TB Wise Multi-Asset Income Update

Recently, we announced some upcoming changes to the objective and policy for the TB Wise Multi-Asset Income Fund (MAI). I would like to reassure you that these changes will not affect the way we continue to manage the fund. The main change is within the wording of the current objective. We have outlined both the current objective and the new objective below.

Current Objective

The investment objective of the Fund is to provide an annual yield* in excess of the Cboe UK All Companies Index with the potential to provide income and capital growth over Rolling Periods of 5 years in line with or in excess of the Consumer Price Index, in each case after charges.

*yield being the amount of income that is paid out every year by an investment, expressed as a percentage of the value of the investment.

As stated above, we currently aim to yield more than the Cboe UK All companies Index, however, last year the Cboe confirmed they were going to stop calculating a yield for this index. In order to remain compliant with regulation and to ensure MAI has appropriate targets, we were required to find an alternative target benchmark that also ensures we don’t change how we manage the fund. Since launch MAI has always sought to pay a good level of income, as well as grow that income and the capital in line with inflation. The new objective below aims to capture these same principles:

New Objective

The Fund aims (after deduction of charges) to provide:

• an annual income in excess of 3%; and

• income and capital growth (after income distributions) at least in line with the Consumer Price Index (“CPI”), over Rolling Periods of 5 years.

As you can see above, we aim to pay an annual income in excess of 3% and for the years prior to 2020/21 we have achieved a yield in excess of this level. When reviewing the level, we have sought to confirm both our commitment to only distribute income that has been accrued (from the underlying holdings and not from the capital) whilst at the same time ensuring that income today is achieved without sacrificing the prospect of future income and capital growth. The current forecast yield (for our fund’s financial year ending February 2022) is 4.36% and it is from this level we aim to grow above inflation over a rolling 5-year period.

In addition, we have also decided to make a change in the sector classification in which the fund sits. Since launch we have always been in the IA Flexible Investment Sector but after careful consideration, we feel the IA Mixed 40-85% Investment Sector better reflects the way the portfolio is managed. Over the past 5 years, the Flexible Sector has seen an increase in non-multi-asset funds, which are often more growth orientated and a decrease in multi-asset income funds. We would again stress that this move in sector classification will not change our management approach but will provide a better comparison of the fund against a more representative group of peers. Whilst in theory this does add a constraint to the asset classes we are able to hold, in practice we have always managed the fund comfortably within the sector limits. For reference, the sector information is below and can be found on the IA Website.

  • Maximum 85% equity exposure (including convertibles)
  • Minimum 40% equity exposure
  • No minimum fixed income or cash requirement
  • Minimum 50% investment in established market currencies (US Dollar, Sterling & Euro) of which 25% must be Sterling
  • Sterling requirement includes assets hedged back to Sterling

Below is a link to the letter from our ACD, T.Bailey Financial Services has been sent out to all direct holders and all third party trading platforms. We hope this is passed on to you but know from experience that is not always the case.

If you have any questions or concerns about the above, please do not hesitate to email or call me directly on the below.

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