BMO US Equity Buffer Hedged to CAD ETF - July Trust · NEO:ZJUL
BMO US Equity Buffer Hedged to CAD ETF - July Trust — BMO UK High Income Trust — Investor Presentation (July 2019)
21 slides from BMO US Equity Buffer Hedged to CAD ETF - July Trust's investor presentation, July 2019
Slide 1: BMO UK High Income Trust plc
694875 UK For retail investors BMO UK High Income Trust plc Philip Webster CFA, Portfolio Manager July 2019
Slide 2: Investment risks
Investment risks Stock market movements may cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount originally invested. The value of your investment is dependent on the supply and demand for the shares of the Investment Trust rather
Slide 3: Strategy and relevance
Strategy and relevance • Active vs Passive management – ongoing shift to passive? • Asset allocators, that I am speaking to have already bought into this polarised view • The Equity Income peer group look very similar, especially when it comes to ownership of the UK mega-caps • We have built a diffe
Slide 4: Shape of the equity portfolio today
Shape of the equity portfolio today • Inherited 53 names, 80% FTSE 100, 20% FTSE 250 (Year-end 2016) • Today we have 34 names; 54% FTSE 100, 33% FTSE 250, 6% Non-index, 4% Overseas, 3% AIM • From March 2017 to 2018 we have introduced 18 new names and exited 34, to March 2019 that fell to 5 introduce
Slide 5: Top 10 Relative Equity positions (March 2017)
Top 10 Relative Equity positions (March 2017) Relative weight Company % British American Tobacco 2.6 BBA Aviation 2.0 Compass Group 1.9 LondonMetric Property 1.7 GlaxoSmithKline 1.6 Ibstock 1.5 Daily Mail & General Trust 1.5 BAE Systems 1.3 Smiths Group 1.3 Halfords Group 1.3 Total 16.7 Source: BMO
Slide 6: Top 10 Relative Equity positions (June 2019)
Top 10 Relative Equity positions (June 2019) Company Relative weight % RELX 4.1 Cairn Homes 3.6 Kerry Group 3.3 Close Brothers Group 3.3 Jupiter Fund Management 3.2 British American Tobacco 3.2 Intermediate Capital Group 3.1 Lenzing 2.9 Phoenix Group Holdings 2.9 GlaxoSmithKline 2.7 Total 32.3 Sourc
Slide 7: What have we been buying?
What have we been buying? Focus of the buying has been a mixture of rebalancing the portfolio to growth, diversifying the income and increasing the moat (competitive dynamics stronger) BUY – Wizz Air – market leading low-cost carrier in Eastern Europe. Initiated post the share price decline – Brewin
Slide 8: Stock example: Lenzing AG
Stock example: Lenzing AG • The Lenzing Group is the world market leader for the production of wood-based cellulose fibres with a market share of 17 percent in 2017 • Lenzing expects the demand for wood- based cellulose fibers will rise by 5 to 6 percent each year to 2020 • Lenzing have very high ma
Slide 9: Lenzing: A leader in sustainability
Lenzing: A leader in sustainability • As consumers, our awareness of production process of our goods is increasing • As a quality company and manufacturer of sustainable fibres, Lenzing has meaningful sustainable business practices which enables them to spot trends early and nurture innovative leade
Slide 10: What have we been selling?
What have we been selling? Focus of the sales has been on downside risk, be that thesis drift, valuation or balance sheet SELL – National Grid – reducing our exposure to the Utilities space which had performed well – Daily Mail & General Trust - newspapers in secular decline; low conviction in remai
Slide 11: Performance: cumulative vs benchmark
Performance Cumulative performance (NAV) vs benchmark (GBP net of fees) 35.0 30.0 28.9 25.0 20.0 18.9 Return % 14.8 14.8 15.0 13.0 13.0 10.0 5.0 3.1 3.3 0.6 0.0 -5.0 -2.2 YTD 3 months 6 months 1 year 3 years Fund Benchmark Past performance should not be seen as an indication of future performance. S
Slide 12: Performance: discrete
Performance Discrete performance (GBP net of fees) June 18- June 17- June 16 – June 15 – June 14 – Percentage growth % June 19 June 18 June 17 June 16 June 15 NAV -2.21 4.59 16.28 4.83 1.20 Share price -2.34 -0.02 23.38 0.80 2.61 FTSE All Share 0.58 8.27 18.41 1.93 3.17 Past performance should not b
Slide 13: Benchmark agnostic
Benchmark agnostic….. Sector allocation (relative to benchmark) Sector (performance relative to benchmark) Financials Financials 1.1 7.8 Consumer Goods Consumer Goods -4.2 5.7 Technology Technology -15.1 4.4 Consumer Services Consumer Services 4.9 3.7 Utilities Utilities 1.0 -0.8 Basic Materials Bas
Slide 14: Value vs growth – relative price performance
Value vs growth – relative price performance 170 160 150 140 Price 130 120 110 100 90 80 01-Dec-74 01-May-82 01-Oct-89 01-Mar-97 01-Aug-04 01-Jan-12 01-Jun-19 Past performance should not be seen as an indication of future performance. Source: Morgan Stanley as at 30-Jun-19. 14
Slide 15: Dividend
Dividend • The core of the portfolio changes are supportive of the dividend – quality, moat, CF and balance sheet • Several of the positions exited have proven this to be correct – Vodafone and Centrica are both high- yielders that have suffered from weak earnings, leveraged balance sheets and divid
Slide 16: Dividend progression
Dividend progression Dividend / Capital repayments – by financial year 5.00 Annual Y-O-Y 4.50 rate Increase FY (p) % 4.00 2014 4.37 2.1% 3.50 2015 4.48 2.5% 2016 4.60 2.7% 3.00 2017 4.72 2.6% 2.50 2018 4.88 3.4% 2.00 2019 5.04 3.3% 1.50 1.00 0.50 0.00 2013 2014 2015 2016 2017 2018 2019 1st interim 2
Slide 17: Dividend yield
Dividend yield Yield (%) 6.0 5.4 5.0 4.1 3.9 4.0 3.0 2.0 1.0 0.7 0.8 0.0 FHI Ordinary shares FTSE ALL-Share AIC UK Equity Income UK 10 Year Gilt Cash Index* Past performance should not be seen as an indication of future performance. The level of any income earned by the fund will fluctuate. Source:
Slide 18: Current market view
Current market view • Risk pressures are building: – Cheap funding continues to support elevated corporate leverage and unsecured consumer debt – Political uncertainty continues through Brexit and/or trade “wars” – Behavioural biases are creating “bubbles” in particular areas of the market – Valuati
Slide 19: Glossary
Glossary • All-Cap: A Fund that invests in equities without regard to whether a company is characterised as small, medium or large • Bond: A form of loan paying a generally agreed rate of interest over a fixed term, with the principal paid at maturity. Bonds may be issued by governments or companies
Slide 20: Disclaimer
Disclaimer FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licenso
Slide 21: Contact us
Contact us BMO Global Asset Management (EMEA) – Head Office Exchange House Primrose Street London EC2A 2NY Tel: +44 (0) 20 7628 8000 Calls may be recorded. bmogam.com Extensive worldwide investment capabilities • Total focus on clients • Comprehensive range of products and solutions • Defined expert
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