PRIMA Fund Update November 2021

Market Review in September

• Best performing equity region/sector: Japanese TOPIX 4% in GBP
• US S&P 500 -2.55% in GBP
• FTSE All-Share -1.41% & FTSE 100 -0.58%
• FTSE Europe ex UK -4.07% in GBP
• MSCI World Growth -3.44% in GBP
• MSCI Asia ex Japan -2.39% in GBP
• US Nasdaq Composite -3.46% in GBP
• MSCI World Small Companies -1.50% in GBP
• MSCI World Value -0.93% in GBP
• US 10-year Treasury yield up 21 basis points to 1.52% (price gone down)
• UK 10-year Gilt yield up 32 basis points to 1.01%% (price gone down)

PRIMA Cautious

• The fund’s standard deviation and average drawdown since inception are lower than that of the sector.
• Short duration bond holdings performed in line with expectations with bond spreads remaining tight.
• The performance of the Marlborough European Multi-Cap strategy and iShares Edge MSCI World Minimum Volume ETF strategies were positive contributors to performance over 4 weeks.
• While there is still some regulatory pressure surrounding social housing affecting the performance of Civitas Social Housing investment trust, with the strategy currently trading at a c.16% discount to its net asset value (NAV), it is a becoming a buying opportunity and was retained within the portfolio.
• The Baillie Gifford Japan investment trust, which is similar to the open-ended fund with a slightly higher allocation to mid and small caps, had a weaker performance during the period, having had a stronger performance during the previous month surrounding positive election news in Japan.

Actions taken:

• Divert new flows from Murray Income Trust to Allianz UK Equity Income Strategy.
• Divert New flows from Baillie Gifford Japan Trust to Baillie Gifford Japanese B Acc strategy
• Buy 1% LF Lindsell Train UK Equity

PRIMA Balanced

• Since inception the fund features lower standard deviation and average drawdown than the sector.
• Underweight allocation to North America equity was the greatest detractor to performance, albeit the performance of the Artemis US Smaller Companies strategy was strong over 1-12 weeks.
• Chinese stocks have seen an improved performance over the short term, which has benefited the Invesco China fund and the portfolio, as the fund was one of the main detractors from performance in the previous months.
• Allocation to alternatives and diversifiers such as the JPM Global Macro Opportunities fund, and iShares Physical Gold strategies were positive contributor to performance over 1-4 weeks.

Actions taken:

• Divert New flows from Baillie Gifford Japan Trust to Baillie Gifford Japanese B Acc strategy
• Divert New flows from Mid Wynd International Trust to Artemis US Smaller Companies, X Trackers S&P 500 Equally Weighted UCITS ETF and HSBC American Index strategies.

PRIMA Adventurous

• The fund appears to be taking less risk than the sector with a lower standard deviation and less volatility.
• Underweight allocation to North America equity was the greatest detractor from performance, albeit the performance of the Artemis US Smaller Companies strategy was strong over 1-12 weeks.
• The positive performance of the L&G Global Technology Index Trust counterbalanced the relatively weaker performance of the L&G Global Health & Pharmaceuticals Index Trust over 12 weeks.
• The iShares MSCI EM Latin America strategy has had a weak performance over 1-12 weeks; a small position was taken in a bid for a leveraged recovery from Covid in this region with its valuations geared to commodities. Political risk ended up driving underperformance. The Chinese property market slowdown had also impacted the fund’s performance; however, this could be offset by US infrastructure spending and there is the potential for this strategy to reprice should political risks diminish in the region.

Actions taken:

• Divert new flows from Mid Wynd International Trust to Artemis US Smaller Companies and X Trackers S&P 500 Equally Weighted UCITS ETF strategies.

Data source: FE Analytics as of 30th of September 2021

Disclaimer

Any research is for information only, it does not constitute financial advice. The value of investments and any income from them may go down as well as up, so you may get back less than you invested. Past performance cannot be relied upon as a guide to future performance. KLO Financial Services Ltd are registered in the UK, company number 08711328. We are authorised and regulated by the Financial Conduct Authority, reference 710272. For any information please visit our website klofinancialservices.com