Orchard Monthly performance commentary

1. June 2015
Launch Date
14 January 2003
Fund Facts
Fund Manager
Richard Harwood
(since inception)
Fund Structure
UCITS IV
Domicile
Dublin
Currencies
GBP, USD, EUR, CHF
Administrator
CACEIS Ireland Ltd
Fund AUM
£69.9m
Investment Commentary
The crisis in Greece saw the Fund fall almost 2% in
June, but still performed solidly mitigating losses
compared to the FTSE 100, Euro Stoxx and
S&P500 which fell 6.64%, 4.10% and 2.10%.
Dividend Policy
Distribution
Dealing Days
Daily
Dividend Yield
Target 6%
2015 Est 6.6%
We often talk about the fact that when
we set up the Fund, we hoped to
capture 70% of the upside in quarters
when the market rose but to incur less
than 30% of any losses in quarters
when the market fell. In the last
quarter the market, as measured by
the MSCI World Index in local
currency fell 1.29%.
The Orchard strategy actually made
money on a gross basis and after all
charges fell only 18bps. This works
out at less than 14% of the loss for the
wider market. Since the strategy
started in December 2000, the gross
returns have captured 68.11% of the
upside and only 28.21% of the
downside.
The obvious downside of falls in the
stock market is that we see the price of
the stocks that we invest in fall with a
knock on effect on the performance of
the Fund. However, unlike a long only
fund those losses may not be as real
as they appear. However, unlike a
long only fund those losses may not
be as real as they appear.
If we look at a specific example of
Twenty-First Century Fox, a
diversified media company, where
we have agreed to buy the stock at
$32 until the 17 July. Between the
23 June and the 29 June the stock
fell 3.38%. from $33.42 to $32.29
which saw the value of our
commitment to buy at $32 rise from
being worth 15c on the 23 June to
50c on the 29 June.
Clearly, on a mark to market basis
which is how the Fund is valued
each day, the increase in the value
of that commitment created a
reduction in the value of the Fund,
but with the share price still above
the price at which we have agreed
to buy the stock, that value of 50c is
all time value and unless the share
price is below $32 on the 17 July,
that time value will erode and the
Fund will regain all of those losses
as well as the 15c it was originally
worth.
“The recent weakness has given an opportunity to
increase our exposure and be paid handsomely for doing
so as well as extending the length of some of our existing
commitments. All of this bodes well for future
performance”.
Orchard Wealth Management Ltd is licensed to conduct investment business by
the Jersey Financial Services Commission. Orchard Funds Plc has the status of a
recognised scheme under Section 264 of FSMA 2000 of the United Kingdom. Past
performance is no guide to the future. Investments can go down as well as up and
investors may not get back the whole amount they invested. For full disclosure of
the risk warnings please visit our website. www.orchardwealthmanagement.com
Orchard Funds PLC
Equity Income & Total Return
6% Targeted Annual Yield
Min Subscription
50,000 for individuals,
10,000 for platforms and
designated bodies