Fund Review dgroup.com

Fu nd Review

Butterfield Asset Management Limited

Select Invest Fund: Growth Class

Quarter 2 2019

Objective

To offer a convenient vehicle for investing in an international portfolio of mutual funds or exchange traded funds, which are anticipated to provide the best opportunities for longterm capital growth and accumulated income across a range of risk tolerance classes.

Investment policy

The Fund seeks to invest in various weightings of three broad asset classes; Equities, Fixed Income and Alternatives. The Fund achieves this by allocating its assets to either the Butterfield Select Fund's Share Classes or mutual funds and ETF's that invest in Equities, Fixed Income and Alternatives. Investments will be made on long-term strategic basis and allow for a short to medium term tactical shifts in keeping with the overall objective of each class.

Key facts as at 30 June 2019

Currency Valuation Dealings Front end fee Units available Identifier Fiscal year end Minimum investment Total expense ratio Size of fund (millions) NAV per share

USD Weekly Thursday None Accumulation BSIFIGR BH 30 June USD 1,000 0.52% USD 2.99 USD 14.58

Lower return potential

Higher return potential

Risk profile Your time horizon

Lower risk

select

select

Select Fund: Equity Select Fund: Alternative Select Fund: Global Fixed Income

Higher risk

Positioning

Equity Bonds Alternative

Underweight

Neutral

Overweight

Average annual compound returns

Total returns Index returns

Quarter 3.55% 3.73%

Year to date 15.17% 14.70%

1 year 4.07% 5.84%

3 years 7.86% 9.82%

5 years 3.41% 5.61%

Fund review

The Alternative Class returned 0.75% in Q2 of 2019, behind the HFRX Global Index return of 1.58%. Hedge funds had their best first six months of the year since 2009, aided by strong returns from both bond and equity markets. The directional equity strategies and specialist equity strategies, specifically financials and healthcare specialists, experienced outsized gains amid a strong equity market environment. Low net equity strategies also contributed to gains driven by long defensive and industrial positions. Macro strategies also experienced positive performance over the quarter, driven by long positions in U.S. equities and FX trading in European and Asian currencies. Commodities trading, specifically in energy and gold, also contributed to gains. Quantitative strategies experienced losses during the quarter, with losses driven by longerterm, non-directional quantitative strategies, specifically within the consumer discretionary and healthcare sectors in the equity sub-strategy. Although, gains from index futures and commodities trading in the futures/forwards sub-strategy slightly offset these losses.



THE BAHAMAS | BERMUDA | CAYMAN ISLANDS | GUERNSEY | SWITZERLAND | UNITED KINGDOM

The Equity class produced a quarterly return of 4.23%, net of fees, in Q2 of 2019. This was ahead of the 4.00% return of the MSCI World (Free) Index benchmark. Global equity markets followed a very strong first quarter with another solid return in the second quarter. A better than expected first quarter earnings season and supportive central bank policy globally offset disappointing economic growth and a re-escalation of the trade tensions in May. All major regions and sectors posted positive returns, with the exceptions of Japan and the energy sector. Six out of the eight active managers within the fund managed to outperform their respective benchmarks over the quarter, with seven outperforming year-to-date. The American Century Global Growth fund continued a very strong run of performance. This was driven by good stock selection among health care and financials stocks, with exposure to US and Hong Kong positive from a geographic perspective. This more than offset negative contribution from technology stocks and some emerging market exposure. Overall, the market has had a very strong first six months of the year. However, it should be noted that this was from a low starting point due to the weakness in December. The market return over one year to the end of June is 6.33%, which is right in line with the long term expected return from equity investment.

The Global Fixed Income Class produced a return of 3.03%, net of fees in Q2 which was below the 3.72% return for the fund's benchmark. The fund maintained its underweight interest rate risk positioning, which subtracted from alpha in Q2, as bond yields fell sharply despite signs of stabilising global growth, a pick up in U.S. inflation and solid consumer spending. Adding to alpha was the allocation to Corporate bonds - which we have been reducing to lower risk - as spreads continued to tighten leading to excellent risk adjusted total returns yearto-date. Global growth had been showing some encouraging signs of rebounding in the second half of 2019 however, leading economic indicators have recently stalled.

Renewed trade tensions between China and U.S. look like the prime culprit although, Brexit limbo and geo-political noise have added some additional pressure to confidence and future outlook's. With global activity clearly entering an uncertain phase the Federal Reserve appears to have finally headed what the bond market, via lower market yields, has been forcing upon them for months and looks set to pull the trigger on an `insurance' cut in an attempt to get ahead of the curve at the coming July meeting. Fixed Income markets are certainly priced for this outcome with ten-year U.S. Treasury yields falling to 2.01% from 2.41% at the start of the quarter and with 90bps of rate cuts fully priced into the curve over the next 12 months. This renewed monetary stimulus has led risk assets higher in the belief that the `Fed Put' is firm however, with rates about to be cut with U.S. growth decent and financial conditions loose bond yields are likely to receive pressure from firmer inflation and a pick up in activity during the second half of 2019 hence why the fund is maintaining it's underweight duration position whilst also remaining pro-risk via an overweight to corporate bonds, agency MBS and inflation protection.

Asset allocation

select

Select Fund: Equity Select Fund: Alternative Select Fund: Global Fixed Income

81% 14%

4%

Top 10 holdings

1selectBNY Mellon Long-Term Global Equity

2

American Century Global Growth

3

Wellington Global Opportunities

4

MFS Global Equity

5

Lazard US Concentrated

6

MFS US Value Fund

7

Artisan Value Fund

8

Schroders QEP Global Core

9

Wisdomtree Japan Hedged ETF

10 DBX MSCI Europe ETF

13.36% 12.18% 10.61% 10.47% 10.46%

7.20% 5.80% 4.81% 3.46% 2.35%

Benchmark composition

80% MSCI World (Free), 10% B of A Merrill Lynch 5-10 Yr US Gov/Corp AAA-A Rated, 10% HFRX Global Hedge Fund.

Contact us

Butterfield Asset Management Limited

Tel: (441) 299 3817

Fixed income allocation

Equity sector allocation select

select

Corporate US Government Securitised/Collateralised SAS Emerging Markets Cash

49% 30% 12%

6% 2% 1%

select

North America Europe developed UK Asia/Pacific Emerging markets

69% 12%

8% 6% 4%

Alternative strategy allocation select

select

Equities Cash Macro Relative value Quantitative Credit

34% 26% 13% 11% 10%

5%



select Past performance is not indicative of future performance. This document is for information purposes only and does not constitute an offer or solicitation of products or services where prohibited by

applicable law. Further, this document is not intended to provide specific investment, financial, accounting, legal or tax advice and no reliance should be placed on the information it provides. Butterfield Asset Management Limited and Butterfield Bank (Cayman) Limited are each wholly-owned subsidiaries of The Bank of N.T. Butterfield & Son Limited. Butterfield Asset Management Limited is licensed to conduct investment business by the Bermuda Monetary Authority. Registered office address: 65 Front Street, Hamilton HM12, Bermuda. Butterfield Bank (Cayman) Limited is licensed to conduct securities investment business by the Cayman Islands Monetary Authority. Registered office address: Butterfield Place, 12 Albert Panton Street, PO Box 705, Grand Cayman KY1-1107, Cayman Islands.

? 2019, The Bank of N.T. Butterfield & Son Limited / REV.22.07.19

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