Fund Manager's Comment
Data as at 31 October 2008
It was a very poor month for the Fund and its underlying markets. Unlike the equity market, which has rallies in between its falls and where there is some liquidity, the high yield market has seen no meaningful rally and liquidity is very poor. This has been the case for some months and makes any repositioning of the Fund nigh on impossible. Typically, the market is dominated by ‘offers’ of bonds with bids few and far between. Having said that, the portfolio performance owes something to the further subordination of the Resolution debt and continued decline in some of our small equity holdings. In some cases this loss of value is justified by the fundamentals. But in other cases it is the effect of forced sellers pressurising an already depressed value.
Previously our Tier 1 Financials exposure had been causing problems. But the government bail-out looks to have stabilised the situation. It has stopped prices falling - but no more than this. Overall, investment grade and high yield have been poor, but prices now discount very high default rates and offer equity-type returns with high running yields.
Visit the Artemis Film Club to listen to Adrian Gosden talking about the High Income Fund.
Awards
- Adrian Frost
- Adrian Gosden
High Income Fund PDFKey Facts
| IMA Sector | £ Strategic Bond |
|---|---|
| Sedol Number | 0683809 |
| Fund Size (Offer basis) | £592.1m |
| Distribution Yield | 10.3% |
| Underlying Yield | 9.1% | Unit Offer Price | 61.85p |
| Unit Bid Price | 56.48p |
| Valuation | 12 noon daily (UK business days) |
| Min. lump sum investment | £1,000 |
|---|---|
| Min. monthly investment | £50 |
| Launch | 26 May 1995 |
| Launch price | 50p |
| Initial charge | 5.25% |
| Annual Management Charge | 1.25% |
| Unit type income | Income |
| Dividend pay dates | 7 October 7 April 7 July 7 January |
Data as at 31 October 2008.
Performance
| Since Launch* | 5 years | 3 years | 1 year | 6 months | |
|---|---|---|---|---|---|
| High Income Fund (TR)† | 164.5 | 7.2 | -15.9 | -26.5 | -21.7 |
| FTSE-A British Govt All Stocks**† | 83.8 | 28.2 | 11.7 | 6.2 | 2.8 |
| Sector Average † | 103.7 | -0.1 | -12.6 | -15.6 | -13.5 |
| Position in Sector | 1 | 6 | 28 | 48 | 47 |
| Funds in Sector | 6 | 33 | 43 | 52 | 53 |
| Quartile | 1 | 1 | 3 | 4 | 4 |
Please remember that past performance is not a guide to
the future.
* Data from 26 May 1995. Source: Lipper Limited, bid to bid in sterling
with net income reinvested to 31 October 2008. All figures show
total returns. ** As FTSE A Brit Govt All Stocks TR data is not available
prior to Nov 1998 we have used CR figures up until 30 Nov 1998.
†Percentage Growth. Sector is IMA £ Strategic Bond.
Percentage Growth
Artemis High Income Fund 12 Months to 30 September
| 2008 | 2007 | 2006 | 2005 | 2004 |
|---|---|---|---|---|
| -14.7 | 2.4 | 10.0 | 16.9 | 10.6 |
Further Discrete Performance periods.
Source: Lipper Limited, bid to bid in sterling with net income reinvested. All figures show total returns.
Value of £1,000 invested at Launch to 31 October 2008
Data from 26 May 1995. Source: Lipper Limited, bid to bid in sterling with net income reinvested to 31 October 2008. All figures show total returns.*As FTSE A Brit Govt All Stocks TR data is not available prior to Nov 1998 we have used CR figures up until 30 Nov 1998 and then applied the percentage growth of the TR index to CR prices to make up the remainder of the data.
Asset Allocation*
*Without cash. Source: Internal
Top Ten Holdings*
| First Hydro Finance | 2.4% |
|---|---|
| Society of Lloyds | 2.1% |
| Asset Repackaging | 2.0% |
| Rentokil Initial | 1.8% |
| Collins Stewart Tullett | 1.7% |
| Experian Finance | 1.6% |
| RSA Insurance | 1.5% |
| Cable & Wireless | 1.5% |
| British Airways | 1.4% |
| Bombardier | 1.4% |
* Without cash.
Source: Internal.
Market Sector Split*
| Banks | 15.5% |
|---|---|
| General Financial | 13.6% |
| Non-Life Insurance | 10.7% |
| Electricity | 7.0% |
| Fixed Line Telecommunications | 3.7% |
| Support Services | 3.5% |
| Real Estate | 3.5% |
| Oil & Gas Producers | 3.3% |
| Travel & Leisure | 3.2% |
| Other | 36.0% |
* Without cash.
* Sector Classification: FTSE Actuaries.
Source: Internal.
Risk Warning
Issued by Artemis Fund Managers Ltd which is authorised and regulated by the Financial Services Authority (www.fsa.gov.uk), 25 The North Colonnade, Canary Wharf, London E14 5HS and is a member of the IMA. Artemis Fund Managers Ltd is a member of the Artemis Marketing Group. We only market our own unit trusts. The value of an investment, and any income from it, can fall as well as rise as a result of market and currency valuations and you may not get back the amount originally invested. A proportion of the Fund may be invested in higher yielding bonds. This may increase the risk to your capital due to a higher likelihood of default by the bond issuer. Changes to market conditions and interest rate levels can have a larger affect on the values of higher yielding bonds than other bonds. In the interests of providing a level of income consistent with the aims of the Artemis High Income Fund the periodic management charges are taken from capital. The effect of this will be to constrain ultimate capital growth over time and may lead to capital erosion.
All data is sourced internally unless otherwise stated.
The distribution yield reflects the amounts that may be distributed over the next twelve months as a percentage of the mid-market unit price of the Fund as at the date shown. It does not include any preliminary charge and investors may be subject to tax on distributions. The distribution yield is higher than the underlying yield because the fund’s annual Management Charge is charged to capital. This has the effect of increasing the distributions for the year by 1.25% and constraining the fund’s capital performance to an equivalent extent.
