Global Concentrated Growth

Transcription

1 Cumulative Excess Return % Return % Global Concentrated Growth Quarterly Review Composite Performance Periods Ending 31 December Qtr 4 1 Year 3 Year 5 Year 10 Year At A Glance Inception: 1 June 2005 : MSCI ACWI AUM: $ million USD Global Concentrated Growth Gross of Fees MSCI ACWI MSCI ACWI Growth The value of investments can fluctuate. Data assumes reinvestment of dividends and capital gains. Data reflects past performance. Past performance does not guarantee future results. Periods greater than one year have been annualized. Quarterly Top Relative Contributors and Detractors Contributor Detractor Tencent Holdings Ltd 0.49 Celgene Corp Kering 0.45 Newell Brands Inc Adobe Systems Inc 0.38 Medidata Solutions Inc Pioneer Natural Resources Co 0.31 Boston Scientific Corp AIA Group Ltd 0.23 CRH PLC Attribution Analysis One Year Ending 31 December Sector Allocation Security Selection Currency Effect Total Effect

2 Investing With a Time-Tested Growth Philosophy We believe that accelerating growth in revenues and earnings results in significant potential for stock price appreciation. markets are inefficient at identifying such points. Our process is designed to uncover stocks that outperform as earnings growth accelerates, market expectations rise and multiples expand. Goal Seeks to outperform the MSCI ACWI by 3% to 4% annualized over a market cycle with expected tracking error of 5% to 7% versus the benchmark. Risk Guidelines Maximum position size: 5% active weight Investment Process Investment Universe Market capitalization > $3B Sufficient trading liquidity 1 2 Fundamental 3 Idea Generation Identify companies exhibiting accelerating growth and improving fundamentals Fundamental information flow Quantitative screens Analysis Confirm acceleration is genuine and sustainable Construction Focus portfolio on best ideas Monitor risk controls and guidelines Companies 2

3 Characteristics Investment Team Characteristics Weighted Average Market Capitalization $100.7 B $111.8 B Median Market Capitalization $35.3 B $7.4 B Price To Earnings Ratio, Historical 1 Year 33.0x 19.3x Price To Earnings Ratio, Forecasted 1 Year 27.6x 17.6x EPS Growth, Historical 1 Year 23.0% 13.9% EPS Growth, Forecasted 1 Year 23.5% 14.2% Number of Holdings Number of Countries 8 47 Turnover, Trailing 1 Year 58% N/A % Cash 2.3% 0.0% Forecasts are not a reliable indicator of future performance. Managers - Keith Creveling, CFA - Brent Puff - Ted Harlan, CFA Client Managers - Nathan Chaudoin - Bernard Chua, CFA - Laura Granger, CFA - Jim Shore, CFA 8 Investment Analysts Located in New York Top 10 Holdings Holding Country Industry Assets American Express Co US Consumer Finance 4.19 Facebook Inc US Internet Software & Services 4.18 Ashtead Group PLC UK Trading Companies & Distributors 4.10 Adobe Systems Inc US Software 3.88 Alphabet Inc US Internet Software & Services 3.85 Tencent Holdings Ltd China Internet Software & Services 3.85 Kering France Textiles Apparel & Luxury Goods 3.77 Alibaba Group Holding Ltd China Internet Software & Services 3.76 Texas Capital Bancshares Inc US Banks 3.72 UnitedHealth Group Inc US Health Care Providers & Services 3.70 Total 39.01% Top 10 Overweights Holding Weight Weight Overweight Ashtead Group PLC American Express Co Texas Capital Bancshares Inc Kering Adobe Systems Inc Fortune Brands Home & Security Inc London Stock Exchange Group PLC HDFC Bank Ltd Alibaba Group Holding Ltd AIA Group Ltd Equity holdings are grouped to include common shares, depository receipts, rights and warrants issued by the same company. holdings subject to change without notice. 3

4 Sector Allocation Weight vs Sector Information Technology Financials Health Care Industrials Real Estate Materials Utilities Telecommunication Services Energy Consumer Discretionary Consumer Staples % Quarterly Sector Performance Contribution to Return vs Sector Contribution to Return Contribution to Return Information Technology Financials Industrials Energy Utilities Telecommunication Services Real Estate Materials Consumer Staples Consumer Discretionary Health Care % When shown, "Diversified" includes portfolio holdings that cannot be attributed to a specific GICS sector. 4

5 Country Allocation: Top 10 Over/Underweights Weight vs. Country United States China Ireland Hong Kong India United Kingdom France Sweden Spain Netherlands Taiwan South Korea Australia Switzerland Canada Germany Japan % Quarterly Top Relative Contributors and Detractors by Country Contributor France 0.61 China 0.29 Hong Kong 0.24 Switzerland 0.10 Germany 0.09 Detractor United States Ireland Japan South Africa South Korea

6 Percentile Rank Global Concentrated Growth Risk-Adjusted Performance Three-Year Risk-Adjusted Performance vs. ea Global Large Cap Equity Universe vs. MSCI AC World-ND, Citigroup 3-Month T-Bill 0 Excess Returns Tracking Error Information Ratio Sharpe Ratio 25 Median Global Concentrated Growth Excess Returns Tracking Error Information Ratio Sharpe Ratio Manager Percentile Rank Median Source: evestment Analytics Excess returns are gross of fees. Number of products in the universe was 386. Available Vehicles Separate Account SICAV Available in U.S. and certain non-u.s. countries Available only in certain non-u.s. countries. 6

7 Quarterly Commentary Review Business and consumer confidence remain high. Global equity valuations are high, but earnings growth has supported sustained stock market gains. Equity earnings yields compare favorably to bond yields. Bottom-up estimates suggest fourth-quarter earnings growth will remain strong, with U.S. earnings supported by tax reform and potential capital expenditure spending increases. Meanwhile, monetary policies remain supportive of risk assets, while inflation expectations remain muted. Global recovery boosts emerging markets. Economic and business fundamentals in many emerging markets continue to improve. Recent gains have been driven by earnings growth rather than expanding multiples. The group has benefited from the cyclical upswing in global economic activity, including gains in manufacturing and trade. Disappointing results pressured health care holdings. Despite positive trends in the sector, drugmaker Celgene suffered amid disappointing results for its Otezla drug and disease drug. A single holding drove underperformance in the materials sector. Weather-related issues negatively impacted short-term demand for building materials company CRH. However, we believe that new acquisitions, improving demand in Europe, and strong pricing and volume growth in the U.S. will continue to drive revenues. Information technology holdings supported performance. Internet company Tencent Holdings and software maker Adobe Systems were top contributors. Tencent advanced on strong earnings, while shares in Adobe rose after announcing a price increase. Health care trends create opportunities. We added to health care, initiating new positions in firms in industries benefiting from increased research and development and investment, including life science tools and diagnostics company Danaher, medical device manufacturer Teleflex, and medical technology firm Medidata Solutions. U.S. technology holdings featured. We maintain our relatively large exposure to prominent U.S.-listed technology holdings that operate on a global scale. Examples include social networking giant Facebook and Alphabet, parent of Google. Key Contributors Tencent Holdings. advanced after reporting better-than-expected revenue and earnings growth. The company also has been realizing success in its cloud and payments businesses and plans to increase its investment in digital content, including a recent investment in an online ticketing platform. Kering. The stock of luxury brands company Kering rallied on the back of a successful product and store restructuring initiative for its flagship Gucci brand. During the third quarter, group revenue accelerated, driven by Gucci revenues. We believe the improving trends at Kering remain sustainable. Adobe Systems. The stock of software maker Adobe a price increase. The news of higher prices beginning in March 2018 adds to the improving trends at the company as it transitions to a cloud-based/subscription business model. Key Detractors Celgene. The drugmaker reported disappointing revenue for Otezla and abandoned a leading compound in clinical As a result, we are the eventual cannibalization of its Revlimid franchise and liquidated our position. Newell Brands. While this consumer and commercial products company has been delivering on cost synergies from its merger with Jarden Industries, inconsistent topline growth offset gains. Weak demand from large distribution partners negatively impacted revenue growth. We consequently exited our position. Medidata Solutions. The technology firm declined after reporting mixed quarterly results. We believe it is positioned to sustain growth as customers migrate clinical trial development onto its data collection platform. Greater research and development spending by customers should support growth in the number of drugs entering clinical trials. Notable Trades Danaher. We purchased this life science tools and diagnostics company after seeing strengthening endmarket demand. We believe earnings growth will be supported by future acquisitions and are impressed with cash flow and its history of successful acquisitions. 7

8 ServiceNow. This provider of cloud computing solutions automates information technology service management requests within an enterprise. We purchased the stock due to our belief that growth is highly sustainable given the to displace expensive legacy service offerings. Teleflex. We purchased this medical device manufacturer with the belief that constant currency revenue growth will accelerate with acquisitions and new product launches. Margins should expand as Teleflex reduces costs, realizes synergies, and absorbs costs relating to a strategic transformation in China. Autodesk. The stock of software maker Autodesk tumbled after management reported mixed results for its fiscal third quarter and announced a surprise restructuring plan that subsequently liquidated our position. Positioning for the Future The portfolio continues to invest in companies where we believe fundamentals are strong and improving but share price performance does not fully reflect these factors. Our process is based on individual security selection, but broad themes have emerged. Shift to digital realm boosts information technology. Within technology, we own a collection of businesses that facilitate the continued migration of spending into online channels. These include investments in several leading online advertising platforms around the world, the leading provider of digital content creation software, and a collection of payment providers that we believe will continue to gain market share as consumption shifts online. Economic conditions support financials overweight. Within the sector, we own emerging markets banks we believe can sustain growth given a combination of low credit penetration and improving economic activity. We have also identified several non-bank financial companies providing mission-critical data and analytics to their respective customers. Within the U.S., regional bank holdings are expected to benefit from a gradual rise in U.S. interest rate policy. Pursuing opportunities in health care trends. We added to our health care exposure, reducing drug company holdings and increasing investments in medical device, diagnostic tools, and outsource manufacturing services. These companies are benefiting from increased research and development investment and expanding new product pipelines and approvals. Lack of growth opportunities in consumer staples. We have no exposure to the sector, where results for many global consumer goods companies have been pressured as demand has slowed and price intensity has risen. A secular shift favoring healthier products and private labels has weighed on growth for many packaged food companies. We maintain our overweight in North America. Our overweight position in North America is largely a reflection of several large U.S.-based technology holdings that operate on a global scale, including Facebook and Alphabet. While the portfolio remains overweight, we trimmed exposure during the period, a result of exiting positions in Celgene, Newell Brands, and Autodesk for company-specific reasons. 8

9 This document does not constitute an offer or solicitation to invest in shares of the fund. The fund may not be licensed in all jurisdictions, and unless otherwise indicated, no regulator or government authority has reviewed this document or the merits of the shares referenced herein. This document is provided on a privileged and confidential basis and, where required by local law, at the request of the recipient. This document (and the information contained herein) is for informational purposes only and is not to be reproduced, distributed or transmitted without the written consent of American Century Investment Management (UK) Limited. If you receive a copy of this document, you may not treat this as constituting a public offering and you should note that there may be restrictions or limitations to whom these materials may be made available. You should conduct appropriate checks to ensure that these materials are made available only to eligible recipients, pursuant to private placement exemptions, or are otherwise used in accordance with applicable law. If you wish to apply to purchase shares of the fund, it is your duty to inform yourself of, and to observe, all applicable laws and regulations of any relevant jurisdiction. In particular, you should inform yourself as to the legal requirements of so applying, and any applicable exchange control regulations and taxes in the countries of your respective citizenship, residence or domicile as well as any other requisite governmental or other consents or formalities which you might encounter which might be relevant to your purchase, holding or disposal of shares. Past performance is no indication as to future performance and the value of any investment may fall as well as rise. Any investment in shares of the fund is done at the investor's own risk. Certain Funds have been authorised for sale in Austria, Finland, Germany, Italy, Luxembourg, the Netherlands, Spain, Switzerland and the UK. For more details, refer to the relevant Fund's KIID. This communication is intended only for persons resident in jurisdictions where its distribution and availability would not be contrary to local laws. This communication is intended only for persons resident in jurisdictions where its distribution and availability would not be contrary to local laws. This promotion has been approved with limitations, in accordance with Section 21 of the Financial Services and Markets Act, by American Century Investment Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. This information is meant to be communicated to and/or directed at only those persons who are categorised as professional clients or eligible counterparties in relation to the fund, and other persons should not act or rely on it. American Century Investment Management (UK) Limited is registered in England and Wales. Registered number: Registered office: 12 Henrietta St, 4th Floor, London WC2E 8LH. The current version of the full prospectus and Key Investor Information Document are available in English and German and can be obtained free of charge by contacting American Century Investment Luxembourg, Grand Duchy of Luxembourg, or at American Century Investment Management (Asia Pacific), Limited currently holds Type 1 and Type 4 registrations from the Securiti Management, Inc. is not registered with the SFC. This fund is not available for sale in the U.S. and nothing herein shall be construed as an offer to sell in the U.S. or to U.S. persons. This promotion is not intended for public distribution and may only be distributed on a non-public offering basis. It is the responsibility of any persons wishing to make a purchase to inform themselves of and observe all applicable laws and regulations. the number Composite returns are gross of investment management fees. Sector weights, portfolio characteristics and holdings are of a representative account in the composite. Holdings are current as of the date indicated, are subject to change and may not reflect the portfolio's current holdings. construction guidelines document operational policies and not necessarily investment restrictions imposed on management of the strategy. Material presented has been derived from industry sources considered to be reliable, but their accuracy and completeness cannot be guaranteed. Opinions expressed are those of the portfolio investment team and are no guarantee of the future performance of any portfolio. Nothing in this document should be construed as offering investment advice. Please note that this is for informational purposes only and does not take into account whether an investment is suitable or appropriate for a specific investor. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI. For purposes of compliance with the Global Investment Performance Standards (GIPS with the Global Investment Performance Standards (GIPS ). Global Concentrated Growth composite includes all portfolios managed using a concentrated growth investment strategy primarily targeting large U.S. companies and large non-u.s. companies in developed countries. Index futures (and currency forwards and futures, where applicable or appropriate) are occasionally used to equitize cash and manage portfolio risk. Other derivative instruments may be used, as allowed, as part of the investment strategy. Returns are calculated and stated in U.S. dollars. The return may increase or decrease as a result of currency fluctuations. Returns for periods less than one year are not annualized. To receive a complete list of composites and/or a GIPS compliant presentation, contact: 4500 Main Street Kansas City, MO Toll Free: Fax: Henrietta Street, 4th Floor London, WC2E 8LH United Kingdom Fax: Madison Avenue, 9th Floor New York, NY Toll Free: Fax: Suite 3201 Champion Tower 3 Garden Road, Central Hong Kong Fax: Charleston Road Mountain View, CA Toll Free: Fax: Rosecrans Avenue Suite 4345 El Segundo, CA Toll Free: Fax: American Century Proprietary Holdings, Inc. All rights reserved. GE-FLY