Templeton Institutional Global Equity Composite

Transcription

1 Templeton Composite Value Equity Product Profile Product Details Composite Assets 588,378, Inception Date 31/12/1990 Base Currency USD Investment Style Value Overview Our time-tested investment approach focuses on identifying stocks trading at a significant discount to their longer-term business value based on our estimates of future normalised earnings and cash flow generation. We utilise a disciplined, consistent investment process that is based on our philosophy of value, patience and bottom-up stock picking. Templeton s long-term perspective and in-depth research give us the insight and conviction to purchase out-of-favour securities and the patience to wait for potential value recognition. Performance Data Average Annual Total Returns (EUR %) 1 Since Inception 3 Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs 20 Yrs (31/12/1990) Templeton Composite - GROSS Templeton Composite - NET MSCI All Country World Index 40% 20% 0% -20% Mths YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs 20 Yrs Since Inception Templeton Composite - GROSS Templeton Composite - NET Calendar Year Returns (EUR %) Templeton Composite - GROSS Templeton Composite - NET MSCI All Country World Index Portfolio Manager Insight Market Review Global equity markets suffered sharp volatility and a widespread rout in the final quarter of Newsflow on the US-China trade dispute drove alternating optimism and pessimism throughout the quarter. Concerns about the pace of US interest-rate hikes and signs of slowing economic growth around the world also weighed on sentiment. Emerging market stocks fared much better than their developed-market peers, which sold off across the board. Major US stock indexes saw widespread declines for the quarter amid doubts about the country s trade policy and the strength of the global economy. In Europe, though tensions eased between the European Union and Italy 1. Periods of more than one year are annualised. Past performance is not an indicator or a guarantee of future performance. For / Professional Investors Only. Not For Distribution To Retail Investors.

2 Templeton Composite regarding the country s budget plans, continued Brexit uncertainty, concerns about the pace of US interest-rate increases and mixed corporate earnings affected investor outlooks. The Bank of Japan stated that it would likely keep the current low levels of short- and long-term interest rates for an extended period of time. Performance Attribution The composite underperformed its benchmark, the, in the fourth quarter, which was largely attributable to stock selection in the financials, health care and consumer discretionary sectors. Financials sector holdings were led lower by banks in the United States and Europe. We continued gradually repositioning our financials portfolio in 2018 to consolidate and rationalize holdings amid heightened uncertainty. In Europe, we have selectively reduced exposure to a handful of domestically focused banks with concentrated political risk. The health care sector remains attractive to us at this point in the cycle. Unlike other defensive sectors such as consumer staples and utilities, health care appears to be less of a simple bond proxy, offering defensiveness independent of interest rate fluctuations. The sector also offers growth possibilities through innovation and untapped market potential. An underweight in the information technology sector and stock selection in the industrials sector contributed to relative performance for the quarter. We believe valuations in some parts of the technology sector remain dramatically divorced from underlying fundamentals, increasing the odds of poor returns over a long-term horizon. Regionally, stock selection in the United States detracted significantly from quarterly performance. Stock selection in Japan contributed. Outlook and Strategy Looking ahead, we see scope for continued moderate global growth as China is likely to undertake stimulus measures and as the US Federal Reserve and European Central Bank navigate their respective economic cycles. While valuations look extended in some parts of the equity market (albeit less so following fourth-quarter weakness), we also see pockets of opportunity, particularly outside the United States. Volatility is likely to remain elevated given rising late-cycle risks, and the resultant dislocations should continue to present opportunities for disciplined stock-pickers. The policy backdrop is also an important consideration given nascent efforts to normalize what has been extraordinarily accommodative central bank policy. Going forward, we continue to believe the process of monetary policy normalization is likely to drive a rotation away from expensive growth stocks to the benefit of beaten-down value shares. Portfolio Characteristics 2,3 Portfolio Price to Earnings (12 Month Trailing) 12.60x 15.47x Price to Book 1.24x 2.05x Price to Cash Flow 5.64x 9.95x Market Capitalisation (Millions in EUR) 66,649 94,702 Number of Issuers Dividend Yield 3.41% 2.78% 4. Based on a representative portfolio in the composite. Securities will vary among individual accounts in the composite. For / Professional Investors Only. Not For Distribution To Retail Investors. 2

3 Templeton Composite Portfolio Diversification Geographic Weightings vs. 5 Percent of Total EUROPE NORTH AMERICA ASIA MID-EAST/AFRICA CASH & CASH EQUIVALENTS Templeton Composite % 25% 50% 75% Sector Weightings vs. 5 Percent of Total Financials Health Care Energy Industrials Communication Services Information Technology Consumer Staples Materials Consumer Discretionary Utilities Real Estate Cash & Cash Equivalents % 5% 10% 15% 20% 25% Templeton Composite Top Ten Holdings 6 Percent of Total Top Holdings Sector Country % ORACLE CORP Software & Services United States 2.71 BP PLC Energy United Kingdom 2.25 ROYAL DUTCH SHELL PLC Energy United Kingdom 2.15 STANDARD CHARTERED PLC Banks United Kingdom 1.99 SAMSUNG ELECTRONICS CO LTD Technology Hardware & Equipment South Korea 1.98 ROCHE HOLDING AG Pharmaceuticals, Biotechnology & Life Switzerland 1.93 Sciences SANOFI Pharmaceuticals, Biotechnology & Life France 1.92 Sciences BNP PARIBAS SA Banks France 1.78 SEVEN & I HOLDINGS CO LTD Food & Staples Retailing Japan 1.76 SHIRE PLC Pharmaceuticals, Biotechnology & Life Sciences United Kingdom 1.66 For / Professional Investors Only. Not For Distribution To Retail Investors. 3

4 Templeton Composite Supplemental Performance Statistics Supplemental Performance Statistics (EUR) 7,8 Standard Deviation (%) 3 Yrs 5 Yrs 10 Yrs Templeton Composite MSCI All Country World Index Tracking Error (%) Information Ratio Beta Sharpe Ratio Templeton Composite MSCI All Country World Index Historical Long-Term Performance Quarterly rolling five-year gross returns in USD (%) since 31/12/1990 as of 31/12/2018 Templeton Composite Investment Philosophy Templeton utilises a disciplined, consistent approach based on three timeless principles of investing: Value Patience Bottom-up stock picking Our flexible approach is applied within a disciplined framework and seeks to identify companies trading at large discounts to their business value. Our long-term focus gives us a framework to take advantage of price volatility to reveal potential longterm investment opportunities. Patience allows for potential long-term value recognition. Our portfolio management process seeks to buy pessimism and sell optimism. We build portfolios spanning regions and sectors made up of securities identified through this process. Investment Process Identify Potential Bargains Experienced analysts Focus on global industry sectors Quantitative and qualitative assessment Identify material ESG issues In-Depth Fundamental Analysis Five-year financial forecasts Management/supplier/ competitive evaluation Upside/downside return quantification Recommendation of Bargain List candidates Research Team Evaluation Presentation of investment thesis Investment debate and critique: Devil s Advocate ESG Devil s Advocate Director of research approval Bottom-Up Portfolio Construction Investment parameters Industry and sector framework Build and diversify portfolio Long-term approach: 20% historical turnover TEMPLETON S BOTTOM-UP STOCK SELECTION PROCESS Portfolio Monitoring and Risk Management Ongoing valuation analysis Ongoing ESG monitoring Disciplined sell methodology Weekly peer review and risk analytics 10. Historical turnover is based on Templeton s experience as a Firm, over a five-year period as of most recent quarter end. The turnover is a byproduct of Templeton s long-term approach to managing portfolios, but various factors, such as a portfolio s specific investment guidelines and market or economic conditions may cause actual portfolio turnover to vary. For more information regarding an individual strategy s historical turnover ratio please contact your Franklin Templeton marketing representative. 7. Risk statistics are calculated using gross of fees composite performance. 8. Beta, Information Ratio and Tracking Error information are measured against the. For / Professional Investors Only. Not For Distribution To Retail Investors. 4

5 Templeton Composite Investment Team Portfolio Manager Years with Firm Years Experience Dr. Sandy Nairn, Ph. D., CFA, Chairman Norman Boersma, CFA, Chief Investment Officer Heather Arnold, CFA, EVP, Director of Research, Portfolio Manager, Research Analyst Antonio Docal, CFA, President - TIC LCC, Director of Portfolio Management, Portfolio Manager, Research Analyst Templeton Team Number of Members Average Years Experience Portfolio Managers/Analysts Research Analysts Additional Resources Investment Risk Management Group Global Research Library Junior Research Analysts Global Portfolio Compliance Product Managers Years with Firm Years Experience Ann Reitman, CFA Chetan Karkhanis 4 20 For / Professional Investors Only. Not For Distribution To Retail Investors. 5

6 Templeton Composite Important Legal Information Templeton claims compliance with the Global Investment Performance Standards (GIPS ). Templeton (or the firm ) as defined encompasses the wholly-owned investment management subsidiaries of Templeton Worldwide, Inc. with global, international, single country or regional, and emerging market equity investment objectives, serving both retail and institutional clients. The firm definition for Templeton does not include the foreign-domiciled investment advisory subsidiaries of Templeton Worldwide, Inc. that primarily offer only locally registered investment mandates or funds and the wrap-fee and non-wrap-fee accounts managed by Templeton Separately Managed Accounts (formerly Templeton Portfolio Advisers). Each investment advisory subsidiary within Templeton employs the same bottom-up, valueoriented investment style whether managing global equity, non-u.s. equity, single country or regional equity, or emerging market equity mandates. Portfolio managers pursuing similar investment mandates share research, have equivalent access to Templeton s bargain and source of funds lists, and are subject to the same peer review process. Templeton believes that the performance shown is representative of its management style and relevant for consideration in selecting any individual investment advisory subsidiary comprising Templeton. Some of the individual investment management subsidiaries which comprise Templeton, however, may have limited or no accounts included in the composite. Effective 1 December 2017, the equity accounts previously defined as Franklin Europe are included in Templeton s firm definition. The Templeton Composite consists of all discretionary tax-exempt institutional portfolios managed by Templeton with global equity investment objectives. No account(s) in the composite use leverage or derivatives other than the use of forward foreign currency contracts in conjunction with the normal settlement of security trades in currencies other than the base currency of each account. As a result, leverage or derivatives do not have a material affect on returns. Total returns are presented in euros both gross and net of investment advisory fees, are inclusive of commissions and transaction costs, and assume reinvestment of any dividends, interest income, capital gains, or other earnings. Periods greater than one year are shown as average annual total returns. Performance data is shown rounded to the nearest hundredth. The returns presented for periods prior to 1 January 1994 are not in compliance with the GIPS standards. Past performance is not an indicator or a guarantee of future performance. When performance for either the portfolio or its benchmark has been converted, different foreign exchange closing rates may be used between the portfolio and its benchmark. The is a free float-adjusted market capitalisation weighted equity index comprised of securities in MSCI s developed and emerging market country-specific indexes. The benchmark is used for comparative purposes only and is provided to represent the investment environment existing during the time periods shown. References to indexes are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. To receive a complete list and description of Templeton composites (including any single account mutual fund composite) and/or a presentation that adheres to the GIPS standards for any composite, contact your Franklin Templeton institutional representative listed below. CFA and Chartered Financial Analyst are trademarks owned by CFA Institute. MSCI makes no warranties and shall have no liability with respect to any MSCI data reproduced herein. No further redistribution or use is permitted. This report is not prepared or endorsed by MSCI. Important data provider notices and terms available at 2. Source: FactSet. Price ratio calculations for weighted average use harmonic means. Any exceptions to this are noted. 3. The dividend yield quoted here is the yield on securities within the portfolio and should not be used as an indication of the income received from this portfolio. 5. Information is historical and may not reflect current or future portfolio characteristics. Percentage may not equal 100% due to rounding. All holdings are subject to change. 6. Holdings of the same issuers have been combined. Top ten holdings information is historical and may not reflect current or future portfolio characteristics. All holdings are subject to change. 9. Information Ratio is a way to evaluate a manager s ability to outperform a benchmark in relation to the risk that manager is assuming, with risk defined as deviation from the benchmark. This measure is calculated by dividing the portfolio s excess return (portfolio return less the benchmark return) by the tracking error (derived by taking the standard deviation of the monthly differences between the portfolio return and the benchmark return over time). For Professional Investors only not for distribution to retail clients. This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal. This material is made available by the following Franklin Templeton entities in those countries where it is allowed to carry out relevant business: Europe: UK: Franklin Templeton Investment Management Limited (FTIML), registered office: Cannon Place 5th Floor, 78 Cannon Street, London EC4N6HL. Tel +44 (0) Authorised and regulated in the United Kingdom by the Financial Conduct Authority and authorised to conduct specific investment business in other European countries either via MiFID outward service or via any of the following outward branches in: Netherlands: FTIML Branch Amsterdam, World Trade Center Amsterdam, H-Toren, 5e verdieping, Zuidplein 36, 1077 XV Amsterdam, Netherlands. Tel Romania: FTIML Branch Bucharest, Buzesti Street, Premium Point, 7th-8th Floor, Bucharest 1, Romania. Registered with Romania Financial Supervisory Authority under no. PJM01SFIM/400005/ , authorised and regulated in the UK by the Financial Conduct Authority. Tel , Fax , Spain: FTIML Branch Madrid, Professional of the Financial Sector under the Supervision of CNMV, José Ortega y Gasset 29, Madrid, Spain. Tel , Fax Luxembourg: Franklin Templeton International Services S.à.r.l., registered office 8A, rue Albert Borschette, L-1246 Luxembourg. Authorised and For / Professional Investors Only. Not For Distribution To Retail Investors Franklin Templeton Investments. All rights reserved.

7 Templeton Composite regulated in Luxembourg by the Commission de Surveillance du Secteur Financier (CSSF) and authorised to conduct specific investment business in other European countries via UCITS and AIFMD outward service or via any of the following outbound FTIS S.à.r.l. branches as listed below: Germany: Franklin Templeton International Services S.à.r.l. German Branch, Mainzer Landstr. 16, Frankfurt/Main, Germany. Tel +49 (0) 69/ , Fax +49 (0) 69/ , Sweden: Franklin Templeton International Services S.à r.l. Swedish Branch filial, Blasieholmsgatan 5, SE , Stockholm, Sweden. Tel +46 (0) , Switzerland: Franklin Templeton Switzerland Ltd., Stockerstrasse 38, CH-8002 Zurich, Switzerland. Tel , Fax , South Africa: Franklin Templeton Investments SA (PTY) Ltd., which is an authorised Financial Services Provider. Kildare House, The Oval, 1 Oakdale Road, Newlands, 7700 Cape Town, South Africa. Tel +27 (21) , Fax +27 (21) , Dubai: Issued by Franklin Templeton Investments (ME) Limited, authorised and regulated by the Dubai Financial Services Authority. Dubai office: Franklin Templeton Investments, The Gate, East Wing, Level 2, Dubai International Financial Centre, P.O. Box , Dubai, U.A.E. Tel , Fax Please visit to be directed to your local Franklin Templeton website with further contact details/information. For / Professional Investors Only. Not For Distribution To Retail Investors Franklin Templeton Investments. All rights reserved.