Sandra Crowl, CAIA. Member of the Investment Committee

Transcription

1 Sandra Crowl, CAIA Member of the Investment Committee 1

2 Macro Backdrop and Investment Ideas for

3 Emerging Markets Tailwinds Overall consumption growth, annual change Global trade growth, in volume EM DM 10% 5% 0% -5% -10% -15% 01/01 01/04 01/07 01/10 01/13 01/16 3 Sources: Left: Emerging Advisors Group, EM Monthly Chartbook, August 2017 Right: Carmignac, CEIC, June 2017

4 Improving Global PMIs 4 Source: Carmignac, Bloomberg, 30/09/2017

5 EM Current Account Balances have Improved Since Latest quarter During 2013 Taper Tantrum Singapore Taiwan Thailand Korea Russia Hong Kong Poland China Philippines Malaysia Brazil Indonesia India South Africa Mexico Chile Turkey 5 Source: Bank of America Merrill Lynch, «The Inquirer : Financial Vulnerability at Multi-Decade Lows», 28/06/2017

6 Disinflation and Orthodox Monetary Policies Emerging markets inflation EM 8 inflation average China India Brazil Indonesia Turkey South Korea Mexico South Africa Emerging central banks rate cuts Source: Carmignac, Credit Suisse, Bloomberg, 30/09/2017

7 China: the Financial Situation Is Getting Back to Normal Through the Monetary Authorities' Action 35% 33% 31% 29% 27% 25% 23% 21% 19% 17% 15% 13% China: total credit growth, annual change* 11% 01/03 01/08 01/13 01/18 $bn China: capital outflows ($bn) /10 04/11 06/12 08/13 10/14 12/15 02/17 7 * Chinese Total Social Financing: total new loan issuance in China + sovereign debt issuance, y/y growth Source: Carmignac, CEIC, 29/09/2017

8 Argentina: Reforms have Borne Fruits Buenos Aires CPI (YoY%) 50% 40% 30% 20% 10% Buenos Aires CPI Estimates* 0% 07/13 07/14 07/15 07/16 07/17 8% Argentina Economic Activity Index (YoY%) 14% 12% 10% 8% 6% 4% 2% Macroeconomic aggregates (% YoY) 13% 6% 6% 4% 4% 4% 8% 4% 0% 0% -2% -4% -2% -1% -4% -8% 06/12 03/13 12/13 09/14 06/15 03/16 12/16 09/17-6% -5% GDP Investment Private consumption e 2018e Exports Imports 8 * Carmignac, CEIC, IMF estimates Sources: Bloomberg, IMF, Morgan Stanley, EM Advisors Group, 30/09/2016

9 Earnings are Improving 130 MSCI Emerging Markets EPS trends EPS 2016 EPS 2017 EPS 2018 EPS 9 Source: Bloomberg, CLSA Evaluator, 30/09/2017

10 Emerging Market Valuations 14x 12x 10x 8x 12-month forward P/E ratio MSCI Emerging Markets 6x 12/07 11/09 10/11 09/13 08/15 07/17 2.4x 2.2x 2.0x 1.8x 1.6x 1.4x 1.2x 12-month forward Price to Book (P/B) MSCI Emerging Markets 1.0x 12/07 11/09 10/11 09/13 08/15 07/17 18% 12-month forward ROE MSCI Emerging Markets 9.5x (x 12-month forward EV/ EBITDA MSCI Emerging Markets 16% 14% 12% 10% 12/07 11/09 10/11 09/13 08/15 07/17 8.5x 7.5x 6.5x 5.5x 4.5x 12/07 11/09 10/11 09/13 08/15 07/17 10 Source : Carmignac, CLSA Evaluator, 30/09/2017

11 The Transformation of Emerging Markets 100% 90% 80% 70% 60% 50% 40% MSCI EM Real Estate MSCI EM -Telecoms MSCI EM - Industrials MSCI EM -Energy MSCI EM - Materials MSCI EM -Cons. Staples MSCI EM - Cons. Discretionary MSCI EM -Finance 30% % 10% MSCI EM -Information Technology 0% 11 Source: Bloomberg 30/08/2017

12 The Transformation of Emerging Markets Petrobras 4.3% Samsung Electronics 3.1% Tencent 4.6% Gazprom 4.0% Petrobras 2.6% Samsung Electronics 4.0% China Mobile 3.2% TSMC 1.9% Alibaba 3.8% Vale 2.9% China Mobile 1.8% TSMC 3.5% Samsung Electronics 2.0% Gazprom 1.8% Naspers 2.0% America Movil 1.7% America Movil 1.4% China Const. Bank 1.5% Posco 1.4% China Const. Bank 1.3% China Mobile 1.4% Lukoil 1.2% Itau Unibanco 1.3% Baidu 1.2% TSMC 1.2% Vale 1.2% Hon Hai Precision 1.2% China Life Insurance 1.1% ICBC 1.1% ICBC 1.1% 12 Sources: Carmignac, MSCI EM Index Data, 31/08/2016

13 Emerging Markets Performance has Turned Out/underperformance of emerging markets (x)* *MSCI Emerging Markets vs. MSCI World Source: Bloomberg, 20/11/2017

14 How to Invest in Emerging Markets 14

15 Our Emerging Markets Fund Range EMERGING EQUITY FUNDS CARMIGNAC EMERGENTS Flagship Emerging market equity fundinvested in large and mid-capitalisations, launched in 1997 AUM: M; Concentrated portfolio: 50 holdings CARMIGNAC PORTFOLIO EMERGING DISCOVERY Emerging market equity fund invested in small and mid-capitalisations as well as frontier markets, launched in 2007 AUM: 339 M EMERGING DIVERSIFIED FUND CARMIGNAC PORTFOLIO EMERGING PATRIMOINE Diversified emerging market fund combining three performance drivers: emerging equities, bonds and currencies AUM: 849 M 15 Source: Carmignac, 31/10/2017

16 IS NOW THE RIGHT TIME TO INVEST IN EMERGING MARKETS? YES... IF YOU DO IT RIGHT! Strong macro fundamentals Underpenetrated sectors + + Companies able to self finance their growth 16

17 China: Benefiting from Structural Reforms 60% 50% 40% 30% 20% 10% Electric bus penetration in public transport Zhengzhou Yutong Bus World s largest manufacturer of buses with 30% market share in China 12% globally Will benefit from Increasing demand for clean vehicles in public transport positive regulatory development for clean vehicles Quality financial ratios Net cash balance sheet Solid cash flow generation: 10% FCF yield in 2017e) 0% 17 Source: Ministry of Transport of the People s Republic of China, 06/11/2015 Carmignac, Bloomberg, Exane, Commerzbank, 31/12/2015

18 Emerging Equities: Secular Growth is Found in Underpenetrated Sectors 200% Bank loans (% of GDP) 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% 18 Sources: Carmignac, Emerging Advisors Group, International Monetary Fund, 30/12/2016

19 Benefiting from the Potential of the Nascent Latam ecommerce Market Carmignac Emergents 14% ecommerce penetration rate (% total retail sales) 12% 10% 8% 6% 4% 2% 0% 19 Sources: Carmignac, MercadoLibre, Euromonitor, 2015

20 What to Look For: Long-term Secular Growth Sector Allocation Net Debt / Market Capitalization 100% 90% 80% 70% 60% 35% Chinese «New economy» sectors 100% 20% 15% 10% 50% 40% 30% 65% «Old economy» sectors Chinese «New economy» sectors 5% 0% 20% 10% -5% 0% MSCI Emerging Markets (Chinese stocks) Carmignac Emergents (Chinese investments) -10% MSCI Emerging Markets (Chinese stocks) Carmignac Emergents (Chinese investments) 20 Source: Carmignac, Bloomberg, MSCI, Companies, 31/12/2016

21 Quality Financial Ratios, Consequence of Our Stock-Picking 25% 20% Carmignac Emergents MSCI Emerging Markets 15% 10% 5% 0% -5% EPS Growth (CAGR )* Return On Equity (2017)* FCF Yield (%) (2018)* Net debt / Market Cap** 21 * Consensus estimates ** Net debt at last company publication date and market capitalisation as at 04/08/2017 Net debt excluding financials Past performance is not necessarily indicative of future performance Sources: Carmignac, Datastream, Bloomberg, 04/08/2017

22 A Socially Conscious Approach Underpenetration Goes Hand In Hand With Sustainability Financing the future Financing sustainable technologies Offering innovative technologies Improving living standards 22 Source: Carmignac, 2017

23 A Socially Conscious Fund A strong recognition of our ESG strengths by Morningstar Morningstar Sustainability Globes Socially Conscious Tag Out of 630 Global Emerging Market Equity funds as of 30/04/2017. Based on 71% of AUM. CarmignacEmergentshas ahigh sustainability score, beating: 87% of peers for its overall sustainability score 95% of peers for its environmental score 65% of peers for its social score 91% of peers for its governance score CarmignacEmergentsis identified as a socially conscious Fund by Morningstar Along with 47other Funds out of 630 which represent 7%of the Funds in the Global Emerging Markets Equity Morningstar category Morningstar Sustainability Globes rating is a way to evaluate how well the companies in a fund s portfolio are managing the environmental, social, and governance or ESG investing factors relevant to their industries. Sustainability Score as of 31/12/2016. Sustainability Rating as of 30/04/2017. Above Average.. Sustainalytics provides company-level analysis used in the calculation of Morningstar s Sustainability Score All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content 23 providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

24 A Rigorous Approach that Works Over the Long Term Carmignac Portfolio Emerging Discovery beats 99% of its peers for its volatility over 5 years 99% 86% Carmignac Emergents beats 86% of its peers for its volatility over 5 years 5-year Down Capture Ratio - Quartile in its Morningstar category 0 Low down capture 1 st quartile Carmignac P. Emerging Discovery 0 Low down capture 1 st quartile Carmignac Emergents CED Morningstar category* CE Morningstar category** th quartile High down capture Reference Indicator* th quartile High down capture MSCI EM** Source: Carmignac, 31/07/2017; rebasedto 100: 28/02/2012; Morningstar Direct Morningstar, Inc-All rights reserved. Monthly returns in Euro, net of fees, as of 31/07/2017. *Category composed of all shares of all funds in the Global Emerging Markets Small and Mid-cap Equities Morningstar Category. Share class used for CarmignacPortfolio Emerging Discovery: LU Reference indicator: 50% MSCI EM SmallCap(EUR) + 50% MSCI EM MidCap(EUR), (Reinvested net dividends, rebalanced quarterly) **Category composed of all shares of all funds in the Global Emerging Markets Equity Morningstar category. Share class used for Carmignac Emergents: FR ((1) Reference indicator: MSCI Emerging Markets (EUR), Reinvested net dividends, rebalanced quarterly) Management fees are included 24 in performance. Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations

25 A Rigorous Approach that Works over the Long Term Carmignac Emergents Ref. Indicator* % +24.5% % -17.8% % +13.4% % -6.8% % +11.4% % -5.2% % +14.5% 2017 (YTD) +20.6% +19.7% Carmignac Emergents A EUR Acc +72.3% Reference Indicator** +56.6% Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations **MSCI Emerging Markets (EUR), (Reinvested net dividends, rebalanced quarterly) Source: Carmignac, 31/10/2017; Base 100: 31/12/2009

26 A Rigorous Approach that Works over the Long Term CarmignacP. Emerging Discovery A EUR Acc Ref. Indicator* % +30.5% % -24.3% % +16.9% % -5.2% % +13.0% % +0.2% % +6.7% 2017 (YTD) +16.6% +14.8% CarmignacPf Emerging Discovery A EUR Acc +71.3% Reference Indicator** +52.1% Performances are net of fees (excluding possible entrance fees charged by the distributor). The return may increase or decrease as a result of currency fluctuations **50% MSCI EM SmallCap(EUR) + 50% MSCI EM MidCap(EUR), (Reinvested net dividends, rebalanced quarterly) 26 Source: Carmignac, 31/10/2017; Base 100: 31/12/2009

27 Current Positioning 27

28 Geographic exposure of Carmignac Emergents RUSSIA 3.7 MEXICO 8.7 LATAM CHILE POLAND ISRAEL SOUTH AFRICA BRAZIL 0.8 TURKEY 14.5 SOUTH KOREA CHINA 2.7 JAPAN TAIWAN UNITED ARAB 5.6 EMEA ARGENTINA 24% 15% EMIRATS 13.6 INDIA INDONESIA ASIA 61% 28 Positions may vary over time. Source: Carmignac, 31/10/2017

29 Geographic exposure of CarmignacPortfolio Emerging Discovery 2.5 RUSSIA TURKEY SOUTH KOREA MEXICO 5.1 COLOMBIA PERU BRAZIL KENYA UNITED ARAB EMIRATES INDIA CHINA SRI VIETNAM 2.8 LANKA INDONESIA 10.7 TAIWAN 7.0 PHILIPPINES 7.3 ARGENTINA TRADITIONAL MARKETS FRONTIER MARKETS 66% 34% 29 Positions may vary over time. Rebased to 100%. Source: Carmignac, 31/10/2017

30 Appendix 30

31 CarmignacEmergentsoffers an attractive ESG rating Overall ESG score* -Carmignac Emergents vs MSCI EM Due to its rigorous investment process, Carmignac Emergentshas a highermsci ESG rating than the MSCI EM Index Score comparison: Carmignac Emergents vs. MSCI EM % 14.1% % 11.3% % 4.5% 3.9 0% % MSCI EM Carmignac Emergents -5% Overall Quality Score Environment Social Governance * All scores are on a 0-10 scale, with 10 being the best. If ESG coverage is less than 100% holdings are adjusted to 100% for report calculations. Source: MSCI Portfolio Analytics, Dec

32 Portfolio With a Low Carbon Footprint CarmignacEmergentsCarbon Footprint As of 31/12/ Carbon emission investment strategy and reporting CarmignacEmergentshas implemented a specific carbon risk policy to its investment approach: Restricting exposure to companies owning fossil fuel reserves Selecting companies that have superior carbon risk management compared to their industry peers Investing in companies that offer clean technology solutions 0 Carbon Footprint* Weighted average carbon intensity** MSCI EM Carmignac Emergents MSCI EM Low Carbon Target *Tons CO2e per million dollars invested ** Tons CO2e / $M sales : measurement of carbon emission per dollar of sales generated by companies in the portfolio Source: MSCI Carbon Portfolio Analytics, Carmignac, 14/03/

33 Sector Allocation of Carmignac Emergents 35% 30% % 20% % 10% 5% % 33 Figures show fund s equity exposure.rebased figures Source: Carmignac, 30/09/2017