Premier Ethical Fund FUND UPDATE - SECOND QUARTER 2017 - Premier Asset Management
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Q2 2017 FOR PROFESSIONAL ADVISERS ONLY, NOT FOR DISTRIBUTION TO RETAIL CLIENTS
Premier Ethical Fund
FUND UPDATE - SECOND QUARTER 2017
ETHICAL
PREMIER ETHICAL
1 PREMIER ETHICAL FUND Q2 2017
Premier Ethical Fund
Need to know Contents
zz Aims to achieve capital growth over the long term by seeking to 2. Performance summary
invest in companies whose business is based on ethical principles.
zz Focused on those companies contributing to the requirements of 3. Equity market analysis
a civilised society and whose products/services are of widespread
4. Performance drivers - asset allocation
benefit to the community.
zz Looks to avoid investing in those companies with products or 5. Performance drivers - holdings
services that may have a negative social and environmental effect.
6. Example holdings and their ethical criteria
zz Mainly invests in UK equities.
zz Managed by an experienced manager with over 30 years of 7. Activity
experience.
8. The complete portfolio
zz Independent committee oversees the ethical policy of the Fund
and works with the fund manager to ensure the portfolio remains 9. General investment risks
aligned with this policy.
Chris Wright
Fund Manager2
Performance summary
zz The market gently drifted up during the quarter whilst displaying QUARTER ENDING 30.06.2017
very low volatility both at the market level and the individual stock
level. 5
Total return-dividends reinvested (%)
zz The Fund produced a positive return against that backdrop, and
4
outperformed the IA UK All Companies sector, the FTSE4Good UK
Index and the FTSE All-Share Index. This was primarily driven by
3 Premier Ethical Fund
stock selection.
FTSE4Good UK Index
2
1
0
CALENDAR YEARS
40
Total return-dividends rinvested (%)
Premier Ethical Fund
30
FTSE4Good UK Index
20
10
0
Chart source: FE Analytics, bid to bid, total return (dividends reinvested), UK
2017 ytd
sterling basis, data based on class C income shares. Data to 30.06.2017.
2014
2015
2016
2012
2013
Past performance is not an indication of future returns.
Q2 20173 PREMIER ETHICAL FUND Q2 2017
Equity market analysis
zz During the quarter the lower quality areas of the market, such INDEX TOTAL RETURNS - QUARTER ENDING 30.06.2017
as oils and resources, performed poorly. There was the start of a
return to quality which benefits the Fund, as we have a quality
bias. UK mid caps 3.0%
zz Concerns are growing that the economic cycle is peaking in the
UK, with credit growth slowing and savings rates at record lows. UK small caps (ex IT) 2.9%
This affected our holdings in NEXT Plc and DixonsCarphone.
Despite reasonable results from each of the two companies, they UK equities 1.4%
both underperformed by around 10%.
UK large caps 1.0%
0% 1% 2% 3% 4%
BENCHMARK TOTAL RETURNS - QUARTER ENDING 30.06.2017¹
Information technology 7.0%
Telecommunication services 5.6%
Financials 5.4%
Industrials 3.8%
Consumer goods 3.1%
Health care 0.8%
Consumer services 0.7%
Source: FE Analytics, bid to bid, total return, UK sterling basis. Indices: FTSE Real estate 0.6%
Small Cap (ex IT) (UK small caps ex (IT)), FTSE 250 (UK mid caps), FTSE 100 Materials -2.1%
(UK large caps), FTSE All-Share (UK equities). 1Source: Bloomberg, data to Energy -3.0%
30.06.2017. Benchmark is FTSE4Good UK index. Past performance is not a Utilities -4.2%
guide to future returns.
-10% 0% 10%4
Performance drivers - asset allocation
Fund breakdown at end of quarter (30.06.2017) Relative to FTSE4Good UK index:
Helped
zz Overweight financials
zz Underweight oils and resources
Hurt
Financials 30.2%
Industrials 18.7%
zz Underweight healthcare
Consumer services 14.2%
Information technology 12.6%
Real estate 5.9%
Consumer goods 5.1%
UNDERWEIGHT / OVERWEIGHT BENCHMARK AS AT 30.06.2017
Materials 2.8%
Health care 1.6%
Industrials 10.8%
Energy 1.4%
Information technology 10.4%
Cash 7.5%
Financials 4.8%
Consumer services 3.7%
Real estate 3.7%
Materials -4.3%
Utilities -4.6%
Energy -6.6%
Consumer goods -6.7%
Telecommunication Services -8.5%
Health care -10.2%
Source: Bloomberg, benchmark is FTSE4Good UK Index. Data as at 30.06.2017.
Please note that the numbers above have been rounded. -20% -10% 0% 10% 20%
Q2 20175 PREMIER ETHICAL FUND Q2 2017
Performance drivers - holdings
Notable contributors Notable detractors
zz Workspace zz Kier
While sentiment towards London Office REITs remains downbeat, Despite posting solid profit growth, in line with its Vision 2020
Workspace continued to post positive like-for-like rental growth strategy, Kier shares performed poorly; investors have been
through the period, materially outperforming peers. Its flexible concerned about delays to major UK infrastructure project
working model offers workers a highly attractive and cost-effective timings, such as HS2 and Heathrow.
means of working and is highly disruptive to incumbents.
zz Next and Dixons
zz Countryside Properties Shares performed poorly as investors have been worried about the
Offering equivalent high margins to other major UK housebuilders, outlook for consumer spending.
its Partnerships business, providing urban regeneration for local
authorities, gives long term visibility and a counter-cyclical buffer
to its business. The stock had been held back by its legacy private
equity shareholding, which was cleared with a large placing, and
has rallied as a result.6
Example holdings and their ethical criteria
The Premier Ethical Fund will actively seek to invest in companies whose businesses are based on ethical principles. Investment emphasis will
be given to those companies which contribute naturally to the requirements of a sustainable civilised society and whose products or services
are of widespread benefit to the community. Below are some of the examples of the stocks currently held and why we believe they are
suitable for inclusion in an ethical portfolio.
zz Berkeley Group
A top quality housebuilder, set up by Tony Pidgley, a Barnardo’s child. Berkeley has a significant commitment to sustainability. It was the
first housebuilder to be awarded the Queen’s Award for Sustainable Development in 2008.
zz David S. Smith
A paper company that specialises in recycling board for cardboard boxes. It collects old boxes, turns them into board, then sells on to
major consumer goods manufacturers, who deliver to retail outlets, from where David S Smith subsequently collects them.
zz FDM Group
Offers graduates from non traditional graduate courses and backgrounds the opportunity to train in IT and develop the potential for a high
earning career. It also does the same for both ex-servicemen and mothers wishing to return to the salesforce. The company has been listed
in the Top Ten IT Employers for Women.
zz Halma
Develops, makes and markets products to protect lives, or improve the quality of life. Products are grouped into those that ensure safety
and those that help the environment.
zz Vestas Wind Systems
Develops, manufactures and markets wind turbines to generate electricity.
Data as at 30.06.2017.
Q2 20177 PREMIER ETHICAL FUND Q2 2017 Activity - holdings Purchases Disposals zz Countryside Properties zz Micro Focus zz On the Beach
8
The complete portfolio
Energy Financials
AMEC Foster Wheeler (1.4%) HSBC (5.0%)
Energy 1.4% Cash 7.5% Prudential (4.4%)
Health care Health care 1.6% Legal & General (4.0%)
Astrazeneca (1.0%) Onesavings Bank (3.3%)
Materials 2.8%
Oxford Biodynamics (0.6%) Financials 30.2% Lloyds Banking Group (2.6%)
Consumer goods 5.1% Just (2.3%)
Standard Life (2.0%)
Materials Real Estate 5.9% Admiral (1.9%)
DS Smith (2.8%) Schroders Plc-Non Voting (1.8%)
Hastings Group (1.6%)
Consumer goods Aldermore (1.3%)
Unilever (3.4%) Information technology 12.6%
J Sainsbury (1.7%) Industrials
Relx (3.2%)
Real estate Melrose Industries (2.9%)
Industrials 18.7%
Workspace (2.2%) Consumer services 14.2% IWG (2.2%)
British Land (1.8%) Sthree (1.8%)
Great Portland Estates (1.2%) Vestas Wind Systems 1.7%)
Big Yellow (0.7%) Consumer services Galliford Try (1.5%)
Berkeley (2.9%) Gateley (1.3%)
Information technology Countryside Properties (2.8%) Firstgroup (1.2%)
FDM (3.2%) On The Beach (2.5%) Kier (1.1%)
Gocompare.Com (2.3%) Next (2.1%) XP Power (1.0%)
ZPG (2.3%) Dixons Carphone (1.1%) Restore (0.7%)
Equiniti (2.1%) MJ Gleeson (1.0%)
Halma (1.6%) Boohoo.Com (1.0%)
Micro Focus International (1.1%) Tax Systems (0.8%)
Data as at 30.06.2017. Please note that the asset allocation may be above or below 100% due to rounding.
Q2 20179 PREMIER ETHICAL FUND Q2 2017
General investment risks
All types of investment carry a degree of risk and it is important If investors withdraw part of their investment, or take an income
that investors understand and are comfortable with the level of risk greater than the natural income from, or growth of, the investment,
to which their capital could be exposed. there is a risk that they could get back less than originally invested.
The fund may invest directly into, or be exposed to via its underlying
The degree of investment risk will depend on the fund’s risk profile.
investments, a variety of assets, sectors or regions, all of which carry
We would typically expect investments that are perceived as lower
specific risks which could impact returns. Some of the main risks
risk to offer less potential for loss but with potentially lower returns,
are summarised on this document, with further detail available in
whereas we would expect higher risk investments to generate
the fund’s prospectus.
higher returns albeit with the extra risk of potential loss. However,
there are no guarantees as to how a type of asset, sector or region
will perform in the future. Concentration
Funds that have a strong focus on a particular asset, sector or
Inflation could erode the value of returns from your investment.
region, can carry a higher risk than funds with a more diversified
There is a risk that the entire market of an asset will fall, affecting portfolio.
the value of assets and the return on the investment. There is
no guarantee that the investment objective of the fund will be Currency
achieved. Where investments are denominated in currencies other than
sterling, changes in exchange rates may cause their value to rise
Past performance is not a guide to future returns. The price of or fall.
shares and any income from them can go down as well as up and
there is the possibility of a loss to the original investment. Derivatives
The levels of taxation and of relief from taxation will depend upon This is a financial contract whose value is related to the value of an
individual circumstances. underlying asset or index, often used with the aim to manage risk
or enhance returns, and whilst their use is not necessarily expected
There may be a variation in the performance between funds with to increase risk within a fund, they could expose the fund to higher
similar objectives due to the different assets selected. Performance levels of volatility from time to time.
of a fund will be affected by the fund manager’s investment
decisions.10
General investment risks (continued)
Equities
As an asset class, equities can experience higher levels of
fluctuation than bonds or money market securities.
Geographic concentration
Funds focused on a specific country or geographic region can carry
greater risk than portfolios that are more internationally diverse.
Legal/Tax
Arising from a change in legal/tax regulations or the application of
them.
Market
The risk of a fall in price of a particular asset type.
Operational
Occasionally processes fail. This is more likely to happen with more
complex products or investments in overseas markets, such as
emerging market countries, which may not have the same level of
safekeeping, infrastructure or controls as more developed markets.
Q2 2017IMPORTANT
2 INFORMATION
Important information
Whilst every effort has been made to ensure the accuracy of the
information contained within this document, we regret that
we cannot accept responsibility for any omissions or errors. The
information given and opinions expressed are subject to change and
should not be interpreted as investment advice. Reference to any FTSE indices and / or FTSE ratings or underlying data. No further
particular stock does not constitute a recommendation to buy or distribution of FTSE Data is permitted without FTSE’s express written
sell the stock. All data is sourced to Premier unless otherwise stated. consent.
Persons who do not have professional experience in matters relating Issued by Premier Asset Management. ‘Premier Asset Management’
to investments should not rely on the content of this document. and ‘Premier’ are the marketing names used to describe the group of
A free, English language copy of the Fund’s full prospectus, the Key companies including Premier Fund Managers Limited and Premier
Investor Information Document and Supplementary Information Portfolio Managers Limited, which are authorised and regulated
Document, are available on the Premier website, or you can request by the Financial Conduct Authority of 25 the North Colonnade,
copies by calling us on 01483 306090. For your protection, calls Canary Wharf, London E14 5HS and are subsidiaries of Premier Asset
may be monitored and recorded for training and quality assurance Management Group plc. The registered address of all companies is
purposes. Eastgate Court, High Street, Guildford, GU1 3DE. Premier Portfolio
Managers Ltd is registered in England no. 01235867. Premier Fund
Awards and ratings: The Elite RatingTM system is proprietary to
Managers Ltd is registered in England no. 02274227. Premier Asset
FundCalibre Ltd, but should not be taken as a recommendation.
Management Group plc is registered in England no. 06306664.
The methodology and calculations used by the companies or 24071712727
organisations that provide the fund or fund manager awards and
ratings are not verified by Premier Asset Management and we
therefore are unable to accept responsibility for their accuracy.
Ratings and awards should not be relied upon for making an
investment decision, nor are they an indication, promise or
guarantee of future performance of a fund or fund manager.
Source: FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a
trade mark of the London Stock Exchange Group companies and
is used by FTSE under licence. All rights in the FTSE indices and / or
FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its
licensors accept any liability for any errors or omissions in the
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