M&G Global Dividend Fund

Transcription

1 Stuart Rhodes, Fund Manager June 2014

2 Fund facts Inception: July 2008 Fund manager: Stuart Rhodes Fund size: 10,590 million Benchmark: MSCI AC World Index Share Classes: Euro A Acc: GB00B39R2S49 Euro A Inc: GB00B94CTF25 Yield objective: Yield premium to the global average Distribution objective: Increase annual distributions over the long term Performance objective: Total return (combination of income and capital growth) 2014 Morningstar. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of Morningstar OBSR, (2) may not be copied or redistributed, (3) do not constitute investment advice offered by Morningstar OBSR, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete, or accurate. Morningstar OBSR shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Morningstar OBSR Analyst Rating is subjective in nature and reflects Morningstar OBSR s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, Morningstar OBSR does not guarantee that a fund will perform in line with its Morningstar OBSR Analyst Rating. Likewise, the Morningstar OBSR Analyst Rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision. 2 Source: M&G, 30 April Ratings at 31 March 2014 and should not be taken as recommendation

3 Price indexed Performance since launch M&G Global Dividend Fund 86.7% MSCI AC World Index 61.2% Global Equity Income sector 56.0% Top performing fund in sector since launch 3 Source: Morningstar, Inc., Pan European database, 30 April 2014, euro A class shares, net income reinvested, price to price. Fund launched 18 July 2008

4 Stuart Rhodes - Fund Manager Joined M&G in 2004 as a global equity analyst working closely with Aled Smith on US equities Appointed manager of the upon its launch in July 2008 He graduated from Bath University with a degree in business administration and is a CFA charterholder 4

5 Agenda Our investment approach a quick reminder Fund update Performance Portfolio activity Fund positioning 5

6 Dividend (pence) Dividend investing our philosophy Focus on dividend growth Dividend (stock yielding 6%, no growth) Dividend (stock yielding 4%, 10% growth) The power of long-term compounding 6 Source: M&G, Illustrative figures only

7 The process works Dividends and share prices go hand in hand Dividend growth* Dividend growth* +53% +48% Purchase date Yield** July % Share price* +30% Purchase date Yield** June % Share price* +62% Dividend growth* Dividend growth* +52% +115% Purchase date Yield** July % Share price* +52% Purchase date Yield** Nov % Share price* +106% 7 Source: M&G, Datastream, 29 April *In local currency **Yield at purchase

8 Dividend investing our approach Picking stocks from three distinct categories Sources of dividends Company characteristics Dividend profile Quality Disciplined companies with reliable growth Assets Asset-backed cyclical companies Rapid growth Structural growth driven by geography or product line Designed to cope with different market conditions 8 Source: M&G, 2014

9 Returns Performance by calendar year in euros Outperforming in rising and falling markets Returns (EUR): vs MSCI AC World Index 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% 2008* YTD MSCI AC World Index 9 Source: Bloomberg, 30 April 2014, euro A class shares, net income reinvested, price to price. *Fund launched on 18 July 2008

10 Rebased to 100 Key developments in Regional performance Return by region in 2013 (USD) Return % S&P MSCI Japan MSCI Europe FTSE All-Share MSCI Asia Pacific ex Japan MSCI Emerging Markets Developed markets outperformed Asia and emerging markets 10 Source: M&G, 31 December 2013

11 Key developments in Style returns Global: Performance of long minus short portfolio (equal weighted) in H % 8% 6% 4% 2% 0% -2% -4% -6% -8% Earnings yield (Next 12 mths) Book to price ROE Operating margin ROIC Debt to equity (inverted) Value outperformed at the expense of quality 11 Source: Macquarie Securities, 31 December 2013

12 Fund weighting Three sources of dividends 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Quality Assets Rapid growth Sale at right price Cash A clear rotation into assets and rapid growth 12 Source: M&G, 30 April 2014

13 Return Monthly investment returns in 2013 Relative return (%) % 25% 20% 15% 10% 5% 0% -5% -10% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec FY MSCI AC World Index 2013 Consistent outperformance despite challenging market conditions 13 Source: Xamin, 31 December Investment returns (gross of fees) calculated in sterling. Relative return calculated geometrically.

14 Share price (USD) Share price (USD) Share price (USD) Share price (USD) US The need for valuation discipline Purchase Sale Purchase Sale Purchase Sale Purchase Sale 14 Source: Datastream, 28 February 2014

15 US Technology: an area where we have struggled in the past FCF yield 10% FCF yield 10% FCF yield 7.6% FCF yield 7.3% FCF yield 7.1% Attractive valuations and a greater commitment to dividends 15 Source: Bloomberg, 11 November 2013

16 Emerging markets Breakdown of returns in 2013 MSCI USA (USD) 40% 30% 20% 10% 0% -10% -20% Jan Apr Jul Oct MSCI Emerging Markets World (USD) 40% 30% 20% 10% 0% -10% -20% Jan Apr Jul Oct Dividend Earnings expectations Multiples Total return change 16 Source: Macquarie Securities, 31 December 2013

17 Transactions in 2013 New purchases Complete sales Nokian Renkaat Assets Nestle Quality Avago Technologies Rapid growth DBS Quality Accenture Quality BHP Billiton Assets Jardine Matheson Rapid growth Osram Licht* Sale at right price HollyFrontier Assets CME Rapid growth Xilinx Rapid growth Link REIT Quality Sands China Rapid growth Umicore Assets Aberdeen Asset Mgmt. Assets Norfolk Southern Assets Cenovus Energy Assets Banco do Brasil Sale at right price Standard Chartered Rapid growth McDonald s Quality Qualcomm Rapid growth Inchcape Sale at right price Solvay Assets Chroma Sale at right price KLA-Tencor Assets Heinz Quality Limited Brands Rapid growth Yip s Chemicals Sale at right price Unibail-Rodamco Quality Tod s Rapid growth Potash Corp Assets Coca-Cola Amatil Quality Consistent with our long-term time horizon of 3 5 years 17 Source: M&G, 31 December *Spun off by Siemens

18 Regional breakdown Absolute fund weighting, % Relative to MSCI AC World, % EMEA 1.6 Asia ex Japan 3.3 Europe ex UK 25.1 Europe ex UK UK Australia / NZ Cash US / Canada -0.3 US / Canada 52.3 UK 13.2 Australia / Cash NZ EMEA Latin America Asia ex Japan Japan Source: M&G, 30 April 2014

19 Fund weighting Sector weightings 30% 25% 20% 15% 10% 5% 0% Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Apr Source: M&G, 30 April 2014

20 Fund weighting Liquidity Portfolio split by average daily volume 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 100m m 20-50m 10-20m 0-10m The strategy has a large cap bias 20 Source: M&G, 30 April 2014

21 Scalability Percentage of the company s equity held by M&G M&G owns more than 5% M&G owns less than 1% M&G owns 2-5% M&G owns 1-2% Plenty of room to build up existing holdings 21 Source: M&G, 30 April 2014

22 Relative investment performance Relative performance vs MSCI AC World Index 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% YTD performance +0.12% Hit rates Down markets : 62% Up markets : 67% Overall hit rate : 65% Down Market Up Market 22 Source: M&G Xamin, 30 April Investment returns (gross of fees) relative to MSCI AC World Index, calculated in sterling

23 Transactions year-to-date, 2014 New purchases Complete sales Imperial Holdings Assets Chubb Quality Wells Fargo Quality Blackrock Assets Cummins Rapid growth Mattel Quality Amgen Quality Compass Quality Reynolds American Reckitt Benckiser Intel Jardine Matheson Potash Corp Prosegur Quality Quality Quality Rapid growth Sale at right price Sale at right price 23 Source: M&G, 30 April 2014

24 multiple Back to a valuation discount Price to earnings (fund and index) Fund P/E premium/discount to MSCI AC World 7% 6% 5% 4% 3% 2% 1% 0% -1% MSCI AC World Index 24 Source: Factset, 31 March Price to earnings on FY2 forward basis

25 Distribution (p) Yield premium and consistent growth in distribution Dividend yield 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% MSCI AC World Distribution % * E Year ending March Delivering on the fund s objectives 25 Source: Style Research, 30 April 2014 for yield; M&G, Bloomberg, 31 March 2014 for distribution data. *Full-year distribution assuming holdings at launch held from 31 March 2008

26 Summary Outperformed in 2013 despite headwinds 2014 performance recovering after a difficult January Actively managing the portfolio with a valuation discipline 26

27 27 The value of stockmarket investments will fluctuate, which will cause fund prices to fall as well as rise and investors may not get back the original amount invested. For Investment Professionals only. Not for onward distribution. No other persons should rely on any information contained within. For Switzerland: Distribution of this document in or from Switzerland is not permissible with the exception of the distribution to Qualified Investors according to the Swiss Collective Investment Schemes Act, the Swiss Collective Investment Schemes Ordinance and the respective Circular issued by the Swiss supervisory authority ("Qualified Investors"). Supplied for the use by the initial recipient (provided it is a Qualified Investor) only. In Spain the M&G Investment Funds are registered for public distribution under Art. 15 of Act 35/2003 on Collective Investment Schemes as follows: M&G Investment Funds (1) reg. no 390, M&G Investment Funds (2) reg. no 601, M&G Investment Funds (3) reg. no 391, M&G Investment Funds (5) reg. no 972, M&G Investment Funds (7) reg. no 541, M&G Investment Funds (8) reg. no 1100, M&G Investment Funds (9) reg. no 930, M&G Investment Funds (14) reg. no 1243, M&G Global Dividend Fund reg. no 713, M&G Dynamic Allocation Fund reg. no 843, M&G Global Macro Bond Fund reg. no 1056 and M&G Optimal Income Fund reg. no 522. The collective investment schemes referred to in this document (the "Schemes") are open-ended investment companies with variable capital, incorporated in England and Wales. In the Netherlands, all funds referred to, are registered with the Dutch regulator, the AFM. This information is not an offer or solicitation of an offer for the purchase of investment shares in one of the Funds referred to herein. Purchases of a Fund should be based on the current Prospectus. The Instrument of Incorporation, Prospectus, Key Investor Information Document, annual or interim Investment Report and Financial Statements, are available free of charge, in paper form, from the ACD: M&G Securities Limited, Laurence Pountney Hill, London, EC4R 0HH, GB, or one of the following: M&G International Investments Limited, German branch, mainbuilding, Taunusanlage 19, Frankfurt am Main, the German paying agent J.P. Morgan AG, Junghofstraße 14, D Frankfurt am Main, the Austrian paying agent, Raiffeisen Bank International A.G., Am Stadtpark 9, A-1030 Wien, the Luxembourg paying agent, J.P. Morgan Bank Luxembourg S.A., European Bank & Business Center, 6 c route de Treves, 2633 Senningerberg, Luxembourg, the Danish paying agent, Nordea Bank Danmark A/S Issuer Services, Securities Services, Hermes Hus, Helgeshøj Allé 33, Postbox 850, DK-0900, Copenhagen C, Denmark, Allfunds Bank, Calle Estafeta, No 6 Complejo Plaza de la Fuente, La Moraleja, 28109, Alcobendas, Madrid, M&G International Investments Limited, the French branch, or from the French centralising agent of the Fund: RBC Dexia Investors Services Bank France. For Switzerland: Please refer to M&G International Investments Ltd., mainbuilding, Taunusanlage 19, Frankfurt am Main, or, for Sweden, from the paying agent, Skandinaviska Enskilda Banken AB (publ), Sergels Torg 2, Stockholm, Sweden. For Italy, they can also be obtained on the website: Before subscribing you should read the Prospectus, which includes investment risks relating to these funds. This financial promotion is published by M&G International Investments Ltd. Registered Office: Laurence Pountney Hill, London EC4R 0HH, authorised and regulated by the Financial Conduct Authority in the UK. Registered in England, No It also has a branch located in France, 6 rue Lamennais, Paris 75008, registered on the Trade Register of Paris, No and is also registered with the CNMV in Spain. Past performance is not a guide to future performance. Performance stats are quoted gross of Italian tax on capital gains.