Mackenzie. International All Cap Growth

Transcription

1 Mackenzie International All Cap Growth INCEPTION: MARCH BENCHMARK: MSCI EAFE TOTAL RETURN INDEX ASSETS: C$ 841 MILLION AS OF DECEMBER 2015 PERFORMANCE SUMMARY For Q4 2015, the Mackenzie International All Cap Growth Composite returned 8.3% (Gross, CAD), 8.0% (Net, CAD). This compares with the MSCI EAFE Total Return Index return of 8.5%. CONTRIBUTORS TO PERFORMANCE At the sector level, stock selection in Industrials contributed to performance. Stock selection in the U.K. and Spain also contributed positively. Among the leading contributors to performance was Kanamoto Co. Ltd. Kanamoto is the second largest construction equipment company in Japan. We expect construction activity to pick up in the second half of 2016 and we believe the company is well positioned to continue to increase its dividend given the payout is very low, especially when compared to peers in the sector. Other leading contributors include Baidu Inc and Ashtead Group Plc. Baidu, the leading Chinese internet search provider, reported a strong quarter with good top line growth and margins driven by mobile search. Video is also growing robustly and now comprises 7% of revenues. Ashtead, the U.K based equipment rental company, has networks in the U.S. and U.K. The company continues to execute very well and its markets are benefiting from favorable structural and cyclical trends. Ashtead announced that they expect full year results will come in ahead of expectations. DETRACTORS FROM PERFORMANCE From a geographical perspective, stock selection in Japan was the largest detractor. Stock selection in the Healthcare sector was also a detractor. Among the largest underperformers at the stock level were Samsonite International and Tokyo Tatemono. Samsonite weakness was caused by the slowdown in China, the Paris terror attacks and the resulting impact on travel. Management has subsequently commented that they have seen a recovery in December and the attack did not, in fact, impact Samsonite as much as had been originally feared. Tokyo Tatemono is an integrated real estate company with condominium sales and office leasing its core businesses. The stock was weak on a change in the National Tax Agency stance on inheritance tax and its potential impact on condo sales. CONTRIBUTORS TOP 5 CONTRIBUTORS SECTOR AVG. ACTIVE WEIGHT CONTRIBUTION TO Q4 RETURNS Kanamoto Co., Ltd. Industrials 2.3% 0.7% Baidu, Inc. Info. Technology 2.1% 0.5% Ashtead Group plc Industrials 2.9% 0.4% Intertek Group plc Industrials 3.1% 0.3% Grupo Catalana Occidente S.A. Financials 1.7% 0.3% DETRACTORS TOP 5 DETRACTORS SECTOR AVG. ACTIVE WEIGHT CONTRIBUTION TO Q4 RETURNS Samsonite International S.A. Consumer Disc. 2.2% -0.4% Tokyo Tatemono Co., Ltd. Financials 2.4% -0.3% Laox CO.,LTD. Consumer Disc. 0.6% -0.3% ICL-Israel Chemicals Ltd. Materials 0.7% -0.2% Svenska Handelsbanken AB Financials 1.3% -0.2% COMMENTARY Q Investing involves risk. Please read the important disclosures under Important Notes which contain more information about the significance and the limitations of the information on this page.

2 PERFORMANCE ATTRIBUTION COUNTRY ATTRIBUTION 2015 Q4 Country 2015 Q4 Sector 1 Year Country as at Dec. 31, Year Sector as at Dec. 31, % 0% 5% Allocation Stock Selection Currency Cash Other SECTOR ATTRIBUTION Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Telecommunication Services Utilities Cash -1% 0% 1% Allocation Stock Selection Currency Australia Austria Belgium Brazil China Denmark Finland France Germany Hong Kong Ireland Israel Italy Japan Korea Luxembourg Mexico Netherlands New Zealand Norway Portugal Singapore Spain Sweden Switzerland Thailand United Kingdom Cash -1% 0% 1% 2% Attribution versus MSCI EAFE TR Index in CAD Allocation Stock Selection Currency PORTFOLIO ACTIVITY In Q4, two names were added to the portfolio and two were eliminated. The portfolio initiated a position in AAC Technology Holdings, listed in Hong Kong. AAC is a global leading supplier of integrated micro-component solutions used in smart phones, tablets, ultrabooks, wearables and other consumer electronic products. We believe AAC is very well positioned to benefit from growth trends in Haptic and Acoustic technologies used in electronic products. The portfolio exited its position in ElringKlinger AG. We exited this German based automotive supplier after the company failed to meet their profit targets and guided down for a second time. NAMES ADDED AAC Technologies Holdings Inc. (Hong Kong Information Technology) Alps Electric Co., Ltd. (Japan Information Technology) NAMES REMOVED ElringKlinger AG (Germany Consumer Discretionary) Tiangong International Co. Ltd. (Hong Kong Materials) COMMENTARY Q Investing involves risk. Please read the important disclosures under Important Notes which contain more information about the significance and the limitations of the information on this page.

3 OUTLOOK The current outlook has a barbell like property. On the positive side, in the U.S. we have lower unemployment, wage acceleration, and growing household formation, all of which are constructive for the U.S. housing industry and by extension the U.S. economy. On the negative side, the strong U.S. dollar continues to be a big headwind for multinational companies. More importantly, plunging commodity prices are affecting capital expansion, manufacturing and transportation. The decision by the Fed to raise interest rates in December has added to the strengthening dollar. We expect the market will continue to be very volatile in the first part of 2016 until it becomes clearer which side of the barbell will eventually outweigh the other. It is our view that improving employment and disposable income will be sufficient to encourage the consumer to accelerate spending resulting in economic expansion that will exceed current low expectations. However, we believe the growth rate will be accompanied by low inflation thereby diminishing the likelihood of aggressive action from the Fed. A recovery in household formations could also be good for the financial services industry and so we remain positive on that sector. The outlook for China is also critical, not just for the Asian markets but for all global markets. The uncertainty surrounding the renminbi (RMB) has added significant volatility to the markets since the Chinese government signaled it would shift from managing the RMB away from the U.S. dollar to a basket of currencies to better reflect the trade weight of the Chinese economy. Markets around the world are worried that China is significantly devaluing its currency and this may put pressure on many other emerging market currencies. We are somewhat surprised by the violent reaction we have seen from the market since the Chinese government signaled that the change in their currency policy was a direct result of the very strong U.S. dollar versus all other currencies globally. The RMB is still much higher against its trade weighted basket despite a move lower against the U.S. dollar. The weakness that has resulted from this change in policy has left the Asian markets at very cheap valuations. Indeed the current price to book ratio for Asia is trading more than one standard deviation below the mean of the past 21 years. This has only occurred three times previously and in each instance the Asian market has gained more than 50%, on average, over the subsequent 12 month period. Indeed, there is incremental good news that the market is ignoring. Vehicle sales in China were up 15% to 2.8mm passenger vehicles for the month of December, lending support to the thesis that consumption is healthier than the stock market may suggest. Europe is the one region that seems to be recovering at a steady pace. We are encouraged by the strengthening demand for passenger vehicles across the region. There looks to be room for demand to continue climbing as the age of the fleet still exceeds 10 years. The stronger demand for autos is a reflection of the improving employment picture. Unemployment rates in most of the major economies are trending down, raising consumer confidence to levels approaching the highest since the global financial crisis. The biggest challenge for Europe is not internal, it is the influx of refugees and how the region deals with the economic impact of this event. Optimistically, the refugee crisis could become a positive for the region if there is a way to integrate them into the economy since most of Europe faces very poor demographics given the declining population trend. PORTFOLIO MANAGEMENT TEAM Mark Grammer, P.Eng, MBA, CFA Portfolio Manager; Industry Start: 1989; Firm Start: 2003 Ashley Misquitta, MBA, CFA Portfolio Manager; Industry Start: 2004; Firm Start: 2014 Phil Taller, MBA, CFA Portfolio Manager; Industry Start: 1991; Firm Start: 2011 Sonny Aggarwal, MBA, CFA Associate Portfolio Manager; Industry Start: 2000; Firm Start: 2014 Klara Gotz, CFA Associate Portfolio Manager; Industry Start: 2006; Firm Start: 2006 Chris Sit, MA, CFA Associate Portfolio Manager; Industry Start: 1997; Firm Start: 1997 Natasha Dowding, Investment Analyst; Industry Start: 2010; Firm Start: 2010 John Lumbers, Investment Analyst; Industry Start: 2012; Firm Start: 2012 COMPOSITE AND BENCHMARK PERFORMANCE (CAD) As at December 31, Months 6 Months 1 Year 2 Years 3 Years 4 Years 5 Years Since Inception* Mackenzie International All Cap Growth (Gross) Mackenzie International All Cap Growth (Net) MSCI EAFE Total Return Index Mackenzie Investments (the Firm ) has been managing International All Cap Growth assets since March The Firm claims compliance with GIPS starting January 1, 2008 and has been independently verified for the period of January 1, 2008 to December 31, Returns for periods greater than 1 year have been annualized. DISCLAIMER Mackenzie Financial Corporation is regulated as a Portfolio Manager in all provinces and territories in Canada by the relevant securities commissions in each jurisdiction. Additional information about Mackenzie Investments Corporation and Mackenzie Financial Corporation is available on the various securities commissions websites in the provinces and territories of Canada. Mackenzie Investments 180 Queen Street West, Toronto, Ontario M5V 3K1 T F E apittman@mackenzieinvestments.com mackenzieinvestments.com

4 IMPORTANT NOTES Investing involves risk. Any opinion expressed herein is as of December 31, 2015 and is subject to change without notice. The contents of this document are provided for illustrative and marketing purposes and do not constitute specific advice regarding your personal investment situation or provide specific individual advice about investment, insurance, financial, legal, accounting, tax or similar matters. Certain information contained in this document is obtained from third parties. Mackenzie Investments believes such information to be accurate and reliable as at the date hereof, however does not guarantee that it is accurate or complete or current at all times. The information provided is subject to change without notice and Mackenzie Investments cannot be held liable for any loss arising from any use of or reliance on the information contained in this document. No portion of this communication may be reproduced or redistributed without the express permission of Mackenzie Investments. Views expressed regarding a particular company, security, industry or market sector are the views of only that speaker/author as of the time expressed and do not necessarily represent the views of Mackenzie Investments or its affiliates. Any such views are subject to change at any time based upon markets and other conditions and Mackenzie Investments and its affiliates disclaim any responsibility to update such views. These views are not a recommendation to buy or sell and may not be relied on as investment advice and, because investment decisions are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any client. Speculation or stated beliefs about future events, such as market and economic conditions, company or security performance, upcoming product offerings or other projections are forward-looking statements. These forward-looking statements represent the beliefs of the speaker/author and do not necessarily represent the views of Mackenzie Investments or its affiliates. Forward-looking statements are inherently subject to, among other things, risks, uncertainties and assumptions which could cause actual events, results, performance or prospects to differ materially from those expressed in, or implied by, these forwardlooking statements. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, the volatility of global equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events and the ability of Mackenzie Investments and its affiliates to attract or retain key employees. The foregoing list of important risks, uncertainties and assumptions is not exhaustive. Please consider these and other factors carefully and not place undue reliance on forward-looking statements. In addition, Mackenzie Investments and its affiliates manage a number of separate strategies and portfolio managers for those strategies may have differing views or any analysis with respect to a particular company, security or the economy than the views expressed herein. Mackenzie s Portfolio Analytics Group is responsible for conducting performance attribution. The group uses Factset Research Systems for conducting performance attribution based on daily holdings. The model uses a multi-currency attribution based on Brinson-Fachler Model. The model decomposes portfolio returns into currency, allocation, selection and interaction effects. Past performance does not guarantee or indicate future results. Information under Composite and Benchmark Performance (CAD) reflects the performance of the Mackenzie International All Cap Growth Composite, and does not necessarily reflect the performance that any particular account investing in the same or similar securities may have had during the period. The performance of other accounts is likely to differ from the performance shown for a variety of reasons, including, but not limited to: differences in market conditions, portfolio turnover and in the number, types, availability and diversity of securities that can be purchased; economies of scale, regulations and other factors applicable to the management of large separate accounts and mutual funds; client-imposed investment restrictions; the timing of client investments and withdrawals; the deduction of taxes; tax considerations; and other factors. Information presented under the headings Contributors to Performance, Detractors from Performance, Contributors, Detractors, Performance Attribution, Sector Attribution, Portfolio Activity, Names Added and Names Removed are made with specific reference to a representative account within the Composite. Gross performance results do not reflect the deduction of management fees and other expenses except for brokerage commissions and other trading expenses. If those fees and costs were reflected, results would be reduced. Including these fees and expenses would reduce the returns shown. Net performance results reflect the deduction of the maximum standard fee of 0.80% charged to institutional clients without taking into account breakpoints, calculated daily and invoiced quarterly, as well as the transaction costs and certain other fees and expenses, including certain taxes, described in the Investment Management Agreement. Certain clients could pay different fees which would result in different net performance returns. Net performance results also do not include the deduction of custodial fees, which will reduce the returns shown. Taxes have not been deducted. Both gross and net performance returns assume the reinvestment of dividends, interest, and realized and unrealized capital gains and losses. Index returns do not reflect transaction costs or the deduction of other fees and expenses and it is not possible to invest directly in an index. The Mackenzie International All Cap Growth Composite contains fully discretionary, International All Cap Growth accounts. New accounts are included in the Composite beginning with the first full month under management after they have been fully invested. COMPLIANCE STATEMENT Mackenzie Investments claims compliance with the Global Investment Performance Standards (GIPS ). Mackenzie Investments has been independently verified for the periods January 1, 2008 through December 31, Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. The International All Cap Growth Composite has been examined for the periods January 1, 2008 through December 31, The verification and performance examination reports are available upon request. FIRM OVERVIEW Mackenzie Investments provides investment management and related services through multiple distribution channels. Assets under management as at December 31, 2015 were C$ 61.7 billion. We provide our investment management expertise through mutual funds, pooled funds, segregated accounts, and separate accounts for retail and institutional investors. Mackenzie Investments is dedicated to generating consistently superior long-term investment returns for its clients. The Firm is a member of the IGM Financial Inc. (TSX:IGM) group of companies. COMPOSITE DESCRIPTION The International All Cap Growth Composite seeks to provide long-term capital growth by investing primarily in a select group of larger capitalization companies from anywhere in the world excluding the U.S. based on their underlying growth potential and relative valuation attractiveness. Portfolios within the composite may use derivatives for hedging and non-hedging purposes and engage in short selling in a manner considered appropriate to pursuing the investment objectives

5 IMPORTANT NOTES (cont d) of the composite. As of December 31, 2015, short selling has not been utilized. The composite was created on December 31, The composite inception date is January 1, 2008.* BENCHMARK DESCRIPTION The Benchmark for International All Cap Growth is the MSCI EAFE Total Return Index, net of withholding taxes. The MSCI EAFE (Europe, Australasia, Far East) Index is a free float adjusted, market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States and Canada. It consists of 21 developed market country indices. REPORTING CURRENCY Valuations and composite performance are reported in Canadian dollars. The composite includes Canadian dollar portfolios. LIST OF COMPOSITES A complete list of composite descriptions is available to prospective clients upon request. Please contact Aaron Pittman at apittman@mackenzieinvestments.com Mackenzie Financial Corporation All rights reserved. 1/16