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T H E H C P O RT F O L I O R A N G E
FINANCIAL
W H O W E A R E
HC Financial Advisers Ltd. was founded in 1988 and is one of the largest financial advisory firms in the country.
W H A T D O W E O F F E R
Our clients are at the core of everything that we do. We provide them with financial advice and help them to plan for their
financial future. We were one of the founding participants in the Irish Life PORTUS platform which allows us to provide
our clients with an investment, pensions and savings platform that is second to none in the country.
W H A T M A K E S U S D I F F E R E N T
HC focusses on the big picture – we look at individual product solutions but we also look at the longer term objectives for
our clients. That means we look at saving, investing, borrowing, protection, pensions and tax planning. We help people
access debt and pay it off. We help people build their assets and pass them to the next generation. We help people
achieve their goals throughout their life and plan for their future. We advise people at every step along the way.
W H A T I S O U R E X P E R T I S E
Our staff are all qualified in their respective fields – we have accountants, tax consultants, pension consultants, CFPs,
MBAs, QFAs. We have always believed in supporting our staff in developing their level of expertise so that they are best
positioned to provide our clients with the best possible advice.
A B O U T U S
C O N T E N T S
1
Asset Class
Investments
9
Our Model
Portfolio Range
3
Peace of
Mind
13
Managed by
Fund Experts
4
Next
Steps
16
Our Portfolio
Summary
5
Risk
Management
6
At HC Financial, your needs are the heart of every decision we make. That’s how we do business.
It’s reflected in how we get to know you and then create a financial plan to help you achieve your goals. Once you plan is agreed and your investments are in place, we continue to keep a close eye on things. Carrying out regular reviews of your investments and whether or not they remain suitable for your needs is a key part of our commitment to you.
The one certainty in the world today, is that very little is certain. Anything can happen and increasingly seems to be happening. This adds an extra layer of challenge to the risk management of your investments. Risk is a core element of investing. It cannot, and should not, be removed completely. But, it can be managed.
Our portfolio range employs a number of robust risk management strategies which have contributed to its successful performance track record to date. By combining these strategies with other carefully selected practices, we’re confident that they will serve you, our valued customer, more effectively, providing you with reassurance and peace of mind.
2
We believe that a carefully designed, well-constructed and well managed range of risk-rated portfolios offer a suitable
investment option for the vast majority of our clients.
Our range is made up of seven risk-rated portfolios, ranging from the lower risk Cautious portfolio, where a large
proportion of the fund is invested in cash and bonds, to the higher risk Very Adventurous portfolio, where there is a much
larger investment in equities.
As a HC client, together we’ll review your attitude to, and capacity for, risk and depending on your answers you will
have a rating between 1 and 7. Each of our portfolios are suitable for a specific rating and we’re confident there will be a
suitable investment option for you.
Our portfolios are provided by Irish Life Assurance plc and are managed by Irish Life Investment Managers (ILIM).
They are regularly reviewed and rebalanced on a quarterly basis back to their strategic asset allocation. For example,
the Conservative portfolio will be managed to a risk rating of IL3. This innovative quarterly rebalancing gives you great
comfort as each quarter it ensures that your investment remains at the risk profile you selected at the outset.
A choice of portfolios to suit your needs
O U R M O D E L P O R T F O L I O R A N G E
CAREFULCAUTIOUS
IL1 IL2 IL3 IL4 IL5 IL6 IL7
CONSERVATIVE BALANCED EXPERIENCED ADVENTUROUS VERY ADVENTUROUS
RISK RATING
LOWER MEDIUM HIGHER
3
We believe in letting experts work to their strengths. We’re financial planners. That’s our area of expertise and we use
it to work with you to create your financial plan, put it into action and then monitor it on your behalf. We’re not fund
experts. However, we have partnered with our investment manager, Irish Life Investment Managers (ILIM) to offer our
portfolio range.
We took time and care to select an investment manager with the right experience and expertise that we felt was a good fit
with our business and beliefs, and one we could work with to get the best returns for our customers’ investments.
ILIM manages over €67 billion of assets (as at December 2018) on behalf of both private investors and international
companies. It has 30years experience and has won a variety of awards, including Investment Manager of the year at the
Irish Pension Awards three years running.
Part of the global Great-West Lifeco, it’s financially strong and has access to global expertise that it calls on to continually
enhance and develop its’ products and services.
M A N A G E D B Y F U N D E X P E R T S
4
We have outlined below, a summary of each of our portfolios, including details of the portfolio objective, suitability and strategic asset allocation
PortfolioVolatility
On a scale of IL1 to IL7
Annual Charge
Portfolio Objective Asset Allocation
CAUTIOUS IL 1 0.10% per
annum
To protect the capital value of an investment with some potential for
growth
CAREFUL IL 20.25% per
annum
To achieve low investment returns with
low risk to capital
CONSERVATIVE IL 30.25% per
annum
To achieve investment returns with a medium – low level of investment
risk
BALANCED IL 40.25% per
annum
To achieve a balance of long term investment
returns and risk
EXPERIENCED IL 50.25% per
annum
To achieve high investment returns from
a mix of asset classes
ADVENTUROUS IL 60.15% per
annum
To achieve high investment returns over
the long term from a focused investment
strategy
VERY ADVENTUROUS
IL 70.20% per
annum
To maximise potential investment returns over
the long term
O U R P O R T F O L I O S U M M A R Y
Equities 20%
Alternatives 22%
Property 6%
Cash 10%
Bonds 42%
Cash 70%
Bonds 30%
Equities 40%
Alternatives 22%
Property 7.5%
Cash 5%
Bonds 25.5%
Equities 60%
Alternatives 22%
Property 7.5%
Bonds 10.5%
Equities 80%Alternatives
12.5%
Property 7.5%
Equities 90%
Equities 94%
Alternatives 5%
Property 5%
Property 6%
5
A comprehensive range of risk management strategies are in place to monitor our portfolios, limit any exposure to unnecessary risk and make sure they remain within their risk ratings.
1. Diversification for smoother returns Whatever happens in the markets it’s likely that some investments will go up in value and some will go down.
Because our portfolio range invests in a diverse (or mixed) range of assets, there is much less chance of everything going up or down in value at the same time. This is what’s known as diversification, also thought of as spreading your eggs across different baskets.
Each of our portfolios invests in a mix of cash and bonds, equities, specialist alternative funds and other options such as property funds. The split between each of these assets per portfolio is determined by its risk rating, and we’ve outlined it below.
Asset Class Cautious Careful Conservative Balanced Experienced Adventurous Very Adventurous
Equities 20% 40% 60% 80% 90% 94%
Bonds 30% 42% 25.5% 10.5%
Alternatives 22% 22% 22% 12.5% 5%
Property 6% 7.5% 7.5% 7.5% 5% 6%
Cash 70% 10% 5%
Total 100% 100% 100% 100% 100% 100% 100%
R I S K M A N A G E M E N T
6
3. Regular Reviews Our portfolios undergo a thorough review each year, evaluating the assets and managers in each portfolio to ensure
they continue to represent the best way of achieving the portfolios long-term risk and performance objectives. This process takes into account the short, medium and long-term expected outlook for investment markets with a view to optimising the strategic fund mix.
As part of this process, any opportunities to enhance the way the portfolios manage risk or increase expected returns, will be assessed. This involves looking at any changes that might be beneficial across the asset classes, managers, geographical split and strategies, as well as how best to put those changes into place.
4. Currency Hedging Our portfolio range invests across a broad range of geographical regions. And while investing in international
markets can be a good thing for a long-term investment, the risk associated with fluctuations in exchange rates must be considered and managed. By using a strategy of hedging with currency futures, when it is beneficial to do so, we aim to limit the risk of loss from fluctuations in exchange rates.
2. Quarterly rebalancing Regular rebalancing is one of the most important risk management tools at our disposal. Each quarter, our fund
managers, ILIM, rebalance the split of each of the portfolios back to its original strategic asset allocation and risk rating.
What do we mean by rebalancing
Phase 1
We start with this pie chart showing a fund with 50% in Equities, 25% in bonds and 25% in other assets
Phase 2
If over the course of a year, Equities grew in value by 20%, while bonds and other assets fell in value by 10%, then without rebalancing the second bar chart shows the new split of the fund. Here 57% of the fund is now invested in Equities, and as such the risk rating has changed also.
Phase 3
If it happened for a second year, we would end up with nearly 2/3 of the fund invested in Equities compared to the 50% we started with. The corresponding change in risk rating may also mean the fund is no longer suitable for an investor who chose to invest in the original mix.
Other/ Externals
25%
Bonds25%
Equities50%
Other/ Externals21.5%
Bonds21.5%
Equities57%
Other/ Externals
18%
Bonds18%
Equities64%
As we can see above, over time the split of a portfolio can change as some assets grow in value, while others may fall. By resetting or rebalancing the portfolio back to its intended split, it will remain appropriate for your attitude to risk. Meaning you don’t have to worry about a fund becoming a higher or lower risk rating than the one you originally invested in.
7
30%
20%
10%
0%
-10%
-20%
-30%ANNUAL PERFORMANCE BEFORE MANAGEMENT CHARGE
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Managed
Fund
Balanced Portfolio
The DSC Model – a simulated illustration of how the model would have performed in the past
STOCK MARKET
FALLS
STOCK MARKET
RISES
2012 AND 2013 – A STRONG MARKET: During 2012 and 2013, the Managed fund grew by slightly more than the Balanced portfolio. This is due to the higher proportion of equities in the Managed fund. However it should be noted, that this higher proportion would usually mean greater volatility and a greater chance of large falls as seen in 2008.
THE 2008 CREDIT CRUNCH: As the graph above shows, during 2008, the Managed fund fell by nearly 25%. Because the DSC model, available on the Balanced portfolio, would have reduced the amount of the portfolio invested in equities, while increasing the amount in cash, this portfolio would have fallen by approximately 14% in the same year. So although we would still have seen a fall in the portfolio value, it would not have been as severe as that experienced on the Managed fund.
Based on how the factors move over time, the DSC model will decide how much of each portfolio to invest in Developed Market equities and how much to invest in cash. ILIM regularly monitor and review these factors.
Because all of the factors on which the DSC model is based are available going back a number of years, it is possible to show how DSC would have worked historically. The following chart shows how our Balanced portfolio compares to a typical Managed fund from 1997 to 2017. Importantly, our Balanced portfolio uses the DSC model, while the typical Managed fund does not.
5. Dynamic Share to Cash Each portfolio uses an innovative Dynamic Share to Cash (DSC) model. The DSC model is a quantitative model
that has been developed by our fund managers ILIM. The advanced model uses a multi-factor approach to identify long-term stock market trends and movements. It works by identifying greater potential for stock market gains or losses over the long-term. The potential for greater losses triggers an increase in the amount invested in cash, while potential for stock market recovery leads to a move out of cash and back into global equities. This is a long-term approach and isn’t designed to react to one-off or short-term market movements in either direction.
How does it work?
The model is driven by a number of key factors, which generally fall into 3 broad categories, and can include the following:
Market Momentum
Taking account of trends in equities
Valuations
Taking account of long-term valuations
of equities
Global Macroeconomics
Taking account of the influence of global
economics on equities
8
Diversification within Asset ClassesWithin each of the different asset classes there is even further diversification. For example, within the equity class, there is an allocation to Global Equities, Low Volatility Shares and the Option Strategy, each of which generates a return in a different way. Global Equities aim to capture the movement in equity markets across the developed and emerging markets. Low Volatility Shares invest in equities with certain characteristics that aim to deliver a smoother journey. Whilst the Option Strategy aims to generate a more stable return through the regular sale of put options, which provide some downside protection if markets fall, and for which the funds get paid a fee.
The extent and type of diversification that exists in each asset class is shown in more detail in this section. This level of diversification aims to ensure that the performance of the portfolios isn’t overly influenced by the performance of any one asset type, sector, geographical region, investment manager or investment style. Removing this dependence aims to produce a smoother investment journey over the longer term, by minimising the bumps along the road.
A S S E T C L A S S I N V E S T M E N T S
9
GLOBAL EQUITIES
• ILIM track the performance of a large global equities index.
• There are over 2,700 individual company equities represented which operate in 11 different sectors.
• We use the DSC model on Global Equities.
• Global equities includes about 10% in Emerging Market equities.
• For the percentage of Global Shares in each in each portfolio fund, see the latest factsheet.
GLOBAL LOW VOLATILITY SHARES
• Using a detailed, quantitative strategy, ILIM choose shares from a broad global share index which not only have shown lower volatility in the past but which are also screened for other indicators such as value, momentum, etc for example.
• ILIM choose over 200 shares to make up their Low Volatility Shares fund.
• For the percentage of Low Volatility Shares in each portfolio fund, see the latest factsheet.
Low Volatility Shares weightcompared to the Global Share index
Financials
Information Technology
Industrials
Consumer Discretionary
Materials
Real Estate
Telecommunication Services
Energy
Utilities
Consumer Staples
Health Care
-15% -10% -5% 0% 5% 10% 15%
LOW VOLATILITY SHARES WEIGHT COMPARED TO THE GLOBAL SHARE INDEX
1. Shares
United Kingdom5.75%
France 3.50%
Other 25.67%
United States 53.59%
South Africa 8.51%
Argentina 0.88%
Brazil 10.00%
Chile 2.59%
Colombia 8.10%
Czech Rep 4.47%
Hungary 4.48%
Indonesia9.02%
Peru2.94%
Philippines0.30%
Poland8.97%
Romania2.65%
Russia 7.67%
Thailand 7.89%Dominican
Republic 0.10%
Turkey 5.60%
Services 0.94%Healthcare 4.47%
Technology & Electronics 2.20%
Banking 29.15%
Automotive 6.20%
Financial Services 0.99%
Energy 5.79%
Media 1.22%Retail 1.72%
Transportation 4.47%
Real Estate 3.69%
Insurance 5.35%
ConsumerGoods 6.57%Leisure
0.25%
CapitalGoods 3.51%
Basic Industry
5.63%
Telecommunications 7.35%
Netherlands 4.98%
Slovakia 0.33%
Austria 3.05% Belgium 4.54%
Germany19.46%
Spain12.59%
Finland 1.77%
France 23.90%
Ireland 1.97%
South Korea14.61%
Taiwan11.63%
India8.60%
South Africa 6.57%
Latvia 0.04%
Japan7.67%
China 32.74% Other
25.85%
Italy 25.31%
Luxembourg 0.14%
Slovenia 0.24% Portugal1.68%
Utility 10.53%
Mexico10.00%
Malaysia5.60%
China3.82%
Uruguay0.24%
USA 65.02%
UK 6.18%
Italy 5.30%
Canada 4.25%
France 4.82%Germany
2.58%
Netherlands 2.57%Japan 1.15%
Ireland 1.68%Luxembourg 2.97%
Other 3.48%
The geographic split of the index is illustrated below.
OPTION STRATEGY
• The option strategy further diversifies the allocation to shares (in addition to DSC and Low Volatility Shares)
• The option strategy currently sells put options on a monthly basis which provides some downside protection if markets fall and for which the funds get paid a fee.
% split on the underlying indices on which the options are taken
S&P 500 50%
EuroStoxx 50 30%
FTSE 100 20%
EMERGING MARKET EQUITIES
• ILIM track the performance of a broad Emerging Markets equity index to provide exposure to Emerging Market Equities.
• Emerging Market Equities include over 1,100 individual companies which operate in 24 different markets.
• For the percentage of Emerging Market Equities in each portfolio fund, see the latest factsheet.
The geographic split of the index is illustrated below.
United Kingdom5.75%
France 3.50%
Other 25.67%
United States 53.59%
South Africa 8.51%
Argentina 0.88%
Brazil 10.00%
Chile 2.59%
Colombia 8.10%
Czech Rep 4.47%
Hungary 4.48%
Indonesia9.02%
Peru2.94%
Philippines0.30%
Poland8.97%
Romania2.65%
Russia 7.67%
Thailand 7.89%Dominican
Republic 0.10%
Turkey 5.60%
Services 0.94%Healthcare 4.47%
Technology & Electronics 2.20%
Banking 29.15%
Automotive 6.20%
Financial Services 0.99%
Energy 5.79%
Media 1.22%Retail 1.72%
Transportation 4.47%
Real Estate 3.69%
Insurance 5.35%
ConsumerGoods 6.57%Leisure
0.25%
CapitalGoods 3.51%
Basic Industry
5.63%
Telecommunications 7.35%
Netherlands 4.98%
Slovakia 0.33%
Austria 3.05% Belgium 4.54%
Germany19.46%
Spain12.59%
Finland 1.77%
France 23.90%
Ireland 1.97%
South Korea14.61%
Taiwan11.63%
India8.60%
South Africa 6.57%
Latvia 0.04%
Japan7.67%
China 32.74% Other
25.85%
Italy 25.31%
Luxembourg 0.14%
Slovenia 0.24% Portugal1.68%
Utility 10.53%
Mexico10.00%
Malaysia5.60%
China3.82%
Uruguay0.24%
USA 65.02%
UK 6.18%
Italy 5.30%
Canada 4.25%
France 4.82%Germany
2.58%
Netherlands 2.57%Japan 1.15%
Ireland 1.68%Luxembourg 2.97%
Other 3.48%
Information is correct as at July 201810
GOVERNMENT BONDS CORPORATE BONDS
The sector split of the index is illustrated below.The geographic split of the index is illustrated below.
United Kingdom5.75%
France 3.50%
Other 25.67%
United States 53.59%
South Africa 8.51%
Argentina 0.88%
Brazil 10.00%
Chile 2.59%
Colombia 8.10%
Czech Rep 4.47%
Hungary 4.48%
Indonesia9.02%
Peru2.94%
Philippines0.30%
Poland8.97%
Romania2.65%
Russia 7.67%
Thailand 7.89%Dominican
Republic 0.10%
Turkey 5.60%
Services 0.94%Healthcare 4.47%
Technology & Electronics 2.20%
Banking 29.15%
Automotive 6.20%
Financial Services 0.99%
Energy 5.79%
Media 1.22%Retail 1.72%
Transportation 4.47%
Real Estate 3.69%
Insurance 5.35%
ConsumerGoods 6.57%Leisure
0.25%
CapitalGoods 3.51%
Basic Industry
5.63%
Telecommunications 7.35%
Netherlands 4.98%
Slovakia 0.33%
Austria 3.05% Belgium 4.54%
Germany19.46%
Spain12.59%
Finland 1.77%
France 23.90%
Ireland 1.97%
South Korea14.61%
Taiwan11.63%
India8.60%
South Africa 6.57%
Latvia 0.04%
Japan7.67%
China 32.74% Other
25.85%
Italy 25.31%
Luxembourg 0.14%
Slovenia 0.24% Portugal1.68%
Utility 10.53%
Mexico10.00%
Malaysia5.60%
China3.82%
Uruguay0.24%
USA 65.02%
UK 6.18%
Italy 5.30%
Canada 4.25%
France 4.82%Germany
2.58%
Netherlands 2.57%Japan 1.15%
Ireland 1.68%Luxembourg 2.97%
Other 3.48%
United Kingdom5.75%
France 3.50%
Other 25.67%
United States 53.59%
South Africa 8.51%
Argentina 0.88%
Brazil 10.00%
Chile 2.59%
Colombia 8.10%
Czech Rep 4.47%
Hungary 4.48%
Indonesia9.02%
Peru2.94%
Philippines0.30%
Poland8.97%
Romania2.65%
Russia 7.67%
Thailand 7.89%Dominican
Republic 0.10%
Turkey 5.60%
Services 0.94%Healthcare 4.47%
Technology & Electronics 2.20%
Banking 29.15%
Automotive 6.20%
Financial Services 0.99%
Energy 5.79%
Media 1.22%Retail 1.72%
Transportation 4.47%
Real Estate 3.69%
Insurance 5.35%
ConsumerGoods 6.57%Leisure
0.25%
CapitalGoods 3.51%
Basic Industry
5.63%
Telecommunications 7.35%
Netherlands 4.98%
Slovakia 0.33%
Austria 3.05% Belgium 4.54%
Germany19.46%
Spain12.59%
Finland 1.77%
France 23.90%
Ireland 1.97%
South Korea14.61%
Taiwan11.63%
India8.60%
South Africa 6.57%
Latvia 0.04%
Japan7.67%
China 32.74% Other
25.85%
Italy 25.31%
Luxembourg 0.14%
Slovenia 0.24% Portugal1.68%
Utility 10.53%
Mexico10.00%
Malaysia5.60%
China3.82%
Uruguay0.24%
USA 65.02%
UK 6.18%
Italy 5.30%
Canada 4.25%
France 4.82%Germany
2.58%
Netherlands 2.57%Japan 1.15%
Ireland 1.68%Luxembourg 2.97%
Other 3.48%
ILIM currently track the performance of recognised and leading bond indices to provide exposure to:
EMERGING MARKET DEBT HIGH YIELD BONDS
The geographic split of the index is illustrated below. The geographic split of the High Yield Bonds
is illustrated below.
United Kingdom5.75%
France 3.50%
Other 25.67%
United States 53.59%
South Africa 8.51%
Argentina 0.88%
Brazil 10.00%
Chile 2.59%
Colombia 8.10%
Czech Rep 4.47%
Hungary 4.48%
Indonesia9.02%
Peru2.94%
Philippines0.30%
Poland8.97%
Romania2.65%
Russia 7.67%
Thailand 7.89%Dominican
Republic 0.10%
Turkey 5.60%
Services 0.94%Healthcare 4.47%
Technology & Electronics 2.20%
Banking 29.15%
Automotive 6.20%
Financial Services 0.99%
Energy 5.79%
Media 1.22%Retail 1.72%
Transportation 4.47%
Real Estate 3.69%
Insurance 5.35%
ConsumerGoods 6.57%Leisure
0.25%
CapitalGoods 3.51%
Basic Industry
5.63%
Telecommunications 7.35%
Netherlands 4.98%
Slovakia 0.33%
Austria 3.05% Belgium 4.54%
Germany19.46%
Spain12.59%
Finland 1.77%
France 23.90%
Ireland 1.97%
South Korea14.61%
Taiwan11.63%
India8.60%
South Africa 6.57%
Latvia 0.04%
Japan7.67%
China 32.74% Other
25.85%
Italy 25.31%
Luxembourg 0.14%
Slovenia 0.24% Portugal1.68%
Utility 10.53%
Mexico10.00%
Malaysia5.60%
China3.82%
Uruguay0.24%
USA 65.02%
UK 6.18%
Italy 5.30%
Canada 4.25%
France 4.82%Germany
2.58%
Netherlands 2.57%Japan 1.15%
Ireland 1.68%Luxembourg 2.97%
Other 3.48%
United Kingdom5.75%
France 3.50%
Other 25.67%
United States 53.59%
South Africa 8.51%
Argentina 0.88%
Brazil 10.00%
Chile 2.59%
Colombia 8.10%
Czech Rep 4.47%
Hungary 4.48%
Indonesia9.02%
Peru2.94%
Philippines0.30%
Poland8.97%
Romania2.65%
Russia 7.67%
Thailand 7.89%Dominican
Republic 0.10%
Turkey 5.60%
Services 0.94%Healthcare 4.47%
Technology & Electronics 2.20%
Banking 29.15%
Automotive 6.20%
Financial Services 0.99%
Energy 5.79%
Media 1.22%Retail 1.72%
Transportation 4.47%
Real Estate 3.69%
Insurance 5.35%
ConsumerGoods 6.57%Leisure
0.25%
CapitalGoods 3.51%
Basic Industry
5.63%
Telecommunications 7.35%
Netherlands 4.98%
Slovakia 0.33%
Austria 3.05% Belgium 4.54%
Germany19.46%
Spain12.59%
Finland 1.77%
France 23.90%
Ireland 1.97%
South Korea14.61%
Taiwan11.63%
India8.60%
South Africa 6.57%
Latvia 0.04%
Japan7.67%
China 32.74% Other
25.85%
Italy 25.31%
Luxembourg 0.14%
Slovenia 0.24% Portugal1.68%
Utility 10.53%
Mexico10.00%
Malaysia5.60%
China3.82%
Uruguay0.24%
USA 65.02%
UK 6.18%
Italy 5.30%
Canada 4.25%
France 4.82%Germany
2.58%
Netherlands 2.57%Japan 1.15%
Ireland 1.68%Luxembourg 2.97%
Other 3.48%
2. Bonds
11
3. External Managers/AlternativesThere is currently access to seven leading global real and absolute return managers with ten funds through each portfolio’s External Managers / Alternatives portion. The percentage allocated to External Managers / Alternatives varies for each portfolio and the latest factsheet which you can ask us for, will show this percentage. ILIM actively look for managers that can bring diverse performance at the right price. They monitor this performance on an ongoing basis and may choose to change the allocation to external managers or the target allocation within the External Manager allocation. They may also choose to replace, add or remove External Managers as opportunities arise and market conditions change.
Manager Assets Managed Fund Name
GMOSource www.gmo.com
$71 billion (31 March 2018)
GMO Real Return Fund
Systematic Global Markets (SGM) Fund
PutnamSource www.putnam.com
$173 billion(31 May 2018)
Putnam Multi Asset Absolute Return
Strategy (MAARS)
AQRSource www.aqr.com $225 billion
(31 March 2018)
AQR Global Risk Parity
AQR Style Premia
BlackrockSource www.blackrock.com
$6.31 trillion(31 March 2018)
BlackRock FIGO Fund
BlackRock Style Advantage Fund
PIMCOSource www.pimco.com
$1.77 trillion(31 March 2018)
PIMCO Income Fund
Dunn Capital ManagementSource www.montlakeucits.com
$1.03 billion (31 March 2018)
Montlake Dunn WMA
MidOceanSource www.midoceanpartners.com
$7.8 billion (31 May 2018)
DB Platinum MidOcean Fund
4. PropertyEach portfolio currently has an allocation to a property investment or fund. Currently this allocation is invested in ILIM’s Pension Exempt Property fund. Information on the property allocation as at the end of June 2018, can be seen below:
The information is correct as at 30 June 2018. For the percentage of property invested in each portfolio fund, please see the factsheet.
TOP FIVE HOLDINGS
PROPERTY
2 Grand Canal Square, Dublin
1 Georges Quay, Dublin
Stephen Court, St Stephens Green, Dublin
24-26 City Quay, Dublin
13-18 City Quay, DublinOffices 65.3%
Industrial 5.3%
Retail 29.4%
The portfolio comprises of:
• 81 individual property assets
• Leased to over 300 tenants
• Broad mix of commercial property - with exposure to offices, retail and industrial properties.
TOTAL VALUE
c. €1.8bn
SECTOR DISTRIBUTION
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A Range of ReturnsEach of the portfolio funds has been developed to suit different attitudes to risk. These range from lower risk Careful Portfolio which has a large percentage invested in cash and bonds, to higher risk Adventurous Portfolio, which is predominantly invested in shares.
As most of us know, investing in shares over long periods of time usually produces better returns than investing in cash and bonds. However alongside these higher returns, investing in shares usually brings higher risk and the possibility that returns can vary considerably each year. Returns can even be negative over a given period of time, especially shorter periods.
So while we might expect the Adventurous Portfolio to give a better return than the Careful Portfolio over long periods, we would also expect the returns on the Adventurous Portfolio to vary to a much greater extent.
P E A C E O F M I N D
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Our Portfolio Performance V Expected Range of Returns
The graphs above show the 5 year range of expected returns back in 2014. That is, the bars show the returns that the HC portfolios were expected to deliver 95% of the time. For example, on the Balanced Portfolio, 95% of the time the returns were expected to be between -4% p.a. and +12% p.a. The other 5% of the time, returns were expected to be outside the range shown and represented by the bars. These range of return figures were produced by Irish Life Investment Managers based on investment conditions and expectations back in 2014.
The dots show the corresponding actual returns on the HC model portfolios over the 5 years to the end of December 2018. In general, the actual returns on the portfolios have been close to the middle of the expected range and this is in line with what we would expect. While the bars show the range of expected returns 95% of the time, we would expect that actual returns would be closer to the middle of the bars, with a lower likelihood of returns being at the top or bottom of the expected range.
Of course, while returns over the 5 years to the end of 2018 have been in line with those expected, that does not mean that future returns will be as expected, and they could be at the extremes of the ranges shown.
These expected return numbers are produced by Irish Life Investment Managers (ILIM). The returns are calculated before performance fees, taxes and product charges. The actual fund management charge and product charge will depend on your individual plan and investment. Please see the Product Booklet or Fund Guide for details.
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CAREFULCAUTIOUS CONSERVATIVE BALANCED EXPERIENCED ADVENTUROUS VERY ADVENTUROUS
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
Warning: These figures are estimates only. They are not a reliable guide to the future performance of this investment.
Possible returns over a 7 year period
This graph shows the range of possible returns you may expect over a 7-year period for each of the portfolio funds.
95% of the time, the average yearly return over a 7-year period is expected to be within the range of the bars shown. This means that 5% of the time the average yearly return could be higher or lower than the bars shown.
The possible return numbers are produced by Irish Life Investment Managers (ILIM). The returns are calculated before performance fees, taxes and product charges. The actual fund management charge and product charge will depend on your individual plan and investment. Please see the Product Booklet or Fund Guide for details.
Possible returns in any 1 year period
This first graph shows the range of possible returns you may expect in any 1-year period for each of the portfolio funds.
95% of the time, in any 1-year, the return is expected to be within the range of the bars shown. This means that 5% of the time the return could be higher or lower than the bars shown.
The bars show the possible range of returns 95% of the time, in any 1-year. However, not all of the returns are equally likely to happen. In fact, returns closer to the middle of each illustration would be more likely than those at the extremes.
Example
Let’s look at Balanced.
95% of the time, we would expect the return in one year on Balanced to be between -14% and +19%. We would also expect that 5% of the time, the return could be lower than -14% or higher than +19%.
CAREFULCAUTIOUS CONSERVATIVE BALANCED EXPERIENCED ADVENTUROUS VERY ADVENTUROUS
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
POSS
IBLE
AN
NU
AL
RET
UR
NS
Example
Again, let’s look at Balanced.
95% of the time we would expect the return to average between -3% and +10% each year over the 7 years. We would also expect that 5% of the time the return could be higher than 10% or lower than -3%.
While these examples show possible returns if things go badly or very well, it is more likely that their investment will see a return each year closer to the middle of the bars. This means that for Balanced an average return of 3-4% would be a more likely outcome.
CAREFULCAUTIOUS CONSERVATIVE BALANCED EXPERIENCED ADVENTUROUS VERY ADVENTUROUS
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
POSS
IBLE
AN
NU
AL
RET
UR
NS
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We believe that our portfolio range is the right option for you.
You can be comfortable and confident in the knowledge that your investments are in good hands. We’ll keep a close eye on your financial plan, reviewing it and checking with you to make sure it still fits with where you are now, where you want to get to and how you feel about the balance of risk and possible reward.
At the same time, our investment manager, ILIM, will be keeping a close eye on our portfolio range. Thanks to quarterly rebalancing, annual reviews and the other various risk management strategies we’ve mentioned, all of which are governed by a strict oversight process, you can be confident that your investments are in good hands.
We hope this gives you a feeling for what our portfolio range is all about. If you’d like to know more, or if you have any questions, we’ll be very happy to talk further about our portfolios, our services and what we can do for, and with you.
N E X T S T E P S
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FINANCIAL
HC Financial Advisers LimitedOranmore Business Park Oranmore Co Galway
Phone: 091 788000 E-mail: [email protected]
HC Financial Advisers Limited (trading as HC Financial) are regulated by the Central Bank of Ireland.
ILA 14647 (NPI 07-19)
Warning: If you invest in this product you may lose some or all of the money you invest.
Warning: The value of your investment may go down as well as up.
Warning: Some of these funds may be affected by changes in currency exchange rates.
Warning: Past performance is not a reliable guide to future performance.
Information has been provided by Irish Life Investment Managers (ILIM) and is correct as at 31/03/2019.