February 2015

| Fund Strategy |

  • Aims to deliver attractive returns on a risk-adjusted basis.
  • Employs a top-down asset allocation process, evaluating the macroeconomic environment to drive portfolio construction.
  • This is complimented by fundamental research into individual names held within the portfolio.
  • At all times, at least 80% of the Fund will be invested in investment grade bonds, or equivalent. Currency exposure will be predominantly sterling and, where appropriate, foreign currency exposure will be hedged back into sterling.
  • The Fund will be constructed to distribute monthly income payments.

Performance Record

Performance Record Graph

Managed by Paul Smith since 01 August 2009

Discrete Annual Performance (%)

Share Type 2015(YTD) 2014 2013 2012 2011
Income 2.2 5.8 5.6 15.9 -2.3

Discrete Annual Performance to Quarter End 31 December 2014 (%)

Share Type 31/12/2013
31/12/2014
31/12/2012
31/12/2013
31/12/2011
31/12/2012
31/12/2010
31/12/2011
31/12/2009
31/12/2010
Income 5.8 5.6 15.9 -2.3 6.5

Cumulative Performance to 31 January 2015 (%)

Share Type 3 Months 6 Months 1 Year 3 Years 5 Years
Income 3.2 4.2 6.7 29.1 33.5
Official Sector 6.5 8.7 11.8 27.2 41.8

Quoted on a bid to bid, total return, UK Sterling basis. Past performance is not a guide to future returns. The price of units and shares and the income from them may go down as well as up and you may get back less than you invested.

Source: Financial Express. 04/02/2015

| Fund Objectives |

To provide a high income payable in monthly instalments.

 

Important Note

The initial charge has been waived by Premier Asset Management until further notice. However, if you have invested via a financial adviser, the initial charge may still apply and be paid to your adviser.

| Key Fund Facts |

Fund Size:£56.2m
Launch Date:06 November 1995
Sector:IA Sterling Corporate Bond
Distribution Yield:A, B, C Inc 2.2%
Underlying Yield:A Inc 1.2%, B Inc: 1.3%, C Inc: 1.5%

| Top 10 Holdings |

%
Cash3.34
University of Cambridge 3.75% 17/102.36
Aspire Defence 4.674% 31/03/402.13
Real Estate Credit Investments1.91
Credit Suisse CD 1.02% 16/10/20151.78
RSL Finance 6.625% 31/03/381.76
South Eastern Power I/L 05/06/23 1.69
National Grid 1.25% Index-Linked 061.69
GE Capital Funding 8% 14/01/39 1.63
CS 7.875% 24/02/20411.63
TOTAL19.92

 

| Further Holdings |

EIB Bank 6.00% 07/12/2028
EIB I/L 16/04/2020
BSkyB 3.125% 26/11/2022
Pepsico 2.50% 01/11/2022
BT 5.75% BDS 7/12/2028
Skandinaviska Enskilda 3% 18/12/202
Amlin PLC 6.50% 19/12/26
European Bank Reconstruction 5.625%
Lloyds 11.875% 16/12/2021
NATS Route 5.25% 31/03/26
Apple 3.85% 04/05/2043
Land Securities 5.391% 31/03/27
McDonald's 2.375% 27/11/2024
Lloyds 10.75% F2V 16/12/2021
HSBC Holdings 6.00% 29/03/40
RSA Insurance 9.375% 20/05/39
SSE 6.25% 27/08/38
Spirit Issuer 3.21625% 28/12/31
Juturna 5.0636% 10/08/33
Electricite De France 6.125% 02/06/
Yorkshire Water Services 3.625% 01/
Societe Generale F2V Perp
E.ON International 6.75% 27/01/39
A2D Funding II 4.5% Gtd Snr 30/09/2
BUPA 5.00% 25/04/2023
GlaxoSmithKline 2.8% 18/03/2023
Rabobank 6.875% 19/03/20
Bank of America 5.25% 09/11/2016
Marks & Spencer 6.125% 02/12/2019
European Bank Reconstruction 1.875%
Unique Pub 6.464% 30/03/32
Glencore 4.125% 30//05/23
Mondi Finance 3.375% 28/09/20
BAA Funding 3.334% 09/12/41
BL Superstore Fin 4.482% 04/10/30
Nordic 5.25% 26/11/19
Barclays 10% 21/05/21
EADS Finance 2.7% 04/17/2023
Centrica 4.375% 13/03/29
BPCE SA 2.75% 08/07/2026
Brit Insurance 6.625% 09/12/30
Anheuser-Busch 4% 24/09/2025
Freshwater 6.057% 17/10/36
Marstons Issuer 5.1576% 15/10/27
Anglian Water I/L 01/08/45
Telenor 2.75% 27/06/2022
Rabobank 8.375% 07/29/49
EFSF 1.875% 23/05/2023
Int Bank Recon & Dev 4.875% 07/12/2
UBS 4.75% 22/05/2023
Santander 3.16% 01/12/15
Deutsche Bank 6.25% 29/05/2049
FirstGroup 5.25% 29/11/22
Northern Powergrid Yorkshire 5.125%
Jefferies 2.375% 20/05/20
Argon Capital 8.162 Fr MTN Perp 29/
UBS FRN 22/02/2022
Petrobras 6.25% Gtd Snr 14/12/2026
AT&T 4.8% 06/15/2044
Electricite De France 5.25%
Rentokill 3.375% 24/09/19
C/Wealth Bank of Aus 3.00% 04/09/20
Rolls-Royce 3.375% 18/06/2026
EE Finance 4.375% 28/03/2019
Aviva 5.9021% Perp
Siemens Financial Services 6.125% 1
GE Capital Trust 5.50% 15/09/66
AXA FRN 5.453%
Credit Agricole 19/09/2033
Punch Taverns B 5.943% 30/12/24
BL Superstore Fin 5.27% 04/10/30
Debenhams 5.25% 15/07/2021
F&C 9.00% 20/12/2016
Tesco Property Fin 5.6611% 13/10/41
Morrisons 3.5% 27/07/26
Barclays 7.75% 10/04/23
Casino Guichard 4.726% 26/05/21
Imperial Tobacco 3.50% 11/02/2023
PGH Capital Ltd 6.625% 18/12/2015
United Parcel 2.45% 01/10/2022
Ecofin Water & Power 6% 31/07/2016
Henderson 7.25% 24/03/16
Transport for London 2.25% 09/08/20
Punch Taverns 7.274% 15/04/22
DirecTV Holdings Gtd Snr 6.375% 01/
Anglian Water 4.50% 05/10/27
Premier Foods 6.5% 15/03/2021
VIB Vermoegen 4.0% 05/12/2016
Next 4.375% 02/10/2026
BAT International Finance 4% 04/09/
Danske Bank 5.75% 31/10/2049
Thames Water 4.0% 19/06/2025
Banco Santander 6.25% 12/03/2049
Verizon 2.45% 11/01/2022
Intercontinental Hotels 3.875% 28/1
Enterprise Inns 6.5% 06/12/2018
Aston Martin 9.25% 15/07/2018
HSBC Var 5.625% 31/12/2049
Helical Bar Jersey 4% 17/06/2019
Northumbrian Water 6.875% 06/02/202
Nationwide 6.875%
Tesco Property Finance 5.4111% 13/0
RL Finance Bonds No. 2 6.125% 30/11
City Greenwich 9.375% 11/10/20
Barclays 8.0% 15/12/2049
KBC Groep 5.625% CoCo 19/Perp
Nationwide
Reed Elsevier 2.75% 01/08/2019
Theatre Hospitals No 2 FRN
St Mowden Properties 2.875% Conv 06
Punch Taverns FRSN 15/10/2016
Theatre Hospitals FRN
Eurosail FRN 13/06/45
Broadgate Finance 1.82375% 25/10/25
Windermere 1.91438% 20/04/15
FUT MAR 15 EURX EUR-BUND
FUT MAR 15 EURX EUR-BUND
FUT MAR 15 LIF LONG GILT
FUT MAR 15 LIF LONG GILT

| Credit Rating Exposure |

%
AAA10.33
AA11.03
A25.14
BBB36.16
BB8.15
B3.67
Non-Rated 5.52

| Maturity |

%
Under 1 year5.75
1-5 years9.74
5-10 years29.11
10-15 years20.56
15 years +34.84

Fund developments and comments

Premier Corporate Bond Monthly Income Fund - Investment Manager, Paul Smith (since 01 August 2009)


Premier Corporate Bond Monthly Income Fund continues to provide a top quartile income within the IA Sterling Corporate Bond sector with envious risk statistics. The Fund continued to deliver strong excess returns to credit selection during 2014 with the securitized issues from Punch Taverns and Enterprise Inns, as well as exposures to European real estate generating strong total returns. Overweight exposures to the consumer sectors and an underweight position in utilities continued to add to credit performance. Maintaining a shorter duration than peers restrained performance as sovereigns rallied during the latter half of the year. The Fund aims to distribute a smoothed monthly income with a balancing distribution in the final month.

Our current strategy is to position the Premier Corporate Bond Monthly Income Fund with greater sector diversification and probably a longer tail of holdings, but still be active and aggressive in credit and duration versus peers, some of whom reflect the broader market. The portfolio’s low correlation to the sector highlights this strategic approach. Our expectations of a flattening in the yield curve were realised during 2014 and we now expect higher yields across the curve as the market begins to factor in rate rises despite anticipated short-term deflation. We remain cautious about the degree of increased leverage being used for shareholder returns, while viewing defensive M&A in certain sectors as a credit positive in the medium term, due to a shift in competitive dynamics.

Default rates are likely to remain low in the immediate-term despite further re-leveraging, as issuers lock in cheap borrowings and corporate liquidity remains at historically high levels. However, some sectors such as the Energy sector will likely experience elevated default rates arising from industry-specific risks such as commodity price volatility. Bondholders should be alert to refinancing risk, as opportunistic issuers which rushed to the market to finance operations cheaply may find primary markets closed in a normalised rate environment.  Despite continuing to set post-crisis tights, we expect further credit spread compression, punctuated by periods of volatility, as sovereign yields begin to normalise. It is difficult to envisage an environment where duration outperforms credit although we closely monitor the spread of UK Gilts and US Treasuries over other G7 sovereigns.

The Fund’s average credit rating is A- and duration continues to be actively managed, maintaining less sensitivity to rate changes than the sector and market as a whole while seeking to benefit from changes in the shape of the yield curve. New forms of subordinated bank debt with unique features to each issue provide ample opportunities to add value. We continue to keep the portfolio highly liquid, enabling a flexible structure while overall bond market liquidity remains a concern.

A small, nimble bond fund is likely to be able to produce good outcomes for investors, as they did in 2014, with a greater dispersion of bonds to choose from and an ability to more actively manage duration. We would propose that a small, nimble, actively managed corporate bond fund is more strategic than the majority of the strategic bond sector constituents given their size and limited market liquidity.

 

Fund Information

Initial ChargeA: 4%, B&C: 0%
Annual Management ChargeA: 1%, B: 0.85%, C: 0.65%
Ongoing Charges FeeAt 30 April 2014, A Inc: 1.37%, B Inc: 1.22%
C Inc: 1.02%
Accounting Dates30 Apr, 31 Oct
Payment Dates28th day of each month
Valuation Point12 noon, daily
SedolA:0389345 B:0390723 C: 0389549
Share ClassClass A, B & C Income
Published Pricewww.premierfunds.co.uk
Min. InvestmentA: £1,000 B: 50,000 C: 250,000
ISA eligibleYes, stocks & shares

Investment Team

Issued by Premier Asset Management. Premier Asset Management is the marketing group for Premier Fund Managers Ltd and Premier Portfolio Managers Ltd, who are authorised and regulated by the Financial Conduct Authority of 25 The North Colonnade, Canary Wharf, London E14 5HS. Please remember that past performance is not a guide to future returns and the price of shares and the income from them may go down as well as up. You could get back less than you invested. Exchange rates will also cause the value of underlying investments to fall as well as rise. Tax concessions are not guaranteed and may be changed at any time, their value will depend on your individual circumstances. Reference to any particular stock does not constitute a recommendation to buy or sell the stock. Persons who do not have professional experience in matters relating to investments should speak with a financial adviser before making an investment decision. A free, English language copy of the Fund’s full prospectus, the Key Investor Information Document and Supplementary Information Document, which include all the important information you need to consider before making an investment decision, are available on the website or copies can be requested by using the contact details on this factsheet. The Distribution Yield reflects the amounts that may be expected to be distributed over the next 12 months as a percentage of the mid-market unit price of the fund. The Underlying Yield reflects the annualised income net of expenses as a percentage of the mid-market unit price. For your protection, calls may be monitored and recorded for training and quality assurance purposes.