PORT LOUIS FUND
LTD
Port Louis Fund Ltd
The company is an open-ended mutual fund
incorporated on 9 June 1997 as a Public Company with
limited ...
Investment Strategies
• The asset allocation of the Fund is being reviewed on a periodic
basis in light of changes in mark...
Objectives of the Firm
1. To carry on business as an investment holding
company.
• To acquire, invest in, hold and manage ...
Objectives of the Firm(continued…)
2. To deal in securities and properties of all kinds.
• Sell, deal in, or dispose of an...
Objectives of the
Firm(continued…)
3. To manage and advise on investment funds.
• Other things that may help to lead to th...
Capital Appreciation
• To grow the principal value of its investments
over time
• Invest in securities that have shown a m...
Income
• Can be generated from investments
• Examples: high quality, short and medium-term
fixed income products, short-te...
Strategic Asset Allocation
Weightage of the asset classes
Tactical Asset Allocation
2004
-6
-5
-4
-3
-2
-1
0
1
Banks&Insurance
Industry
Investments
Sugar
Commerce
Hotels
Transport
-6
0
-0.6
0.1 0.6
-3.5
-2....
2004
Listed Equities
• Decreased in percentage terms from 57.3% in 2003 to 45.4% in
2004.
• Listed investments worth Rs 17...
2005
-4
-3.5
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
Banks&Insurance
Industry
Investments
Sugar
Commerce
Hotels
Transport
-3.6
-0.6
...
2005
Listed Equities
• Decreased in percentage terms from 46.1% in 2004 to 40.2% in
2005.
• Exposure in Banks and Insuranc...
2006
-5
-4
-3
-2
-1
0
1
Banks&Insurance
Industry
Investments
Sugar
Commerce
Hotels
Transport
-0.1
0.9
0.5 0.2 0.2
-1.3
-4....
2006
Listed Equities
• Decreased in percentage terms from 40.2% in 2005 to 36.0% in
2006. The value of listed and quoted i...
2007
• Exposure to the Transport and Industry sectors were reduced through disposal of
shares due to the increase in the prices...
2008
•Total buy for the year amounted to Rs 41.7m whereas total disposal was Rs 119.8 m.
This is clearly a defensive measure fr...
2009
•Holdings in Banking & Insurance sector decreased by 3.2% partly due to a decline in
value and partly due to disposal of s...
2010
2010
Locally ListedEquities
• Acquisition of Shares
amounted to Rs33.3m
• Investment, sugar,
commerce and banking
sectors
...
2011
2011
Locally ListedEquities
• Shares bought
amounted to Rs25.5m
• Sugar and commerce
sectors
• Shares disposed
valued at R...
2012
2012
Locally Listed Equities
• Shares bought valued at
Rs3.10m
• Investment and banking
sectors
• Shares of Bramer
Banking...
Ratio Analysis
The ratios which have been taken
into consideration with Port
Louis Fund are Profitability Ratios:
o Net Profit Margin
 ...
Expenses Ratio
• is a measure of what it costs the investment company to operate a
mutual fund.
• The figures for the expe...
Liquidity Ratio
• determines a company's ability to pay off its short-terms debts obligations.
• Current Ratio measures a ...
Investment Ratios
• Earnings per share
• are the portion of a company's profit allocated to each
outstanding share of comm...
Earnings per share and
Earnings Yield
• From the diagram above, it can be deduced that both ratios have
been doing well du...
Dividend per share and
Dividend yield
• Dividend per share
• is the sum of declared dividends for every ordinary share
iss...
Dividend per share and
Dividend yield
• From this chart, it has been noticed that these
ratios have been continuously chan...
Price Earnings Ratio
• a widely used ratio which helps the investors to decide whether to
buy shares of a particular compa...
• Hence based on the ratios calculated, it can be
noted that this Asset Management has been
performing very well prior to ...
For our analysis, a comparison
between the return of Port Louis
Fund (PLF) and the return of the
Stock Exchange of Mauriti...
The following graph depicts the
return from 2003 to 2012 of listed
equities both for PLF and SEM
Beta Coefficient
• It shows the riskiness of the fund as compared to
the market.
• Beta=1 :as risky as the market
Beta<1 :...
2003
PLF
• Return 38.1%
• Higher performance than the
benchmark
• Return mainly explained by a
general increase in the mar...
2004
• PLF
• Return 36.3%
• Higher performance than the
benchmark
• The decline in return is because the
fund has reduced ...
2005
• PLF
• Return 11.9%
• Higher performance than the
benchmark
• The decline in return is because the
fund has reduced ...
2006
• PLF
• Return 12.7%
• Lower performance than the
benchmark
• This is because major components
of the fund did not pe...
2007
• PLF
• Return 58%
• Lower performance than the
benchmark
• Did not perform as well as SEM as
the fund was overweighe...
2008
PLF
• Return 23.3%
• Lower performance than
benchmark
• Due to underweight in some
securities in the banking and suga...
2009
PLF
• Negative return 18.1%
• Better performance than
benchmark
• Due to financial crisis and
consequently a general ...
2010
PLF
• Return 16.4%
• Slightly lower performance than
benchmark
• due to the local acquisition of
shares being mainly ...
2011
PLF
• Return 30.4%
• Higher performance than
benchmark
• due to an increase in local
acquisition contributing a retur...
2012
PLF
• Negative return 1.1%
• Lower performance than
benchmark
• Because investors were sceptic due
to the exposure of...
Inconclusion,duringthepast10 years,PLFperformed
relativelywellasitsreturnwashigher ascomparedto
SEM.
Forthefirst5years,the...
Thank You
Port louis fund (edited)
of 55

Port louis fund (edited)

An overview of the investment strategy of a mutual fund we took the example of a Mauritian mutual fund namely Port Louis fund
Published on: Mar 4, 2016
Published in: Education      Economy & Finance      Business      
Source: www.slideshare.net


Transcripts - Port louis fund (edited)

  • 1. PORT LOUIS FUND LTD
  • 2. Port Louis Fund Ltd The company is an open-ended mutual fund incorporated on 9 June 1997 as a Public Company with limited liability.  Management Company: Capital Asset Management Ltd The latter is wholly owned subsidiary of SIC. CAM is licensed by the Financial Services Commission as a CIS Manager and Investment Advisor (Unrestricted) under the Securities Act 2005.  Mutual fund investing in various asset classes
  • 3. Investment Strategies • The asset allocation of the Fund is being reviewed on a periodic basis in light of changes in market conditions so as to be consistent with the long-term goal. • The asset has been allocated with a view to meet the objectives. The investment portfolio of the Fund has been classified into the four main asset classes Listed Equities Unquoted Shares Foreign Investments • Fixed Income Securities & Others
  • 4. Objectives of the Firm 1. To carry on business as an investment holding company. • To acquire, invest in, hold and manage securities and properties of all kinds • In a view of making revenue and profit
  • 5. Objectives of the Firm(continued…) 2. To deal in securities and properties of all kinds. • Sell, deal in, or dispose of any of the foregoing • To discount, buy and sell bills, notes, options, and any other negotiable or transferable securities.
  • 6. Objectives of the Firm(continued…) 3. To manage and advise on investment funds. • Other things that may help to lead to the achievement of the above objectives. • Furthermore to achieve long term capital growth, • by investing in a combination of performing listed companies, in prime unquoted companies and in financial instruments.
  • 7. Capital Appreciation • To grow the principal value of its investments over time • Invest in securities that have shown a moderate to above average degree of risk • Examples: common stocks, equity mutual funds and index funds.
  • 8. Income • Can be generated from investments • Examples: high quality, short and medium-term fixed income products, short-term bond funds. • To summarise, Port Louis Fund Ltd seeks long term capital growth with a reasonable income yield.
  • 9. Strategic Asset Allocation
  • 10. Weightage of the asset classes
  • 11. Tactical Asset Allocation
  • 12. 2004 -6 -5 -4 -3 -2 -1 0 1 Banks&Insurance Industry Investments Sugar Commerce Hotels Transport -6 0 -0.6 0.1 0.6 -3.5 -2.5 %ChangeinHoldings Locally Listed Equities
  • 13. 2004 Listed Equities • Decreased in percentage terms from 57.3% in 2003 to 45.4% in 2004. • Listed investments worth Rs 174.8m were disposed and shares worth Rs 12.0m on the local market were acquired. • Exposure in the Bank and Insurance sector and the Hotels sector were reduced from 22.3% to 16.3% and from 13.1% to 9.6% respectively. • mainly done in order to capitalise the gain of these two sectors in the market. The proceeds received were earmarked for foreign investment. • Gain on disposal of investment had gone up significantly to Rs 24.4m (2003: Rs 0.36m).
  • 14. 2005 -4 -3.5 -3 -2.5 -2 -1.5 -1 -0.5 0 0.5 Banks&Insurance Industry Investments Sugar Commerce Hotels Transport -3.6 -0.6 0.2 -0.01 0.2 0.4 -2.3 %ChangeinHoldings Locally Listed Equities
  • 15. 2005 Listed Equities • Decreased in percentage terms from 46.1% in 2004 to 40.2% in 2005. • Exposure in Banks and Insurance was reduced from 16.8% to 13.2% this year and same for the transport sector from 11.0% to 8.7%. • Decrease was due to the change in asset allocation. Proceeds from investment were used to finance foreign investment. Foreign investment increased from 5.1% in 2004 to 18.7% in 2005. • On the other hand, exposure to the Hotels sector was increased from 9.7% to 10.1% was due to that the tourism sector was expected to grow.
  • 16. 2006 -5 -4 -3 -2 -1 0 1 Banks&Insurance Industry Investments Sugar Commerce Hotels Transport -0.1 0.9 0.5 0.2 0.2 -1.3 -4.6 %ChangeinHoldings Locally Listed Equities
  • 17. 2006 Listed Equities • Decreased in percentage terms from 40.2% in 2005 to 36.0% in 2006. The value of listed and quoted investment amounted to Rs 330.1m (2005: Rs 363.6m). • During the year, listed investments worth Rs 85.0m were disposed and Rs 21.3m of investments were acquired. • Exposure in transport and hotel sectors was reduced rom 8.7% to 4.1% and 10.1% to 8.8% respectively, in order to further increase foreign investment. • The foreign investment had substantially been increased from Rs 168.5m (18.7%) to Rs 253.4m (27.7%) in 2006.
  • 18. 2007
  • 19. • Exposure to the Transport and Industry sectors were reduced through disposal of shares due to the increase in the prices of fuel during that time • Banking and insurance sector change was due to an increase in their value and exposure in hotel sectors had been increased and this was because Tourism being a major pillar of growth was doing exceedingly well and the number of tourist arrivals was expected to reach above 900,000 that year •Investment growth was mostly attributable to high investment in hotels and IRS projects 2007
  • 20. 2008
  • 21. •Total buy for the year amounted to Rs 41.7m whereas total disposal was Rs 119.8 m. This is clearly a defensive measure from the investment manager since many sectors are confronted to the risk of recession in foreign markets and decline in global stock markets •Holdings in Banks and Insurance sector increased by 4.97% due to an increase in value of shares held. Why? Our Banks were still being profitable! •The fund acquired some shares in the Leisure and Hotel sector as they were excelling in 2007 and was found to be underweighted in the portfolio of the fund and has been investing in high growth local stock •Exposure to the Commerce and Industry sectors were reduced through disposal of shares as the risk associated with their return wasn’t according the level set by the fund 2008
  • 22. 2009
  • 23. •Holdings in Banking & Insurance sector decreased by 3.2% partly due to a decline in value and partly due to disposal of shares. Even though the financial crisis had a lagged effect on the Mauritian economy , for the near future of banks were not optimistic •The decrease in holdings in the leisure and hotel sector is explained by a fall in value given the fact that the tourism industry was still suffering from recession prevailing in our leading tourist markets •The Fund also increased its exposure in commerce and investment sectors. This could be due to the government initiative to increase investment in public infrastructure through their additional stimulus package. 2009
  • 24. 2010
  • 25. 2010 Locally ListedEquities • Acquisition of Shares amounted to Rs33.3m • Investment, sugar, commerce and banking sectors • Major infrastructural projects such as the Jin Fei and ring road are likely to impact positively on the economy and that can be a reason for the increase in the investment sector. • Shares disposed amounted to Rs26.7m • Hotels, investment and transport sectors • The hotels were experiencing reductions in their revenues and profits due to the Euro Crisis zone that’s why the investor manager decided to sell some shares of the hotel sector.
  • 26. 2011
  • 27. 2011 Locally ListedEquities • Shares bought amounted to Rs25.5m • Sugar and commerce sectors • Shares disposed valued at Rs45.5m • Banking & insurance, hotel and investment sectors
  • 28. 2012
  • 29. 2012 Locally Listed Equities • Shares bought valued at Rs3.10m • Investment and banking sectors • Shares of Bramer Banking Corporation Ltd have been bought • Shares disposed amounted to Rs5.03m • Hotel and finance sectors • Due to Euro Debt Crisis, want to reduce financial risk • Reductions of the number of arrivals of tourists
  • 30. Ratio Analysis
  • 31. The ratios which have been taken into consideration with Port Louis Fund are Profitability Ratios: o Net Profit Margin  Management /Expenses Ratio  Liquidity Ratios: o Current Ratios  Investment ratios: o Earnings Per share o Earnings Yield o Dividend per share o Dividend Yield o Price Earnings Ratio
  • 32. Expenses Ratio • is a measure of what it costs the investment company to operate a mutual fund. • The figures for the expenses ratio have been taken directly from the annual reports of the fund and the figure below show the latter has changed during these ten years: • The expense ratio has been fluctuating over this decade. It is at its peak in year 2007 due to the • fact that the management fee paid is based on a gradual fee structure which is related to the performance of the Fund. 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 2002 2004 2006 2008 2010 2012 2014 Management Ratios/Total Expenses Ratio: Management Ratios/Total Expenses Ratio:
  • 33. Liquidity Ratio • determines a company's ability to pay off its short-terms debts obligations. • Current Ratio measures a company's ability to pay short-term obligations and is given by • Current Ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 • From this chart, it can be deduced that Port Louis has not faced any problem in meeting its short term obligations as the graph is always lying above the x-axis. 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 2002 2004 2006 2008 2010 2012 2014 Current Ratio Current Ratio
  • 34. Investment Ratios • Earnings per share • are the portion of a company's profit allocated to each outstanding share of common stock and it is calculated • Earnings per share = 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑃𝑟𝑒𝑓𝑒𝑟𝑟𝑒𝑑 𝑠𝑡𝑜𝑐𝑘 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑂𝑟𝑑𝑖𝑛𝑎𝑟𝑦 𝑠ℎ𝑎𝑟𝑒𝑠 𝑖𝑠𝑠𝑢𝑒𝑑 • Earnings Yield • shows the percentage of each dollar invested in the stock that was earned by the company and is given by: • Earnings Yield = 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
  • 35. Earnings per share and Earnings Yield • From the diagram above, it can be deduced that both ratios have been doing well during this interval. However, only in year 2009 both ratios fell considerably and the reason behind this worsening situation is due to the financial crisis. -0.100 -0.050 0.000 0.050 0.100 0.150 0.200 0.250 -2.000 -1.000 0.000 1.000 2.000 3.000 4.000 5.000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 EarningsYield EPS Year Earnings yield Earnings per share
  • 36. Dividend per share and Dividend yield • Dividend per share • is the sum of declared dividends for every ordinary share issued. The values for the dividend per share have been taken directly from the annual reports of Port Louis Fund. • Dividend Yield • is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. It is calculated by the following: • Dividend Yield = 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
  • 37. Dividend per share and Dividend yield • From this chart, it has been noticed that these ratios have been continuously changing. The lowest dividend per share has been paid in year 2009
  • 38. Price Earnings Ratio • a widely used ratio which helps the investors to decide whether to buy shares of a particular company. • Price Earnings ratio = 𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒 • From this diagram, it is to be seen that there has been some ups and downs in this ratio with a negative price earnings ratio being paid again in year 2009. -15.00 -10.00 -5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 2002 2004 2006 2008 2010 2012 Price Earnings Ratio Price Earnings Ratio
  • 39. • Hence based on the ratios calculated, it can be noted that this Asset Management has been performing very well prior to the financial crisis. However, post the financial crisis, the performance of this fund has been deteriorating. Nevertheless, it can be noticed that the latter is on its mend.
  • 40. For our analysis, a comparison between the return of Port Louis Fund (PLF) and the return of the Stock Exchange of Mauritius (SEM) have been made.
  • 41. The following graph depicts the return from 2003 to 2012 of listed equities both for PLF and SEM
  • 42. Beta Coefficient • It shows the riskiness of the fund as compared to the market. • Beta=1 :as risky as the market Beta<1 :less risky than the market Beta>1 :riskier than the market
  • 43. 2003 PLF • Return 38.1% • Higher performance than the benchmark • Return mainly explained by a general increase in the market price of listed equities • Beta of the fund was 0.72 SEMDEX • Return 35.1%
  • 44. 2004 • PLF • Return 36.3% • Higher performance than the benchmark • The decline in return is because the fund has reduced its exposure to banking, insurance and hotel sectors which were major components • Beta was 0.70 SEMDEX • Return 35.4%
  • 45. 2005 • PLF • Return 11.9% • Higher performance than the benchmark • The decline in return is because the fund has reduced its exposure to banking, insurance and finance sectors which were major components • Beta was 0.68 SEMDEX • Return 10.4%
  • 46. 2006 • PLF • Return 12.7% • Lower performance than the benchmark • This is because major components of the fund did not perform in line with the market • Beta was 0.64 SEMDEX • Return 16.3%
  • 47. 2007 • PLF • Return 58% • Lower performance than the benchmark • Did not perform as well as SEM as the fund was overweighed with securities which didn’t perform in line with the market and underweighted with securities which did perform well • Beta was 0.54 SEMDEX • Return 70.3%
  • 48. 2008 PLF • Return 23.3% • Lower performance than benchmark • Due to underweight in some securities in the banking and sugar sectors which outperformed the market SEMDEX • Return 28.5%
  • 49. 2009 PLF • Negative return 18.1% • Better performance than benchmark • Due to financial crisis and consequently a general fall in market value of listed equities occur. SEMDEX • Negative return 23.1%
  • 50. 2010 PLF • Return 16.4% • Slightly lower performance than benchmark • due to the local acquisition of shares being mainly in investment, sugar, commerce and banking sectors SEMDEX • Return 16.7%
  • 51. 2011 PLF • Return 30.4% • Higher performance than benchmark • due to an increase in local acquisition contributing a return of 13.4% SEMDEX • Return 26.8%
  • 52. 2012 PLF • Negative return 1.1% • Lower performance than benchmark • Because investors were sceptic due to the exposure of many companies to the on-going crisis SEMDEX • Return 15.3%
  • 53. Inconclusion,duringthepast10 years,PLFperformed relativelywellasitsreturnwashigher ascomparedto SEM. Forthefirst5years,thebetaoflessthanoneshowedthat thefundislessriskythanthemarket,thatiswhenthe marketisfallingorrisingrapidlytheFundhadacertain degreeofresilience
  • 54. Thank You