FP Thoroughbred Core Alpha Fund Short Report for the year ended 31 July 2015
Investment Objective and Policy The Fund aims to achieve long-term capital growth by the active management of a global multi asset portfolio. The Fund will aim to achieve its objective by investing mainly in Collective Investment Schemes (both regulated and unregulated) such as unit trusts and OEICs, and exchange traded funds as permitted by the FCA rules. The Fund will not invest more than 25% in any single Collective Investment Scheme. The asset allocation of the Fund will be constructed and managed in such a way as to ensure there is diversity within the Fund and, as a result, at any given time, the portfolio of investments of the Fund will have an overall risk profile that is balanced both by geography and investment sector, but with a UK bias that reflects the likely residency of most of the Fund’s investors. Within constraints agreed with the Fund’s investment committee, the Fund managers may decide to exclude certain investment sectors at any point in time, with the intention of improving risk adjusted returns. The Fund may also invest in transferable securities, money market instruments, cash and near cash holdings and deposits. The Fund may utilise derivatives for the purposes of efficient portfolio management. Use may also be made of stock lending, borrowing, cash holdings, and other investment techniques of efficient portfolio management.
Fund Facts
Risk Profile
Interim/Annual Accounting End Dates
Ex-dividend (xd) Dates
Income Distribution/ Accumulation Dates
31 January 31 July
01 August
30 November
Please refer to the Full Prospectus for details of all the risks. The Fund has exposure to credit, counterparty and usual market risks. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up. Exchange rate changes may cause the value of any overseas investments to rise or fall. You should always regard investments in the Fund as medium to long term.
Charges
Share Class B
0.00%
Annual Management Charge as at 31/07/15 0.75%
Share Class C
0.00%
0.25%
Share Class
Initial Charge
Total Expense Ratios as at 31/07/15 1.53% 1.03%
Total Expense Ratios as at 31/07/14 1.55% 1.05%
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FP Thoroughbred Core Alpha Fund │ Short Report for the year ended 31 July 2015
Distributions/Accumulations The distribution for Share Class B Accumulation is 1.5204p per Share, payable 30 November 2015. The distribution for Share Class C Accumulation is 2.5316p per Share, payable 30 November 2015.
Comparative Tables Net Asset Value Net Asset Value of Share Class (£)
Shares in issue
Net Asset Value pence per Share
31/07/13
383,630
244,970
156.60
31/07/14
7,101
4,386
161.90
31/07/15
7,649
4,386
174.39
31/07/13
52,130,727
31,417,262
165.93
31/07/14
55,622,366
32,286,122
172.28
31/07/15
56,892,381
30,506,507
186.49
Highest Published Share price (p)
Lowest Published Share price (p)
Net Revenue per Share (p)
2010
136.97
116.49
0.0000
2011
138.74
120.13
0.0240
2012
138.92
125.38
0.7138
2013 1
152.82
138.80
0.0000
2010
137.50
116.68
0.3616
2011
139.51
120.87
0.4814
2012
140.23
126.21
1.0475
2013
160.47
140.10
1.3444
2014
167.66
156.74
1.9217
2015 2
181.30
167.14
1.5204
2010
144.07
121.77
1.2723
2011
146.57
127.14
1.4448
2012
148.22
132.87
1.6532
2013
170.20
148.10
2.0638
2014
178.71
166.96
2.2179
2015 2
193.59
178.23
2.5316
Date Share Class B Accumulation
Share Class C Accumulation
Price and Revenue History Calendar Year Share Class A Accumulation
Share Class B Accumulation
†
Share Class C Accumulation
†
1
From 1 January to 12 March 2013. 2 From 1 January to 31 July 2015. † Includes the distributions payable 30 November 2015. Share Class A Accumulation was closed 12 March 2013. All Share Classes were launched 3 March 2009.
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FP Thoroughbred Core Alpha Fund │ Short Report for the year ended 31 July 2015
Comparative Tables (continued) Major Holdings % of Fund as at 31/07/15
Top 10 Holdings
% of Fund as at 31/07/14
Top 10 Holdings
Standard Life Global Absolute Return Strategies
9.35
Standard Life Global Absolute Return Strategies
5.98
Henderson UK Property
8.74
Artemis UK Growth
5.84
First State Asia Pacific Sustainability
7.89
First State Asia Pacific Sustainability
5.68
Kames High Yield Bond
5.29
Invesco Perpetual UK Strategic Income
5.46
Artemis UK Growth
4.89
Kames High Yield Bond
4.94
PFS Chelverton UK Equity Income
4.79
Threadneedle UK Equity Income
4.92
Vanguard S&P 500
4.77
Pictet Water
4.76
ETFS Physical Gold
4.62
Henderson UK Property
4.73
Ignis UK Property
4.41
ETFS Physical Gold
4.53
Invesco Perpetual UK Strategic Income
4.27
Invesco Perpetual Japan
3.89
Portfolio Information Breakdown of Investment type 80
75.36%
70 60 50 40 30 17.33%
20
6.40%
10
2.10%
0 -10
Collective Investment Schemes[68.38%]
Exchange Traded Funds [10.74%]
Equities [4.53%]
Offshore Funds [4.76%]
(1.19) Net other liabilities [11.59%]
Comparative figures shown above in square brackets relate to 31 July 2014.
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FP Thoroughbred Core Alpha Fund │ Short Report for the year ended 31 July 2015
Investment Manager’s Report Investment review The last year has been characterised by periods of higher volatility across most equity markets and indeed in many asset classes. Some markets have risen steeply and fallen back almost as sharply, others have been characterised by an almost sloth like tolerance of events. I remain on the cautious side of optimistic, and, as I commented in the previous Full Report, the Fund entered the reporting period with higher cash weighting reflecting short term caution. In September I changed how this caution was reflected, adding to commercial property and absolute return. This cautious stance remained in place for the rest of the year under review. In early February I opportunistically added exposure to the oil price, believing the price will be higher in the medium to long term – though this has not yet paid off, it is a holding I plan to maintain, and may even add to in the event of further oil price weakness. This position was funded from cash, and was followed in April by a reduction across UK equities, a move made due to the potential volatility around the General Election, where many commentators, Mattioli Woods included, were predicting a hung parliament which could lead to weeks of coalition negotiations and, I felt, much more downside for markets than upside. We also took profits on the water holding, adding to physical gold, and trimmed investment grade bonds adding to absolute return. The “surprise” majority outcome led me to reintroduce half the exposure but I also took this opportunity to re-assess our UK exposure. Having decided many equity markets looked pretty fully valued and the possible impact of a promised in/out European Union referendum on the market, I added to alternative asset classes, namely commercial property and absolute return. Throughout I have been overweight my peers on Japan, and underweight the US, both of which have felt comfortable and have paid dividends for performance. Significant trades for the year under review include:
Buying ETFS Daily Hedged Brent Crude Oil and Custodian REIT (February), the latter for further diversification within commercial property allocations (smaller, more regional lots than existing funds hold)
Within Property, adding a new position in Custodian REIT (February) and selling M&G Property Portfolio on performance concerns and topped up Ignis UK Property (April).
Tactically halving UK Equities (April) including sales of Threadneedle UK Equity Income, Artemis UK Growth and Schroder UK Dynamic Smaller Companies and the subsequent reinvestment of half this amount (May) back into Artemis UK Growth, but topping up Chelverton UK Equity Income and Franklin UK Smaller Companies.
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FP Thoroughbred Core Alpha Fund │ Short Report for the year ended 31 July 2015
Investment Manager’s Report (continued) Outlook We ended the year with lower exposure to equities and fixed interest, with increased exposure to commercial property and absolute return. This reflects my continuing near term caution. Although arguably the area with some of the best economic growth, I continue to view the US as relatively expensive compared to other global equity markets and think valuations cannot be justified by corporate earnings. I still have near term concerns over Europe’s slow recovery and China’s ability to smoothly transition to a consumer led economy, from one based on government investment. With this in mind I believe periods of high volatility look set to continue in markets, though I am perhaps more sanguine about China’s ability to come through this big change than others. Within fixed interest, I continue to see little value in sovereign debt, with a few bonds now trading with negative yields. I continue to prefer convertibles and high yield within this arena and am assessing alternatives with a US rate rise still possible later this year. With lower return prospects for bonds and equities, I view returns from income and in particular alternative asset classes as an increasingly important part of my diversified portfolio. I continue to view the income from commercial property as attractive, along with uncorrelated returns from absolute return. I continue to hold physical gold as insurance, being most concerned about the possibility of currency wars. Simon Gibson Director Mattioli Woods Plc 9 September 2015
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FP Thoroughbred Core Alpha Fund │ Short Report for the year ended 31 July 2015
Significant Information On 22 July 2014, Fund Partners Limited was authorised by the FCA as an Alternative Investment Fund Manager (“AIFM”). Under the Alternative Investment Fund Managers Directive, acting as the Alternative Investment Fund Manager, Fund Partners are required to disclose how those whose actions have a material impact on the Fund are remunerated. The remuneration strategy across Fund Partners is governed by the Remuneration Committee, a committee of the Fund Partners Board. The Remuneration Committee has established an AIFM Remuneration Policy designed to ensure the AIFM Remuneration Code in the UK Financial Authority handbook are met proportionally for all AIFM Remuneration Code Staff. Fund Partners considers its activities as non complex due to the fact that regulation limits the AIF strategies conducted and the scope of investment in such a way that investor risk is mitigated. The discretion of Fund Partners and the portfolio manager is strictly controlled within certain predefined parameters as determined in the prospectus of each Alternative Investment Fund. In its role as an AIFM, Fund Partners deem themselves as lower risk due to the nature of the activities it conducts. Fund Partners does not pay any form of variable remuneration currently. Therefore Fund Partners have provided a basic overview of how staff whose actions have a material impact on the Fund are remunerated. July 2015
Total remuneration paid
Number of Beneficiaries
Total remuneration paid by the AIFM during the financial year Remuneration paid to employees of the AIFM who have a material impact on the risk profile of the AIF
Fixed remuneration
Variable remuneration paid
Carried interest paid by the AIF
55
1,714,794
1,714,794
0
0
5
385,813
385,813
0
0
Due to the size and structure of Fund Partners, it is determined that employees of the AIFM who have a material impact on the risk profile of the AIF includes the Board and the Head of Risk and Compliance. The delegated investment manager is subject to regulatory requirements on remuneration that Fund Partners deem to be equally as effective as those detailed in the Alternative Investment Fund Managers Directive, which would include the Capital Requirements Directive or Markets in Financial Instruments Directive.
The information in this report is designed to enable shareholders to make an informed judgment on the activities of the Fund during the period it covers and the result of those activities at the end of the period. The long Report and Accounts are available free of charge on request. For more information about the activities and performance of the Fund during the period and previous periods, please contact:
Authorised Corporate Director
Depositary
Investment Manager
Auditor
Fund Partners Limited Cedar House, 3 Cedar Park, Cobham Road, Wimborne, Dorset, BH21 7SB
Northern Trust Global Services Limited UK Trustee & Depositary Services, 50 Bank Street, Canary Wharf, London, E14 5NT
Mattioli Woods Plc Cheveley House, Fordham Road, Newmarket, Suffolk, CB8 7XN
Deloitte LLP Chartered Accountants and Statutory Auditor Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2DB
Authorised by the Prudential Regulation Authority (PRA) and regulated by the FCA and the PRA
Authorised and regulated by the FCA
Customer Service Centre: 0845 111 0159 www.fundpartners.co.uk Authorised and regulated by the Financial Conduct Authority (FCA)
Please note that telephone calls may be recorded for monitoring and training purposes, and to confirm investors' instructions
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