Investment Objective:



SCore Factor Equity 60 Portfolio (Funds/ETFs): Investment Objective:To deliver an enhanced market return from a factor-tilted 60% equity / 40% bond allocation using a combination of index funds and ETFs.Investment Targets:CPI +3% p.a. over the economic cycleTargeted maximum volatility10%Targeted maximum drawdown 20%Portfolio Characteristics:Underlying InstrumentsIndex Funds and ETFsEquity Exposure60% initialFactor TiltsLow Volatility, Size, ValueFixed Income Exposure40% initialGlobal FI –Sovereign & Corporate (Investment Grade)Cash ExposureErrInvestment Philosophy:We believe that the appropriate objective for most investors is to achieve the return of the broader market across the cycle. Our aim is to protect and increase the real wealth of investors. Sparrows Capital designs portfolios with a long-term view based on a disciplined long only, unleveraged process, using cost effective investment vehicles. We build efficient, diversified portfolios with the intention of delivering and exceeding the market return over the long term. Selecting the most appropriate instrument to express our portfolio preferences is critical. As an Evidence Based investor, we do not engage in market timing or active manager selection. Long-term academic evidence and empirical analysis show that few asset managers add value consistently through stock picking or tactical asset allocation. Those managers that do add value tend to do so only over limited and unpredictable time periods. Sparrows Capital seeks to achieve the return of the broader markets over the economic cycle. The investment strategy focuses on efficient harvesting of risk premia from the liquid, diversified asset universe.We understand that asset allocation is the primary driver of risk and return, particularly over the medium to long term. Risk appetite dictates portfolio construction, which in turn drives investment returns.We also recognise that certain risk factors are rewarded with a persistent premium across various stages of the market cycle. We have incorporated this feature into our portfolios by systematically blending Low Volatility, Small Cap, Value & Momentum factors into our offering (see below).Investment Approach:The SCore Factor Equity 60 Portfolio Client portfolio is managed strategically using an evidence-based, passive approach incorporating factor tilts, currency hedging and inflation protection where deemed appropriate. The portfolio comprises eleven liquid, transparent assets to provide exposure to stock and bond markets. Equity exposure is diversified across approximately 1500 issuers in 23 developed markets.Factor exposure is achieved by allocation to single-factor instruments.Fixed income exposure is investment grade, globally diversified and currency hedged.Portfolio monitoring and risk management is essential to ensure that individual portfolios do not drift into different risk profiles as markets move over time. To capture this, SC monitors all portfolios continuously and executes a tolerance based rebalancing process on a quarterly basis.Factor InvestingThe market has historically awarded a persistent risk/ return premium to certain risk categories. Equity factors associated with historically attractive risk premia include:Value: Size: Low volatility: Momentum: A factor-based approach favours these categories with a view to improving portfolio performance and efficiency across the cycle relative to traditional benchmarks. Asset Allocation (by Region): North America: 50.95%Europe (ex- UK): 17.95%UK: 6.29%Japan: 11.97%Asia Pacific (ex-Japan): 3.73%Emerging Markets: 2.02%Undisclosed: 7.1%Holdings: Bonds: Vanguard Global Short Term Bond Index (GBP hedged): 32%Xtrackers II Global Inflation-Linked Bond UCITs ETF (GBP Hedged): 8%Equities: Ishares MSCI World Minimum Volatility UCITs ETF (USD): 16.2%Ishares MSCI World Small Cap UCITs ETF (GBP): 12.2% Ishares MSCI World Value UCITs ETF (GBP): 12.2%Vanguard FTSE North America UCITs ETF (USD): 7.4%Vanguard FTSE Developed Europe UCITs ETF (EUR): 2.7%Vanguard FTSE Emerging Markets UCITs ETF (USD): 1.8%Vanguard FTSE Japan UCITs ETF (USD): 0.9%Ishares Core MSCI Pacific ex-Japan ETF (GBP): 0.7%Property: Ishares Global Property Securities Index Fund (GBP): 6%Performance (Simulated since November 2009):Investment Returns (to end September 2019): 1 Year 3 Years5 years10 Years (11/09- 09/19) SC 60 +7.08%+21.47%+51.62%+222.47%MPI Balanced+4.16%+16.2%+31.64%+75.91%1 Year3 Years5 Years10 YearsSC Annualised Growth RateUK CPIReal ReturnVolatility (S.Dev)SharpeMax DrawdownDiscrete Calendar Year Returns:2016201720182019 (to September)SC 60 +19.10%+5.98%-2.08%+13.37%MPI Balanced+10.40%+7.72%-4.67%+11.02% ................
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