afsl: 438262 model portfolio performance reporting · 1 october 2014 international fund of funds...

AFSL: 438262

Model Portfolio Performance Reporting 31st March 2020

Portfolio 3 mths 1 yr 3 yrs pa 5 yrs pa Since inception

pa

Cumulative Inception Date

Core Australian Equities Portfolio (Including Franking Credits)

-20.17% -0.82% 3.64% 4.90% 8.70% 75.66% 1 July 2013

Core Australian Equities Portfolio (Excluding Franking Credits)

-20.39% -1.80% 2.52% 3.80% 7.48% 62.76% 1 July 2013

Self-Funding Instalment Portfolio (Including Franking Credits)

-24.29% 0.53% 4.46% 7.16% 10.54% 73.63% 1 October

2014

Self-Funding Instalment Portfolio (Excluding Franking Credits)

-24.57% -0.66% 3.12% 5.89% 9.23% 62.62% 1 October

2014

International Fund of Funds

-5.0% 8.19% 13.14% 9.77 10.94% 72.60% 1 January 2015

Interest Bearing Securities (Including Franking Credits)

-6.06% -0.33% 4.58% 5.30% 5.15% 30.18% 1 January 2015

Interest Bearing Securities (Excluding Franking Credits)

-6.28% -1.36% 3.53% 4.34% 4.19% 24.05% 1 January 2015

ARIF (Including Franking Credits)

-30.07% -26.20% -1.29% 2.49% 11.05% 1 January 2016

ARIF (Excluding Franking Credits)

-30.07% -26.21% -1.33% 2.46% 10.88% 1 January 2016

Awards: Finalist in the 2018 and 2019 Institute of Managed Accounts awards.

Core Australian Equities Model Portfolio 31st March 2020

Performance

Top 5 and Bottom 5 for the quarter

Asset Total return %

RMD 12.95%

CSL 8.11%

VOC -13.29%

NHF -15.54%

BLD -17.50%

AFG -48.43%

ORG -46.53%

LLC -40.51%

ALQ -39.53%

ALL -36.59%

Cumulative TWR

S&P/ASX 200 ACCUMULATION INDEX

Periods to 31st Mar 2020 3 mths 1 yr 3 yrs p.a. 5 yrs p.a. Since

inception p.a.

Portfolio return (TWR) -20.17% -0.82% 3.64% 4.90% 8.70%

S&P/ASX 200 Acc Index -23.1% -14.42% -0.56% 1.39% 5.36%

Alpha 2.92% 13.60% 4.20% 3.51% 3.34%

Portfolio Index Alpha

Return Since Inception 75.66% 42.25% 33.41%

Annualised Return 8.70% 5.36% 3.34%

Tracking Error 4.72%

Information Ratio 0.71

The portfolio's inception date for performance calculation purposes is 01 Jul 2013. Portfolio total dollar and percentage returns are inclusive of franking credits. Percentage returns have been calculated using the Time Weighted Return (TWR) method. Portfolio returns are based on a theoretical model portfolio. Returns for individual investors may vary. Cash is given a 0% return. Gross return shown.

Portfolio Analysis

Number of stocks 20.00

PE (FY1) 17.60

Forecast Yield 2.59%

Fully Franked Yield 3.35% Data from Morningstar.

Portfolio Overview When investing in Australian equities we look for companies that demonstrate real Market Opportunities for Profitable Products or Services with Competitive Advantages and Barriers to Entry. The first elements make a business possible, the last elements make it a good and enduring business; without these, competitors enter to drive costs up and prices down ultimately eroding the company’s competitive advantage.

Portfolio Review The economic impact of the COVID-19 pandemic triggered the fastest share market correction in history this quarter. Falls this quarter have erased two thirds of the stellar return of over 30% in CY2019. For the March quarter the portfolio delivered a negative return of -20.17% vs the benchmark ASX 200 accumulation index of -23.1%. The portfolio outperformed relative to the benchmark. Our overweight position in healthcare was a major contributor to this outperformance with ResMed and CSL two of only a handful of stock in the index that delivered positive returns for the quarter. Other stocks making up the top five and falling at rates below the market were Vocus (-13.29%), NHF (-15.54%) and Boral (-17.50%). The worst performers in the portfolio for the quarter were in the more cyclical finance, energy and construction sectors of the economy including mortgage broker Australian Financial Group down 48.43%, Origin Energy down 46.53% as energy demand and prices have collapsed exacerbated by a price war between the Saudi’s and the Russians and Lend Lease down 40.51% on concerns around project delays. During the quarter we exited our remaining position in Westpac and in Boral after another profit downgrade and our total loss of confidence in management and the strategic direction of the company. Our overweight position in health and non-bank financials and our underweight position in banks helped deliver strong risk rated returns. The information ratio of the portfolio which measures the consistency in generating superior risk weighted returns rose from 0.63 to 0.70.

Core Australian Equities ModelCash

A-REIT

Consumer Discretionary

Consumer Staples

Energy

Financials xREIT

Health Care

Industrial

Information Technology

Materials

Telecom

Utilities

Inner: S&P ASX200 Index Weights Outer: Core Australian Equities Model Weights

Self-Funding Instalment Model Portfolio 31st March 2020

Performance

Top 5 and Bottom 5 for the quarter


BLDSWR 14.23%

RMD 12.95%

CBASWR 10.10%

CSLSWL 9.35%

QUB 7.90%

ORGSWB -59.01%

QUBSOA -57.27%

ALQSOA -56.16%

LLCSWB -54.02%

ALLSOP -53.03%

Cumulative TWR after expenses

S&P/ASX 200 ACCUMULATION INDEX

Periods to 31st Mar 2020 3 mths 1 yr 3 yrs p.a. 5 yrs p.a.

Since inception

p.a.

Portfolio return (TWR) -24.3% 0.53% 4.46% 7.2% 10.54%

S&P/ASX 200 Acc Index - 23.1% -14.4% -0.56% 1.4% 3.58%

Alpha -1.2% 14.96% 5.02% 5.8% 6.95%


Accumulated Return 73.63% 21.40% 52.23%

Annualised Return (%pa) 10.54% 3.58% 7.01%

Tracking Error (%pa) 6.85%


The portfolio's inception date for performance calculation purposes is 30 Sept 2014. Portfolio total dollar and percentage returns are inclusive of franking credits. Percentage returns have been calculated using the Time Weighted Return (TWR) method. Portfolio returns are based on a theoretical model portfolio. Returns for individual investors may vary. Cash is given a 0% return. Gross return shown. Portfolio Analysis Portfolio Overview

Number of stocks 20..0

Forecast Gross Yield 5.8%

Forecast Gearing 43.0%

This portfolio has been designed for those with a smaller balance in self-managed superannuation fund, however the portfolio can be applied to other investment structures. This portfolio is based on the Core Australian Equites portfolio. A self-funding installment is used as the alternative to purchasing the ordinary share. Self-funding installments are a geared investment and are weighted in the portfolio by its exposure to the ordinary share. The overall aim of the portfolio is to maximize the use of franking credits, gearing and growth assets to assist those seeking a high growth, low cash flow strategy to grow their wealth.

Portfolio Review Leverage magnifies gains in up markets and losses in down markets. The SFI portfolio delivered a negative return of -24.3% for the quarter, underperforming the benchmark by 1.2% which declined by -23.1%. This is a good result for a leveraged portfolio given the size of the correction this quarter. The best performers in the portfolio were Boral (BLDSWR) up 14.23%, CBA (CBASWR)up 12.95% and CSL (CSLSWL) up 9.35%. ResMed where no warrant is available and ordinary shares are held was also a positive contributor. The worst performers were Origin (ORGSWB) down 59%, Qube (QUBSOA) down 57.3%, ALQ (ALQSOA) down 56.2%. In line with the core equities portfolio, instalment warrants for cyclical stocks were the hardest hit in the quarter.

0 5 10 15 20 25 30 35 40

Cash

A-REIT


Consumer Staples

Energy

Financials xREIT

Health Care

Industrial


Materials

Telecom

Utilities

SFI Model Portfolio

S&P/ASX index weights SFI exposure weights SFI weights

International Fund of Funds Model Portfolio 31st March 2020

Performance Portfolio Overview

Our international equity portfolio employs a Fund of Funds approach and seeks out specialist managers and opportunities not always available to retail investors. When researching and selecting international fund managers, Royston Capital will seek to review with particular focus on managers that have a complimentary investment philosophy to ours. . The funds we select have a high conviction to their investment strategy and as a result generally hold a maximum of 50 stocks. Each manager in the portfolio has a specific purpose and expertise.


MSCI INTERNATIONAL ACWI EX AUSTRALIA NET DIV

AUD

Periods to 31st Mar 2020

3 mths 1 yr 3 yrs p.a. 5 yrs p.a.

Since inception

p.a.

Portfolio return (TWR) -5.0% 8.19% 13.14% 9.77 10.94%

MSCI International ACWI Ex Australia Net Div AUD -9.41% 3.36% 9.45% 7.65% 8.81%

Alpha 4.41% 4.83% 3.69% 2.13% 2.13%


Accumulated Return 72.60% 55.86% 16.74%

Annualised Return (%pa) 10.94% 8.81% 2.13%

Tracking Error (%pa) 3.80%


The portfolio's inception date for performance calculation purposes is 31 Dec 2014. Portfolio total dollar and percentage returns are inclusive of franking credits. Percentage returns have been calculated using the Time Weighted Return (TWR) method. Portfolio returns are based on a theoretical model portfolio. Returns for individual investors may vary. Cash is given a 0% return. Gross return shown. Portfolio Analysis Portfolio Review

The International Fund of Fund portfolio delivered very strong outperformance in a down market during the March quarter benefitting in part from the sharp fall in the $A against the $US. The return for the quarter was -5.0% vs the benchmark MSCI All Country World Index ex Australia of -9.41% delivering outperformance of 4.41%. Magellan Global was the best performer for the quarter followed by Magellan Infrastructure, Walter Scott and Cooper Investors. There were no changes to the International Fund of Fund during the quarter. From a currency perspective the AUD$ has fallen against the USD$ which has benefited the portfolio as a whole.

Sector AllocationBasic Materials

ConsumerCyclicalsFinancials

Real Estate

Communications

Energy

Industrials

Technology

ConsumerDiscretionaryHealth care

Country Allocation

Australaisa

Japan

Asia Developed

Asia Emerging

North America

Latin America

UK

Europe Developed

Europe Emerging

Africa / M East

Interest Bearing Securities Model Portfolio 31st March 2020

Performance Portfolio Overview

When investing in interest bearing securities we seek preservation of capital while also seeking attractive income streams. We consider the following variables: · Credit rating and profitability of underlying issuer · Ranking within the capital structure · Call economics · Floating or fixed rate issue · Investor protection within the structure · Liquidity · Frequency of distributions and availability of franking credits · Running yield and yield to maturity · Duration risk · Conversion discounts and step-up margins · Other complexities with the structure such as put and call options should they exist


BLOOMBERG AUSBOND BANK BILL INDEX

Periods to 31stMar2020 3 mths 1 yr 3 yrs p.a.

5 yrs p.a.

Since inception p.a.

Portfolio return after expenses (TWR) -6.1% -0.33% 4.58% 5.30% 5.15%

Bloomberg AusBond Bank Bill Index 0.26% 1.23% 1.66% 1.83% 1.87%

Alpha -6.3% -1.57% 2.92% 3.47% 3.27%

Portfolio Index Alpha Accumulated Return 30.18% 10.25% 19.93% Annualised Return (%pa) 5.15% 1.87% 3.27% Tracking Error (%pa) 3.79%


The portfolio's inception date for performance calculation purposes is 31 Dec 2014. Portfolio total dollar and percentage returns are inclusive of franking credits. Percentage returns have been calculated using the Time Weighted Return (TWR) method. Portfolio returns are based on a theoretical model portfolio. Returns for individual investors may vary. Cash is given a 0% return. Gross return shown. Portfolio Analysis

Count 11

Tenor 1.64

Gross Yield 3.29%

Gross Yield to Maturity 4.31%

Portfolio Review The Interest-Bearing Securities portfolio delivered a negative return of -6.1% in the March quarter and underperformed the Bloomberg

AusBond Bank Bill benchmark by 6.3%. In line with equities, listed fixed interest securities were also sold down in March heightened

by some signs of stress emerging in credit markets. This required some stabilising intervention from the Reserve Banks of Australia

and the initiation of Australia’s first ever quantitative easing program.

Late last we made a timely move from longer tenor securities to shorter tenor. This worked in our favour during this testing period so

far. The portfolio continues to hold a high level of cash from the redemption of MXUPA which we intend to invest when an

appropriate opportunity arises.

The higher risk corporate fixed interest securities in the portfolio were the worst performers with CWNHB (Crown Resorts Lt),

MQGPC (Macquarie Group Ltd) and CGFPA (Challenger Group) down by 15.4%,13.6% and 10.5% respectively. Bank Hybrids were

also sold off but performed better than most other corporate fixed interest securities. The best performers for the quarter were

NABPB (NAB), ANZPD (ANZ), and CBAPE (Commonwealth Bank) down 2.62%, 2.97% and 3.18% respectively.

Interest Bearing SecuritiesCash

Managed Fund

A-REIT

ConsumerDiscretionaryConsumer Staples

Energy

Financials xREIT

Inner: S&P ASX200 Index Weights Outer: Interest Bearing Securities Model Weights

Aust REIT and Infrastructure Fund 31st March 2020

Performance

Top 5 and bottom 5 for the quarter


GMG -9.6%

NSR -13.9%

BWP -14.64%

TCL -19.29%

DXS -22.41%

SCG -57.86%

SGP -45.37%

GOZ -39.36%

SYD -35.4%

GPT -35.18%


S&P/ASX 300 A-REIT TR

Periods to 31st March 2020 3 mths 1 yr 3 yrs pa.

5 yrs pa.

Since inception p.a.

Portfolio return (TWR) -30.07% -26.2% -1.3% 2.49%

S&P/ASX 200 A-REIT GIC Accumulation Index

-34.37% -31.73% -5.1% -1.25%

Alpha 4.30% 5.54% 3.81% 3.75%

Portfolio Index Alpha Accumulated Return 11.05% -5.21% 16.26% Annualised Return (%pa) 2.49% -1.25% 3.74% Tracking Error (%pa) 4.68%


The portfolio's inception date for performance calculation purposes is 31 Dec 2015. Portfolio total dollar and percentage returns are inclusive of franking credits. Percentage returns have been calculated using the Time Weighted Return (TWR) method. Portfolio returns are based on a theoretical model portfolio. Returns for individual investors may vary. Cash is given a 0% return. Gross return shown.

Portfolio Analysis Portfolio Overview

Number of stocks 13 Forecast Yield 6.92%

PE (current) 22.67

The Royston-Admiral Australia REIT and Infrastructure Fund (ARIF) exists as a Managed Discretionary Account under Royston Capital and advised by Admiral Investment. Admiral is an investment manager licensed by the Hong Kong Securities and Futures Commission that focuses in real estate and related investments across Asia Pacific. The ARIF is a long only mandate that invests in Australian REITs (A-REITs) and Infrastructure Trust. The goal of ARIF is to provide steady dividend income and capital appreciation through time. The portfolio seeks to outperform the S&P ASX 300 A-REIT Index, on a total return basis, through the medium term. ARIF will be denominated in the Australian Dollar and invested in Australian denominated assets. This mandate invests only in listed vehicles that provide liquidity daily.

Portfolio Review The COVID-19 pandemic has been the perfect storm for REIT and infrastructure stocks. Shopping centres and airports have been shut down and traffic on toll roads has fallen dramatically. The REIT and Infrastructure fund had a negative return of 30.03% for the quarter. The fund outperformed the ASX 200 A-REIT benchmark which declined by 34.37% during the quarter. The best performers included Goodman Group in industrial property (GMG), National Storage (NSR) and the Bunnings Warehouse Property Trust (BWP). Bunnings stores have continued to operate. Shopping centre REIT Scentre Group (SCG) was the worst performer down 57.86% for the quarter.

Australian REIT and Infrastructure Fund Cash

A-REIT


Consumer Staples

Energy

Financials xREIT

Health Care

Industrial


Materials

Telecom

UtilitiesInner: S&P ASX200 Index Weights Outer: ARIF Model Weights

Disclaimer:

This information was prepared by Royston Capital, ABN 98 158 028 392 AFSL 438262. The information in this presentation is current as at 30 June 2019 unless otherwise stated.

Material contained in this publication is an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

This publication is confidential and intended only for current clients and prospective clients of Royston Capital and their professional institutional advisors only and is not to be provided to other persons.

This publication does not constitute an offer to sell, or the solicitation of an offer to buy, any securities or any interests in investment funds advised by, or the advisory services of, Royston Capital. This publication contains general information only and does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.

No legal or tax advice is provided. Any taxation position described in this publication should be used as a guide only and is not tax advice. You should consult a registered tax agent for specific tax advice on your circumstances. Recipients should independently evaluate specific investments and trading strategies.

By accepting receipt of this publication, the recipient agrees not to distribute, offer or sell this presentation or copies of it and agrees not to make use of the publication other than for its own general information purposes.

The views expressed in this publication represent the opinions of the persons responsible for it as at its date, and should not be construed as guarantees of performance with respect to any investment. Royston Capital has taken reasonable care to ensure that the information contained in this publication has been obtained from reliable sources, but no representation or warranty, express or implied, is provided in relation to the accuracy, completeness or reliability of such information. Royston Capital does not undertake and is under no obligation to update or keep current the information or content

contained in this publication for future events.

Past performance is not necessarily indicative of future results. In addition the price and/or value of and income derived from any particular investment may vary because of changes in interest rates, foreign exchange rates, operational or financial conditions. Investors may therefore get back less than originally invested Furthermore, these investments may not be eligible for sale in all jurisdictions or to certain categories of investors. Portfolio performance is based on a theoretical model portfolio, returns for individual investors may differ.

Royston Capital, nor its associates, does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.

© 2020 Royston Capital Pty Ltd. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Royston Capital Pty Ltd.

afsl: 438262 model portfolio performance reporting · 1 october 2014 international fund of funds...

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