barometer ucits fund icav - ...€¦ · barometer ucits fund icav strategy 2001 – 2004 2002 –...

Barometer UCITS Fund ICAV

September | 2017

Barometer UCITS Fund ICAVBarometer Tactical Income Fund

Barometer UCITS Fund ICAV Agenda

• Barometer - Organizational Strength and Governance

• Tactical Income Strategy - Differentiated Process

• Investment Manager Performance

• Portfolio Rotation

• Current View – Constructive Capital Markets

• Current Portfolio Construction

2


Organizational Strength

and Governance

3


4

Greg Guichon

Chairman, Chief Portfolio ManagerDavid Burrows

President, Chief Investment Strategist

Roy Scaini

Chief Executive Officer

• Partnership established in 2001 and evolved from founding partners’ focus on the unique needs

of the private client investor

• Independent firm with 35 employees and AUM of approximately $ 2.0 billion*

• Provide wealth management services to over 400 HNW and UHNW clients

• Absolute return investment strategy available to North American investors through Pooled Pools

and separately managed accounts

• Minimum $2 million for Private Pools; $10 million for separately managed accounts

Backg r oun d

* Assets under management include separately managed client accounts, private pools, and Barometer Group of Funds. Barometer Private Pools,

Barometer group of funds and investment advisory services to broker/clients via an investment management platform as at December 31, 2016.

HNW – High Net Worth

UHNW – Ultra High Net Worth

Barometer UCITS Fund ICAV St r a t egy

Investment Strategy

▪ Global Tactical Income

Investment Objective

▪ An open mandate of income generating securities across markets, asset classes,

geographies, and sectors to find steady cash generating investments that exhibit

the best risk reward characteristics

▪ Designed to maximize absolute returns with low volatility

▪ Portfolio constructed with 30 to 40 securities and focused on large-cap

companies that are highly liquid

5

Barometer UCITS Fund ICAV I nves t m en t Team

6

Barometer UCITS Fund ICAV Cor po r a t e G ove r nance

7

• Investment Manager - Barometer Capital Management Inc.

• Fund Depository - Société Générale S.A., Dublin

• Fund Administrator - Maples Fund Services (Ireland) Limited

• Independent Auditors – Deloitte and Touche

• Swiss Representative - 1741 Fund Solutions Ltd.

• Swiss Paying Agent – Notenstein La Roche Bank Ltd.

• Manager - Barometer Management (Ireland) Limited

• Tom Coghlan (Independent Irish Director)

• Philip McEroe (Independent Irish Director)

• Roy Scaini (Canadian Resident)


Differentiated Process

8


9

Focus in market

leadership

– without bias

Recognize

change

and adjust

Be prepared

to play defense

A tactical approach…

D i s c i p l i n e d L e a d e r s h i p A p p r o a c h ™


10

O ur P r ocess

Asset classSector

Security

• Disciplined

• Quantitative

Security selection

Removes emotion

and rationalization


11

D i s c i p l i n e d L e a d e r s h i p A p p r o a c h ™

Market / Sector

Risk

Security Selection

1. Top-down

2. Bottom-up

3. Disciplined selling

Improving breadth

Portfolio

Positive change

Asset classSector

Security


Go anywhere for income

▪ Government bonds

▪ Corporate bonds

▪ Convertible bonds

▪ Preferred shares

▪ REITs

▪ Dividend paying common shares

REIT - Real Estate Investment Trust

Cap i t a l S t r uc t u r e A r b i t r age

12


Barometer’s security selection process assesses

▪ Balance sheet health

▪ Sustainability of payments

> Low % payout / High interest coverage ratio

▪ Healthy re-investment

▪ Likelihood of credit upgrade or distribution increase

▪ Relative yields spreads

▪ Potential for narrowing risk premiums

Secu r i t y Se lec t i o n

Increasing cash distributions or credit quality drives portfolio return

13


Qualitative▪ Quality of assets

(in the event of a default)

▪ Bond covenants

▪ Quality of management

▪ Barriers to entry

▪ Cyclicality of business

Quantitative▪ Cash flow relative to debt

▪ Debt to EBITDA

▪ EBITDA interest coverage

▪ % Debt in capital structure

▪ EBITDA growth

▪ Operating margins

▪ Sales growth

▪ Altman Z score

▪ Highest probability of default

EBITDA – Earnings before interest, taxes, depreciation and amortization

Cr ed i t Q ua l i t y

As s es s m en t Pa r am e t e r s

14


15

Investment Manager

Performance


Individual account performance results and account composition may differ from that of the listed mandate due to a number of factors, including fees, client imposed restrictions, timing of trade executions,deposits, withdrawals and market fluctuations. Tactical Income Mandate (“Mandate”) performance returns are expressed gross of fees and taxes, excluding those withheld by law, or other charges that may be payable. The Mandate performance returns are historical annual compounded total returns unless otherwise noted. Please note that benchmark returns may differ from that of the Mandate as they may have a different composition and risk profile. Past performance is not indicative of future results. Inception date of the Mandate is January 2001.

Tac t i ca l I ncom e M anda t e

16

Annualized Returns YTD 1 YR 3 YR 5 YR 10 YR Inception

Tactical Income Mandate 3.7% 6.0% 3.2% 7.0% 8.0% 11.7%

50% S&P/TSX Equity Income Index/

50% FTSE TMX Canada Universe

Bond Index

-0.4% 1.3% -0.2% 2.7% 4.5% 7.8%

July 31, 2017


Strategy2001 –

2004

2002 –

2005

2003 –

2006

2004 –

2007

2005 –

2008

2006 –

2009

2007 –

2010

2008 –

2011

2009 –

2012

2010 –

2013

2011 –

2014

2012 –

2015

2013 –

2016

Tactical Income

Mandate21.0% 24.7% 22.0% 16.2% 4.8% 5.4% 10.1% 10.5% 15.7% 12.4% 9.7% 7.3% 7.0%

50% S&P/TSX

Equity Income/ 50%

FTSE TMX Canada

Universe Bond

16.0% 16.9% 14.1% 10.1% 2.9% 3.9% 7.7% 7.5% 11.4% 6.9% 4.0% 0.7% 2.8%

Calendar Year Returns

Individual account performance results and account composition may differ from that of the listed mandate due to a number of factors, including

fees, client imposed restrictions, timing of trade executions, deposits, withdrawals and market fluctuations. Tactical Income Mandate (“Mandate”)

performance returns are expressed gross of fees and taxes, excluding those withheld by law, or other charges that may be payable. The

Mandate performance returns are historical annual compounded total returns unless otherwise noted. Note that benchmark returns may differ

from that of the Mandate as they may have a different composition and risk profile. Past performance is not indicative of future results. Inception

date of the Mandate is January 2001.

April 30, 2017 – Four Year Rolling Return Window (Annualized)


vs . Benchm ar k

17

Year Mandate Benchmark

2001 10.1% 15.1%

2002 10.4% 11.0%

2003 29.7% 21.7%

2004 36.0% 16.7%

2005 24.1% 18.5%

2006 1.2% 0.8%

2007 5.2% 5.4%

2008 -10.2% -10.9%

2009 27.1% 23.1%

2010 20.4% 16.5%

2011 8.3% 4.6%

2012 8.2% 2.7%

2013 13.2% 4.1%

2014 9.0% 4.4%

2015 -0.8% -8.3%

2016 7.1% 11.7%

2017 YTD 3.7% -0.4%


10/31/2001

to

3/31/2002

5/31/2003

to

5/31/2004

6/30/2005

to

6/30/2006

11/30/2006

to

6/30/2007

12/31/2008

to

12/31/2009

8/31/2010

to

3/31/2011

7/31/2012

to

1/31/2013

12/31/2012

to

8/31/2013

10/31/2013

to

12/31/2013

01/31/2015

to

06/30/2015

06/30/2016

to

02/28/2017

∆ 10y U.S.

Treasury

Yield1.16 1.28 1.22 0.57 1.63 1.00 0.52 1.03 0.47 0.71 0.92

∆ BAC ML

10y

Treasury

Price Index

-8.7% -9.2% -9.9% -4.6% -12.6% -7.6% -3.1% -8.0% -3.7% -5.7% -7.8%

Tactical

Income

Mandate7.5% 23.3% 17.9% 11.2% 27.1% 17.1% 5.5% 3.2% 3.9%

BAC ML= Bank of America Merrill Lynch

Returns are presented at month-end and the period is highlighted to illustrate performance during rising interest rates. The Tactical Income Mandate (the “Mandate”) returns are expressed gross of

management fees, expenses and performance fees. Mandate returns include the Barometer Tactical Income Pool, the Disciplined Leadership Tactical Income Growth Fund and separately managed

accounts. The data presented represents accounts that may share a similar investment profile as the Mandate, however due to client investment restrictions may differ from the Mandate and returns should

not be assumed to be indicative of the Mandate. Further, individual client account holdings may also vary as a result of each client’s stated investment policy requirements. Performance of individual

accounts may differ from the Mandate and past performance is not indicative of future results.

We have included a 10-year U.S. Treasury Bond and BAC ML 10y treasury price index for general comparison to our Mandate’s performance. However, our Mandate is not representative of a 10-year U.S.

Treasury Bond and the volatility and risk profile of our Mandate may vary substantially compared to the Bond for reasons which include, but are not limited to: (i) Barometer uses an active investment style to

construct portfolios; (ii) the Mandate may hold or have held a higher concentration in specific securities and industries; (iii) investment products may utilize, short selling and other strategies as outlined in the

offering documents; and (iv) may hold and have held a higher concentration of non-rated income investments, including corporate securities, and a lower concentration of government-issued securities.

Inception date of Mandate is January, 2001.


18

Annualized Returns

July 31, 2017YTD 1 YR 3 YR 5 YR 10 YR Inception

Tactical Income Mandate 3.7% 6.0% 3.2% 7.0% 8.0% 11.7%


Returns are presented at month-end and the period is highlighted to illustrate performance during rising interest rates. The Tactical Income Mandate (the “Mandate”) returns are expressed gross of

management fees, expenses and performance fees. Mandate returns include the Barometer Tactical Income Pool, the Disciplined Leadership Tactical Income Growth Fund and separately managed accounts.

The data presented represents accounts that may share a similar investment profile as the Mandate, however due to client investment restrictions may differ from the Mandate and returns should not be

assumed to be indicative of the Mandate. Further, individual client account holdings may also vary as a result of each client’s stated investment policy requirements. Performance of individual accounts may

differ from the Mandate and past performance is not indicative of future results.

We have included a 10-year U.S. Treasury Bond for general comparison to our Mandate’s performance. However, our Mandate is not representative of a 10-year U.S. Treasury Bond and the volatility and risk

profile of our Mandate may vary substantially compared to the Bond for reasons which include, but are not limited to: (i) Barometer uses an active investment style to construct portfolios; (ii) the Mandate may

hold or have held a higher concentration in specific securities and industries; (iii) investment products may utilize, short selling and other strategies as outlined in the offering documents; and (iv) may hold and

have held a higher concentration of non-rated income investments, including corporate securities, and a lower concentration of government-issued securities. Inception date of Mandate is January 2001.As at

April 30, 2017.


i n Pe r i ods o f R i s i n g Yie l ds

19


Source: Morningstar, June 30, 2017

The chart above is for illustrative purposes only. Past performance is no guarantee of future results. Results would be different for other time periods. Stocks are represented by the S&P 500 Index and S&P/TSX

Composite Total Return Index, unmanaged indexes and leading measures of overall US and Canadian performance respectively. Investors cannot invest directly in the indexes. Investors cannot invest directly in the

index. The rates of return are net of all expenses and fees. All performance data assumes reinvestment of all distributions or dividends and does not take into account sales, redemption, distribution or optional

charges or income taxes payable by any securityholder that would have reduced returns. Individual account performance results and account composition may differ from that of the Barometer Tactical Income Pool

(“Pool”) due to a number of factors, including fees, client imposed restrictions, timing of trade executions, deposits, withdrawals and market fluctuations. Please note that the benchmark return may differ from the

individual account or the Pool as they may have a different composition and risk profile.20

B a r o m e t e r Ta c t i c a l I n c o m e P o o l

R i s k R e w a r d


21


D r a w D o w n


22

Portfol io Rotat ion


600

800

1,000

1,200

1,400

1,600

Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09

S&

P 5

00

45.8%

54.2%

Bonds

Cash

Equities

Sept 08

Tactical Asset Rotation – Global Financial Crisis

10.2%

30.1%

59.7%

Cash

Corp.Bond

Equities

Mar 09

12.6%

87.4%

Bonds

Cash

Equities

Sept 07

The information contained herein has been provided by Barometer Capital Management Inc. (“Barometer”) for information purposes only.23


– A s s e t R o t a t i o n

A large equity hedge was used in

the portfolio in September 2008

reducing net equity exposure to

approximately 20%


1.0%

1.5%

2.0%

2.5%

3.0%

Sep12

Oct12

Nov12

Dec12

Jan13

Feb13

Mar13

Apr13

May13

Jun13

Jul13

Aug13

Sep13

Oct13

Nov13

10-y

r T

rea

su

ry Y

ield

Taper

Tantrum

Tactical Asset Rotation – Taper Tantrum

5.0%

24.3%

70.7%

Cash

Bonds

Equities

Nov 2012

1.3%

15.8%

82.9%

Cash

Bonds

Equities

Apr 2013

2.7%

2.8%

94.5%

Bonds

Cash

Equities

Sept 2013

The information contained herein has been provided by Barometer Capital Management Inc. (“Barometer”) for information purposes only. 24


– A s s e t R o t a t i o n


Tactical Sector Rotation – OPEC Oil Oversupply

The information contained herein has been provided by Barometer Capital Management Inc. (“Barometer”) for information

purposes only.

25


– S e c t o r R o t a t i o n

Source: Bloomberg Finance L.P.,

Barometer Capital Management Inc.


Construct ive

Capital Markets

26

Barometer UCITS Fund ICAV Secu la r Bu l l and Bea r M a r ke t s

27

Source: Raymond James Research


I n v e s t m e n t G r a d e S p r e a d s

– S t a b l e

Source: Bloomberg Finance L.P.

As at August 18, 2017

28


Source: TD Securities Inc.

As at July 31, 2017

PMI - Purchasing Manager’s Index

G loba l PM I s – I m p r ov ing

29


As at May 1, 2017

O ut pu t G ap i n U . S . – Shr i nk i n g

Source: Goldman Sachs Inc.

30


31

Source: Raymond JamesQ - Quarter

Cor po r a t e Es t im a t es


32

Source: Bloomberg Finance L.P.

Ear n ings Bea t Ra t e i n

Second Q ua r t e r


33

Ear n ings Rev i s i o n Fo r 2Q , 2018

Source: Goldman Sachs


34

Portfol io Construct ion


35

His t o r i ca l Sec t o r A l l oca t i o ns


Barometer UCITS Fund ICAV Por t f o l i o Ana l y t i c s


Y/Y – Year-over-year

36


11.5%

11.1%

7.5%

5.8%

5.7%

5.5%

3.0%

2.9%

2.9%

2.9%

2.9%

2.9%

2.8%

2.8%

2.8%

2.7%

2.7%

2.7%

2.7%

2.7%

2.6%

2.5%

2.4%

2.0%

2.0%

2.0%

Industrials - Aerospace & Defense

Cash

Financials - Diversified Banks

Information Technology - Data Processing & Outsourced Services

Financials - Asset Management & Custody Banks

Information Technology - Systems Software

Health Care - Managed Health Care

Information Technology - Application Software

Information Technology - Home Entertainment Software

Health Care - Health Care Equipment

Financials - Investment Banking & Brokerage

Industrials - Industrial Machinery

Information Technology - Technology Hardware, Storage & Peripherals

Materials - Gold

Information Technology - Internet Software & Services

Energy - Oil & Gas Storage & Transportation

Consumer Staples - Packaged Foods & Meats

Information Technology - Semiconductors

Materials - Copper

Industrials - Construction Machinery & Heavy Trucks

Materials - Diversified Metals & Mining

Utilities - Renewable Electricity

Financials - Multi-Sector Holdings

Utilities - Independent Power Producers & Energy Traders

Health Care - Pharmaceuticals

Industrials - Railroads

Industry Allocations as at August 21, 2017

Barometer Tactical Income Fund

Sector AllocationInformation Technology 25.4%

Industrials 19.1%

Financials 18.5%

Cash 11.1%

Materials 8.1%

Health Care 7.9%

Utilities 4.5%

Energy 2.7%

Consumer Staples 2.7%

Geographic Allocation

U.S.: 67.5%

Canada: 26.5%

Asia: 3.1%

Europe: 2.9%

Bar om e t e r UC I TS Fund I CAV

37


Barometer Tactical Income Fund

25.4% Information Technology

US;ATVI Activision Blizzard Inc

US;ADBE Adobe Systems Inc

US;AAPL Apple Inc

US;AVGO Broadcom Ltd

US;FB Facebook Inc

US;FISV Fiserv Inc

US;MSFT Microsoft Corp

US;ORCL Oracle Corp

US;V Visa Inc

19.1% Industrials

CA;CNR Canadian National Railway Co

US;CAT Caterpillar Inc

US;FTV Fortive Corp

US;GD General Dynamics Corp

US;LMT Lockheed Martin Corp

US;NOC Northrop Grumman Corp

US;RTN Raytheon Co

18.5% Financials

CA;AQY.A Alignvest Acquisition II Corp

US;BAC Bank of America Corp

US;BLK BlackRock Inc

CA;BAM.A Brookfield Asset Management Inc

US;C Citigroup Inc

US;JPM JPMorgan Chase & Co

US;MS Morgan Stanley

CA;ONEX Onex Corp

8.1% Materials

CA;FNV Franco-Nevada Corp

CA;LUN Lundin Mining Corp

US;RIO Rio Tinto PLC

7.9% Health Care

US;JNJ Johnson & Johnson

US;SYK Stryker Corp

US;UNH UnitedHealth Group Inc

4.5% Utilities

CA;AQN Algonquin Power & Utilities Corp

CA;PIF Polaris Infrastructure Inc

2.7% Energy

CA;KML Kinder Morgan Canada Ltd

2.7% Consumer Staples

CA;MFI Maple Leaf Foods Inc

11.1% Cash and Cash Equivalents

30.0% Index Hedge

Holdings as at August 21, 2017

Bar om e t e r UC I TS Fund I CAV

38



1 mo 3 mo 6 mo YTD 1 yr 3 yr 5 yr S.I.*

*F Class (EUR)

0.34% 1.71% 2.45% 4.76% 6.22% n/a% n/a 7.81%

*Class F Euro Inception Date: January 13, 2016

Bar om e t e r Tac t i ca l I ncom e Fund

– Per f o r m ance

39

*Before the introduction of A shares, returns have been calculated as class F shares NAVs after deduction of management

fee of 1.20% fixed and 20% performance fee. From October 2016 onwards performance is shown for A shares.

Barometer UCITS Fund ICAV W hy Ba r om e t e r ?

Active tactical mandateHistorically effective at managing draw-downs

An Evergreen Strategy – focus on leadershipUnbiased with respect to style

Low correlation

Lower beta – attractive risk adjusted returns

Corporate governance – no laughing matter

Cash is an asset class – we manage our credit risk

Interest alignment – Fund seeded by Partners

Proven

40

Barometer UCITS Fund ICAV I m po r t an t I n f o r m a t i on

This document contains “forward looking statements” which reflect the current expectations of the Barometer, Investment Manager of the Barometer UCITS Fund ICAV. These statements

reflect management’s current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known

and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance

or achievements that may be expressed or implied by such forward-looking statements including without limitation, those under the heading “Risk Factors” in the prospectus of the

Barometer UCITS Fund ICAV. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements provide incorrect, actual

results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this document.

This document is provided for information purposes only. It does not constitute an offer, solicitation or invitation to buy the units of the Barometer Tactical Income Fund (“Sub-fund”) in any

jurisdiction. The sub-fund may be only offered and distributed to investors in accordance with all relevant local laws and regulations. Prospective applicants for the Sub-fund should inform

themselves as to the legal requirements of so applying, and any applicable exchange control regulations and taxes in the countries of their respective citizenship, residence or domicile.

Changes in exchange rates may have an adverse effect on the value price or income of the product. The information does not provide individual financial, legal, tax or investment advice.

We recommend that you consult with a financial advisor prior to making any investment decisions.

Applications to invest in the Sub-fund must only be made on the basis of the prospectus and supplement. Please read the Key Investor Information Documents prior to investing in the

Sub-fund. These documents are available at www.barometer.ie. Barometer Capital Management Inc. (“Barometer”) is not liable for any errors or omissions in the information or for any

loss or damage suffered.

Returns are presented net of fees. Commissions, trailing commissions, management fees and expenses all may be associated with the Sub-fund. The indicated rates of return are the

monthly total returns including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income

taxes payable by any security holder that would have reduced returns. The Sub- fund is not guaranteed, its value changes frequently and past performance is not be a reliable guide to

future performance.

The Sub-fund strategy and current holdings are subject to change. The portfolio holdings information above may not contain all investments held, may differ from Barometer’s other

marketing materials, and may be different from the Barometer UCITS Fund ICAV annual financial report for the same period.

The Barometer UCITS Fund ICAV prospectus for Switzerland, the Key Investor Information Documents, the Instrument of Incorporation, the annual and semi-annual report and further

information can be obtained free of charge from the representative in Switzerland or by visiting www.barometer.ie.

The representative in Switzerland is 1741 Fund Solutions Ltd., Burggraben 16, 9001 St. Gallen, Switzerland.

The Swiss paying agent in Switzerland is: Notenstein La Roche Bank Ltd., Bohl 17, 9004 St. Gallen, Switzerland. The place of jurisdiction is at the registered office of the representative

in Switzerland.

The document has been prepared for the use of the recipient as a qualified investor according to art. 10 para. 3, 3bis and 3ter of the Swiss Collective Investment Schemes Act. It does

not constitute an offer or an invitation by or on behalf of Barometer Management (Ireland) Limited or Barometer Capital Management Inc. to any person to buy or sell any security.

41

Barometer UCITS Fund ICAV Con t ac t Us

ISIN EUR IE00BYX3ZR54

ISIN USD IE00BYX3ZS61

Investor Relations:

Roy Scaini,

Director

Barometer Management (Ireland) Ltd.

[email protected]

+1 416 601-6888

Beat Guldimann,

Advisor European Distribution

Barometer Management (Ireland) Ltd.

[email protected]

+1 647 295-2563

+41 79 521-7885

42