HANSA TRUST Board Meeting 28th January 2015/media/Files/H/Hansa-Trust/documents... · Sao Paulo and...
Transcript of HANSA TRUST Board Meeting 28th January 2015/media/Files/H/Hansa-Trust/documents... · Sao Paulo and...
April 2018
2
Hansa Trust is a proprietor based investment trust blending best-in-class third party funds, a global equity portfolio and a strategic holding in Ocean Wilsons Holdings
Managed by Hansa Capital Partners the trust adopts a long-term approach, ignoring short-term noise, with a focus on the growth and preservation of capital.
We are fully aligned with our investors, with significant internal money under management, in addition to third-party mandates
This patient approach to managing money leads to natural bias towards equities albeit one that is dynamically dialled up and down as influenced by the economic cycle
The strategic holding in Wilson Sons, held through the stake in Ocean Wilsons Holdings, gives access to the large and growing Brazilian logistics and container industries. Wilsons has created significant economic value through time which has been reflected in exceptional long-term share price performance
3
HANSA TRUSTIndex
• History of Hansa & Strategic Review
• Performance Review
• Portfolio Positioning & Characteristics
• Ocean Wilsons Holdings
• Market Outlook
• Appendix
History of Hansa & Strategic Review
4
5
HANSA TRUSTHansa timeline
A history of buying and selling large strategic stakes
Hansa Trust began life as Scottish and Mercantile Investment Company
Rea Brothers was formedThe Salomon Family obtain control of
Rea Brothers
Rea Brothers acquire a number of investment companies, including
Scottish and Mercantile
Rea Brothers purchases 58% of Ocean Wilsons
Holdings LimitedScottish and
Mercantile becomes Finsbury Trust
Rea Brothers was sold
Finsbury Trust becomes Hansa Trust
Ocean Wilsons successfully floats 41.75% of Wilson Sons Limited on the Sao Paulo and the Luxembourg Stock
Exchanges
Strategic review of Hansa Trust initiated
1900 1920 1940 1960 1980 2000 2020
6
HANSA TRUSTCorporate structure
HANSA TRUSTStrategic Review
7
Description Portfolio Weight
Core Regional
Thematic
Core Regional exposure based on the output of the Hansa House View.
Thematic Growth sectors such as biotechnology and technology
34.3%
5.6%
Global Equities Equity exposure through direct global holdings 16.5%
Diversifying Diversifying investments. As business cycles mature we seek to dynamically shift to those asset classes and sectors which will add portfolio protection
12.5%
Strategic Stakes
Diversifying
Wilson Sons – Brazilian operating assets
Ocean Wilsons Investments Limited – Fund portfolio
19.7%
11.3%
The ‘Four Silo Approach’ - By blending assets and managers with different characteristics we aim to develop the optimal portfolio
Description Portfolio Weight
UK Equities
Special situation UK equities but also included larger UK holdings
65%
Strategic Stakes
Wilson Sons – Brazilian operating assets
(includes Ocean Wilsons Investment portfolio)
35%
Hansa TrustJanuary 2014
Hansa TrustMarch 2018
Performance Review
8
HANSA TRUSTPerformance to end March 2018
9
Source: Hansa Trust internal, unaudited data: Bloomberg, FTSE
3 months One year 5 years (p.a.) 15 years (p.a.)
NAV Performance TR -2.0% 6.3% 5.9% 12.9%NAV Performance ex. OWHL TR -1.8% 6.0% 8.5% 10.9%Ordinary Share TR -4.6% 16.5% 5.6% 12.7%‘A’ Ordinary Share TR -3.7% 17.3% 5.8% 12.6%FTSE All-Stocks Gilts TR 0.3% 10.5% 4.2% 5.3%UK CPI 0.1% 2.4% 1.4% 2.2%MSCI All Country World Index NR GBP -5.0% 2.2% 11.0% 10.0%FTSE All Share TR -6.9% 1.2% 6.6% 9.1%
0%
100%
200%
300%
400%
500%
600%
Mar
-03
Sep-
03
Mar
-04
Sep-
04
Mar
-05
Sep-
05
Mar
-06
Sep-
06
Mar
-07
Sep-
07
Mar
-08
Sep-
08
Mar
-09
Sep-
09
Mar
-10
Sep-
10
Mar
-11
Sep-
11
Mar
-12
Sep-
12
Mar
-13
Sep-
13
Mar
-14
Sep-
14
Mar
-15
Sep-
15
Mar
-16
Sep-
16
Mar
-17
Sep-
17
Mar
-18
NAV Cum Income TR Ord Share TR A Ord Share TR
10
HANSA TRUSTPerformance of the different silos one year to 31 March 2018
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Core Regional Funds Global Equities Thematic Diversifying (exOWHL)
Ocean WilsonsHoldings Limited
Cash/FX
23,0
16,5
50
2,83
2,91
21,
068,
450
816,
907
694,
973
673,
764
494,
845
479,
033
236,
077
233,
144
228,
411
189,
381
188,
020
129,
847
103,
317
1,50
8,40
81,
448,
902
700,
800
439,
928
290,
615
203,
345
198,
651
192,
113
176,
242
156,
477
122,
656
57,9
89
1,41
7,24
31,
859,
927
62,9
80
239,
874
189,
801
67,1
5052
,739
29,3
13
10,1
82,8
37
236,
109
36,9
7625
8,61
91,
158,
996
17,8
7065
,864
121,
197
177,
179
231,
307
243,
857
257,
585
343,
938
500,
878
562,
954
52,7
02 1,45
724
,780
38,0
8582
,747
282,
822
441,
909
77,0
85
207,
821
£-
£5,000,000
£10,000,000
£15,000,000
£20,000,000
£25,000,000
Good
hart
: Han
joIn
dus J
apan
Lon
g O
nly
Blac
kRoc
k Eu
r Hed
geSI
SF A
sian
Tota
l Ret
urn
Find
lay
Park
Am
eric
anBl
ackR
ock
Fron
tiers
Prin
ce S
tree
t Ins
tO
dey
Abso
lute
Ret
urn
Adel
phi E
ur S
elec
t Equ
itySR
Glo
bal F
ront
iers
iSha
res E
uro
Stox
xSe
lect
Equ
ity O
ffsho
reVa
ngua
rd D
ev E
ur e
x U
KN
TAsia
n Di
scov
ery
Indu
s Jap
an JP
Y Un
hedg
edVu
lcan
Val
ue E
quity
Pers
hing
Squ
are
Inte
ract
ive
Brok
ers
Hans
teen
Hol
ding
sHi
lton
Food
UBM
CBRE
Orio
n En
gine
ered
Car
bons
Alph
abet
Coca
-Col
a Bo
ttle
rs Ja
pan
Berk
shire
Hat
haw
ayEx
orSa
msu
ngHo
war
d Hu
ghes
Cor
pO
rang
eIri
dium
Nut
rien
Trip
advi
sor
Baye
r AG
Softb
ank
CK H
utch
ison
Whi
te M
ount
ains
Libe
rty
Glob
alCV
S He
alth
Equi
ties S
old
Durin
g Pe
riod
GAM
Sta
r Tec
hSP
DR M
SCI W
orld
Fin
sW
orld
wid
e He
alth
care
Glob
al E
vent
Par
tner
s Ltd
Keyn
es D
ynam
ic B
Str
ateg
yCZ
Abs
Alp
ha U
CITS
GAM
Cor
e M
acro
Glad
wyn
e GB
PBN
Y Ab
s Ret
urn
Bond
Fun
dSc
hrod
er G
AIA
Blue
Tren
dHu
dson
Bay
MKP
Opp
Offs
hore
Fiel
d St
reet
Offs
hore
JLP
Cred
it O
ppO
cean
Wils
ons H
oldi
ngs
DV4
Ltd
Cash
/FX
Fund
Hol
ding
s sol
d du
ring
perio
dTo
tal
11
Private Equity
Global Equities DiversifyingCore Regional Funds
HANSA TRUSTPerformance Contribution 1 Year to end March 2018
OWHL
Thematic
71,2
12,6
67
3,93
8,52
43,
324,
895
2,72
5,30
22,
678,
145
2,09
4,90
81,
908,
942
1,53
0,36
81,
119,
126
548,
810
524,
761
365,
289
228,
411
189,
381
3,97
1,56
92,
209,
040
1,56
6,58
01,
508,
408
290,
615
250,
507
203,
345
198,
651
192,
113
176,
242
156,
477
122,
656
57,9
89
3,70
6,15
44,
556,
847
97,6
30
896,
232
829,
888
415,
941
394,
818
225,
581
67,1
5052
,739
50,2
8338
,733
29,3
13
33,5
12,8
3674
9,95
133
8,52
7
36,9
7614
6,22
930
7,65
23,
020,
361
17,8
7065
,864
121,
197
177,
179
231,
307
243,
857
257,
585
343,
938
500,
878
562,
954
52,7
02
194,
295
550,
169
£-
£10,000,000
£20,000,000
£30,000,000
£40,000,000
£50,000,000
£60,000,000
£70,000,000
£80,000,000
Good
hart
: Han
joFi
ndla
y Pa
rk A
mer
ican
Sele
ct E
quity
Offs
hore
SISF
Asia
n To
tal R
etur
nVu
lcan
Val
ue E
quity
Indu
s Jap
an L
ong
Onl
yBl
ackR
ock
Eur H
edge
Prin
ce S
tree
t Ins
tVa
ngua
rd D
ev E
ur e
x U
KBl
ackR
ock
Fron
tiers
NTA
sian
Disc
over
ySR
Glo
bal F
ront
iers
iSha
res E
uro
Stox
xIn
dus J
apan
JPY
Unhe
dged
Adel
phi E
ur S
elec
t Equ
ityO
dey
Abso
lute
Ret
urn
Pers
hing
Squ
are
UBM
Hans
teen
Hol
ding
sHi
lton
Food
Inte
ract
ive
Brok
ers
CBRE
Acer
tec
Orio
n En
gine
ered
Car
bons
Alph
abet
Coca
-Col
a Bo
ttle
rs Ja
pan
Berk
shire
Hat
haw
ayEx
orSa
msu
ngHo
war
d Hu
ghes
Cor
pO
rang
eIri
dium
Nut
rien
Trip
advi
sor
Baye
r AG
Softb
ank
CK H
utch
ison
Whi
te M
ount
ains
Libe
rty
Glob
alCV
S He
alth
Equi
ties S
old
Durin
g Pe
riod
GAM
Sta
r Tec
hSP
DR M
SCI W
orld
Fin
sW
orld
wid
e He
alth
care
JLP
Cred
it O
ppGl
obal
Eve
nt P
artn
ers L
tdFi
eld
Stre
et O
ffsho
reHu
dson
Bay
Keyn
es D
ynam
ic B
Str
ateg
yCZ
Abs
Alp
ha U
CITS
GAM
Cor
e M
acro
BNY
Abs R
etur
n Bo
nd F
und
MKP
Opp
Offs
hore
Glad
wyn
e GB
PSc
hrod
er G
AIA
Blue
Tren
dO
cean
Wils
ons H
oldi
ngs
DV4
Ltd
Cash
/FX
Fund
Hol
ding
s sol
d du
ring
perio
dTo
tal
12
Private Equity
Global Equities DiversifyingCore Regional Funds
OWHL
Thematic
HANSA TRUSTPerformance Contribution 3 Years to end March 2018
13
HANSA TRUSTPerformance of less correlated funds 1 June 2016 to 31 March 2018A basket of lower-correlated funds have been purchased since June/July 2016. The performance since has been positive and outperformed bonds and cash.
8.1%6.6%
4.7%2.3%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Perf
orm
ance
(GBP
)
14
HANSA TRUSTTransactions 1 April 2017 to 31 March 2018
• Equity Purchases £42.0m:
– White Mountains Insurance Group £3.0m– CK Hutchison £2.8m– Exor NV £2.7m– Berkshire Hathaway £2.7m– Samsung £2.6m– Orange £2.6m– Softbank £2.5m– Alphabet £2.4m– Liberty Global £2.3m– CVS Health £2.1m– Interactive Brokers £2.1m– Coca-Cola Bottlers Japan Holdings £2.1m– Bayer AG £2.1m– Howard Hughes Corp £1.9m– Orion Engineered Carbons £1.9m– Nutrien £1.8m– CBRE Group Inc. £1.7m– TripAdvisor £1.4m– Iridium Communications Inc. £1.3m
• Fund Purchases £15.8m:
– iShares EURO STOXX Mid UCITS ETF £5.1m– SR Global Fund Frontier Markets £2.6m– Blackrock Frontiers Investment Trust £2.4m– Pareturn Gladwyne Absolute Credit UCITS GBP £1.6m– Worldwide Healthcare Trust £1.6m– GAM Systematic Core Macro Fund £1.3m– CZ Absolute Alpha UCITS Fund £1.3m
• Equity Sales £36.2m:
– NCC Group - £6.4m (profit of £4.3m)– Experian Group Limited £6.3m (profit of £4.1m)– UBM PLC - £5.5m (profit of £1.9m)– Galliford Try PLC - £4.9m (profit of £2.6m)– Cape PLC £4.1m (loss of £0.5m)– Brooks Macdonald Group PLC £3.9m (profit of £1.5m)– Goals Soccer Centres £2.3m (loss of £0.5m)– Hargreaves Services £2.3m (loss of 49k)– Altitude Group PLC - £1.5m (profit of £0.7m)– ImmuPharma - £0.6m (loss of £0.3m)– RedT Energy PLC - £0.1m (loss of £0.8m)– CAP-XX Ltd - £0.1m (loss of £1.0m)– Gordon Dadds Group £64k (loss of £1.1m)
• Fund Sales £12.8m:
– SSgA GBP Liquidity Fund - £3.8m (profit of 3k)– JLP Credit Opportunity Fund £2.3m (profit of £0.3m)– iShares Core EM IMI UCITS ETF - £2.0m (profit of £11k)– Schroder ISF Asian Total Return Fund - £2.2m (profit of £0.6m)– Argentiere Fund - £1.7m (loss of £0.2m)– Global Event Partners £1.6m (profit of £0.2m)– Cantab CCP Core Macro Fund £1.3m (profit of £29k)
15
HANSA TRUSTGlobal Equities – performance by size of holding 31 March 2018
Security NameInitial Purchase
Date
Value 31/03/18
(GBP)
% of Total NAV
% of Global Equity Silo
1 YearPerformance
(or since initial
purchase)
3 YearPerformance
(or since initial
purchase)
Hansteen Holdings PLC 25/11/2005 4,553,692 1.4% 8.5% 13.8% 25.1%
Interactive Brokers Group Inc 05/04/2017 3,592,882 1.1% 6.7% 72.0% 72.0%
UBM PLC 15/10/2010 3,569,606 1.1% 6.7% 26.9% 95.6%
Hilton Food Group PLC 23/04/2014 2,993,000 0.9% 5.6% 30.0% 102.7%
EXOR NV 05/09/2017 2,888,547 0.9% 5.4% 5.9% 5.9%
Berkshire Hathaway Inc 03/04/2017 2,842,810 0.9% 5.3% 6.6% 6.6%
Samsung Electronics Co Ltd 08/08/2017 2,740,305 0.8% 5.1% 4.6% 4.6%
White Mountains Insurance 11/04/2017 2,617,978 0.8% 4.9% -17.2% -17.2%
Alphabet Inc - A Shares 18/04/2017 2,584,598 0.8% 4.8% 8.3% 8.3%
CK Hutchison 01/12/2017 2,555,944 0.8% 4.8% -9.2% -9.2%
Orange 20/02/2018 2,541,542 0.8% 4.8% -0.8% -0.8%
Coca-Cola Bottlers Japan 22/01/2018 2,282,363 0.7% 4.3% 9.2% 9.2%
SoftBank Group Corp 08/05/2017 2,237,678 0.7% 4.2% -9.8% -9.8%
Orion Engineered Carbons SA 17/07/2017 2,027,576 0.6% 3.8% 7.8% 7.8%
CBRE Group Inc 12/07/2017 2,017,529 0.6% 3.8% 16.8% 16.8%
Howard Hughes Corp 10/04/2017 1,982,756 0.6% 3.7% 3.0% 3.0%
Bayer AG 05/04/2017 1,813,872 0.6% 3.4% -11.4% -11.4%
Liberty Global Plc 05/04/2017 1,784,808 0.6% 3.3% -21.9% -21.9%
Nutrien 29/11/2017 1,613,985 0.5% 3.0% -9.2% -9.2%
CVS Health Corp 10/04/2017 1,507,154 0.5% 2.8% -27.1% -27.1%
TripAdvisor Inc 11/09/2017 1,339,946 0.4% 2.5% -14.0% -14.0%
Iridium Communications Inc 12/07/2017 1,197,093 0.4% 2.2% -5.9% -5.9%
Acertec Limited 10/05/2006 11,699 0.0% 0.0% 0.0% 8.7%
Total Global Equities Silo 53,297,362 16.5% 100.0%
Primary Exchange or Equity Index
S&P 500, 19.3%
NASDAQ, 15.4%
FTSE 250, 15.2%
Kospi, 9.9%
Russell 1000, 8.6%
Nikkei 225, 8.5%
DAX, 8.2%
FTSE Small Cap, 5.6%
Borsa Italiana,
5.4% NYSE, 3.8%
HANSA TRUSTGlobal Equities as at end March 2018
Europe 41%
US40%
Asia 19%
Geographic Exposure by Listing
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
World Index FTSE 100 Global Equities Performance
Performance 1 April 2017 to 31 March 2018
Portfolio Positioning & Characteristics
17
18
HANSA TRUSTCurrent Positioning (as at 31 March 2018)
12.9%
7.0% 6.3%
3.7% 3.2%
1.2%
4.1%
0.4% 1.0%
13.1%
3.4%
7.0%
3.6%1.8%
19.7%
11.3%
0.2%0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
19
HANSA TRUSTPortfolio Characteristics (as at 31 March 2018)
Look-through analysis of Hansa Trust portfolio, including holdings in Ocean Wilsons (Investments) Ltd*
Note: The exposures are based on the underlying holdings of the investments*Exposures in Ocean Wilson (Investments) Ltd. are based on the top 30 positions. These are subsequently grossed up to 100%. Dealing Frequency has been excluded from the look-through analysis.
48.6%
19.7%
16.5%
7.0%
3.6% 2.7% 1.7% 0.2%
Asset Type
Long Only Wilson Sons Direct Equities Market Neutral
Private Equity Long-Short Fixed Income Cash
41.2%
31.0%
12.3%
8.1% 3.6% 3.6% 0.2%
Dealing Frequency
Daily Ocean Wilsons Holdings LtdMonthly QuarterlyFixed Life Investment Period Complete Weekly> 1 year
26.2%
20.4%11.3%
9.0%
8.2%
8.2%
8.0%7.0%
1.0% 0.4%
0.2%
Geographic Exposure
North America Latin America Middle East & AfricaUK Diversifying Hedge Funds Developed Europe ex UKJapan Asia Pacific ex Japan Middle East & AfricaEmerging Europe Cash/Liquidity Funds
22.8%
12.8%
11.3%10.7%8.2%
8.0%
7.8%
5.1%4.5% 3.6%
3.5%1.0% 0.5%
0.2%
Sector Exposure
Industrials Information Technology Middle East & AfricaFinancials Diversifying Hedge Funds Consumer DiscretionaryConsumer Staples Health Care MaterialsReal Estate Telecommunications EnergyUtilities Cash/Liquidity Funds
20
HANSA TRUSTOther Portfolio Characteristics (as at 31 March 2018)
Look-through analysis of Hansa Trust portfolio, including holdings in Ocean Wilson (Investments) Ltd.
0%46%
0 < x ≤ 1%48%
1 < x ≤ 1.5%3%
1.5 < x ≤ 2%3%
Annual 3rd Party Management Fees on Underlying Holdings
Cash0%
1 Week38%
1 month9%
3 months12%
6 months5%
> 6 months4%
Fixed32%
Liquidity
Weighted average management fee = 1.09%. This includes management fees paid to third parties and to Hansa Capital Partners LLP.
21
HANSA TRUSTDividend Profile
Dividend Policy
The Trust’s dividend policy was updated in 2014, and it is now to pay two similar interim dividends each year.Barring unforeseen circumstances, the dividend is expected to grow over time reflecting the longer term returnsof the portfolio.
An interim dividend of 8p was announced on 12th April 2018 and will be paid on 31st May 2018.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
12 m
onth
yie
ld
Net
div
iden
d (p
ence
)
Dividend Payments and Annual Yield
Net dividends paid during calendar year (LHS) 12 month yield (RHS)
22
HANSA TRUSTDiscount
A significant discount to asset value both absolute and relative to the broader investment trust sector. Even more so on a look through basis
-50%
-45%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Dec-
07
Jun-
08
Dec-
08
Jun-
09
Dec-
09
Jun-
10
Dec-
10
Jun-
11
Dec-
11
Jun-
12
Dec-
12
Jun-
13
Dec-
13
Jun-
14
Dec-
14
Jun-
15
Dec-
15
Jun-
16
Dec-
16
Jun-
17
Dec-
17
Hansa Trust Ord and A combined
Discount Look-through discount
-45%-40%-35%-30%-25%-20%-15%-10%
-5%0%5%
10%
May
-08
Nov
-08
May
-09
Nov
-09
May
-10
Nov
-10
May
-11
Nov
-11
May
-12
Nov
-12
May
-13
Nov
-13
May
-14
Nov
-14
May
-15
Nov
-15
May
-16
Nov
-16
May
-17
Nov
-17
Hansa Trust Ord and A combined (relative to AIC overall average discount)
Discount Look-through discount
Ocean Wilsons Holdings
23
24
HANSA TRUSTOcean Wilsons Holdings
Ocean Wilsons Holdings is a Bermudian investment holding company whose main assets are a controlling interest in Wilsons Sons and an international investment portfolio, both run with a long-term view. The Oceans holding is controlled by the Hansa Trust board
25
HANSA TRUSTWilson Sons
Wilson Sons is among Brazil’s largest and oldest port, maritime and logistics services companies
Revenue EBITDA
26
HANSA TRUSTWilson Sons
Despite the challenges faced in Brazil in recent years, Wilsons has generated significant economic value
27
HANSA TRUSTWilson Sons
Wilson Sons operates in a market with significant structural growth potential
28
HANSA TRUSTOcean Wilsons Investments (Limited) as at 31 December 2017
Ocean Wilsons Investments (Limited) is an investment portfolio focused on achieving long-term returns while emphasising capital generation and possessing an emerging market bias
13.3%
9.4%8.2%
6.5% 6.4%
3.0% 2.1% 2.0%
28.8%
3.2% 2.7% 2.3%1.0% 1.0%
6.6%
0.5% 0.4%2.6%
0%
5%
10%
15%
20%
25%
30%
Market Outlook
29
HANSA TRUSTMarket outlook…..a choppy to start to the year
…….markets raced ahead in January only to collapse in late January and early February. Net net little change
30
Source: Bloomberg
Local Currency Returns as of 17 Apr 2018Start of year (1 Jan 2018)
to Peak (26 Jan 2018)Peak (26 Jan 2018) to Trough (8 Feb 2018) Q1 2018 YTD
Equities - RegionsMSCI ACWI + FM NR USD 7.3 -9.0 -0.9 1.2MSCI World (Developed) NR USD 7.0 -9.0 -1.3 0.9MSCI EM (Emerging Markets) NR USD 10.0 -8.6 1.5 3.3MSCI Frontier Markets NR USD 6.6 -5.1 5.1 4.2MSCI EM Asia NR USD 9.5 -8.7 0.9 2.2MSCI EM ex Asia NR USD 11.5 -8.4 3.0 6.4MSCI Europe NR EUR 2.9 -6.7 -4.3 -2.3Equities - CountriesMSCI North America NR USD 7.2 -10.0 -1.1 1.3MSCI United Kingdom NR GBP -0.2 -6.4 -7.3 -5.3MSCI Japan NR JPY 3.8 -5.8 -4.8 -2.4MSCI China NR USD 14.5 -11.4 1.8 5.3MSCI India NR INR 5.0 -4.8 -4.1 -1.5MSCI Brazil NR BRL 12.5 -4.7 12.6 12.1MSCI Russia NR USD 12.3 -5.4 9.4 13.6Equities - SectorMSCI ACWI Financials NR USD 8.5 -8.2 -1.0 2.9MSCI ACWI Energy NR USD 7.2 -11.6 -3.8 -4.5MSCI ACWI Information Technology NR USD 9.1 -10.2 3.2 6.4MSCI ACWI Health Care NR USD 9.1 -10.6 -1.0 1.0MSCI ACWI Biotech NR USD 12.9 -11.5 -1.6 4.0Fixed IncomeiBoxx USD Treasuries TR -1.2 -1.0 -1.2 -2.2iBoxx USD Liquid IG -1.0 -1.7 -2.9 -3.2iBoxx USD Liquid HY 0.8 -1.6 -1.0 -0.5FTSE UK Gilts All Stocks TR GBP -1.7 -1.2 0.3 -1.8FTSE UK Govt Index Linked All Stocks TR GBP -2.0 -1.9 0.0 -2.4iBoxx GBP Non-Gilts TR -0.6 -1.4 -1.2 -1.7JPM GBI-EM Global Diversified TR USD 4.7 -2.2 4.4 3.4JPM EMBI Global TR USD 0.1 -1.9 -1.8 -2.2JPM Corp EMBI USD 0.1 -0.8 -1.2 -1.0CommoditiesBloomberg Commodity Index TR USD 3.1 -4.1 -0.4 0.2Gold Bullion USD 3.6 -2.3 1.7 1.2Copper Index USD -2.9 -3.7 -8.7 -5.5European Dated Brent Index USD 5.1 -8.6 3.5 -3.5WTI Cushing CR USD 9.5 -7.5 7.5 2.0
HANSA TRUSTMarket outlook…..reasons for volatility
….the catalyst for the correction appeared to be disappointing inflation numbers. Certainly the market had started to bake in persistently low inflation but another key factor is market complacency
31
Source: FactSetSource: Deutsche Bank
HANSA TRUSTMarket outlook……correction or crash?
……under a wide range of valuation measures, equity markets are increasingly fully valued, especially the US stock market
0%10%20%30%40%50%60%70%80%90%
100%
P/E to Growth EV/Sales EV/EBITDA Price/Book Forward P/E FCF yield Cyclicallyadjusted P/E
Aggregate Index Historical Percentile
S&P500 STOXX600
32
HANSA TRUSTMarket outlook……correction or crash?
…….economic growth is largely improving in both developed and emerging markets. No sign of recession any time soon
33
Source: Deutsche Bank
HANSA TRUSTMarket outlook……correction or crash?
…..stronger economic growth is feeding through to improved corporate profitability.
34
Source: Standard & Poors. Thompson Financial. FactSet. Credit Suisse
HANSA TRUSTMarket outlook……correction or crash?
…….clearly we are at an inflection point in the liquidity cycle but still huge amounts of liquidity being pumped into the system. A significant jump in yields may limit equity returns
35
HANSA TRUSTMarket outlook……correction or crash?
………some tentative signs that excess & exuberance are re-entering the system but not at the extremes you would normally associate with a downturn
Arguments for….. Arguments against…..Pockets of consumer excess in areas such auto debt
Mortgage debt, which is far more important, is well under control
Overall country debt levels still high in developed economies and also in China
Banks are key to healthy economies and they appear well controlled
Some signs that retail investors are increasingly viewing equities as the ‘best asset class’
Investors still feel the pain of previous bear markets and are keen to forecast the next downturn
Volatility low Fund manager cash levels still high (4.7% on Merrill Lynch fund manager survey)
Bitcoin – market manias
36
Excess & Exuberance
Global Financial
Crisis Liquidity pumped into the system
via zero interest rate policies and
QE
The avoidance of a global collapse in
economies and the banking system saw valuations
normalise across asset classes
Bond yields collapse through
zero interest rate policies and massive demand
via QE
Equities rise as investors
forced up the risk spectrum in pursuit of
returns
Liquidity cycle
inflects
?
HANSA TRUSTMarket outlook……correction or crash?
…..much has happened in this cycle. The question is, how close are we to the end?
37
HANSA TRUSTPositioning……technology and innovation
38
……despite the strong performance, valuations remain attractive, especially if growth is taken into consideration. Tech has important implications geographically and for existing industries
Source: GAM. New Relic
HANSA TRUSTPositioning……emerging and frontier markets
39
…..EM and FM remain structurally attractive combined with lower valuations
Source: GAM. Statista Digital Market Outlook
HANSA TRUSTPositioning……bonds
…..bonds remain unattractive albeit we watch the current rise in yields
40
HANSA TRUSTSummary as at 31 March 2018
Riskier AssetsLower Risk Assets
Strategic Allocation
…..we’re currently running 10% in defensive assets. We’re minded to progressively increase this albeit with the provision of identifying the right assets
Equities58.5%
Directional Hedge Funds4.2%
Private Equity7.5%
Bonds1.9%
Cash0.4%
Hedge Funds (non directional)
7.7%
Strategic19.7%
Look-through analysis of Hansa Trust portfolio, including top 30 holdings in Ocean Wilson (Investments) which are grossed up to 100%.
HANSA TRUSTConclusion
42
• Clearly markets are in the more mature stages of their lifecycle
• Higher valuations remove the safety net and can lead to higher portfolio volatility and being susceptible to disappointment
• For this reason we are getting prepared to add to more defensive positions as the cycle evolves
• It is also the case though that for now we see continued upside in equities…….often the later, momentum stages of stock market cycles can represent powerful periods for performance