pfliportfolio m ldl td · 2020. 10. 30. · 12 • relative value charts 16 • silver demand 20...
TRANSCRIPT
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Charteris Treasury P f li M L dPortfolio Managers Ltd
The DMS Charteris Gold & Precious Metals Fund
Fund Presentation
October 2020
For Professional investors only. Not for consumer use
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• Background 3
• Objective(s)
• Commodity Performance
4
5y
• Irving Fisher
5
7
• Merits of holding Bullion vs. Equities
R l ti V l Ch t
12
16• Relative Value Charts
• Silver Demand
16
20
• Cycle Analysis 23
For professional intermediaries only 2
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Ian Williams Chartered FCSI became a Chartered Wealth Manager in 2013, Lead manager of the DMS Charteris Gold & Precious Metals Fund. Correctly predicted $2 000 Gold price in July 2008 Daily Telegraph feature
ManagerCorrectly predicted $2,000 Gold price in July 2008 Daily Telegraph feature. Citywire plus rating in 2020, Citywire A Rating in 2009, 2010, 2011 & awarded Alpha Manager in 2011 for previously managed UK Gilt fund
2016 Top UK mutual Fund across all sectors calendar year - up 133.95% *Source FE 2019 Top UK mutual Fund across all sectors calendar year - up 51.96% *Source FT 2020 YTD (31 Dec 19 1 Sep 20) up 48 37 % *S FE
Performance
2020 YTD (31 Dec 19 – 1 Sep 20) - up 48.37 % *Source FE
UK UCITS Structure
ACD – DMS Investment Management. DMS is the worldwide leader in Fund governance with t d i f $350b
Framework
assets under service of $350bn
Depositary & Custodian – Credit Agricole (AAA). CACEIS Bank, UK Branch
3
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– The fund mainly invests in gold and silver mining companies with a market
Fund objectiveThe Fund seeks to provide capital growth through investment in a diversified portfolio of shares in companies whose core business is involved in the mining, refining, financing, production and marketing of gold and or precious metals.
g pcapitalisation of more than $500m.
– The fund does not buy the underlying physical precious metals.
– The fund is long only. It does & will not short or hedge bullion in any way.
– The fund can hold up to 10% in other funds, such as Gold and Silver ETFs
Concentrated portfolioValuation‐based approach
Activelymanaged
,(exchange‐traded funds) and ETCs (exchange‐traded certificates) at manager’s discretion.
– The fund does not invest directly in South d i il d idomiciled companies.
– The fund does not invest in general miners such as zinc, copper and iron ore, for instance.
Conviction led Liquid portfolioLong term
4
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Our processHow do we build portfolios?
Macro overlayCentral bank policy, market overview
• Top‐down macroeconomic view drives our expectations for the underlying precious metals prices.
• Our focused, active management approach dictates bottom‐up sector and stock selection decisions based on identifying businesses that are
& technical analysis
Bear market strategyBull market strategydecisions based on identifying businesses that are best placed to benefit from the bullish or bearish global macro trends we feel will influence the asset class.
gyLow or no silver bullion and no silver miner exposure
gyGold & silver miners up to near 100% of the portfolio
Bull market strategy
1. Overweight silver relative to gold
2. Overweight mid‐caps relative to large‐caps
3 Overweight gold/silver mining stocks relative to
Asset classCash, equities, gold, silver, other precious metals
Asset classCash, equities, gold, silver, other precious metals
3. Overweight gold/silver mining stocks relative to physical gold/silver
4. Approx. 2% cash exposureStock universeList of stocks that fit the sector themes and asset classes
Stock universeList of stocks that fit the sector themes and asset classes
Bear market strategy
1. Underweight silver relative to gold (no silver miners or silver metal/bullion)
2. Overweight streaming/royalty companies and larger cap index constituents
Stock screeningThorough stock selection process
cap index constituents
3. Maximum 10% cash exposure
Portfolio20‐50 stocks that make up the
For professional intermediaries only 5
portfolio (typically 25‐40)
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L t P i $1 845 00
Gold priceSource: Charteris, Bloomberg (as at June 2020)
Last Price $1,845.001,950
Gold very close to an all time high
1,500an all‐time high priced in USD Dollars
1,050
Dollars
600
150
1999
2000
2001
2002
2002
2003
2004
2005
2005
2006
2007
2008
2008
2009
2010
2011
2011
2012
2013
2014
2014
2015
2016
2017
2017
2018
2019
2020
6
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Precious metals prices performance in an inflationary backdrop
Gold price in tandem with the Fed’s balance sheetSource: Charteris, Bloomberg (as at Jan 2020)
– History suggests that investors, including other central banks buy gold when they see how much the Feds balance sheet is
d
800
900
1000
expanding.
– Covid‐19 has resulted in the biggest global fiscal and monetary policy stimulus seen since WW2.
– Under QE 1, 2, and 3 the Fed’s balance sheet 500
600
700
Q , ,rose by $4trn in the six years after Financial Crisis. It has risen a further £2trn in March/April and is on course to rise at least another $2trn – a rise of 100%.
– The Bank of Russia has been ahead of the 200
300
400
The Bank of Russia has been ahead of the pack in switching its US Treasury bonds into gold, taking over a year to undertake the switch due to the size. The Bank still might have a bit more to do. We expect a lot of other central banks to follow suit
0
100
200
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020other central banks to follow suit.
Gold Spot ($/Oz) US Condition of All Federal Reserve Banks Total Assets
7
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M V = P TM is for money M0, M1, M2, M3, M4?
V is for Velocity The amount money changes hands
P is for Price Average Price Level
T i f T t l O t t V l f t ti f G d & S i
8
T is for Total Output Volume of transactions for Goods & Services
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Real M2 Money StockSource: Federal Reserve Bank of St Louis (as at June 2020)
Monetary base; TotalSource: Federal Reserve Bank of St Louis (as at June 2020)
6,950
7,400
7,850
5,100,000
5,600
6,050
6,500
4,100,000
4,250
4,700
5,1503,100,000
2,900
3,350
3,800
1,100,000
2,100,000
2,000
2,450
2000
2000
2001
2002
2003
2003
2004
2005
2006
2006
2007
2008
2009
2009
2010
2011
2012
2012
2013
2014
2015
2015
2016
2017
2018
2018
2019
2020
100,000
2000
2000
2001
2002
2003
2003
2004
2005
2006
2006
2007
2008
2009
2009
2010
2011
2012
2012
2013
2014
2015
2015
2016
2017
2018
2018
2019
2020
9Source: Federal Reserve Bank of St Louis
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Velocity of M2 Money StockSource: Federal Reserve Bank of St Louis (as at Jan 2020)
Labour Force participation rateSource: Federal Reserve Bank of St Louis (as at Jan 2020)
3
6868
2
63
58
1
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019 53
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
10
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Last Price $23.45
Silver priceSource: Charteris, Bloomberg (as at June 2020)
Last Price $23.45
52
57
Silver spot price in USD Dollars
37
42
47USD Dollars
It h l d G ld
22
27
32 It has lagged Gold
7
12
17
2
1999
2000
2001
2002
2002
2003
2004
2005
2005
2006
2007
2008
2008
2009
2010
2011
2011
2012
2013
2014
2014
2015
2016
2017
2017
2018
2019
2020
11
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Gold vs. Silver (both in USD) since 2000 (% rebased – M0)Source: Charteris, Bloomberg (as at June 2020)
1000
800
900
1000
Silver spot price is much more volatile
600
700
much more volatile than Gold spot price
400
500
100
200
300
01999 2004 2009 2014 2019
XAU Curncy XAG Curncy
12
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P iti• Listed securities traditionally outperform Bullion in a Bull Market due to the operational gearing (i.e. Fixed or
semi‐fixed costs vs. rising revenue stream)
Positives
• Listed securities have the ability to pay dividends to investors
• Listed equities have capability to make fresh discoveries due to their exploration activities (Cap‐Ex)
• Listed equities can be subject to take over activity from larger miners E g Barrick taking Randgold• Listed equities can be subject to take‐over activity from larger miners. E.g. Barrick taking Randgold
• Good Managements can enhance shareholder value
Negatives• Gold & Silver Mines eventually run out of Gold/SilverGold & Silver Mines eventually run out of Gold/Silver
• Gold & Silver Mines can suffer from Flood, Earthquakes, Politics, theft etc
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• Bad management can waste shareholder value
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Gold vs. Silver vs. HUI Index (all in USD) since 2000Source: Charteris, Bloomberg (as at June 2020)
800
900
1000
600
700
400
500
100
200
300
0
100
1999 2004 2009 2014 2019
XAU Curncy XAG Curncy HUI Index
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(as at 30 Jun 20)
Gold in Canadian Dollar C$ Gold in Euro €
2,125
2,475
Gold in Canadian Dollar C$Source: Charteris, Bloomberg
1,500
1,750
Source: Charteris, Bloomberg
1,075
1,425
1,775
750
1,000
1,250
All time high in CAD All time high in EUR375
725
2000
2000
2001
2002
2003
2003
2004
2005
2006
2006
2007
2008
2009
2009
2010
2011
2012
2012
2013
2014
2015
2015
2016
2017
2018
2018
2019
2020
250
500
2000
2000
2001
2002
2003
2003
2004
2005
2006
2006
2007
2008
2009
2009
2010
2011
2012
2012
2013
2014
2015
2015
2016
2017
2018
2018
2019
2020
1,550
Gold in Pound Sterling £Source: Charteris, Bloomberg
195 150210,150
Gold in Japanese Yen Source: Charteris, Bloomberg
950
1,150
1,350
105,150120,150135,150150,150165,150180,150195,150
All time high in GBP150
350
550
750
15015,15030,15045,15060,15075,15090,150
All time high in JPY
15
150
2000
2000
2001
2002
2003
2003
2004
2005
2006
2006
2007
2008
2009
2009
2010
2011
2012
2012
2013
2014
2015
2015
2016
2017
2018
2018
2019
2020
150
2000
2000
2001
2002
2003
2003
2004
2005
2006
2006
2007
2008
2009
2009
2010
2011
2012
2012
2013
2014
2015
2015
2016
2017
2018
2018
2019
2020
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Gold (CMX) 20 year seasonal (1989-2019)Source: Equityclock
Silver (CMX) 20 year seasonal (1989-2019)Source: Equityclock
16
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17
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(as at 30 Jun 20)
28
30 Classic End of mega‐cycle
selling climax low
Gold price / Gold Shares Ratio 2000 - PresentSource: Charteris, Bloomberg
Gold equities Cheap
24
26
28 selling climax low p
18
20
22
12
14
16
6
8
10
2
4
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Gold equities expensive
18
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(as at 30 Jun 20)
Gold price / Silver Price Ratio 1949 - Present
Silver Cheap
130
140
Source: Charteris, Bloomberg
p
100
110
120
80
90
50
60
70
30
40
50
Silver Expensive
10
20
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
19
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Commodities E i
GSCI / S&P 500 Ratio 1970 - PresentExpensive
10
Source: Charteris, Bloomberg
5
Commodities Cheap
0
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Silver Expensive0.05
Silver / S&P 500 Ratio 1989 - PresentSource: Charteris, Bloomberg
0.02
0.03
0.04
SilverCh
0.00
0.01
990
992
994
996
998
000
002
004
006
008
010
012
014
016
018
020
20
Cheap19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20
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Total annual Global Silver supply in decline Silver scrap at 20yr lows
80090010001100
Total annual Global Silver supply in declineSource: Charteris, Silver Institute
Silver scrap at 20yr lowsSource: Charteris, Silver Institute
250
300
350
200300400500600700800
50
100
150
200
250
0100200
1950
1960
1970
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
0
50
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
1000
Silver Fabrication demand charging higherSource: Charteris, Silver Institute
1000
Silver industrial demand near record highsSource: Charteris, Silver Institute
500600700800900
400500600700800900
0100200300400
7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9
0100200300400
60 63 66 69 72 75 78 81 84 87 90 93 96 99 02 05 08 11 14 17
21
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019 196
196
196
196
197
197
197
198
198
198
199
199
199
199
200
200
200
201
201
201
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{as at 30 Sept 20)
Market capitalisation
large‐cap ($2bn – $200bn)35.17%
Mid cap ($300m ‐ $2bn)
Stock Country Weight
Wheaton Precious Canada 4.92%Canada79%
Share domicile holding
Market capitalisation
Mid cap ($300m $2bn)49.4%
Small cap ($0m ‐ $300m)12.6%
Agnico Eagle Canada 4.70%
MAG Silver Canada 4.50%
K92 Mining Canada 4 34%
UK12.25%
USA3 79% Cash
2.83%
K92 Mining Canada 4.34%
Polymetal UK 4.03%
Teranga Gold Canada 3.98%
3.79%
Australia2.09%
CashSilvercorp Canada 3.93%
Royal Gold USA 3.79%
First Majestic Canada 3.76%
2.83%
Metal breakdown
Gold
Highland Gold UK 3.70%
Total of top 10 41.86%
56.85%
Silver43.15%
PalladiumPalladium0.00%
Platinum0.00%
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• Correlation: gold is inversely correlated to other asset classes (especially bonds) which in the current environment makes it an appropriate option for model portfolios.
h ld h d h lf f h• Momentum: the strong move up in prices we could see in the second half of 2020 may happen sooner and perhaps most aggressively in the price of silver (43% of the fund), which is at near all‐time lows against gold.
• Valuations: mining shares are still cheap relative to gold itself, so investors are not paying excessive valuations to increase their exposure to buy the fund for the expected returns ahead.
• Flows: many investors are underweight precious metals as an asset class, and investor sentiment can turn quickly,
• Active management: the switch from outperforming giant blue chips to mid‐caps has yet to take place and we have positioned the portfolio with that potential outcome in mind.
• Policy: the Central Bank of Russia has been ahead of the pack in switching its US Treasury bonds into• Policy: the Central Bank of Russia has been ahead of the pack in switching its US Treasury bonds into gold, taking over a year to undertake the switch due to the size – and it still might have a bit more to do. Other central banks could follow suit.
• Macro backdrop: should Covid‐19‐driven QE play out, it could be bullish for all real asset inflation hedges including gold and other precious metals.
• Dividends: one of the few sectors that may see dividends increase this year as revenue is going up and costs (oil is 30% of an average miner’s cost, for instance) are going down. The current 1.5% yield on the fund covers the annual management charge.
• Experience: fund manager and team are experienced in managing the fund through different economic cycles.y
• Proven outperformance: best‐performing fund out of more than 2,500 UK‐based funds in 2016 and 2019, according to FE Analytics, the fund data provider.
For professional intermediaries only 23
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Bloomberg Ticker Codes WCHGEIA LN Equity (Inst Acc Class) Thomson Reuters Codes LP68418916 (Inst Acc Class)g q y ( )WCHGEII Equity (Inst Inc Class)WGPMERA LN Equity (A Inc Class)WGPMERI LN Equity (A Acc Class)WCHGERA LN Equity (B Acc Class)WCHGERI LN Equity (B Inc Class)
( )LP68418917 (Inst Inc Class)LP68418912 (A Acc Class)LP68418913 (A Inc Class)LP68418914 (B Acc Class)LP68418915 (B Inc Class)WCHGERI LN Equity (B Inc Class) LP68418915 (B Inc Class)
AMC 1% (Institutional/Clean Classes) OCF 1 52% (I Classes) (as at 29 Feb 20)AMC 1% (Institutional/Clean Classes)1.25% (A Classes)1.75% (B Classes)
OCF 1.52% (I Classes) (as at 29 Feb 20)1.79% (A Classes) (as at 29 Feb 20)2.28% (B Classes) (as at 29 Feb 20)
ISIN Identifiers GB00BYQ2JY43 (Inst Acc Class)GB00BYQ2JZ59 (Inst Inc Class)GB00BYQ2JS82 (A Acc Class)GB00BYQ2JT99 (A Inc Class)GB00BYQ2JW29 (B Acc Class)
MEXID HTMTE (Inst Acc Class) Citicode / FE Code ICC2 (Inst Acc Class)
GB00BYQ2JW29 (B Acc Class)GB00BYQ2JX36) (B Inc Class)
MEXID HTMTE (Inst Acc Class)HTMTF (Inst Inc Class)HTMTA (A Acc Class)HTMTB (A Inc Class)HTMTC (B Acc Class)
Citicode / FE Code ICC2 (Inst Acc Class)ICC3 (Inst Inc Class)I3RH (A Acc Class)I3RI (A Inc Class)ICC0 (B Acc Class)
24
HTMTD (B Inc Class) ICC1 (B Inc Class)
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Past performance should not be used as a guide to future performance All performance information is based on the Institutional Accumulation share classPast performance should not be used as a guide to future performance. All performance information is based on the Institutional Accumulation share class unless otherwise stated.
The al e of this in estment and the income from it can go do n as ell as p it ma be affected b e change rate ariations and o ma not get back theThe value of this investment and the income from it can go down as well as up, it may be affected by exchange rate variations and you may not get back the amount that you invested.
Th tl k d i thi t ti t th i f th I t t M t th ti f ti d h ld t b i t t dThe outlook expressed in this presentation represents the views of the Investment Manager at the time of preparation and should not be interpreted as investment advice.
h l d l d h h h d d b h h l h h b fThe asset splits detailed within this presentation are correct as at the reporting period and are subject to change, whilst operating within the objectives of the Fund.
This presentation should be viewed in conjunction with the Fund’s Key Investor Information Document (KIID), which will exclusively form the basis of any application and the Fund’s prospectus. A comprehensive list of risk factors is detailed in the KIID and the Principal Prospectus and an investment should not be contemplated until the risk are fully considered and understood.
This presentation is issued by Charteris Treasury Portfolio Managers Ltd. The KIID and Prospectus are available from the ACD, DMS Investment Management Services (UK) Ltd at dmsgovernance.com or Charteris at charteris.co.uk.
Charteris Treasury Portfolio Managers Ltd is authorised and regulated by the Financial Conduct Authority (company reference number 114952).
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y g g y y ( p y )