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Private investors

Artemis Pan-European Absolute Return Fund

All data as at 28 February 2017 except where specified
  • Summary
  • About the fund
  • Performance
  • Composition
  • Key facts
  • Investment insights
  • Literature
  • How to invest


The fund’s aims

The fund aims to achieve a positive return over the longer term, notwithstanding changing market conditions, investing principally in the shares of companies listed, quoted or traded in Europe, including the UK.

Current prices and yield
(class I)

As at noon, 22 March 2017
Mid price (GBP hedged acc shares)120.09p
Historic yield (GBP hedged acc shares)0.00%

Investment information
(class I)

Minimum lump sum investment£250,000
Ongoing charge (GBP acc hedged shares)1.00%

The initial charge is currently waived. The ongoing charge includes the annual management charge of 0.75% and is shown as at the date of the Key Investor Information Document (KIID). A performance fee is charged as 20% of any outperformance of the share class against the greater of the LIBOR 3 month index (in the relevant currency) or zero. A full explanation of the fund's charges can be found in the KIID.

Fund manager’s update

February was an interesting month for European equities. For the first time since last summer ‘bond proxies’ (stocks whose predictable dividends make them a good substitute for bonds) and expensive stocks whose earnings grow slowly but predictably performed well. This, unsurprisingly, came alongside a rapid fall in German bund yields. What made these moves so unusual was the fact that economic data continued to improve.

The oil services sector is an area of particular interest for us. Although expectations are very depressed, more and more signs of a pick-up in demand across the sector are emerging.

We are yet to see a convincing explanation of the sudden downwards move in bund yields. It cannot just be fear of the French election, which investors have known about for some time. More likely it is an unwelcome consequence of the ECB’s purchases of bonds which is making bunds scarce. To us, this signals that the end of quantitative easing in Europe is getting closer. Perpetually low interest rates were never the intention and with inflation picking up they are deeply undesirable.

This shift back towards defensive areas of the market meant the fund gave back some of the strong gains it made during the previous seven months. Volatility like this is always present during a change of leadership in the market. Although we never like losing money, we have made sure we have plenty of buying power in the fund to take advantage of temporary sell-offs. This is exactly what we did during the month, adding to a wide range of existing positions. These were mainly banks, energy and construction companies, many of which have reported strong results. The oil services sector is an area of particular interest for us. Although expectations are very depressed, more and more signs of a pick-up in demand across the sector are emerging. In the short book, we are happy with our current exposures so activity here was more muted. On balance, our short book will remain smaller than our long book. This is reflective of where we are currently finding our best ideas.

14 September 2016

Paul Casson: Opportunities abound …

Central banks continue to dominate markets. Underneath that, though, there is considerable rotation between sectors in Europe, says Paul Casson.

Value of £1,000 invested at launch to 28 February 2017

Value of £1,000 invested at launch to 28 February 2017

Data from 14 July 2014. Source Lipper Limited, class I GBP hedged accumulation shares, mid to mid in sterling to 28 February 2017. All figures show total returns with dividends reinvested.

Net sector exposure

Percentage growth (class I)

20162015201420132012
12 months to 31 December5.1%14.0%n/an/an/a
20172016201520142013
12 months to 28 February7.2%9.4%n/an/an/a
Please remember that past performance is not a guide to the future. Source: Lipper Limited, accumulation units, bid to bid in sterling. All figures show total returns with dividends reinvested. As the fund was launched on 14 July 2014, complete five year performance data is not yet available.

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Paul Casson: Opportunities abound …





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About the fund

The Artemis Pan-European Absolute Return Fund is an equity ‘long/short’ fund. It aims to deliver a positive return over the longer term, irrespective of changing market conditions.

To achieve this, it combines a traditional portfolio of ‘long’ European stocks (where the manager expects a company’s share prices to rise) with a portfolio of ‘short’ positions (where he aims to make money from an anticipated fall in a share’s price).

This long/short structure allows manager Paul Casson to use his stock-picking skills to profit from falling, as well as rising, share prices. The fund aims to deliver returns with significantly less ups and downs than stockmarkets overall. The fund's holdings are well diversified across 60 to 100 'long' and 60 'short' positions in carefully researched companies.

In considering investment opportunities across the European market, he combines analysis of 'big picture' economic and market themes and trends to help determine where earnings growth (or reduction) might occur, and detailed accounting investigation to enable a clear understanding of the strengths (or weaknesses) of companies prior to investing.

The result is a more complex fund than those that buy shares solely with a view to them growing in value over time. With complexity comes increased investment risk.

  • A wider range of opportunities: long-only funds can seek to profit only from shares that are likely to rise. But this fund's structure looks to profit from falling, as well as rising, share prices.
  • Proven investment process: the fund’s approach is based on a pan-European strategy with a proven performance record.
  • Flexible approach: the manager takes a flexible, practical approach to stock-picking, adapting the fund's investment style across ups and downs in the economy and stockmarkets.

Reasons to consider

The fund may be suitable for investors looking for:

  • positive returns in falling as well as rising markets
  • capital growth over the long-term
  • a fund which uses complex and technical investment instruments to achieve its objectives

Introducing the fund

Manager Paul Casson exlains the Artemis Pan-European Absolute Return Fund’s positioning and strategy.

Risk considerations

Before making an investment, investors should consider the level of risk they’re comfortable taking with their money.

  • This fund tries to identify shares that will fall in value. To do this, the manager will use derivatives (financial instruments whose value is linked to the expected price movements of an underlying asset). Investing in derivatives carries risks; in the case of a ‘short’ position, for example, if the price of the underlying asset doesn't fall in value as the manager expected, but instead rises, the fund will lose money.
  • The manager may also use borrowing from time to time to increase the amount of money he can use to invest in both shares and derivatives, which can further increase the level of risk.
  • At certain times, for example during periods of market volatility, the fund may hold a substantial part of its assets in cash with the aim of protecting the value of the fund. However, this also means that if markets rise during this time, the return on your investment will be less than if the fund is fully invested in other types of asset.
  • As well as these specific risks, investors should be aware that the usual risks of investing in shares apply. Companies and stockmarkets can go through periods of turbulence and the value of your investment can fall.
  • This fund’s ‘SRRI’ risk rating, a measure of how volatile the fund’s performance has been over time, is currently 5, in a range of 1 (lower risk) to 7 (higher risk).

More detailed information on fund risks is included in the ‘risk warnings’ section below.

Risk warnings

To ensure you understand whether this fund is suitable for you, please read the Key Investor Information Document, which is available, along with the fund’s Prospectus, from artemis.co.uk.

There is no guarantee that the fund will achieve a positive return over the longer term or any other time period and investors' capital is at risk.

The value of any investment, and any income from it, can rise and fall with movements in stockmarkets, currencies and interest rates. These can move irrationally and can be affected unpredictably by diverse factors, including political and economic events. This could mean that you won’t get back the amount you originally invested.

The fund’s past performance should not be considered a guide to future returns.

The fund will use derivatives (financial instruments whose value is linked to the expected price movements of an underlying asset) for investment purposes, including taking long and short positions, and may use borrowing from time to time. It may also invest in derivatives to protect the value of the fund, reduce costs and/or generate additional income. Investing in derivatives also carries risks, however. In the case of a ‘short’ position, for example, where the fund aims to profit from falling prices, if the price of the underlying asset rises in value, the fund will lose money.

The fund may hold large cash deposits with the aim of protecting the value of the fund. This can mean that, when markets are rising, the return on your investment will be less than if it were fully invested in other types of asset.

The costs and benefits of currency hedging transactions will apply to hedged shares.

Artemis Fund Managers Limited is entitled to a performance fee calculated as 20% of any outperformance of the share class against the greater of the LIBOR 3 month index (in the relevant currency) or zero.

The performance fee is accrued daily but only charged at the end of the fund's financial year if conditions are met. Any underperformance will be carried forward into the next financial year and must be recovered before any performance fee can be paid.

The additional expenses of the fund are currently capped at 0.25%. This has the effect of capping the ongoing charge for the class I shares issued by the fund at 1%. Artemis reserves the right to remove the cap without notice.

The historic yield reflects distribution payments declared by the fund over the previous year as a percentage of its mid-market unit/share price. It does not include any preliminary charge. Investors may be subject to tax on the distribution payments that they receive.

Any research and analysis in this communication has been obtained by Artemis for its own use. Although this communication is based on sources of information that Artemis believes to be reliable, no guarantee is given as to its accuracy or completeness.

Any forward-looking statements are based on Artemis’ current expectations and projections and are subject to change without notice.

Issued by Artemis Fund Managers Ltd which is authorised and regulated by the Financial Conduct Authority.

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