secured put writing fund - globevest capital globevest capital secured put writing fund (the "fund")

Download Secured Put Writing Fund - Globevest Capital Globevest Capital Secured Put Writing Fund (the "Fund")

If you can't read please download the document

Post on 26-Jun-2020

0 views

Category:

Documents

0 download

Embed Size (px)

TRANSCRIPT

  • Secured Put Writing Fund

    Annual Management Report of Fund Performance as of

    December 31, 2018

    This annual management report of fund performance contains

    financial highlights but does not contain the complete annual

    financial statements. You can request a copy, at no cost, of the

    annual financial statements by calling us at 450-641-8989, by

    visiting www.globevestcapital.com or www.sedar.com, by

    writing to us at 1005, Lionel-Daunais #104, Boucherville,

    Quebec, J4B 0B1 or by e-mailing us at

    info@globevestcapital.com.

    You may also contact us using one of these methods to request

    a copy of the investment fund’s proxy voting policies and

    procedures, proxy voting disclosure record, or quarterly

    portfolio disclosure.

    http://www.globevestcapital.com/ http://www.globevestcapital.com/ http://www.sedar.com/ http://www.sedar.com/ mailto:info@globevestcapital.com mailto:info@globevestcapital.com

  • 2

    Investment Objectives and Strategies Globevest Capital Secured Put Writing Fund (the "Fund") is designed to maximize returns and provide long-term growth by selling cash-covered put options on Canadian, US and global equity securities. The Fund hedges the put options with a cash hedge and, as a result, invests in cash, cash equivalents, money market securities and short-term debt securities. The investment objectives and strategies are described in the simplified prospectus.

    Risk The risk determination of the Funds is based on the investment risk classification method of Schedule F of NI 81-102. The Fund was created on January 3, 2014. For the prior period, we used the following benchmark (in accordance with items 4 and 5 of Schedule F of NI 81-102): 50% FTSE Canada Short Term Bond, 30% S&P 500 and 20% S&P TSX Composite. According to this method of calculation, the fund's risk is “medium”.

    Results of Operations Its net asset value as of December 31, 2018 is 116 million. The net asset value as of June 30, 2018 was 131 million.

    Net returns by series for the year are as follow:

    Class A1 -4.59% Class A31 -4.30% Class A51 -4.30% Class F1 -2.75% Class O1 -3.32% Class AH2 -10.72% Class FH2 -11.31% Class F6H2, 3 -11.31% Class OH2, 4 -11.31% Class IH2 -9.52%

    1 US currency unhedged. 2 US currency hedged. 3 As there were no outstanding Series F6H units of the fund during part of the calendar year 2018, performance for Series FH units of the fund is presented for the year 2018. 4 As there were no outstanding Series OH units of the fund during part of the calendar year 2018, performance for Series FH units of the fund is presented for the year 2018.

    Commentary North American equity markets collapsed in the last quarter of 2018, leaving them with their worst year since 2008. In the last 12 months, the S&P 500 has lost -6.24%, while Toronto S&P / TSX fell 11.8%.

    These corrections are explained by the fear of a recession mainly due to: - rate increases, - the trade war between China and the United States (the two largest world economic powers), - slowdown in global growth - the decline in the effect of US tax cuts. More than half of North American companies have lost more than 20% of their stock market value since their recent highs. As a result, volatility tripled during this period. Investors who were too optimistic this summer, panicked this fall. It was at the heart of these panic sales that we took the opportunity to reposition the portfolio. We have made commitments on high quality companies by not only getting much higher premiums than normal, but also keeping a much higher cushion. With the ingredients gathered to optimize the portfolio, we have chosen to lengthen the average maturity of our commitments. The fund is therefore positioned defensively, while offering excellent returns for the coming year. As of December 31, the fund had commitments on 89 different companies for an average horizon of 8.2 months. We reduced portfolio risk by raising the average cushion to 11.4%. The annualized return of 8.1% of the time value of the options remains very interesting. This increase in volatility at the end of the year allows us to start the new year with an optimal portfolio. In recent years, volatility, apart from a few spikes, remained at rather low levels. This is why we have chosen to extend the maturity of our commitments

    International Financial Reporting Standards All the financial reports and statements are presented in Canadian dollars and are prepared in compliance with International Financial Reporting Standards (IFRS) as well as the standards governed by Regulation 81- 106 respecting Investment Fund Continuous Disclosure. Effective January 1, 2018, the Fund adopted retrospectively IFRS 9. The new standard requires financial assets to be carried at amortized cost or fair value, with changes in fair value recognized in fair value through profit or loss (FVTPL) or fair value through other comprehensive income (FVOCI) based on the entity’s business model for managing financial assets and the contractual cash flow characteristics of the financial assets.

  • 3

    Upon transition to IFRS 9, the Fund’s financial assets and financial liabilities that were classified and designated as fair value through profit or loss (FVTPL) under IAS 39 are, from the transition date, classified at fair value through profit or loss. Financial assets that were classified as loans and receivables under IAS 39 are classified as financial assets measured at amortized cost. There were no changes in the measurement attributes for any of the financial assets and financial liabilities upon transition to IFRS 9.

    Related Party Transactions Globevest Capital ltd is the Fund’s Manager pursuant to the administrative agreement. The Manager ensures the daily administration of the Fund and makes sure the Fund is provided with all services (accounting, custody, portfolio management, record maintenance, transfer agent) required to function properly.

    Management Fees In compensation for the continuous advice, recommendations and services provided to the Fund, the Fund pays management fees to the Manager, which are calculated on a daily basis according to the net asset value of the Fund and paid monthly. For the twelve months ended December 31, 2018, the Fund paid a total of $296k in management fees to the Manager, inclusive of sales tax.

    Independent Review Committee In accordance with National Instrument 81-107 - Independent Review Committee for Investment Funds, the Manager has appointed an Independent Review Committee ("IRC") to review and evaluate:

    a) The relevance and effectiveness of the management company's written policies and procedures relating to conflict of interest matters;

    b) The relevance and effectiveness of any standing instruction that it provides to the management;

    c) The independence of its members and their remuneration;

    d) Its own effectiveness as a committee, as well as the efficiency and contribution of each of its members;

    e) Its structural effectiveness.

    For the period from January 1, 2018 to December 31, 2018, the IRC concluded that:

    1) To the best of his knowledge, there have been no breaches of any of the Manager's

    policies or procedures or grounds for believing that a breach has occurred;

    2) That the policies and procedures in place are adequate.

    Fund expenses The expenses of the Fund include:

    1) Management fees. This is the total of the Manager's fee, the trailing commission if applicable and the operating expenses of the Fund.

    2) The transaction costs. These are the Fund's transaction fees.

    Series Management

    expense ratio (MER)

    Trading expense ratio

    (TER)

    Fund expenses

    Série A 2.49% 0.25% 2.74% Série A3 2.83% 0.25% 3.08% Série A5 2.83% 0.25% 3.08% Série F 1.17% 0.25% 1.42% Série O 1.74% 0.25% 1.99% Série AH 2.49% 0.25% 2.74% Série FH 1.17% 0.25% 1.42% Série F6H 1.17% 0.25% 1.42% Série OH 1.74% 0.25% 1.99% Série I* 0.19% 0.25% 0.44% Série IH* 0.19% 0.25% 0.44% * Series I and IH units are only available to individuals or institutional clients who have an arrangement with Globevest. There is no management fee payable by the Fund in respect of the Series I and IH Units. Series I and Series I unitholders pay a negotiated fee directly to Globevest.

    Past performance The performance information assumes that all distributions made by the investment fund during the periods presented were reinvested in additional securities of the investment fund. Past performance of the investment fund is not necessarily indicative of future performance.

  • 4

    Annual returns

    The following bar graphs indicate the Fund’s annual returns for each year. They show the year-to-year variation in the Fund’s return. The graphs present, in percentage form, what would have been the upward or downward, on the last day of the year, of an investment made on the first day of the year.

    11.57%

    -1.42% -0.15%

    -4.59% -10.00%

    -5.00%

    0.00%

    5.00%

    10.00%

    15.00%

    2015 2016 2017 2018

    %

    Serie A

    11.16%

    -1.13% -0.26%

    -4.30% -10.00%

    -5.00%

    0.00%

    5.00%

    10.00%

    15.00%

    2015 2016 2017 2018

    %

    Serie A3

    11.09%

Recommended

View more >