Guinness
Global Money Managers Fund

• In brief: why invest in a fund of asset managers?
• Asset management investment case
• Fund managers
• Investment process
• Portfolio construction & risk controls

In brief: why invest in a fund of asset managers?

High returns on capital

Successful asset management companies can grow using relatively little capital. Overall shareholder returns can therefore be very high

Growing global sector

Global conventional assets under management are growing faster than world equity returns, supporting growing revenues in the sector

Low balance sheet risk

Money management companies tend to have very low gearing versus other financial sectors (especially banks), reducing balance sheet risk

Above average dividend yield

The sector typically exhibits high free cashflow, which translates into higher dividend yields on average than the broad equity market

Higher beta

The sector has the potential to outperform the market (capture higher beta) during periods of market strength, particularly in equities

Investment case for a portfolio of asset managers

Asset managers have a number of characteristics which make them particularly interesting from a shareholders point of view.

1. High returns on capital

   A key attraction of the money management industry is that successful companies can enjoy both very high rates of return on capital (not much is required) and a growth rate higher than the underlying investment returns as additional assets are raised. Overall shareholder returns can therefore be very high.

2. Growing global sector

   The value of assets under management globally has grown faster than the performance of equity markets. Since 1990, new investable companies and increasing personal wealth have helped grow conventional assets under management by 700%, versus world equity returns of 150%. We expect this trend to continue. An expanding pool of assets provides an attractive environment for good asset managers to grow.

3. Financials exposure with lower balance sheet risk

   For investors who are concerned about the fragility of bank balance sheets globally, we believe this Fund gives exposure to the attractive growth and return attributes of the financial sector whilst lessening the balance sheet risk. The average gearing of the underlying companies held in the Fund has been consistently less than zero (i.e. overall net cash).

4. Above average dividends

   Asset management companies often deliver high free cash flow, which translates into higher dividend yields on average than the broad equity market. The gross dividend yield paid by the companies in our universe of asset managers has been consistently higher than the MSCI World Index gross yield. (You should note that Guinness Global Money Managers Fund is managed for total returns, and has not paid out dividends to investors in the past. There is currently no intention to do so in the future.)

5. Higher beta

   In periods of rising equity markets, asset management companies focusing on managing equities can enjoy a rising income without adding any new customers. They effectively provide a geared exposure to rising equity markets. So the Fund is a means for investors to capture higher beta during periods of market strength, particularly in equities.

6. Potential for rapid growth

   A final interesting characteristic is that a successful asset management company can grow its business very rapidly if markets are rising and the underlying performance of its fund range is strong. To date we have had our best successes in the Fund by identifying and investing in this type of company.

7. Favourable environment for investing in asset management companies

   If you believe that global equity markets are set on a path of reasonable long-term growth, albeit at likely lower returns than of old, and in an environment of rising global invested assets, a diversified portfolio of listed asset managers can play a useful role in your portfolio.

Fund Managers

Investment process

We seek quality asset management companies at the right price.

Identifying high quality asset managers

Our process starts with identifying the global investment universe of companies engaged in asset management services. The majority of the universe comprises companies where asset management is the main activity; however, we also look at associated services such as custody banks and stock exchanges. We analyse the universe regularly for companies which look attractive on valuation, return on investment, earnings sentiment and price momentum. In plain English – good companies that are attractively valued where investor sentiment is improving and investor buying is occurring. For the asset managers, we add an important fifth criteria: superior underlying asset management performance. This process is designed to give us a portfolio of reasonable value, good quality, successful asset management companies which we hope will provide a shareholder return in excess of the broad equity market.

Stock due diligence

Stock ideas are taken from our screens. We then conduct due diligence to establish whether we have conviction to include the stock in our portfolio. The due diligence centres around detailed financial modelling.

Portfolio construction

Equally-weighted portfolio

The portfolio comprises 30 equally-weighted positions. Our equally-weighted portfolio construction is designed to create the best balance between maintaining fund concentration and managing stock-specific risk. It also imposes a structural sell discipline: an existing position must be sold to purchase a new holding.

Sector weights

There is no benchmark adherence in the Fund’s sub-sector weights.

Portfolio risk controls

Stock specific risk

By constructing the fund of 30 equally weighted positions, we avoid significant exposure to any one individual stock.

Emerging market exposure

Emerging market exposure is normally limited to 20% of the portfolio.

Liquidity

The portfolio is liquid, with 80% of the Fund normally invested in companies with a market capitalisation over US $500 million.

Currency

The Fund is not hedged from a currency perspective.

Fund	Global Money Managers Fund	Date (period end)	31.08.2018
Index	MSCI World Index	Fund Launch	31.12.2010
Financials Index	MSCI World Financials Index	Basis	Total return, in GBP

Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency movement, and you may not get back the amount originally invested.

Cumulative performance (%)
X class (1) (OCF: 1.24%)	Year-to-date	1 year	3 years	5 years	From launch
Fund	-4.12	0.22	34.02	63.56	115.52
Index	9.12	12.13	65.89	93.71	139.61
Financials Index	0.85	5.61	58.41	80.29	115.65

Annualised performance (%)
X class (1) (OCF: 1.24%)	1 year	3 years	5 years	10 years	From launch
Fund	0.22	10.24	10.34	0.00	10.53
Index	12.13	18.36	14.13	10.81	12.07
Financials Index	5.61	16.55	12.50	7.57	10.54

Calendar year performance (%)
X class (1) (OCF: 1.24%)	2013	2014	2015	2016	2017
Fund	51.91	10.04	-5.72	13.70	23.39
Index	24.32	11.46	4.87	28.24	11.80
Financials Index	24.97	9.59	2.22	34.16	12.11

Discrete year performance to date (%)
12 months ending:	Aug-14	Aug-15	Aug-16	Aug-17	Aug-18
Fund X Class (OCF: 1.24%) (1)	22.25	-0.16	2.65	30.27	0.22
Fund C Class (OCF: 1.99%)	21.34	-0.91	1.88	29.29	-0.54
Index	12.79	3.52	25.20	18.09	12.13
Financials Index	10.88	2.65	16.71	28.46	5.61

Source: Financial Express, bid to bid basis, total return.

Notes

(1) The performance numbers displayed here are calculated in GBP (Sterling). Please note: The Fund's X class was launched on 15/02/2012. The performance shown is a simulation for X class performance being based on the actual performance of the Fund's E class, which has the same annual management charge as the X class, and has existed since the Fund's launch. The Fund's E class is denominated in USD but for the purposes of this performance data its performance is calculated in GBP. Hence, the Fund's E Share class is used here to illustrate the performance of a GBP-based clean-fee (RDR-compliant) share class since the Fund's launch on 31.12.10.

Fact sheets
For information on the Fund’s current investments, please see the latest fact sheet:	English	French	German	Italian

Key facts
Launch date	31/12/2010
Fund managers (start date)	Will Riley (31/12/2010) Tim Guinness (31/12/2010)
Benchmark	MSCI World Index
IA sector	IA Global
Structure	OEIC (UCITS)
Domicile	Ireland
Redemption fee	2% within 30 days of purchase

Underlying currency	US Dollar
Pricing	Daily, forwards
Valuation	2300 Dublin time
Deal cut off time	1500 Dublin time
Year end	31 December
Administrator	Link Fund Administrators (Ireland) Ltd
Custodian	JP Morgan Bank (Ireland) plc
UK Reporting Fund status	Yes
ISA Eligible	Yes

Share classes
	1.24% OCF		1.49% OCF		1.99% OCF
Currency	USD	GBP	USD	EUR	USD	GBP	EUR
Accumulation or Distribution	Acc	Acc	Acc	Acc	Acc	Acc	Acc
Name	E	X	A	D	B	C	C EUR Acc
Initial charge	0%	0%	0%	0%	2%	5%	5%
OCF* (Total ongoing charges p.a.)	1.24%	1.24%	1.49%	1.49%	1.99%	1.99%	1.99%
Minimum direct investment	$10,000,000	£5,000,000	$200,000	€ 100,000	$1,000	£1,000	€ 1,000
Minimum platform investment	Guinness Asset Management minimums do not apply. Platforms apply their own minimum investment levels.
ISIN Code	IE00B3NSFR34	IE00B7MJHM43	IE00B644LY07	IE00B68GW162	IE00B3QW5Z07	IE00B64PRP62	IE00BGHQF748
SEDOL	B3NSFR3	B7MJHM4	B644LY0	B68GW16	B3QW5Z0	B64PRP6	BGHQF74
Bloomberg ticker	GUGLMME ID	GUGLMMX ID	GUGLMMA ID	GUGLMMD ID	GUGLMMB ID	GUGLMMC ID	GUGLMCE ID
Country registrations	UK, CH, LUX, FIN, SGP

*OCF = Ongoing Charges Figure, which includes the annual management charge.

Country codes

UK

United Kingdom

CH

Switzerland

LUX

Luxembourg

FIN

Finland

SGP

Singapore (professional only)

GER

Germany

FR

France