We’ve finished 2017 with 10.37% yield (the price of the fund unit rose 10.37% in RUR). For comparison, the base deposits profitability in Russia in the end of the year was 7.794% (in RUR).
At the end of the year the Fund portfolio was mixed by assets of different risk classes and contained:
- 44% of equities,
- 41% of fixed income securities,
- and 15% of foreign currencies (EUR, USD).
Equities of the portfolio is well balanced by different industries.
In the 2018 I expect the yield of the Fund will be around 15-20%.
In the first half of 2017 the Fund unit reaches all-time hight, rose 4.65% year-to-date. This yield supposes annual growth around 10%.
Investment yield was received from coupons, dividends and some speculative transactions with stocks. At June 30th the share of stocks in the portfolio was more than a half — 56%. Another large share is fixed income (36%), and the rest is foreign currency and rubles.
Fund portfolio structure at June 30, 2017
Indicators, % (6 month, Dec 30, 2016 — Jun 30, 2017)
|TNO Capital (unit price, RUR)
|MICEX index (RUR)
|RTS index (USD)
|Inflation rate (May 2017, YoY)
*Sberbank – Balanced Fund
It was a good year for Russian equity market (MICEX +24% YTD), but not so good for forex assets (currency basket decreased more than 18% YTD to Russian ruble). Revaluation of the Fund forex assets causes weak performance of the Fund unit in 2016 (+5% YTD). For example, standard bank deposit (in RUR) in 2016 was able to receive 8.4-10% per annum.
Our long-term strategy for 2017 provides:
- To increase equity share in the portfolio to 40% (now — 26%)
- To decrease fixed income share in the portfolio to 40% (now — 51%)
- To keep foreing assets share in the portfolio by 15-20% (now — 23%)
In the 3-rd quarter TNOC unit added 3.8% due to some short-term operations with gold-linked assets in July-August.
From the beginning of the year TNOC unit increased 5.3% (equal to the 7.1% annual pace of growth in RUR).
Indicators, % (9 month, Dec 30, 2015 — Sep 30, 2016)
Flat portfolio performance is continued as local currency market and stockmarket were traded mostly in flat direction in April-June. From the beginning of the year price unit of the fund rose by 2.5%. The benchmark, Sberbank-Balanced Fund, rose 7.44% at the same period.
Worse-than-benchmark performance is due to the large share of forex assets in the portfolio, so RUR revaluation in June also had some negative effect.
Fund unit price rose just 1.31% in the first quarter of 2016 (for example, Micex index rose 6.23% at the same period). Weak growth is due to the Russian Ruble revaluation in late February and March, so it had negative influence on the forex assets of the Fund.
From july till september (3Q2015) the Fund’s unit added 5.3%. From the beginning of the year the Fund’s unit rose by 32.4% (for comparison MICEX index rose 17.6% for the same period). Better than stock market index performance is due to large share of bonds in portfolio (more than 50% of assets).
Performance TNO Capital vs MICEX index (Dec 30, 2014 = 0%), 9m2015
Bond portfolio indicators at September, 2015:
— Weighted average yield 11.19%
— Duration 18.3 months
(1 year=365 days; discount rate=11%)
— Wide portfolio diversification — not more than 6% for each issuer
In the first 3 month of 2015 the value of the Fund’s unit rose by 19.7%. MICEX index, for comparison, added 16.4% at the same period. Stable growth of the Fund’s unit, which you could see in the picture below, is explained by a large share of fixed income in assets. It has defended portfolio in the period of stock market slump in March 2015.
Performance TNO Capital vs MICEX index (Dec 30, 2014 = 0%), IQ2015
In the near future I will add a new benchmark to compare with my portfolio. It will be the fund with mixed strategy (fixed income & equity), that will be more appropriate than previously used Сбербанк – Фонд активного управления .
TNO Capital portfolio structure at the end of IQ2015