THIS IS THE MINIMUM DISCLOSURE DOCUMENT AS REQUIRED BY BOARD NOTICE 92
MARCH 2017
OLD MUTUAL GLOBAL CURRENCY FEEDER FUND
FUND INFORMATION
FUND PERFORMANCE as at 31/03/2017
% PERFORMANCE (ANNUALISED)
RISK PROFILE
Low
Low to
Moderate
Moderate
Moderate to
High
1-Yr
High
The risk rating does not take the impact of exchange rate fluctuations into account.
RECOMMENDED MINIMUM INVESTMENT TERM
3-Yr
5-Yr
7-Yr
10-Yr
Since
Inception1
Fund (Class A)
-11.0%
4.4%
-
-
-
Fund (Class B1)2
-10.9%
3.9%
-
-
-
9.3%
-
Benchmark
-13.2%
3.5%
8.7%
-
-
6.7%
Performance since inception of the fund.
Inception: 30 November 2013. Class B1 Fund is only available through investment platforms such as
Old Mutual Wealth.
Performance measurements over periods shorter than the recommended investment term may not be
appropriate. Past performance is no indication of future performance. Fund returns are net of fees.
1
2
5 years+
FUND OBJECTIVE
The fund aims to maximise total return to investors through full exposure to a
basket of major foreign currencies by investing in a foreign collective investment
scheme focusing on global currencies. Any income earned will be of an
incidental nature.
WHO IS THIS FUND FOR?
This fund is aimed at investors who want rand-denominated exposure to a
basket of major foreign currencies, while avoiding equity risk. The investor can
tolerate exchange rate volatility.
INVESTMENT MANDATE
Apart from assets in liquid form, the feeder fund holds participatory interests in
only one collective investment scheme, the Old Mutual Global Currency Fund,
a sub-fund of the Russell Investments Company PLC. This underlying sub-fund will
primarily invest in short-term securities with an outstanding term of 12 months or
less including commercial paper, banker’s acceptances, certificates of deposit
and government securities.
REGULATION 28 COMPLIANCE
The fund aims to offer exposure to a specific asset class. It therefore holds a higher
allocation to international assets than what is allowed in terms of Regulation 28
of the Pension Funds Act. This fund is therefore not Regulation 28 compliant.
BENCHMARK:
A composite of the currency weights of the IMF’s
Special Drawing Rights Basket (SDR) and the capital
returns and yields on three-month instruments across
the US, Europe, the UK and Japan.
ASISA CATEGORY:
Global – Interest Bearing – Short Term
FUND MANAGER(S):
The underlying sub-fund manager selection is
performed by Old Mutual Investment Group –
MacroSolutions, where Urvesh Desai is the lead
portfolio manager.
The sub-fund is managed by Rogge Global Partners.
LAUNCH DATE:
01/03/2010*
* The investment policy and name of the fund changed on
23/02/2013 (previously the Old Mutual US Dollar Feeder Fund).
SIZE OF FUND:
R359m
31/12/2016
Highest
Average
Lowest
Rolling 12-Month Return
35.0%
11.5%
-18.9%
Performance Since Inception
180
170
160
Fund
Benchmark
SA Inflation
150
140
130
120
110
100
90
Jan 13
Nov 13
Dividend
Interest
Total
Total %
0.75c
3.71c
4.46c
1.37%
FUND COMPOSITION
Sep 14
Maximum Drawdown
Liquid Assets
N/A
% Positive Months
52.0%
Annual Standard Deviation
14.1%
1-Year Annualised Rolling Returns (Fund vs Benchmark)
40%
Fund
Benchmark
30%
20%
10%
0%
-10%
-20%
Jul 14
Jan 15
Jul 15
Jan 16
Jul 16
Jan 17
CURRENCY SPLIT
US Dollar
Chinese Yuan
3.6%
Mar 17
-11.9%
Months to Recover
39.8%
Euro
96.4%
May 16
Risk Statistics (Since Inception)
33.2%
ASSET & PERCENTAGE ALLOCATION
RIC Old Mutual
Gobal Currency
Fund
Jul 15
Past performance is no indication of future performance.
-30%
Jan 14
DISTRIBUTIONS:(Annually)
Date
Fund (Since Inception)
Indexed to 100 on 31 Jan 2013
3 years+
Indexed to 100 on 31 Jan 2013
1 year+
10.8%
UK Sterling
8.1%
Japanese Yen
8.1%
Funds are also available via Old Mutual Wealth and MAX Investments.
Helpline 0860 234 234 Fax +27 21 509 7100 Internet www.omut.co.za Email [email protected]
OLD MUTUAL GLOBAL CURRENCY FEEDER FUND
FUND MANAGER INFORMATION
URVESH DESAI
PORTFOLIO MANAGER
• BSc (Hons), FIA (Fellow
of the Institute of
Actuaries)
FUND COMMENTARY
as at 31/03/2017
Interest rate markets moved to fully price an imminent rate hike
at the March US Federal Reserve (Fed) policy meeting following
the release of a series of robust US economic data. The Fed did
indeed deliver on that front, hiking rates by 25bps in March.
Meanwhile, both the Bank of Japan and Bank of England chose
to retain a wait-and-see policy stance. In the euro-area, the
European Central Bank (ECB) left policy unchanged at its latest
policy meeting, but there were early signs that it was setting the
stage for a gradual process to dial down its stimulus programme.
Political risks also receded in the region as Geert Wilders’ Dutch
populist anti-EU PVV party won fewer seats than expected in the
Dutch elections. However, oil and commodity-related assets were
dragged lower by a decline in oil prices on the back of a rise
in US crude oil inventories and concerns about future OPEC oil
production. Ongoing uncertainty about the Trump administration’s
ability to pass substantive tax reforms in 2017 also weighed
on market sentiment. The US 10-year Treasury yield ended the
month unchanged at 2.39%, having risen as high as 2.63% in
the middle of the month. The US dollar softened against the other
G4 currencies over the month.
Republicans’ efforts in the House of Representatives to “repeal and
replace” the Affordable Care Act collapsed with both moderate
and conservative Republicans failing to agree on the details of
a bill proposed by the House Speaker. The inability to follow
through on one of President Trump’s key policy priorities has now
raised market concerns that efforts to make significant reforms to
the US corporate tax structure may also stall in the coming months.
Elsewhere, the Fed delivered a “dovish” 25bp rate hike at its
March policy meeting, with almost all of the voting members in
agreement that the progress made by the US economy over the
past three months warranted further monetary tightening. The rate
hike takes the target range for the fed funds rate to 0.75%-1%.
Many market participants had expected the Fed to upwardly
revise its forward guidance on policy rates, but it refrained from
delivering such a move. The Fed’s latest collective forecasts point
to two more rate hikes this year and a further three rate hikes
in 2018. As such, US Treasury yields traded lower after the
meeting and the US dollar weakened. We continue to believe
that the Fed will tighten policy only gradually, while other central
banks will remain behind the curve on rate hikes, even though
the pressure to maintain a highly accommodative policy stance
is diminishing globally.
At the ECB’s latest policy meeting, it indicated its reluctance to
shift from its highly accommodative policy stance at this juncture,
partly given heightened political risks in the region. However, the
euro area economy continues to grow at an above trend rate,
while disinflationary pressures have also eased in the region. As
such, the ECB’s policy language became a little more nuanced on
forward guidance and we believe that there are hints from the ECB
that it may look to announce a shift in its policy bias as the year
progresses, especially if, as we expect, the French election passes
off without a Le Pen victory. Initially, euro area government bond
yields traded higher, with 10-year Bund yields rising to 49bps,
although they still ended the month at 33bps. Meanwhile, the
very attractive fixed rate pricing for the final offering of the ECB’s
targeted longer-term refinancing operations (TLTRO-II) meant that
there was a solid take-up of funds by a wide range of European
banks. A total of €233.5bn was allotted amongst 474 bidders,
bringing the gross take-up of the TLTRO-II programme to €740bn
over the past twelve months. EUR/USD ended the month at 1.07,
modestly higher over the month.
The UK Spring Budget saw the government maintain its fiscal
targets as the borrowing requirement for the current fiscal year
remained lower than initially feared thanks to robust economic
growth since last year’s EU referendum result. The Bank of England
left policy unchanged as expected, whilst broadly signalling that
the need for further policy easing is waning against a backdrop
of rising imported inflationary pressures and decent economic
growth prospects. Both core and headline CPI inflation rose faster
than expected in February, with headline CPI moving above the
Bank’s 2% inflation target, to 2.3% y/y. On the political front,
the UK government officially triggered Article 50 on 29 March,
beginning the two-year period of negotiations on the terms of the
UK’s exit from the EU. GBP ended the month fractionally higher
versus the US dollar at 1.254.
EM fixed income assets traded higher in March, aided by the
decline in the US dollar and US Treasury yields following the
“dovish hike” from the Fed. EM hard currency debt rose by 0.4%,
supported by the decline in core yields, with investment grade
credits outperforming high yield. Meanwhile, EM local bonds
OTHER INVESTMENT CONSIDERATIONS
increased by 2.3% in US$ unhedged terms, reflecting both gains
in duration and support from stronger EM currencies. By region,
Latin American local debt outperformed (+3.6%) while Asia slightly
underperformed (+2.0%). On the FX front, EM currencies gained
1.6% on aggregate against the US dollar, led by MXN, which
rallied 7.4% over the month, aided by Banxico’s recently introduced
FX hedging programme. RUB (+3.6%) and INR (+2.8%) also
outperformed, the latter supported by a favourable state election
outcome which saw PM Modi’s party perform better than expected,
while ZAR (-2.1%) weakened sharply into month-end, following
President’s Zuma’s decision to fire Finance Minister Gordhan.
In South Africa, Zuma’s decision to remove Gordhan gives him
more control of the National Treasury, and as a result increases the
risk of further ratings downgrades to junk, following S&P’s decision
to cut its foreign currency rating to BB+, with a negative outlook.
While there is some suggestion a no confidence motion against
Zuma will be called, it is likely to fail at this juncture as his support
base within the ANC National Executive Committee remains
strong, thus keeping South African assets under pressure for now.
On the monetary policy front, China’s central bank followed the
Fed, raising the rates it charges on its reverse repo operations
with banks by a further 10bps. The move had been expected,
although the timing after the US Fed hike was partly motivated
by the desire to preserve some of CNY’s carry over USD. More
fundamentally, however, the PBoC wishes to contain domestic
credit risks, which suggests we will see more policy tightening via
further hikes in interbank rates in coming months. Elsewhere, the
Turkish central bank also tightened policy, hiking its late liquidity
lending rate by a further 75bps to 11.75% as expected. With
inflation well above target and political tensions still elevated in
the run-up to April’s referendum on the Executive Presidency, risks
remain skewed towards further tightening in the near term. TRY
may remain volatile until these risks have passed.
By contrast, Russia’s central bank cut rates for the first time in six
months in March, reducing the policy rate by 25bp to 9.75%.
Nonetheless, relatively hawkish rhetoric accompanying the decision
suggests that any additional easing will be gradual. We expect
125bps in further cuts this year, likely in 25bps increments. In
Chile, the central bank also cut its policy rate by 25bps on the
back of subdued price pressures and weak activity data. Weak
growth prospects are likely to extend and could prolong the easing
cycle, especially if the central bank paints a downbeat outlook in
its policy report due 3 April.
With respect to currencies we booked profits on our short JPY versus
EUR position mid-month, before rotating into a short USD versus
EUR trade. The portfolio continues to invest in a highly diversified
and high quality selection of short-dated debt.
Source: Old Mutual Investment Group as at 31/03/2017
ONGOING
MINIMUM INVESTMENTS:
• Monthly: R500 • Lump sum: R10 000 • Ad hoc: R500
INITIAL CHARGES (All fees are VAT inclusive):
There is no initial administration charge for investment transactions of R500 and
above. Initial adviser fee will be between 0% and 0.68%.
Investment transactions below the R500 fund minimum incur a 0.46% administration charge.
EXIT FEE:
Old Mutual Unit Trusts will charge an exit fee of 2.28% if exiting within 2 weeks
of entry and reserves the right to charge this fee if exiting within 6 months of
entry. The exit fee will not apply to investments in the fund via the Old Mutual
Unit Trusts Tax-Free Investment.
Annual service fees (incl. VAT)
Class A
0.87%
0.02%
0.89%
Class B1*
0.86%
0.68%
* Please note: The Class B1 Fund is only available through investment platforms such as Old Mutual Wealth.
The fee is accrued daily and paid to the management company on a monthly basis. Other charges incurred
by the fund, and deducted from its portfolio, are included in the TER. A portion of Old Mutual Unit Trusts’
annual service fees may be paid to administration platforms.
TAX REFERENCE NUMBER: 9245/117/18/0
ISIN CODES:
Class A
ZAE000140380
Class B1
ZAE000184289
36 Months
Total Expenses
Total Expense Ratio (TER)
Transaction Cost (TC)
Total Investment Charge
Class A
12 Months
Class B1*
0.70%
0.02%
0.72%
Class A
1.01%
0.02%
1.03%
Class B1*
0.84%
0.02%
0.86%
TER is a historic measure of the impact the deduction of management and operating costs has on a fund’s value. A higher TER does not necessarily imply a poor return, nor does a low TER imply a good return. The current
TER, which includes the annual service fee, may not necessarily be an accurate indication of future TERs. Transaction Cost (TC) is a necessary cost in administering the fund and impacts fund returns. It should not be considered
in isolation as returns may be impacted by many other factors over time including market returns, the type of fund, the investment decisions of the investment manager and the TER.
* Please note: The Class B1 Fund is only available through investment platforms such as Old Mutual Wealth.
Funds are also available via Old Mutual Wealth and MAX Investments.
Helpline 0860 234 234 Fax +27 21 509 7100 Internet www.omut.co.za Email [email protected]
We aim to treat our clients fairly by giving you the information you need in as simple a way as possible, to enable you to make informed decisions about your investments.
• We believe in the value of sound advice and so recommend that you consult a financial planner before buying or selling unit trusts. You may, however, buy and sell without the help of a financial planner. If you do use a
planner, we remind you that they are entitled to certain negotiable planner fees or commissions.
• You should ideally see unit trusts as a medium- to long-term investment. The fluctuations of particular investment strategies affect how a fund performs. Your fund value may go up or down. Therefore, we cannot guarantee
the investment capital or return of your investment. How a fund has performed in the past does not necessarily indicate how it will perform in the future.
• The fund fees and costs that we charge for managing your investment are disclosed in the relevant fund’s Minimum Disclosure Document (MDD) or table of fees and charges, both available on our public website or from
our contact centre.
• Additional information on this proposed investment can be obtained, free of charge, from our public website or our contact centre.
• Our cut-off time for client instructions (e.g. buying and selling) is at 15:00 each working day for all our funds, except the Money Market Funds, the price of which is set at 13:00. These are also the times we value our
funds to determine the daily ruling price (other than at month-end when we value the Old Mutual Index Funds and Old Mutual Multi-Managers Fund of Funds range at 17:00 close). Daily prices are available on the OMUT
public website and in the media.
• Unit trusts are traded at ruling prices, may borrow to fund client disinvestments and may engage in scrip lending. The daily ruling price is based on the current market value of the fund’s assets plus income minus expenses
(NAV of the portfolio) divided by the number of units on issue.
• This fund holds assets in foreign countries and therefore it may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information.
• A feeder fund is a portfolio that invests in a single fund which levies its own charges. This could result in a higher fee structure for the feeder fund.
• The Net Asset Value to Net Asset Value figures are used for the performance calculations. The performance quoted is for a lump sum investment. The performance calculation includes income distributions prior
to the deduction of taxes and distributions are reinvested on the ex-dividend date. Performances may differ as a result of actual initial fees, the actual investment date, the date of reinvestment and dividend
withholding tax. Annualised returns are the weighted average compound growth rates over the performance period measured. Performances are in ZAR and as at 31 March 2017. Sources: Morningstar and
Old Mutual Investment Group (FSP no. 604).
Old Mutual Unit Trust Managers (RF) (Pty) Ltd (OMUT), registration number 1965 008 47107, is a registered manager in terms of the Collective Investment Schemes Control Act 45 of 2002. Old Mutual is a member of the
Association for Savings and Investment South Africa (ASISA). OMUT has the right to close the portfolio to new investors in order to manage it more efficiently in accordance with its mandate.
Trustee: Standard Bank, PO Box 54, Cape Town 8000. Tel: +27 21 401 2002, Fax: +27 21 401 3887.
Issued: April 2017