Guinness Global Equity Income Fund Portfolio Managers Dr Ian - - PowerPoint PPT Presentation
Guinness Global Equity Income Fund Portfolio Managers Dr Ian Mortimer, CFA Matthew Page, CFA Q3 2018, GBP This document is presented to you in your capacity as a Professional Client and is not for general distribution to Retail Clients. Should you
Portfolio Managers Dr Ian Mortimer, CFA Matthew Page, CFA Q3 2018, GBP
This document is presented to you in your capacity as a Professional Client and is not for general distribution to Retail Clients. Should you receive this document as a Retail Client you should disregard its content and take no action based upon it.
2
accounts
Source: Guinness Asset Management
3
Source: Guinness Asset Management. Guinness Atkinson Asset Management. Financial Express (30.06.2018).
Global growth Managers: Matthew Page, Ian Mortimer Analysts: Joshua Cole, Sagar Thanki Strategy AUM: £330mn
Quality, value, and dividend growth Managers: Matthew Page, Ian Mortimer Analysts: Sagar Thanki Strategy AUM: £402mn
1 UCITS Fund (GUGLEIE ID) in
IA Global Equity Income sector
Performance vs peers1:
Rank YTD 10 / 54 1 year 20 / 54 3 years 9 / 46 5 years 16 / 38 Since launch* 6 / 22
Performance vs peers2:
Rank YTD 116/ 294 1 year 46/ 281 3 years 20 / 255 5 years 11 / 227 10 years 2 / 156
2 UCITS Fund (launched on 31.10.2014)
in IA Global sector. Returns are a simulation based on the actual returns
investors, until the launch of the UCITS
accordance with the same investment process and with the same portfolios.
4
Source: Guinness Asset Management, Guinness Atkinson Asset Management (30.06.2018)
100 200 300 400 500 600 700 800 2011 2012 2013 2014 2015 2016 2017 Jun‐18 GBPm AUM Global Equity Income Strategy Global Innovators strategy
5
Matthew Page, CFA Portfolio Manager
Fixed Income Currencies and Commodities (FICC)
degree in Physics in 2004
Source: Guinness Asset Management
Dr Ian Mortimer, CFA Portfolio Manager
Physics in 2006
London, with a Masters degree in Physics in 2003
Global Innovators 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tim Guinness Manager Matthew Page ‐ ‐ Analyst Manager Ian Mortimer ‐ ‐ ‐ ‐ ‐ ‐ Analyst Manager Sagar Thanki ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Analyst Global Equity Income 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Matthew Page ‐ ‐ ‐ ‐ ‐ ‐ ‐ Manager Ian Mortimer ‐ ‐ ‐ ‐ ‐ ‐ ‐ Manager Sagar Thanki ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Analyst
Source: Financial Express, Y Class (0.99% OCF), IA Global Equity Income sector
IA Global Equity Income sector
% total return in GBP, data as at: 30/06/2018
Year to date 1 year 3 years 5 Years From launch (31.12.10)
Morgan Stanley Global Brands Equity Income 4.09 Schroder Global Equity Income 12.97 Newton Global Income Inst W Acc GBP 56.63 Schroder Global Equity Income 88.03 Artemis Global Income 145.53 Schroder Global Equity Income 2.85 Old Mutual Global Equity Income (IRL) 11.75 Quilter Investors Global Equity Value 55.90 Artemis Global Income 85.19 Schroder Global Equity Income 131.87 Mirabaud Global Equity High Income 2.77 Mirabaud Global Equity High Income 11.62 Schroder Global Equity Income 54.60
82.39 Invesco Perpetual Global Equity Income 131.54 TB Evenlode Global Income 2.50 Oldfield The TM Overstone UCITS Equity Income 10.57 Investec Global Quality Equity Income 50.37 Newton Global Income Inst W Acc GBP 76.08 Investec Global Quality Equity Income 128.66 Quilter Investors Global Equity Value 2.17 M&G Global Dividend 9.07 Baillie Gifford Global Income Growth 48.77 Quilter Investors Global Equity Value 74.62 Newton Global Income Inst W Acc GBP 123.20 Oldfield The TM Overstone UCITS Equity Income 2.09 Aviva Inv Global Equity Income 9.03 M&G Global Dividend 48.26 Aviva Inv Global Equity Income 74.22 Guinness Global Equity Income 117.83 Newton Global Income Inst W Acc GBP 1.99 Neptune Global Income 8.83 Kames Global Equity Income 48.13 Oldfield The TM Overstone UCITS Equity Income 73.86 M&G Global Dividend 108.83 Aviva Inv Global Equity Income 1.87 Artemis Global Income 8.66 Investec Global Dividend 47.52 Baillie Gifford Global Income Growth 72.50 Baillie Gifford Global Income Growth 102.64 Investec Global Dividend 1.82 Artemis Global Equity Income 8.31 JPM Global Equity Income 47.05 Investec Global Quality Equity Income 70.81 Aviva Inv Global Equity Income 100.99 Guinness Global Equity Income 1.65 JPM Global Equity Income 8.25 Guinness Global Equity Income 45.41 Fidelity Global Dividend 69.86 LM IF ClearBridge Global Equity Income 99.64 Old Mutual Global Equity Income (IRL) 1.47 Investec Global Dividend 7.44 Aviva Inv Global Equity Income 44.51 Sarasin Global Higher Dividend 69.83 Sarasin Global Higher Dividend 99.32 Artemis Global Income 1.40
6.87 Oldfield The TM Overstone UCITS Equity Income 44.47 Janus Henderson Global Equity Income I Inc 69.17 Liontrust Global Income I Inc 91.59 JPM Global Equity Income 1.34 Kames Global Equity Income 6.74 Fidelity Global Dividend 44.40 JPM Global Equity Income 68.43 Threadneedle Global Equity Income 90.34 Artemis Global Equity Income 1.25 Invesco Perpetual Global Equity Income 6.64 Sarasin Global Dividend 43.37 Kames Global Equity Income 68.17 Sector : IA Global Equity Income 88.99 Liontrust Global Income I Inc 0.99 Morgan Stanley Global Brands Equity Income 6.27 Fidelity Global Enhanced Income 43.22 Invesco Perpetual Global Equity Income 67.78 LM IF Martin Currie Global Equity Income 85.33 Fidelity Global Dividend 0.95 Sarasin Global Dividend (Sterling Hedged) 6.27 Janus Henderson Global Equity Income I Inc 42.25 Guinness Global Equity Income 65.98 Davy Global Equity Income 83.81 Investec Global Quality Equity Income 0.87 Liontrust Global Income I Inc 6.00 Sarasin Global Higher Dividend 42.11 LM IF ClearBridge Global Equity Income 64.28 Sarasin Global Higher Dividend (Sterling Hedged) 73.88 Fidelity Global Enhanced Income 0.67 Baillie Gifford Global Income Growth 5.74 Invesco Perpetual Global Equity Income 41.24 GAM Multistock Global Equity Income 63.57 Amundi SICAV II Global Equity Target Income 71.53 Neptune Global Income 0.57 Sarasin Global Dividend 5.64 LF Canlife Global Equity Income 40.43 M&G Global Dividend 61.34 Veritas Global Equity Income 70.74 Invesco Perpetual Global Equity Income 0.45 Vanguard Global Equity Income 5.63 Artemis Global Income 40.41 TB Saracen Global Income & Growth 59.39 Pictet High Dividend Selection 69.98 Vanguard Global Equity Income 0.24 Guinness Global Equity Income 5.28 BlackRock Global Income 40.41 LF Canlife Global Equity Income 59.07 GAM Multistock Global Equity Income 69.82 Sarasin Global Dividend 0.12 HSBC Global Equity Income 5.17 Threadneedle Global Equity Income 39.86 Standard Life Investments Global Equity Income 58.90 Lazard Global Equity Income C Acc 65.82 Veritas Global Equity Income 0.07 GAM Multistock Global Equity Income 5.13 TB Saracen Global Income & Growth 39.24 BlackRock Global Income 58.47 Aberdeen World Equity Income 35.98 Baillie Gifford Global Income Growth ‐0.02 Quilter Investors Global Equity Value 4.56 Mirabaud Global Equity High Income 38.66 Jupiter Global Equity Income 55.62 Premier Global Infrastructure Income C Inc 28.20 M&G Global Dividend ‐0.24 Newton Global Income Inst W Acc GBP 4.46 Artemis Global Equity Income 38.64 Sector : IA Global Equity Income 54.69 Janus Henderson Global Equity Income I Inc ‐0.32 Janus Henderson Global Equity Income I Inc 4.43 Veritas Global Equity Income 38.22 Threadneedle Global Equity Income 54.23 Architas Global Equity Income ‐0.39 Barclays GlobalAccess Global Equity Income 4.27 Jupiter Global Equity Income 37.61 Liontrust Global Income I Inc 53.27 LF Canlife Global Equity Income ‐0.42 Sector : IA Global Equity Income 3.58 LM IF Martin Currie Global Equity Income 36.41 Epoch Global Equity Shareholder Yield 52.62 GAM Multistock Global Equity Income ‐0.66 Sarasin Global Higher Dividend (Sterling Hedged) 3.57 Epoch Global Equity Shareholder Yield 36.17 Premier Global Infrastructure Income C Inc 52.36 HSBC Global Equity Income ‐0.66 LF Canlife Global Equity Income 3.54 Pictet High Dividend Selection 35.54 Amundi SICAV II Global Equity Target Income 51.45 Sector : IA Global Equity Income ‐0.86 LM IF Martin Currie Global Equity Income 3.48
35.40 Sarasin Global Higher Dividend (Sterling Hedged) 49.77 Kames Global Equity Income ‐0.98 Sarasin Global Higher Dividend 3.10 Sector : IA Global Equity Income 35.31 Davy Global Equity Income 49.19 Sarasin Global Higher Dividend ‐1.17 Troy Trojan Global Income 2.64 Liontrust Global Income I Inc 34.97 Veritas Global Equity Income 44.76 Pictet High Dividend Selection ‐1.21 Jupiter Global Equity Income 2.31 GAM Multistock Global Equity Income 33.77 LM IF Martin Currie Global Equity Income 44.58 Troy Trojan Global Income ‐1.24 TB Saracen Global Income & Growth 2.27 Davy Global Equity Income 33.71 Pictet High Dividend Selection 42.04 LM IF RARE Global Infrastructure Income ‐1.36 Amundi SICAV II Global Equity Target Income 2.10 LM IF ClearBridge Global Equity Income 33.26 Neptune Global Income 40.83 Amundi SICAV II Global Equity Target Income ‐1.38 Lazard Global Equity Income C Acc 1.96 Standard Life Investments Global Equity Income 32.79 Lazard Global Equity Income C Acc 38.81 LM IF Martin Currie Global Equity Income ‐1.38 Threadneedle Global Equity Income 1.88 Amundi SICAV II Global Equity Target Income 32.78 Barclays GlobalAccess Global Equity Income 33.79 Lazard Global Equity Income C Acc ‐1.40 Fidelity Global Dividend 1.66 Lazard Global Equity Income C Acc 26.83 Davy Defensive Equity Income 24.35 LF Miton Global Infrastructure Income ‐1.46 Courtiers Global (ex UK) Equity Income 1.60 Premier Global Infrastructure Income C Inc 26.39 Aberdeen World Equity Income 18.42 TB Saracen Global Income & Growth ‐1.71 Investec Global Quality Equity Income 1.42 Aberdeen World Equity Income 25.44 Sarasin Global Dividend (Sterling Hedged) ‐1.73 UBS Global Enhanced Equity Income 1.38 Lazard Global Equity Income 24.68
‐1.95 Fidelity Global Enhanced Income 1.16 Davy Defensive Equity Income 24.40 Threadneedle Global Equity Income ‐1.98 Lazard Global Equity Income 0.89 Sarasin Global Dividend (Sterling Hedged) 21.73 Lazard Global Equity Income ‐2.01 Pictet High Dividend Selection 0.69 Sarasin Global Higher Dividend (Sterling Hedged) 19.27 Courtiers Global (ex UK) Equity Income ‐2.03 Standard Life Investments Global Equity Income 0.49 UBS Global Enhanced Equity Income 17.84 Standard Life Investments Global Equity Income ‐2.11 Davy Global Equity Income 0.40 Neptune Global Income 17.69 Epoch Global Equity Shareholder Yield ‐2.54 LM IF ClearBridge Global Equity Income 0.36 Barclays GlobalAccess Global Equity Income 14.10 Jupiter Global Equity Income ‐2.63 Epoch Global Equity Shareholder Yield 0.02 Davy Global Equity Income ‐2.65 Aberdeen World Equity Income ‐1.12 Sarasin Global Higher Dividend (Sterling Hedged) ‐2.88 Veritas Global Equity Income ‐1.57 Davy Defensive Equity Income ‐2.94 Davy Defensive Equity Income ‐1.84 UBS Global Enhanced Equity Income ‐3.79 LF Miton Global Infrastructure Income ‐3.02 Barclays GlobalAccess Global Equity Income ‐4.16 BlackRock Global Income ‐3.17 LM IF ClearBridge Global Equity Income ‐4.21 LM IF RARE Global Infrastructure Income ‐4.82 BlackRock Global Income ‐4.39 Premier Global Infrastructure Income C Inc ‐5.55 MSCI World Index 3.24 MSCI World Index 9.90 MSCI World Index 54.68 MSCI World Index 89.70 MSCI World Index 135.80 MSCI AC World Index 2.33 MSCI AC World Index 9.51 MSCI AC World Index 53.33 MSCI AC World Index 84.99 MSCI AC World Index 120.99
Source: Guinness Asset Management
Imputed income generated by investing £1,000 at launch (31/12/2010) and switching into lower OCF share class when introduced on first ex‐ dividend date
2.8%
The Fund typically has 35 equally weighted positions We target a low turnover with average of 3 – 5 year investment horizon
We focus on companies with a long history of persistent high return on capital We avoid highly leveraged companies
We try to identify companies that are cheap vs market, peers, and their own history Fund investment process is fundamentally driven from the bottom‐up
The Fund targets a moderate dividend yield (we do not screen for high dividend yield companies) The Fund aims to grow the dividend stream year‐
c.16,000
c.600
c.500 1
Sustainable competitive advantage Screened for 10 years of CFROI greater than 10%
2
Strong balance sheet and critical mass Debt to equity < 1. Market cap > $1bn.
Source: Guinness Asset Management
Source: Guinness Asset Management, CS HOLT
Source: NBER
Length of c ength of cycle cle Occurre urrence nces > 10 > 10 year years 2 8-1 8-10 year years 3 6-8 6-8 year years 4 4-6 y 6 years 8 2-4 y 4 years 14 Total no. of cycle Total no. of cycles 33 33
Source: Guinness Asset Management, CS HOLT
Value destruction
2 4 6 8 10 12 14
CFROI Time Value creation
2 4 6 8 10 12 14
CFROI Time
Value creation 2 4 6 8 10 12 14 CFROI Time
6% cost of capital 6% cost of capital 6% cost of capital
CFROI >10% for 10 years is a powerful indicator of continuing high returns: there is a 95% chance that qualifying companies will achieve it again the following year, and an 80% chance they will still be achieving it after four years Good company Average company Poor company
debt financing
shareholders rather than using it to de‐lever their balance sheet
Source: Guinness Asset Management
Log graph of the performance of the whole Guinness Global Quality Universe, and the universe after applying a 2% yield threshold
The performance of the Universe is based on an annual screen of globally listed companies back to 2000 to deliver an annual index of companies which generate consistently high returns on capital (our CFROI Global Quality Universe). The graph shows the performance of a simple strategy of buying all companies in the universe each year, and is based on an equally weighted portfolio, total return with quarterly rebalancing, and does not include the costs of dealing. Total return in USD. The performance of the Guinness Global Quality Universe is not indicative of the future performance of the Guinness Global Equity Income Fund. The value of investments and the income from them can fall as well as rise. Source: Bloomberg, Guinness Asset Management
Source: Guinness Asset Management, CS HOLT, Bloomberg
Source: Guinness Asset Management, CS HOLT, Bloomberg
Pacific in particular)
companies with yields greater than 2%
Source: Guinness Asset Management
18
Imp Improvin ing re retu turn on
capital l pro profile bu busin sinesses
Investment universe of ~500 persistently high return on capital businesses Prioritisation / Idea generation
Business strength, Valuation, Dividend
Portfolio addition
Discount to intrinsic value, sustainable dividend, better risk/return than a current holding
Fundamental analysis
Proprietary modelling, Assessment of return potential, Risk analysis, Competitive advantage, Market sentiment
Watch list
Like the business, don’t like the valuation
Reject
Weak business, poor allocator of capital, industry in decline, unsustainable dividend
Understand performance
Did total return evolve as expected?
Source: Guinness Asset Management
19
5yr average CFROI* > cost
Year‐on‐year improvements in CFROI*
Market expectation of continued strong CFROI in future
Market implied value < intrinsic value Multiples: ‐ discount vs peers ‐ greater than 1s.d. vs company 10yr average ‐ discount vs broad market
Above market dividend yield Good history of paying dividend Prospect for sustainable dividend growth in future
* CFROI = Cash Flow Return On Investment (our preferred metric for return on capital)
Source: Guinness Asset Management
Source: Guinness Asset Management
21
Trim winners, top up underperformers
Strong sell discipline, no long tail of small positions
No large weights in just one or two positions
Genuinely index agnostic
Source: Guinness Asset Management
Source: Guinness Asset Management
upside / valuation becomes too rich
Source: Guinness Asset Management, Bloomberg (data as at 30.06.2018) By receipt of this presentation document in either hard or soft copy, the recipient agrees not to copy, disclose, disseminate or use this information other than in their own fund selection process. Note: this portfolio data is Confidential Information that, until the 15th day of each month, is not in the public domain.
PE PE 18Y 19Y WPP PLC Consumer Discretionary 19.5 GB 3.2% 9.2 8.8 ANTA Sports Products Ltd Consumer Discretionary 13.9 CN 2.8% 22.8 18.9 VF Corp Consumer Discretionary 32.2 US 2.6% 23.6 21.2 British American Tobacco PLC Consumer Staples 117.5 GB 3.9% 13.3 12.3 Japan Tobacco Inc Consumer Staples 54.5 JP 3.7% 13.2 12.3 Reckitt Benckiser Group PLC Consumer Staples 59.0 GB 3.0% 17.6 16.2 Procter & Gamble Co/The Consumer Staples 196.5 US 2.9% 18.7 17.3 Walmart Inc Consumer Staples 247.9 US 2.9% 19.9 17.8 Danone SA Consumer Staples 51.0 FR 2.8% 17.1 15.6 Hengan International Group Co Ltd Consumer Staples 11.3 CN 2.8% 17.4 16.0 Unilever PLC Consumer Staples 162.4 GB 2.8% 19.1 17.5 Imperial Brands PLC Consumer Staples 36.1 GB 2.4% 9.0 8.7 Royal Dutch Shell PLC Energy 290.8 NL 2.6% 13.2 12.2 Deutsche Boerse AG Financials 26.0 DE 2.9% 20.2 18.0 NEX Group PLC Financials 5.2 GB 2.8% 38.6 28.2 CME Group Inc Financials 55.8 US 2.7% 24.6 23.0 Arthur J Gallagher & Co Financials 11.9 US 2.7% 19.0 17.1 Aflac Inc Financials 33.2 US 2.6% 11.3 10.8 Johnson & Johnson Health Care 326.1 US 2.9% 15.7 14.9 Roche Holding AG Health Care 193.3 CH 2.9% 13.1 12.7 Novo Nordisk A/S Health Care 116.3 DK 2.9% 18.4 17.7 Sonic Healthcare Ltd Health Care 7.8 AU 2.7% 20.5 19.0 AbbVie Inc Health Care 147.8 US 2.7% 12.5 10.7 Merck & Co Inc Health Care 162.7 US 2.4% 13.0 12.3 Randstad NV Industrials 10.8 NL 3.0% 12.0 11.2 Illinois Tool Works Inc Industrials 47.0 US 2.9% 20.3 18.6 Eaton Corp PLC Industrials 32.8 US 2.8% 15.3 14.0 United Technologies Corp Industrials 100.0 US 2.7% 17.7 15.9 BAE Systems PLC Industrials 27.1 GB 2.7% 13.0 12.1 Schneider Electric SE Industrials 47.6 FR 2.5% 15.6 14.3 Taiwan Semiconductor Manufacturing Information Technology 182.0 TW 3.2% 16.2 14.4 Cisco Systems Inc Information Technology 201.3 US 2.7% 16.4 14.8 CA Inc Information Technology 15.2 US 2.6% 13.0 12.4 Microsoft Corp Information Technology 768.4 US 2.5% 24.8 23.1 Vodacom Group Ltd Telecommunication Services 15.4 ZA 3.8% 16.0 14.7 Average mkt. cap 114.4 Total portfolio 15.7 14.5 Median mkt. cap 51.0 MSCI World Index 15.8 14.5 Fund premium/(discount) ‐0.6% 0.1% Name Sector
Country of domicile % NAV
Source: Guinness Asset Management, Bloomberg (data as at 30.06.2018)
Source: Guinness Asset Management, Bloomberg (data as at 30.06.2018)
Fund MSCI World Average 10yr CFROI 18% 8% Weighted average net debt / equity 56% 66%
Conviction
Typically 35 equally weighted positions in the portfolio Low turnover: average 3 – 5 year investment horizon
Quality
Focus on companies with a long history of persistent high return on capital Avoid highly leveraged companies
Value
Identify companies that are cheap vs market, peers, or their own history Fundamentally driven bottom‐up process
Dividend
Target a moderate dividend yield (do not screen for high dividend yield companies) Aim to grow the dividend stream year‐on‐year
Positions 35 Top 10 %NAV Bottom 10 %NAV 33% 26% Active share 93% Average yearly position turnover 5 Fund MSCI World P/E (2018e) 15.7 15.8 FCF Yield 5.6% 4.3% Fund MSCI World Dividend yield (LTM) 2.7% 2.4% Weighted average payout ratio 49% 49%
Source: Guinness Asset Management, Bloomberg, CS HOLT (data as at 30.06.2018)
Y Class shares (0.99% OCF), bid to bid basis, total return, 31.12.2010 to 30.06.2018. Past performance should not be taken as an indicator of future performance. The value of investments and the income from them can fall as well as rise. Source: Financial Express
‐60 ‐10 40 90 140 190 % %
Guinness Global Equity Income Fund (TR, in GBP) MSCI World Index (GTR, in GB) IA Global Equity Income sector average (TR, in GBP)
2.9 5.7 26.6 10.5 2.2 26.9 9.6 1.7 ‐4.3 11.4 25.0 12.1 5.5 29.0 12.4 3.2 ‐2.1 9.7 20.4 6.7 1.5 23.2 10.4 ‐0.9
‐10 10 20 30 2011 2012 2013 2014 2015 2016 2017 2018
135.8% 117.8% 89.0%
28
Source: Guinness Asset Management, Bloomberg
1 2 3 4 5 6 7
29
Source: Guinness Asset Management, Bloomberg (all data total return in USD, 1.24% OCF) Start date End date Guinness Global Equity Income MSCI World Index Fund relative performance Reason for sell off 02/05/2011 04/10/2011 ‐15.6% ‐21.8% 6.1% European crisis / Greece 19/03/2012 04/06/2012 ‐8.9% ‐12.3% 3.4% US credit rating downgrade 21/05/2013 24/06/2013 ‐5.2% ‐7.7% 2.4% "Taper tantrum" 27/08/2014 16/10/2014 ‐8.3% ‐8.8% 0.4% Oil price sell off 17/08/2015 25/08/2015 ‐8.5% ‐9.4% 0.9% Chinese stock market decline 31/12/2015 11/02/2016 ‐6.1% ‐11.5% 5.4% China growth concerns 26/01/2018 08/02/2018 ‐7.1% ‐9.0% 2.0% Volatility spike / inflation concerns
1 2 3 4 5 6 7
Past performance should not be taken as an indicator of future performance. The value of investments and the income from them can fall as well as rise.
30
Source: Guinness Asset Management, Bloomberg (all data total return in USD, 1.24% OCF) Past performance should not be taken as an indicator of future performance. The value of investments and the income from them can fall as well as rise.
Start date End date Guinness Global Equity Income MSCI World Index Fund relative performance Reason for sell off Downside capture 02/05/2011 04/10/2011 ‐15.6% ‐21.8% 6.1% European crisis / Greece 72% 19/03/2012 04/06/2012 ‐8.9% ‐12.3% 3.4% US credit rating downgrade 73% 31/12/2015 11/02/2016 ‐6.1% ‐11.5% 5.4% China growth concerns 53%
Average: 66%
1 2 6
Y Class shares (0.99% OCF), bid to bid basis, monthly total return. Past performance should not be taken as an indicator of future performance. The value of investments and the income from them can fall as well as rise. Source: Financial Express (data as at 30.06.2018)
< ‐4% ‐4% to ‐2% ‐2% to 2% 2% to 4% > 4% Guinness Global Equity Income ‐4.5% ‐2.1% 0.4% 2.5% 5.0% MSCI World Index ‐5.1% ‐3.0% 0.4% 3.0% 5.5% Difference 0.6% 0.9% 0.0% ‐0.4% ‐0.5% Frequency 5 8 47 19 11 ‐6% ‐4% ‐2% 0% 2% 4% 6% Average Monthly TR (GBP) Index Total Return Range (GBP)
Guinness Global Equity Income MSCI World Index
Source: Financial Express Y Class shares (0.99% OCF), annualised weekly performance, 31.12.10 to 30.06.2018. Past performance should not be taken as an indicator of future performance. The value of investments and the income from them can fall as well as rise.
IA Global Equity Income sector, plus M&G Global Dividend Fund. Risk and performance analysis
Annualised, weekly, in GBP
Return pa (%) Volatility (%) Downside Risk Max drawdown Sortino Excess return Sharpe ratio Info ratio Treynor Jensens Alpha
Guinness Global Equity Income Fund 10.94 12.26 12.66 ‐16.34 0.58 ‐1.17 0.60 ‐0.24 8.49 ‐0.01 MSCI World Index 12.11 13.39 14.18 ‐18.21 0.60 0.00 0.64 0.00 8.52 0.00 IA Global Equity Income sector 8.86 11.42 11.82 ‐15.50 0.45 ‐3.20 0.47 ‐0.46 7.01 ‐1.02
10 20 30 40 50 60 70 80 90 100
FUND PERCENTILE RANK in peer group
Source: Financial Express *IA Global Equity Income sector Y Class shares (0.99% OCF), bid to bid basis, monthly total return 31.12.2010 to 30.06.2017. Past performance should not be taken as an indicator of future performance. The value of investments and the income from them can fall as well as rise.
1st quartile 4th quartile
Risk and performance analysis
Annualised, weekly, in GBP
Return (% pa) Volatility (%) Downside risk Max drawdown Sortino Excess return Sharpe ratio Info ratio Treynor Jensens Alpha MSCI World Index 12.11 13.39 14.18 ‐18.21 0.60 0.64 8.52 Global Equity Income sector* 8.86 11.42 11.82 ‐15.50 0.45 ‐3.20 0.47 ‐0.46 7.01 ‐1.02 Artemis Global Income 12.72 13.46 13.93 ‐17.85 0.67 0.78 0.69 0.09 10.92 2.04 Schroder Global Equity Income 11.86 13.36 13.19 ‐18.01 0.63 ‐0.21 0.62 ‐0.03 9.73 1.10 Invesco Perpetual Global Equity Income 11.84 12.18 12.62 ‐15.51 0.66 ‐0.24 0.68 ‐0.03 10.62 1.58 Newton Global Income 11.30 11.04 10.38 ‐13.02 0.74 ‐0.82 0.70 ‐0.10 11.33 1.82 Guinness Global Equity Income 10.94 12.26 12.66 ‐16.34 0.58 ‐1.17 0.60 ‐0.24 8.49 ‐0.01 Baillie Gifford Global Income Growth 9.87 11.52 11.53 ‐13.48 0.55 ‐2.16 0.55 ‐0.25 8.98 0.39 Aviva Inv Global Equity Income 9.75 13.83 14.29 ‐19.67 0.43 ‐2.39 0.44 ‐0.28 7.00 ‐1.00 Legg Mason IF ClearBridge Global Equity Income 9.65 12.15 12.22 ‐20.21 0.50 ‐2.43 0.50 ‐0.31 7.87 ‐0.36 Sarasin Global Higher Dividend 9.63 11.95 11.62 ‐18.36 0.53 ‐2.42 0.51 ‐0.32 7.91 ‐0.35 Liontrust Global Income 9.05 12.64 13.39 ‐17.32 0.40 ‐3.19 0.42 ‐0.36 6.92 ‐0.96 Threadneedle Global Equity Income 8.96 12.28 12.62 ‐14.57 0.43 ‐3.12 0.44 ‐0.41 6.80 ‐1.14 Legg Mason IF Martin Currie Global Equity Income 8.57 11.72 11.83 ‐15.42 0.43 ‐3.39 0.44 ‐0.44 6.81 ‐1.11 Davy Global Equity Income 8.45 13.56 14.58 ‐18.83 0.37 ‐3.11 0.40 ‐0.53 5.77 ‐2.22 Sarasin Global Higher Dividend (Sterling Hedged) 7.65 11.42 12.30 ‐18.59 0.33 ‐4.41 0.36 ‐0.45 6.30 ‐1.19 Amundi SICAV II Global Equity Target Income 7.46 12.99 14.14 ‐21.97 0.27 ‐4.68 0.30 ‐1.37 4.06 ‐3.77 Veritas Global Equity Income 7.39 12.80 13.06 ‐18.65 0.29 ‐4.69 0.30 ‐0.52 4.94 ‐2.36 Pictet High Dividend Selection 7.33 11.91 12.01 ‐14.10 0.34 ‐4.46 0.34 ‐0.72 5.01 ‐2.55 GAM Multistock Global Equity Income 7.31 13.52 14.66 ‐20.24 0.25 ‐4.82 0.27 ‐1.22 3.79 ‐4.09 Lazard Global Equity Income 6.97 13.60 13.65 ‐26.20 0.25 ‐5.04 0.26 ‐0.59 4.08 ‐3.23 Premier Global Infrastructure Income 3.37 11.79 12.59 ‐31.28 ‐0.03 ‐8.83 0.00 ‐0.85 ‐0.49 ‐5.18
Source: Financial Express Y Class shares (0.99% OCF), bid to bid basis, annualised total return 31.12.2010 to 30.06.2018. Past performance should not be taken as an indicator of future performance. The value of investments and the income from them can fall as well as rise.
Guinness Global Equity Income MSCI World Index IA sector average
8 9 10 11 12 13 11 12 13 14 15
Total return (annualised) Volatility (annualised)
The Fund Structure & legal Pricing & dealing
Fund launch date
31 December 2010
Domicile
Ireland
Pricing
Daily
Fund managers
Matthew Page, CFA Dr Ian Mortimer, CFA
Fund structure
Dublin OEIC (UCITS IV)
Performance fee
None
Benchmark
MSCI World Index
Administrator
Link Fund Administrators (Ireland) Ltd.
Exit fees
2% within 30 days of purchase
(to mitigate market timing)
Leverage
None
Custodian
JP Morgan
Valuation point
23:00 (Dublin time)
Currency hedging
None
Reporting status
Reporting Fund for UK tax purposes
Dealing cut off
15:00 (Dublin time)
Share classes for UK investors*
Class Currency Max TER (OCF) Description Acc / dist ISIN Y
GBP 0.99% Standard post‐RDR share class Accumulation IE00BVYPNY24 Distribution IE00BVYPP131 * Other share classes available in EUR and USD and at different fee levels Source: Guinness Asset Management
0.99% OCF 0.74% OCF
For charities
1.24% OCF 1.49% OCF 1.99% OCF
Currency
GBP / USD / EUR GBP GBP / USD USD / EUR GBP / USD / EUR
Initial charge 0% 0% 0% 0% 5% Max total expense ratio (OCF) 0.99% 0.74% 1.24% 1.49% 1.99% Accumulation or Distribution Accumulation Distribution Distribution Distribution Distribution Accumulation Distribution Country registrations*
UK, CH, LUX, FIN, SW, SGP UK, CH, LUX, FIN, SW, SGP UK, CH, LUX, FIN, SW, SGP AT, GER UK, CH, LUX, FIN, SW, SGP USD class: AT, GER, IT UK, CH, LUX, FIN, SW, SGP AT, IT EUR class: GER UK, CH, LUX, FIN, SW, SGP EUR class: AT, GER, IT UK, CH, LUX, FIN, SW, SGP USD class: AT, GER, IT
Name
Y Acc Y Dist Z GBP: “X” / USD: “E” USD: “A” / EUR: “D” C Acc USD: “B” / GBP: “C”
ISIN codes
GBP: IE00BVYPP024 USD: IE00BVYPNX17 EUR: IE00BVYPNZ31 GBP: IE00BVYPP131 USD: IE00BVYPP248 EUR: IE00BVYPP024 GBP: IE00B754QH41 GBP: IE00B7LM5753 USD: IE00B67PB391 USD: IE00B3QG6N78 EUR: IE00B66B5L40 GBP: IE00BVYPNV92 USD: IE00BVYPNW00 EUR: IE00BGHQF631 GBP: IE00B3PB1722 USD: IE00B42XCP33
Bloomberg tickers
GBP: GUGYGBA ID USD: GUGYUSA ID EUR: GUGYEUA ID GBP: GUGYGBD ID USD: GUGYUSD ID EUR: GUGYEUD ID GBP: GUGLEIZ ID GBP: GUGLEIX ID USD: GUGLEIE ID USD: GUGLEIA ID EUR: GUGLEID ID GBP: GUGCGBA ID USD: GUGCUSA ID EUR: GUGLECE ID GBP: GUGLEIC ID USD: GUGLEIB ID
UK: United Kingdom; CH: Switzerland; LUX: Luxembourg; FIN: Finland; SW: Sweden; SGP: Singapore; AT: Austria; GER: Germany; IT: Italy
Source: Guinness Asset Management
Source: Guinness Asset Management
Operational growth
Multiple expansion
Dividend payment 3 drivers of return
Wrong reasoning Correct reasoning Good outcome Luck Skill Bad outcome Mistake Misfortune
Source: Credit Suisse HOLT
13 year 13 years asset life s asset life
$100 100
Inflation‐adjusted gross cash flows Non‐depreciating asset release Inflation‐adjusted gross investment
$10 $25
CFROI = IRR = 6%
Sales, marketing and investor relations
Charlie Riddell charlie.riddell@guinnessfunds.com +44 (0) 20 7222 3473 Flurry Wright flurry.wright@guinnessfunds.com +44 (0) 20 7222 5703 Deborah Kay deborah.kay@guinnessfunds.com +44 (0) 20 7222 2037 Alex Hall alex.hall@guinnessfunds.com +44 (0) 20 7042 6525 Padraig Staunton padraig.staunton@guinnessfunds.com +44 (0) 20 7222 3719
Investment management team
Ian Mortimer ian.mortimer@gafunds.com +44 (0) 20 7222 3115 Matthew Page matthew.page@gafunds.com +44 (0) 20 7222 3085 Sagar Thanki sagar.thanki@gafunds.com +44 (0) 20 7042 6514
Guinness Asset Management Ltd.
14 Queen Anne’s Gate London SW1H 9AA info@guinnessfunds.com www.guinnessfunds.com +44 (0) 20 7222 5703 For your protection, calls to these numbers will be recorded
40
Volatility: Standard deviation is a statistical measurement that, when applied to an investment fund, expresses its volatility, or risk. It shows how widely a range of returns varied from the fund’s average return over a particular period. Low volatility reduces the risk of buying into an investment in the upper range of its deviation cycle and then seeing its value head toward the lower extreme. For example, if a fund had an average return of 5%, and its volatility was 15, this would mean that the range of its returns over the period had swung between +20% and ‐10%. Another fund with the same average return and 5% volatility would return between 10% and nothing, but there would at least be no loss. While volatility is specific to a fund’s particular mix of investments, and comparison to other portfolios is difficult, for those that offer similar returns the lower‐volatility funds are preferable. There is no point in taking on higher risk than necessary in order to achieve the same reward. Sharpe: This is a commonly used measure that calculates the level of a fund’s return over and above the return of a notional risk‐free investment, such as cash or government
unit of risk. Sharpe is useful when comparing similar portfolios or instruments. There is no absolute definition of a “good” or “bad” Sharpe ratio, beyond the thought that a fund with a negative Sharpe would have been better off investing in risk‐free government securities. However, in general it is considered that the higher the Sharpe ratio, the better. As the ratio increases, so does the risk‐adjusted performance. In effect, when analysing similar investments, the one with the highest Sharpe has achieved more return while taking on no more risk than its fellows — or, conversely, has achieved a similar return with less risk. Downside risk is a measurement that considers only negative returns. It is calculated as a downside deviation of returns below a specified risk‐free rate. It represents an estimation of a security’s potential to suffer a decline in price in negative market conditions and could be considered as an estimate of the potential loss on any investment. Sortino Ratio: This ratio is similar to the Sharpe ratio, using downside risk rather than standard deviation as the denominator. Thus, the Sortino ratio is calculated by subtracting the risk‐free rate from the return of the portfolio and then dividing by the downside deviation. The Sortino ratio measures the return to “bad” volatility, thereby giving investors a measure to assess risk in a better manner than simply looking at excess returns to total volatility. A large Sortino ratio indicates a low risk. Tracking Error: This statistic measures the standard deviation of a fund’s excess returns over the returns of an index or benchmark portfolio. As such, it can be an indication of “riskiness” in the manager’s investment style. A tracking error below 2 suggests a passive approach, with a close fit between the fund and its benchmark. At 3 and above, the correlation is progressively looser and indicates that the manager will be deploying a more active investment style and taking bigger positions away from the composition of the benchmark. While zero tracking error would indicate a fund that was a perfect replication of its benchmark portfolio, this is hardly likely to be encountered in reality. The fund will not be fully invested at all times in its benchmark components, since an element of liquidity will need to be retained for redemptions, and the assumed reinvestment of dividends will not always be possible. Transaction costs dilute returns — and proportionately more so in smaller funds. Issues of timing and availability mean that changes in the benchmark’s constituents cannot be instantaneously mirrored in the fund’s portfolio. These factors will all produce greater tracking error — and be reflected in the beta and r‐squared
41
Information Ratio: The information ratio is a versatile and useful risk‐adjusted measure of actively managed fund performance. It assesses the degree to which a manager uses skill and knowledge to enhance the fund returns. It is calculated by deducting the returns of the fund’s benchmark by the fund’s overall returns. This result is then divided by the fund’s tracking error, which is a measure of the volatility of the fund’s excess returns. The value that is arrived is an expression of, for each unit of extra risk assumed, the success of the manager’s decisions (“tilts”) away from the benchmark. The higher the information ratio, the better. It is generally considered that a figure of 0.5 reflects a good performance, 0.75 very good, and 1 outstanding. This is particularly useful when comparing a group of funds with similar management styles and asset allocation policies. If two funds have near‐identical alphas, the higher information ratio identifies the manager who has been more skilful in betting on stock picks that deviated from the benchmark or index, while the lower denotes gains that have more to do with market movements than active management. However, this comes with both a caveat and a means of using it creatively. As ever, the r‐squared correlation between the fund and its benchmark must be strong if any discrete reliance is to be placed on the information ratio. Its versatility, however, comes from the point that “added value” does not necessarily mean value added to the fund’s own benchmark. Analysts can decide which benchmark or index they wish the fund to outperform and adjust the statistics accordingly. Treynor Ratio: This is another risk‐adjusted performance measure, similar in calculation and application to the Sharpe ratio. The difference is that while Sharpe weighs a fund’s returns against total risk (standard deviation, or volatility), Treynor looks at excess return for each unit of systemic risk (the volatility, inherent in the market that cannot be diversified). The Treynor calculation takes the fund’s excess return over a notional risk‐free rate, then divides it by the fund’s beta. A Treynor ratio greater than 1 shows that the fund has produced more units of return than of risk. Based on market risk alone, the ratio assumes that nonsystemic risk is capable of being eliminated by diversification across a wide range of investments, and it measures whether the systemic risk has been rewarded. Also known as the volatility‐to‐reward ratio, Treynor is useful in comparing funds that invest in similar market sectors and achieve similar returns. For example, when assessing a range of UK equity funds, it is the one with the highest Treynor ratio that is taking on the least market risk to achieve its level of performance. Also, since it factors out the manager’s ability from movements in the fund’s sector, Treynor may be used to compare fund performances adjusted for systemic risks in different market sectors because, although intuitively the ratio should be higher for bond funds than for those investing entirely in equities, this is not necessarily true in every case. While not perfect, and not to be taken in isolation, the Treynor ratio can be a pointer to the optimum risk‐ and sector‐adjusted fund for a particular risk‐aversion profile. Jensen’s Alpha: This is a risk‐adjusted measure used to gauge the extent to which a manager has added value to the returns that could have been expected from a benchmark portfolio, while taking into account the fund’s sensitivity to that benchmark. Jensen’s alpha is therefore a test of whether the fund has achieved better performance than the beta would suggest. If the value is positive, it indicates an active management style with superior stockpicking ability. If the value is negative, it indicates that returns are falling short of the adjusted benchmark return. For further details visit: https://analytics.financialexpress.net/help/documentation/glossary‐statistical‐calculations/
42
Issued by Guinness Asset Management Limited, authorised and regulated by the Financial Conduct Authority. This report is primarily designed to inform you about Guinness Global Equity Income Fund. Any investment decision should take account of the subjectivity of the comments contained in the report. It is provided for information only and all the information contained in it is believed to be reliable but may be inaccurate or incomplete; any opinions stated are honestly held at the time of writing, but are not guaranteed. The contents of the document should not therefore be relied upon. It should not be taken as a recommendation to make an investment in the Fund or to buy or sell individual securities, nor does it constitute an offer for sale. Risk The Guinness Global Equity Income Fund is an equity fund. Investors should be willing and able to assume the risks of equity investing. The value of an investment and the income from it can fall as well as rise as a result of market and currency movement, and you may not get back the amount originally invested. Details on the risk factors are included in the Fund’s documentation, available on our website. Shareholders should note that all or part of the fees and expenses will be charged to the capital of the Fund. This will have the effect of lowering the capital value of your investment. Documentation The documentation needed to make an investment, including the Prospectus, the Key Investor Information Document (KIID) and the Application Form, is available from the website guinnessfunds.com, or free of charge from:‐
Residency In countries where the Fund is not registered for sale or in any other circumstances where its distribution is not authorised or is unlawful, the Fund should not be distributed to resident Retail Clients. THIS INVESTMENT IS NOT FOR SALE TO U.S. PERSONS. Structure & regulation The Fund is a sub‐fund of Guinness Asset Management Funds PLC (the “Company”), an open‐ended umbrella‐type investment company, incorporated in Ireland and authorised and supervised by the Central Bank of Ireland, which operates under EU legislation. The Fund has been approved by the Financial Conduct Authority for sale in the UK. If you are in any doubt about the suitability of investing in this Fund, please consult your investment or other professional adviser. Switzerland The prospectus and KIID for Switzerland, the articles of association, and the annual and semi‐annual reports can be obtained free of charge from the representative in Switzerland, Carnegie Fund Services S.A., 11, rue du Général‐Dufour, 1204 Geneva, Switzerland, Tel. +41 22 705 11 77, www.carnegie‐fund‐services.ch. The paying agent is Banque Cantonale de Genève, 17 Quai de l'Ile, 1204 Geneva, Switzerland. Telephone calls will be recorded and monitored. 03/08/2018, GBP