Investment report - Standard Life Investments

Investment report - Standard Life Investments



MyFolio Managed Income

IV Fund

31 March 2014

The fund aims to provide an income-focused return with some capital appreciation over the longer term.

Investing mainly in a range of collective investment schemes from selected managers to achieve a broad

exposure to diversified investments, including equities, absolute returns, fixed and variable rate interest

bearing securities and immoveable property. The fund may also invest in transferable securities, moneymarket

instruments, deposits and cash. Typically, the fund will have a preference to those assets providing

potential for growth, such as equities.

The value of investments within the fund can fall as well as rise and is not guaranteed – you may get back

less than you pay in. The fund may use derivatives for the purposes of efficient portfolio management,

reduction of risk or to meet its investment objective if this is permitted and appropriate. The sterling value

of overseas assets held in the fund may rise and fall as a result of exchange rate fluctuations.



Fund of Funds


Fund Manager Bambos Hambi

Fund Manager Start 16 Dec 2011

Launch Date 16 Dec 2011

Current Fund Size £8.8m

Base Currency GBP

This document is intended for use by individuals who are familiar with investment terminology. Please contact your financial adviser if you need an

explanation of the terms used.

Fund Information *

Composition by Fund Exposure

Fund % Fund %

SLI Global Absolute Return Strategies 17.9 SLI Global Emerging Markets Equity Income 6.1

SLI UK Equity Income Unconstrained 15.3 SLI European Equity Income 4.0

SLI UK Property 10.9 Cash and Other 3.7

SPDR S&P US Dividend Aristocrats ETF 8.8 Jupiter Japan Income 1.4

SLI Emerging Markets Local Currency Debt 8.0 Schroder Asian Income Maximiser 1.1

SLI Higher Income 7.3 SLI Corporate Bond 0.9

SLI UK Equity High Income 7.2 SLI Absolute Return Global Bond Strategies 0.6

Cullen North American High Dividend Value Equity 6.4 SLI Short Duration Credit 0.4

Tactical asset allocation +

The table below shows the tactical asset allocation of each asset class relative to the strategic asset allocation position.

Asset Class Underweight % Strategic Asset % Overweight %

Cash & Other - 0.9 0.1

Sterling Corporate 2.4 3.6 -

Absolute Return Bonds - 0.5 -

UK Equities - 22.0 1.5

US Equities - 13.2 1.9

European Equities - 4.4 -

Japan Equities - - 1.3

Asia Pacific Equities 2.6 3.6 -

Emerging Market Equities 0.4 6.8 -

Sterling Hedged High-yield Bonds - 7.2 0.4

UK Property - 11.2 -

Emerging Market Debt - 7.6 0.4

Absolute Return - 19.0 -

+ Portfolios not re-balanced daily. Due to market fluctuations the Fund Composition may vary from the Tactical Asset Allocation.

Fund Performance *

Price Indexed







The performance of the fund has been

calculated over the stated period using

bid to bid basis for a UK basic rate tax

payer. The performance shown is based

on an Annual Management Charge

(AMC) of 0.23%. You may be investing

in another shareclass with a higher

AMC. The charges for different share

classes are shown on the next page. For

details of your actual charges please

contact your financial adviser or refer to

the product documentation.

Source: Standard Life Investments








MyFolio Managed

Income IV

Year on Year Performance

Source: Standard Life Investments (Fund)

Year to

31/03/2014 (%)

Year to

31/03/2013 (%)

Retail Fund Performance 4.9 12.2

Institutional Fund Performance 5.9 12.6

Platform One 5.6 n/a

Cumulative Performance

Source: Standard Life Investments (Fund)

6 Months (%) 1 Year (%)

Retail Fund Performance 4.5


Institutional Fund Performance 4.9


Platform One 4.8


Note: Past Performance is not a guide to future performance. The price of shares and the income from them may go down as well as up and

cannot be guaranteed; an investor may receive back less than their original investment.

For full details of the fund's objective, policy, investment and borrowing powers and details of the risks investors need to be aware of, please

refer to the prospectus.

For a full description of those eligible to invest in each share class please refer to the relevant prospectus.


Cash and Other - may include bank and building society deposits, other money market instruments such as Certificates of Deposits (CDs),

Floating Rate Notes (FRNs) including Asset Backed Securities (ABSs), Money Market Funds and allowances for tax, dividends and interest due if


Quarterly Commentary


Global equity markets generally made

marginal progress in the first quarter of

2014, with developed markets

outperforming emerging markets. At

the start of the year, concerns about

the impact of US quantitative easing

on emerging markets, as well as

disappointing economic data from the

US and China, led markets lower.

Markets did rebound somewhat over

the rest of the quarter, with some

developed markets hitting record

highs. In contrast, escalation tensions

in Ukraine and ongoing concerns over

an economic slowdown in China

weighed on emerging markets.

There was relatively limited volatility

and movement within government

bond markets over the first quarter.

The developing crisis in the Ukraine

did instil a risk premium into core

market bonds but the impact proved

relatively short-lived. Meanwhile,

spreads (the difference in yield

between government and corporate

bonds) on investment grade corporate

bonds tightened in both Europe and

the US to give positive excess returns.

Sterling credit spreads widened by 4-5

basis points over the quarter against a

backdrop of significant long-dated

corporate bond issuance in the UK.

The recent revival in UK commercial

real estate gathered momentum in the

first quarter of 2014, helped by further

evidence of economic recovery. Since

April 2013, commercial real estate

prices have increased by over 5% and

we expect rental growth to rise more

strongly as the economy improves

further. On a sector basis, offices

continue to lead the real estate

recovery, followed by industrials with

retail lagging. Investment activity

reached a six-year high in 2013, with

overseas participants the largest

investors but with increased

investment from UK institutions.

Activity has also started strongly in

2014 and we expect another busy year

in terms of investment volumes.


The Strategic Asset Allocation (SAA) for

each of the MyFolio funds is reviewed

every quarter, with the aim of ensuring

that the best long-term interests of

investors continue to be met. Following

the most recent review, no changes

were made to the SAA model.

Our Tactical Asset Allocation (TAA)

aims to position the MyFolio funds for

a favourable economic backdrop into

2014, which remains characterised by

sub-trend growth and interest rates

remaining low but slowly rising. In this

environment, the funds will achieve

the best risk-adjusted returns by

holding assets that are linked to

countries where central bank policy is

supportive and credit dynamics are


With this in mind, the main Tactical

Asset Allocation positions are listed


• Overweight position in developed

market equities versus an underweight

position in emerging markets equities

– concerns over weak Chinese data

and slowing US economic momentum

marked the start of 2014. We maintain

a relative overweight position in

developed markets where economic

growth expectations are improving.

Within emerging markets, there is

significant divergence. Some

countries, such as Brazil, have less

than desirable inflation and structural

dynamics, while other countries, such

as Turkey, have concerns over external

debt levels. Slowing growth has been a

feature of many emerging markets,

particularly China, which is the largest

constituent within the emerging market

bloc. On the other hand, the

economies of developed markets are

in a recovery phase. Improving growth

prospects in most areas are providing

a positive environment for equity

market returns. The US has led

developed markets on the path to

recovery, followed by the UK.

Meanwhile, Japan has experienced a

pick-up in growth momentum since the

emergence of Abenomics. We therefore

expect the relative outperformance of

developed versus emerging markets to

continue as growth in developed

markets continues to pick up, while

emerging economies continue to

struggle with declining growth rates

and other structural issues.

In terms of the underlying funds, we

made the following changes:

• Bought the Standard Life

Investments Short Duration Credit


• Sold the Smith & Williamson Short

Dated Corporate Bond Fund

We switched our holding from the

Smith & Williamson Short Dated

Corporate Bond Fund to the newly

launched Standard Life Investments

Short Duration Credit Fund in order to

meet our mandate to invest

predominantly in Standard Life

Investments funds.


Our overweight position (more than

the SAA) in high yield bonds was

positive for performance over the

quarter, as were underweight holdings

(less than the SAA) in Asia-Pacific

equities and emerging markets

equities. At a fund level, positive

contributions came from our holdings

in the Standard Life Investments UK

Equity Income Unconstrained Fund, the

Schroder Asian Income Maximiser

Fund, the Standard Life Investments

UK Property Fund, the Standard Life

Investments Short Duration Credit

Fund and the Standard Life

Investments Global Emerging Markets

Local Currency Debt Fund.

On the downside, our overweight

holdings in UK and Japanese equities

were detrimental. At a fund level, the

weakest performers were the Standard

Life Investments Global Emerging

Markets Equity Income Fund, the

Jupiter Japan Income Fund, the

Standard Life Investments European

Equity Income Fund and the Standard

Life Investments Corporate Bond Fund.


Our cautiously optimistic view of the

global economy remains intact. Easy

monetary policy and the reduced pace

of public and private sector

deleveraging will help support growth.

We are also encouraged by the

increased contribution of business

investment to growth in the major

economies at the end of last year. In

general, we retain our preference for

developed over developing markets.

The US should continue to see

underlying demand improve through

2014, with trends in fiscal policy,

household deleveraging and

investment-led growth all moving in

the right direction. In contrast, many

emerging markets remain under


We remain constructive on corporate

bonds as the main structural drivers

for the asset class remain in place. Our

central case is for spreads to tighten

over the course of the year. We may

have to endure pockets of volatility,

although this will offer opportunities

that we can exploit.

We anticipate that the recent

improvement in capital values in UK

commercial real estate will continue,

while rents should grow more strongly

as the UK economy improves. As a

result, investors in UK commercial

property can expect reasonably strong,

positive total returns over a three-year

period. Prime/good quality secondary

assets and selective poorer quality

secondary assets in stronger locations

are likely to provide the best

opportunities in the improving

economic environment we anticipate in


Other Fund Information

Retail Acc Retail Inc Institutional Acc Institutional Inc

Lipper n/a n/a n/a n/a

Bloomberg n/a n/a n/a n/a

ISIN GB00B78HGR05 GB00B6VFW652 GB00B66WF408 GB00B6SVGS62


Platform One Acc

Platform One Inc

Lipper 68165330 68165331


ISIN GB00B463K228 GB00B7MW6592

SEDOL B463K22 B7MW659



Reporting Dates 31 Dec 30 Jun

XD Dates 30 Sep, 31 Dec, 31 Mar 30 Jun

Payment Dates (Income) 31 Jul, 31 Jan, 30 Apr 31 Oct

Valuation Point

Type of Share

ISA Option


Income & Accumulation


Retail Institutional Platform One

Initial Charge 4.00% 0.00% 0.00%

Annual Management Charge 1.15% 0.23% 0.40%

Ongoing Charges Figure 1.98% 1.06% 1.28%

The Ongoing Charges Figure (OCF) expresses the annualised operating expenses of each share class as a percentage of the average net asset

value of that class over the last annual reporting period.

*Any data contained herein which is attributed to a third party ("Third Party Data") is the property of (a) third party supplier(s) (the “Owner”) and is

licensed for use by Standard Life**. Third Party Data may not be copied or distributed. Third Party Data is provided “as is” and is not warranted to be

accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, Standard Life** or any other third party (including any

third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data.

Past performance is no guarantee of future results. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to

which Third Party Data relates.

**Standard Life means the relevant member of the Standard Life group, being Standard Life plc together with its subsidiaries, subsidiary undertakings

and associated companies (whether direct or indirect) from time to time.

“FTSE®”, "FT-SE®", "Footsie®", [“FTSE4Good®” and “techMARK] are trade marks jointly owned by the London Stock Exchange Plc and The Financial

Times Limited and are used by FTSE International Limited (“FTSE”) under licence. [“All-World®”, “All- Share®” and “All-Small®” are trade marks of


The Fund is not in any way sponsored, endorsed, sold or promoted by FTSE International Limited (“FTSE”), by the London Stock Exchange Plc (the

“Exchange”), Euronext N.V. (“Euronext”), The Financial Times Limited (“FT”), European Public Real Estate Association (“EPRA”) or the National

Association of Real Estate Investment Trusts (“NAREIT”) (together the “Licensor Parties”) and none of the Licensor Parties make any warranty or

representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE EPRA NAREIT Developed Index (the

“Index”) and/or the figure at which the said Index stands at any particular time on any particular day or otherwise. The Index is compiled and

calculated by FTSE. However, none of the Licensor Parties shall be liable (whether in negligence or otherwise) to any person for any error in the Index

and none of the Licensor Parties shall be under any obligation to advise any person of any error therein.

“FTSE®” is a trade mark of the Exchange and the FT, “NAREIT®” is a trade mark of the National Association of Real Estate Investment Trusts and

“EPRA®” is a trade mark of EPRA and all are used by FTSE under licence.”

Useful numbers -

Mutual Funds Servicing

0845 279 3003.

Market and Fund Specific Information

0845 60 60 062.

Call charges will vary.

Standard Life Investments Limited is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL.

Standard Life Investments Limited is authorised and regulated by the Financial Conduct Authority.

Calls may be monitored and/or recorded to protect both you and us and help with our training. © 2014 Standard Life 201404101618 INVRT000 0314 XL8E

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