Premier UK Growth Fund - FUND UPDATE - SECOND QUARTER 2019 - Premier Asset Management
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Q2 2019 FOR PROFESSIONAL ADVISERS ONLY, NOT FOR DISTRIBUTION TO RETAIL CLIENTS Premier UK Growth Fund FUND UPDATE - SECOND QUARTER 2019
1 PREMIER UK GROWTH FUND Q2 2019
Premier UK Growth Fund
Need to know Contents
The fund's essential characteristics: 2. Performance summary
To achieve capital growth.
3. Equity market analysis
The fund aims to deliver long term growth by investing in an
actively managed portfolio of principally UK listed company shares. 4. Performance drivers - asset allocation
The fund is classified in the IA UK All Companies sector, which we
believe is a meaningful comparator to help investors assess the 5. Performance drivers - holdings
performance of the fund.
6. Activity - asset allocation
As the fund invests in UK companies, we believe the FTSE All-Share
Index, which is made up of many of the companies listed on the 7. Activity - holdings
London Stock Exchange, is also a meaningful comparator to help
investors assess performance. 8. The complete portfolio
9. Portfolio characteristics relative to the index
10. General investment risks
11. Important information
Jon Hudson Benji Dawes
Co-manager Co-manager2
Performance summary
zz The Fund returned 3.3% over the quarter in line with the Index QUARTER ENDING 30.06.2019
and sector.
4.0% Premier UK Growth
zz Considering the multi-cap strategy of the Fund, we view the
IA UK All Companies sector
performance as credible as large caps have outperformed small
dividends reinvested (%)
caps in the period due to increasing fears of a hard Brexit and FTSE All-Share Index
corresponding weakness in sterling.
Total return
2.0%
zz We remain encouraged by the underlying operational
performance of the companies held within the Fund.
0.0%
SINCE MANAGED BY JON HUDSON & BENJI DAWES
Premier UK Growth
8.0%
IA UK All Companies sector
FTSE All-Share Index
dividends reinvested (%)
6.0%
Total return
4.0%
2.0%
Chart source: FE Analytics, bid to bid, total return (dividends reinvested), UK
sterling basis, data based on class C income shares. Data to 30.06.2019. Past 0.0%
performance is not an indication of future returns. Jon Hudson and Benji Dawes
commenced management of the fund on 01.11.2017.
Q2 20193 PREMIER UK GROWTH FUND Q2 2019
Equity market analysis
zz Due to weak sterling, the multinational dominated FTSE 100 Index INDEX TOTAL RETURNS - QUARTER ENDING 30.06.20191
outperformed the FTSE 250 and FTSE Small Cap Index.
zz Global markets continued to push higher, despite mixed
economic data, largely due to more dovish rhetoric from the UK small caps, 0.9%
central banks.
zz With 40% of global debt now yielding less than 1%, we still believe UK mid caps, 2.9%
equities, including the UK, offer a more attractive risk reward
proposition despite the increasing polarisation between so-called UK equities, 3.3%
defensive and cyclical stocks. While we do own some cyclicals
that we feel are already pricing in a bearish scenario, our strategy UK large caps, 3.3%
remains to predominantly find quality companies that we believe
can grow regardless of the economic cycle. 0.0% 2.0% 4.0% 6.0%
SECTOR TOTAL RETURNS - QUARTER ENDING 30.06.20192
Technology 9.9%
Industrials 7.2%
Oil & Gas 4.5%
Financials 4.5%
Basic Materials 4.2%
Health Care 3.4%
Consu mer Servi ces 3.2%
1
Source: FE Analytics, based on a bid to bid, total return (net income reinvested), Consu mer Goods -1.4%
UK sterling basis. Indices: FTSE Small Cap (ex IT) (UK small caps), FTSE 250 (UK mid
Utilities -1.9%
caps), FTSE 100 (UK large caps), FTSE All-Share (UK equities). 2Source: FE Analytics.
Telecommunications -6.4%
Comparative index is FTSE All-Share Index. Based on a bid to bid, total return (net
income reinvested), UK sterling basis. Past performance is not a guide to future returns. -10% -5% 0% 5% 10% 15%4
Performance drivers - asset allocation
Fund breakdown at end of quarter (30.06.2019) Relative to comparative index:
We seek to own high quality growth companies that can exploit
large market value opportunities, and use a strong valuation
discipline to both new and existing holdings. We anticipate therefore
that over the long term, the majority of performance will be driven
by individual stock selection not by asset allocation.
Helped
zz Overweight technology
Financials 20.5% zz Underweight telecommunications
Consumer services 18.7%
Hurt
Consumer goods 15.3%
zz Underweight large caps
Industrials 13.6%
zz Overweight small caps
Technology 10.5%
zz Underweight oil and gas
Oil & gas 6.6%
Health care 6.6%
UNDERWEIGHT / OVERWEIGHT INDEX AS AT 30.06.2019
Basic materials 4.3%
Cash & other 4.0% Technology, 9.4%
Consumer Services, 7.2%
Industrials, 2.2%
Consumer Goods, 1.4%
Health Care, -2.0%
Telecommunications, -2.4%
Utilities, -2.6%
Basic Materials, -3.9%
Financials, -5.6%
Comparative index is FTSE All-Share Index. Data as at 30.06.2019. Oil & Gas, -7.7%
Please note that the numbers above have been rounded.
-10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
Q2 20195 PREMIER UK GROWTH FUND Q2 2019
Performance drivers - holdings
Notable contributors Notable detractors
zz Sumo Group zz Diversified Gas & Oil
Confident trading update leading to re-rating Weak natural gas price in US and concerns regarding funding
its decommissioning liabilities
zz Marlowe
Reassuring trading updates leading to share price recovery zz Imperial Brands
Weak industry cigarette volume in USA
zz Gym Group
Encouraging growth in average revenue per member eases zz Just Eat
competition concerns Concerns over strategy and increasing competition. Hidden
value lies within the company
zz BCA Marketplace
Takeover bid from private equity zz Redrow
Stock overhang from forced seller combined with increased
zz Jadestone Energy
hard Brexit fears
Re-rating continues as investors discover this recent issue6
Activity - asset allocation
Market cap* 31.03.2019 30.06.2019 Change
Mega 11.4% 11.5% +0.1% zz Reduced mid-caps and increased small caps – stock specific
rationale
Large 19.6% 20.1% +0.5%
zz No other significant changes
Mid 34.7% 27.9% -6.8%
Small 29.2% 36.6% +7.4%
Cash 5.2% 4.0% -1.2%
Sector exposure 31.03.2019 30.06.2019 Change
Financials 18.5% 20.5% +2.0%
Consumer services 20.6% 18.7% -1.9%
Consumer goods 14.7% 15.3% +0.6%
Industrials 12.5% 13.6% +1.1%
Technology 10.9% 10.5% -0.4%
Oil & gas 8.9% 6.6% -2.3%
Health care 4.3% 6.6% +2.3%
Basic materials 4.4% 4.3% -0.1%
Telecommunications 0.0% 0.0% 0.0%
Utilities 0.0% 0.0% 0.0%
Cash & other 5.2% 4.0% -1.2%
Based on a bid to bid, total return (net income reinvested), gross of fees, UK sterling basis of the total fund with close of business pricing.
Please note that the numbers above have been rounded. *Market cap: Mega (£50bn+), Large (£3-£50bn), Mid (£500mn-£3bn), Small (7 PREMIER UK GROWTH FUND Q2 2019 Activity - holdings Key purchases Key disposals zz Trainline zz Greene King zz Argentex zz Craneware zz Hikma Pharmaceuticals zz Sherborne zz AFH Financial Group zz CVS Group
8
The complete portfolio
Small Mega
Sumo Group (4.1%) Cash 4.0% Rio Tinto (3.2%)
Mega Cap 11.5% GlaxoSmithKline (2.6%)
Gym Group (3.5%)
Marlowe (2.6%) Diageo (2.5%)
Frontier Development (2.3%) Royal Dutch Shell 'B' (2.1%)
Dotdigital Group (2.1%) BP (1.0%)
Jadestone Energy (2.0%) Small Cap Large Cap 20.1% Large
CVS Group (2.0%) 36.6% Legal & General (4.4%)
NCC Group (1.9%) Prudential (3.8%)
Alpha FX Group (1.9%) Just Eat (2.5%)
Strix Group (1.8%) B & M European Value Retail (2.4%)
The Simplybiz Group (1.8%) Hikma Pharmaceutical (2.2%)
Caretech Holdings (1.8%) BAE Systems (2.0%)
Liontrust Asset Management (1.7%) Imperial Brands (2.0%)
Codemasters Group (1.7%) Mid Cap 27.9% Bellway (0.9%)
Robert Walters (1.6%) Mid
Argentex Group (1.1%) Sirius Real Estate (3.7%)
Central Asia Metals (1.1%) Forterra (3.3%)
Team17 Group (0.8%) Spirent Communications (2.9%)
Phoenix Spree Deutschland (0.6%) Boohoo Group (2.8%)
AFH Financial Group (0.5%) Redrow (2.7%)
BCA Marketplace (2.4%)
John Laing Group (2.1%)
FDM Group (2.0%)
Moneysupermarket (1.8%)
Dart Group (1.6%)
Diversified Gas (1.4%)
Onesavings Bank (0.8%)
Trainline (0.5%)
Data as at 30.06.2019.
Please note that the numbers above have been rounded. Market cap: Mega (£50bn+), Large (£3-£50bn), Mid (£500mn-£3bn), Small (9 PREMIER UK GROWTH FUND Q2 2019
Portfolio characteristics relative to FTSE All-Share Index
VALUATION ANALYSIS1 TOP STOCK CONTRIBUTORS AND DETRACTORS
QUARTER ENDING 30.06.20192
Valuation Fund Index
Price to earnings ratio* 17.7x 13.1x Sumo Group 0.9%
Marlowe 0.5%
EPS growth 13.5% 5.8%
BCA Marketplace 0.5%
PEG ratio 1.3x 2.3x Gym Group 0.4%
Pru dential 0.4%
Income CVS Group 0.3%
Jadestone Energy 0.3%
Return on equity 23.6% 10.7% Boohoo Group 0.3%
Rio Tinto 0.3%
Balance sheet Moneysupermarket 0.3%
Hikma Pharmaceutical -0.1%
Net debt/EBITDA 0.7x 1.3x Cent Asia Metals -0.1%
Bellway -0.1%
Sherborne Investor -0.1%
B & M European Valu e Retail -0.2%
Phoenix Spree Deutschland -0.2%
Redrow -0.3%
Just Eat -0.5%
Diversifi ed Gas -0.7%
Imperial Brands -0.8%
-2% 0% 2%
1Source: Bloomberg, based on prospective data. Index: FTSE All-Share. *Weighted average of individual securities valuation characteristics. 2Based on a bid to bid, total
return (net income reinvested), gross of fees, UK sterling basis of the total fund with close of business pricing. Data as at 30.06.2019. Past performance is not a guide to
future returns.10
General investment risks
All types of investment carry a degree of risk and it is important The fund may invest directly into, or be exposed to via its underlying
that you understand and are comfortable with the level of risk to investments, a variety of assets which carry specific risks which
which your capital could be exposed. We recommend that you could impact the returns from your fund. The main risks are
consult with a financial adviser if unsure in any way. summarised here, with further detail available in the fund’s
There is the potential for loss of your original investment. The prospectus.
amount of investment risk will depend on the fund’s risk profile. Equities: As an asset class, equities can experience high levels of
We would typically expect investments that are perceived as fluctuation in prices.
lower risk to offer less potential for loss but with potentially lower
Geographic concentration: Funds that have a strong focus on a
returns, whereas we would expect higher risk investments to
generate higher returns albeit with the extra risk of potential loss particular country or region, can carry a higher risk than funds with
over the long-term. However, there are no guarantees as to how an a more diversified portfolio.
investment will perform in the future. Inflation: Higher inflation can negatively impact investment
Inflation could erode the relative value of your investment. markets, in particular, fixed interest securities such as government
bonds and corporate bonds.
There is a risk that financial markets will fall, affecting the value of
your investment. Interest rate: Unexpected movements in interest rates will affect
There is no guarantee that the investment objective of the fund will all types of assets, in particular, fixed interest securities such as
be achieved. government bonds and corporate bonds. If interest rates go up, the
value of the bond may fall, and vice versa.
Past performance of a fund is not a guide to future returns. The
price of shares and any income from them can go down as well as Legal/tax: Arising from a change in legal/tax regulations or the
up and there is the possibility of a loss to your original investment. application of them.
The levels of taxation and of relief from taxation will depend upon Liquidity: During difficult market conditions, securities may become
individual circumstances. more difficult to sell and buy at a desired price.
There may be a variation in the performance between funds with Operational: Processes, systems and controls can fail. This is more
similar objectives due to the different assets selected. Performance likely to happen with more complex products or investments in
of a fund will be affected by the fund manager’s investment overseas markets, such as emerging market countries, which may
decisions. not have the same level of safekeeping, infrastructure or controls as
If you withdraw part of your investment to supplement the income more developed markets.
paid out to you, there is an increased risk that the residual amount Smaller companies: Investment in smaller companies is typically
of your investment will be less than your original investment when higher risk than investment in larger companies.
you decide to sell.
Q2 2019IMPORTANT
2 INFORMATION
Disclaimer: Whilst every effort has been made to ensure the accuracy The methodology and calculations used by the companies or
of the information contained within this document, we regret that organisations that provide the fund or fund manager awards and
we cannot accept responsibility for any omissions or errors. The ratings are not verified by Premier Asset Management and we
information given and opinions expressed are subject to change therefore are unable to accept responsibility for their accuracy.
and should not be interpreted as investment advice. Reference to Ratings and awards should not be relied upon for making an
any particular stock does not constitute a recommendation to buy investment decision, nor are they an indication, promise or
or sell the stock. All data is sourced to Premier Asset Management guarantee of future performance of a fund or fund manager.
unless otherwise stated. Persons who do not have professional Source: FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®”
experience in matters relating to investments should not rely on is a trademark of the London Stock Exchange Group companies
the content of this document. A free, English language copy of the and is used by FTSE International Limited under license. All rights
fund’s full prospectus, the Key Investor Information Document and in the FTSE indicies and/or FTSE ratings vest in FTSE and/or its
Supplementary Information Document, are available on the Premier licensors. Neither FTSE nor its licensors accept any liability for
website, or you can request copies by calling us on 01483 306090. any errors or omissions in the FTSE indices and/or FTSE ratings or
For your protection, calls may be monitored and recorded for underlying data. No further distribution of FTSE Data is permitted
training and quality assurance purposes. without FTSE’s express written consent.
Awards and ratings: The Defaqto 2019 Diamond Rating is based Issued by Premier Asset Management. Premier Fund Managers
on the class C shares for the Fund. Defaqto is an independent Limited (registered no. 02274227) and Premier Portfolio Managers
researcher of financial products and is not authorised to provide Limited (registered no. 01235867) are authorised and regulated by
financial advice. Premier Asset Management does not have any the Financial Conduct Authority. Registered address: Eastgate Court,
influence or control over the Defaqto Diamond Ratings or the High Street, Guildford, GU1 3DE. Premier Asset Management is the
methodology used to create them. We are therefore unable to marketing name used for the two companies.
guarantee their accuracy or that these will not change in the future,
01081915885
or that Premier Asset Management will continue to use Defaqto
ratings in the future.
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