Premier Miton Diversified Funds Update

Neil Birrell

Premier Miton Chief Investment Officer

 

The fight against inflation has resulted in aggressive policy tightening from central banks. This has meant that financial markets have moved in a way that investors can take less risk for the same return. By tightening financial conditions, central banks are looking to take investors out of riskier investments and into less risky areas of financial markets. For example, this could be out of high yield credit and elements of the equity market and into “safer” areas of fixed income, namely government and investment grade bonds.

With the fall in bonds, yields have hit levels not seen for a very long time. In our view they are discounting much of the inflation and interest rate risk. The short-term moves have created interesting opportunities in short-dated credit markets. In particular, the forced selling by elements of the UK pension fund industry following the mini budget has exacerbated matters.

As a result, we have increased the allocation to bonds across the range of Diversified funds. Unusually, we used another Premier Miton fund to gain the exposure, the Premier Miton Strategic Monthly Income Bond Fund, rather than investing directly into bonds. The fund has the same investment strategy and the same fund managers as we use in the Diversified funds. Using the fund allows us to gain immediate exposure to bonds, through very volatile markets, in a more diversified manner than we would have done if investing directly. The position will be reduced and invested directly into bonds, at some point, when markets are calmer.

The holding was funded from the property company weighting. Not by selling any positions, however. For each asset class we have target weights and property was below target, partly due to falling prices and partly because Kirsty Riddle, fund manager of the Premier Miton Pan European Property Share Fund, is cautious in the short term, so bonds look relatively much more attractive in our view. If you have the opportunity to do so, our latest views on property companies are outlined in the latest In Favour / Out of Favour note. It explains the short-term pain the sector is suffering and the potential it offers for long-term gain.

In the case of the Premier Miton Diversified Income Fund, given the higher yields now available from bonds, as well as using the money not being used in the property company allocation, we also reduced the weighting in cash and allocated that to bonds. This will assist with maintaining a robust dividend profile for the fund. For the Premier Miton Diversified Sustainable Growth Fund, the increased bond allocation was made directly, to ensure they met the ESG and sustainable criteria required.

Volatility in financial markets can be painful in the short term, but it also provides opportunities that we look to take advantage of; this move is one of those. However, it is also part of the longer-term opportunities that we can see and, as ever, we remain focused on the long-term risk / reward profiles of the range of funds.

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Risks

The value of investments may fluctuate which will cause fund prices to fall as well as rise and investors may not get back the original amount invested.

Higher inflation can lead to some investments falling in value, particularly those with a fixed level of interest, for example government bonds and corporate bonds.

Past performance is not a reliable indicator of future returns.

Equities (shares) can experience high levels of price fluctuation.

Government and corporate bonds generally offer a fixed level of interest to investors, so their value can be affected by changes in interest rates. When central bank interest rates fall, investors may be prepared to pay more for bonds and bond prices tend to rise. If interest rates rise, bonds may be less valuable to investors and their prices can fall.

In certain market conditions companies may reduce or even suspend paying dividends until conditions improve. This will impact the level of income distributed by the Fund.

Property values can rise and fall sharply depending on the strength of a country’s economy.

Premier Miton Diversified Sustainable Growth Fund, Premier Miton Diversified Dynamic Growth Fund and Premier Miton Diversified Growth Fund may experience high volatility due to the composition of the portfolio or the portfolio management techniques used.

Future forecasts are not reliable indictors of future returns.

IMPORTANT INFORMATION:

For Investment Professionals only. No other persons should rely on any information contained in this document.

Whilst every effort has been made to ensure the accuracy of the information contained within this document, we regret that we cannot accept responsibility for any omissions or errors. The information given and opinions expressed are subject to change and should not be interpreted as investment advice.

All data is sourced to Premier Miton unless otherwise stated. Persons who do not have professional experience in matters relating to investments should not rely on the content of this document.

For your protection, calls may be monitored and recorded for training and quality assurance purposes.

A free, English language copy of the fund range’s full prospectus, the Key Investor Information Document and Supplementary Information Document are available on the Premier Miton website, or you can request copies by calling us on 01483 306090.

Financial Promotion is issued by Premier Miton Investors. Premier Portfolio Managers Limited is registered in England no. 01235867. Premier Fund Managers Limited is registered in England no. 02274227.  Both companies are authorised and regulated by the Financial Conduct Authority and are members of the ‘Premier Miton Investors’ marketing group and subsidiaries of Premier Miton Group plc (registered in England no. 06306664). Registered office: Eastgate Court, High Street, Guildford, Surrey GU1 3DE.

007796/131022

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The content of the pages of this website is for your general information and use only. It, and the products and services described within it, are subject to change without notice. We shall not be liable to you, or any third party, for any amendment, modification, suspension or discontinuance of any product or service described on our website. Neither we, nor any third parties, provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or appropriateness of the information and materials made available on this website.

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The information contained on this website does not constitute an offer or solicitation to sell shares in the funds or portfolio or to provide you with other products or services. Any application or investment must only be made on the basis of the relevant documentation of the investment, such as, for example, terms and conditions. The information on this website does not constitute any investment, tax, legal or other advice. Persons who do not have professional experience in matters relating to investments should always consult with an independent financial adviser before making an investment decision. Any opinion expressed on individual funds, services or products, represent the views of the individual at the time of preparation and should not be interpreted as a personal recommendation to buy or sell or otherwise trade all or any of the investments that may be referred to.

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This section of the website and the content it contains is for retail clients only and by persons who are resident in the United Kingdom [who are not US persons]. Professional advisers should refer to the Professional Advisers site.

The content of the pages of this website is for your general information only. It, and the products and services described within it, are subject to change without notice. We shall not be liable to you, or any third party, for any amendment, modification, suspension or discontinuance of any product or service described on our website. Neither we, nor any third parties, provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or appropriateness of the information and materials made available on this website.

You acknowledge that such information may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law. Your use of any information or materials is entirely at your own risk, for which we shall not be liable.

The information contained on this website does not constitute an offer or solicitation to sell or purchase shares in the funds or portfolios or to provide you with other products or services. Any application or investment must only be made on the basis of the relevant documentation of the investment, such as, for example, terms and conditions. The information on this website does not constitute any investment, tax, legal or other advice. Persons who do not have professional experience in matters relating to investments should always consult with an independent financial adviser before making an investment decision. Any opinion expressed on individual funds, services or products represent the views of the individual at the time of preparation and should not be interpreted as a personal recommendation to buy or sell or otherwise trade all or any of the investments that may be referred to.

Website terms of use: Please ensure you have read and accept the full 'website terms of use' before continuing.

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Disclaimer

This section of the website and the content it contains is for professional financial advisers only and should not be relied upon, or circulated to, retail clients. Retail clients should refer to the Private Investor's site.

The content of the pages of this website is for your general information and use only. It, and the products and services described within it, are subject to change without notice. We shall not be liable to you, or any third party, for any amendment, modification, suspension or discontinuance of any product or service described on our website. Neither we, nor any third parties, provide any warranty or guarantee as to the accuracy, timeliness, performance, completeness or appropriateness of the information and materials made available on this website.

You acknowledge that such information may contain inaccuracies or errors and we expressly exclude liability for any such inaccuracies or errors to the fullest extent permitted by law. Your use of any information or materials is entirely at your own risk, for which we shall not be liable.

The information contained on this website does not constitute an offer or solicitation to sell shares in the funds or portfolio or to provide you with other products or services. Any application or investment must only be made on the basis of the relevant documentation of the investment, such as, for example, terms and conditions. The information on this website does not constitute any investment, tax, legal or other advice. Persons who do not have professional experience in matters relating to investments should always consult with an independent financial adviser before making an investment decision. Any opinion expressed on individual funds, services or products, represent the views of the individual at the time of preparation and should not be interpreted as a personal recommendation to buy or sell or otherwise trade all or any of the investments that may be referred to.

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