBP) (H2-RMB) (H2-SGD)
Classes Dis. Dis. Dis. Dis. Dis. Dis. Dis. Dis. Dis. Dis. Dis. Dis. Dis.
Dividend USD AUD EUR GBP CNY SGD CAD USD AUD CAD GBP RMB SGD
Per Share 0.06600 0.07433 0.04933 0.05767 0.08683 0.06183 0.06183 0.04200 0.05033 0.03783 0.03367 0.06283 0.03783
The projected level of monthly dividend is intended to cover the first half of the financial year of the Allianz Global Investors Fund, from October 2017 to March 2018. Currency hedged share classes (as
denoted by the prefix “H2-”) may be subject to shorter term changes, subject to foreign exchange implied interest rate movements.
* Actual review period and projected monthly payout covering period are subject to change without prior notice.
Stock-like returns with less volatility
The Fund’s structure provides potential income Data from Jan 1988 to Jun 20174
and capital appreciation while helping to moderate 12%
S&P 500 Index
downside risk. Historically, convertibles and high-yield
BofA Merrill Lynch Russell 2000
bonds have captured less of the market’s downside
Return (Annualized)
8% US High Yield BofA Merrill Lynch Index
Master II Index All US Convertible Index
while still providing attractive upside potential, although
these asset classes may still have negative returns under
4%
current market conditions. MSCI EAFE Index
0%
0% 4% 8% 12% 16% 20% 24%
Risk (Annualized)
Source: BofA Merrill Lynch, Factset, Allianz Global Investors, as at 30 June 2017. Past
performance, or any prediction, projection or forecast, is not indicative of future performance.
Cushion against rising interest rates
US high yield, convertibles and equities have historically provided better performances in rising interest rate
environment and delivered diversification benefits from core fixed income.
Rate Hike Cycles
Start 29-Mar-88 04-Feb-94 30-Jun-99 30-Jun-04 16-Dec-15
End 24-Feb-89 01-Feb-95 16-May-00 29-Jun-06 31-Dec-16
No. of Months 11 12 11 24 12+
Total Rate Hike 3.25% 3.00% 1.75% 4.25% 0.25%
Asset Class Performance (%)
US Core Bonds 3.41 -2.04 2.02 2.99 2.68
US Investment Grade Bonds 5.54 -2.78 0.06 2.96 5.90
10-Year US Treasuries 4.94 -6.96 3.88 4.61 0.91
US Equities 15.09 0.67 9.65 7.81 12.08
US Convertible Bonds 11.09 -8.49 25.43 4.80 11.21
US High Yield Bonds 8.95 -1.71 -1.84 7.41 18.17
Source: Morningstar Direct, as at 31 December 2016. US Core Bonds are represented by Bloomberg Barclays US Aggregate Bond TR USD; US Investment Grade Bonds are represented by BofAML US
Corporate Master TR USD; 10-Year US Treasuries are represented by BofAML US Treasuries 10+Year TR USD; US Equities are represented by S&P 500 TR USD; US Convertible Bonds are represented by
BofAML US Convertible; US High Yield Bonds are represented by BofAML US High Yield Master II TR USD.Allianz Income and Growth 5
Fund Highlights
Top 5 Holdings – High-Yield Bonds6 Top 5 Holdings – Convertible Bonds6 Top 5 Holdings – Equities / Equity Securities6
Sector % Sector % Sector %
PLATFORM SPECIALTY PROD MICRON TECHNOLOGY INC 3%
CHEMICALS 0.3 TECHNOLOGY 0.8 APPLE INC IT 1.0
6.5% 02/01/22 11/15/43
CALUMET SPECIALTY PROD PRICELINE GROUP INC/THE 0.9%
ENERGY 0.3 TECHNOLOGY 0.7 MICROSOFT CORP IT 1.0
6.5% 04/15/21 09/15/21
MCCLATCHY CO 9% 12/15/22 PUBLISHING & PRINT 0.3 INTEL CORP 3.25% 08/01/39 TECHNOLOGY 0.6 FACEBOOK INC IT 1.0
NETFLIX INC 5.875% 02/15/25 BROADCASTING 0.3 ANTHEM INC 5.25% 05/01/18 HEALTHCARE 0.6 VISA INC IT 0.9
TRANSDIGM INC 6.5%
AEROSPACE 0.3 ALLERGAN PLC 5.5% 03/01/18 HEALTHCARE 0.6 ALPHABET INC CL A IT 0.9
05/15/25
Total 1.5 Total 3.3 Total 4.8
Rating Allocation – High-Yield Bonds (%) Rating Allocation – Convertible Bonds (%) Sector Allocation – Equities / Equity Securities (%)
Liquidity 4.5 Liquidity 4.1 Liquidity 3.8
Not Rated 1.6 CCC 0.8 Others 0.9 IT 34.0
BBB 1.9 Telecom
A 2.8 Services 1.0
BB 42.0 Not Rated 58.4
CCC 8.4 Materials 2.9
BBB 10.7 Energy 2.9
Cons. Disc. 16.1
Financials 5.8
Cons.
B 41.5 B 10.8 Staples 6.3
Industrials 11.4 Healthcare 14.9
BB 12.3
Fund Details
Class AT Class AM Class AM Class AM Class AM Class AM Class AM Class AM Class AMg2 Class AMg2 Class AMg2 Class AMg2 Class AMg2 Class AMg2
(USD) Acc. (USD) Dis. (H2-AUD) Dis. (H2-EUR) Dis. (H2-GBP) Dis. (H2-RMB) Dis. (H2-SGD) Dis. (H2-CAD) Dis. (USD) Dis. (H2-AUD) Dis. (H2-CAD) Dis. (H2-GBP) Dis. (H2-RMB) Dis. (H2-SGD)Dis.
Fund Manager Doug Forsyth
Fund Size7 USD 19,761.02m
Number of Holdings 509 (High Yield Bonds: 252, Convertible Bonds: 183, Equities / Equity Securities: 74)
Initial Fee Up to 5%
All-in-Fee8 1.50% p.a.
Total Expense Ratio9 1.55% 1.55% 1.55% 1.55% 1.55% 1.57% 1.54% 1.55% N/A N/A N/A N/A N/A N/A
Unit NAV USD 15.80 USD 9.09 AUD 9.10 EUR 8.67 GBP 8.60 CNY 8.45 SGD 8.84 CAD 8.57 USD 10.18 AUD 10.10 CAD 10.10 GBP 10.09 CNY 10.10 SGD 10.14
Inception Date 18/11/2011 16/10/2012 15/10/2012 02/05/2013 02/05/2013 14/06/2013 01/07/2013 02/05/2013 15/02/2017 15/05/2017 15/05/2017 15/05/2017 15/05/2017 15/02/2017
Dividend Frequency3 N/A Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly
ISIN Code LU0689472784 LU0820561818 LU0820562030 LU0913601281 LU0820562386 LU0820562469 LU0943347566 LU0820562113 LU1551013342 LU1597252433 LU1597252862 LU1597252607 LU1597253084 LU1551013425
Bloomberg Ticker ALLIGAT LX ALLIGAM LX ALLIGAH LX ALZAH2E LX ALZAH2G LX ALZAH2R LX ALIGH2S LX ALZAH2C LX ALIAMG2 LX ALIAMHA LX ALIAMHC LX ALIAMHG LX ALIAMHR LX ALIAG2H LX
Source: All data quoted are Allianz Global Investors, as at 30 September 2017, unless stated otherwise.
1
Source: BofA Merrill Lynch, JP Morgan and Allianz Global Investors, as at 30 September 2017. Based on speculative grade issuers, trailing 12-month default rate.
2
Spread is defined as the difference between the yields of two bonds with differing credit ratings. It reflects the additional yield that could be earned by an investor
from a bond which has a higher risk.
3
Dividend payments are applicable for Class AM Dis (monthly distribution) and Class AMg2 Dis (monthly distribution), and for reference only. Yields are not
guaranteed, dividend may be paid out from capital (Class AM and Class AMg2). This may result in an immediate decrease in the NAV per share and may reduce
the capital available for the Fund for future investment and capital growth. Positive distribution yield does not imply positive return. For details, please refer to the
Fund's distribution policy disclosed in the offering documents.
4
US high-yield bonds are represented by BofA Merrill Lynch US High Yield Master II Index; US convertible bonds are represented by BofA Merrill Lynch All US
Convertibles Index; the US 500 stocks representing all major industries are represented by S&P 500 Index; the small-cap segment of the US equity universe is
represented by Russell 2000 Index; the equities of developed market countries in Europe, Australasia and the Far East are represented by MSCI EAFE Index.
5
Source: Morningstar, as at 31 August 2017. Copyright © 2017 Morningstar Asia Limited (“Morningstar”). All Rights Reserved. The information contained
herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or
timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no
guarantee of future results.
6
Securities may be held directly or indirectly via other investment vehicles.
7
The Fund size quoted includes all share classes of the Fund.
8
The All-in-Fee includes the expenses previously called management and administration fees.
9
Total Expense Ratio (TER): Total cost (except transaction costs) charged to the Fund during the last financial year expressed as a ratio of the Fund’s average NAV.
For share classes that have been incepted for less than one year as at close of the last financial year (please refer to the Inception Date in the Fund Details table),
the TER will be annualized. For share classes incepted after the close of the last financial year, the TER will be reflected as N/A.
Information herein is based on sources we believe to be accurate and reliable as at the date it was made. We reserve the right to revise any information herein at any
time without notice. No offer or solicitation to buy or sell securities and no investment advice or recommendation is made herein. In making investment decisions,
investors should not rely solely on this material but should seek independent professional advice. However, if you choose not to seek professional advice, you should
consider the suitability of the product for yourself. Past performance of the fund manager(s) and the fund is not indicative of future performance. Prices of units
in the Fund and the income from them, if any, may fall as well as rise and cannot be guaranteed. Distribution payments of the Fund, where applicable, may at the
sole discretion of the Manager, be made out of either income and/or net capital gains or capital of the Fund. As a result, it may reduce the Fund’s net asset value.
The dividend yields and payouts are not guaranteed and might change depending on the market conditions or at the Manager’s discretion. Investment involves
risks including the possible loss of principal amount invested and risks associated with investment in emerging and less developed markets. The Fund may invest in
financial derivative instruments and/or structured products and be subject to various risks (including counterparty, liquidity, credit and market risks etc.). Investing
in fixed income instruments (if applicable) may expose investors to various risks, including but not limited to creditworthiness, interest rate, liquidity and restricted
flexibility risks. Changes to the economic environment and market conditions may affect these risks, resulting in an adverse effect to the value of the investment.
During periods of rising nominal interest rates, the values of fixed income instruments (including short positions with respect to fixed income instruments) are
generally expected to decline. Conversely, during periods of declining interest rates, the values are generally expected to rise. Liquidity risk may possibly delay or
prevent account withdrawals or redemptions. Past performance, or any prediction, projection or forecast, is not indicative of future performance. Investors should
read the Prospectus obtainable from Allianz Global Investors Singapore Limited or any of its appointed distributors for further details including the risk factors,
before investing. This material has not been reviewed by the Monetary Authority of Singapore (MAS). MAS authorization/recognition is not a recommendation or
endorsement. The issuer of this material is Allianz Global Investors Singapore Limited (12 Marina View, #13-02 Asia Square Tower 2, Singapore 018961, Company
Registration No. 199907169Z).
Investment hotline: +65 6438 0828 sg.allianzgi.comYou can also read
