Lazard Global Listed Infrastructure Equity Fund

Transcription

1 Lazard Global Listed Infrastructure Equity Fund Fourth Quarter 2017 Featuring: Bertrand Cliquet Portfolio Manager/Analyst For Professional Investors Only This presentation and all research and materials enclosed are property of Lazard Asset Management LLC. Information and opinions presented have been obtained or derived from sources believed by Lazard to be reliable. Lazard makes no representation as to their accuracy or completeness. All opinions expressed herein are as of the date of this presentation and are subject to change. Please refer to the Important Information section for additional information about risks.

2 Expected Risk and Return Expected Return Preferred Infrastructure Listed Equities Cash Fixed Income Real Assets: Real Estate, Infrastructure Expected Volatility Invest in assets which feature: Long duration Inflation-linking Lower risk of capital loss For illustrative purposes only. Expected returns do not represent a promise or guarantee of future results and are subject to change. 12 Lazard Asset Management

3 Key Messages The Lazard Global Listed Infrastructure Fund returned -0.22% for the 4 th quarter of 2017 vs 1.53% for the sector. For the FY 2017, the fund returned 19.98%, significantly stronger than the sector of 12.78% and buoyant equity markets at 18.48% in Local Currency Low market volatility, but value rank at work: strong difference in individual stock performance, reducing strongly performing sectors, increasing positions in poorly performing stocks (UK regulated assets) Regulated US infrastructure stocks confirm higher volatility, as interest rates movement highlight valuation vulnerability, we remain largely on the side-lines Current portfolio is substantially more attractive than the sector Past performance is not a reliable indicator of future results. All data in sterling and illustrated on a percentage growth basis, Bid to Bid Price, Gross Income Reinvested, Net of Fees Institutional share class (Income units). All opinions expressed herein are as of 31 December 2017 and are subject to change. Source: Morningstar Direct 23 Lazard Asset Management

4 Performance Lazard Global Listed Infrastructure Equity Fund (A Inc GBP Share Class) Performance as of 31 December 2017 (%) Annualised Q Year 3 Years 5 Years Lazard Global Listed Infrastructure Equity Fund Custom Infrastructure Index Relative Performance Calendar Year Returns (%) Lazard Global Listed Infrastructure Equity Fund Custom Infrastructure Index Relative Performance As of 31 December 2017 Past performance is not a reliable indicator of future results. All data in sterling. NAV to NAV (net income reinvested), Net of Fees. Lazard Global Listed Infrastructure is not measured versus the performance of any benchmark. Custom Infrastructure Index from inception to 31 March 2015 is the UBS Global 50/50 Infrastructure and Utilities Index (Local) and the FTSE Developed Core Infrastructure 50/50 GBP Hedged Index from 1 April 2015 onwards. A Inc GBP share class. The Global Listed Infrastructure Equity Fund is a sub-fund of Lazard Global Active Funds plc, an open-ended investment company with variable capital structured as umbrella funds with segregated liability between sub-funds incorporated with limited liability and is authorised and regulated as UCITS by the Central Bank of Ireland. This information is for illustrative purposes only and is supplemental to the GIPS Composite Information. Source: Morningstar Direct 34 Lazard Asset Management

5 Stock Contribution Top Contributors and Detractors Lazard Global Listed Infrastructure Equity Fund 2017Q4 Contributors Average Weight (%) Total Performance (%) Contribution (%) Abertis Infraestructuras SA VINCI SA Fraport AG Union Pacific Corporation Norfolk Southern Corporation Detractors Average Weight (%) Total Performance (%) Contribution (%) PG&E Corporation 3.7 (34.8) (1.65) SES SA FDR (Class A) 3.8 (29.6) (1.31) Eutelsat Communications SA 4.1 (17.4) (0.85) National Grid plc 3.2 (4.8) (0.12) Pennon Group Plc 3.2 (1.8) (0.06) 1 Year Contributors Average Weight (%) Total Performance (%) Contribution (%) Abertis Infraestructuras SA CSX Corporation VINCI SA Atlantia S.p.A Fraport AG Detractors Average Weight (%) Total Performance (%) Contribution (%) SES SA FDR (Class A) 4.6 (32.1) (1.60) PG&E Corporation 3.9 (31.6) (1.34) United Utilities Group PLC 1.9 (16.6) (0.29) National Grid plc 0.9 (8.9) (0.19) Pennon Group Plc 3.4 (1.3) (0.07) As of 31 December 2017 Reporting in local currency. Contribution is based upon a representative portfolio. Contribution analysis is provided for illustrative purposes only, as values are calculated based on returns gross of fees. Performance would be lower if fees and expenses were included. Past performance is not a reliable indicator of future results. The allocations and specific securities mentioned are based upon a portfolio that represents the proposed investment for a fully discretionary account. Allocations and security selection are subject to change. The securities mentioned are not necessarily held by Lazard for all client portfolios, and their mention should not be considered a recommendation or solicitation to purchase or sell these securities. It should not be assumed that any investment in these securities was, or will prove to be, profitable. The securities mentioned may not represent the entire portfolio. This information is for illustrative purposes only and is supplemental to the GIPS Composite Information. Source: Lazard 54 Lazard Asset Management

6 Key Transactions 2017Q4 Lazard Global Listed Infrastructure Equity Fund Portfolio: 27 Stocks as at 31 December 2017 vs. 26 Stocks as at 30 September 2017 New Purchases Severn Trent Complete Sells N/A As of 31 December Allocations and securities mentioned are based upon a representative portfolio which represents the proposed investment for a fully discretionary account. Allocations and security selection are subject to change. The information provided in this material should not be considered a recommendation or solicitation to purchase or sell any security. There is no assurance that any securities referenced herein will remain in the account s portfolio or that securities sold have not been repurchased. The securities discussed may not represent the account s entire portfolio. It should not be assumed that any of the referenced securities were or will prove to be profitable, or that the investment decisions we make in the future will be profitable. This information is for illustrative purposes only and is supplemental to the GIPS Composite Information. 65 Lazard Asset Management

7 Portfolio by Country and Sector Lazard Global Listed Infrastructure Stage 1 Initial Filtering Stage 2 Qualitative Risk Ranking Stage 3 Fundamental Analysis and Value Ranking Stage 4 Portfolio Construction Broken Down by Company Domicile Portfolio by Country Portfolio by Sector United States 13.0% Portugal 1.2% Cash & net Hedging 4.4% Australia 8.9% France 15.1% Toll Roads 28.2% Cash & Net Hedging 4.4% Water Utilities 4.1% Airports 4.5% Communications Infra 7.7% Diversified Utilities 13.8% United Kingdom 13.2% Germany 4.2% Electricity Utilities 14.9% Spain 11.4% Italy 28.6% Railroads 9.2% Gas Utilities 13.2% Portfolio Summary: 27 Companies 18 Countries 8 Infrastructure Sectors 280+ Assets Global Asset Diversification (Toll Roads) 150 toll road concessions 23,000+ kms of toll roads 12 countries As of 31 December 2017 The allocations mentioned are based upon a portfolio that represents the proposed investment for a fully discretionary account. Allocations are subject to change. Portfolio summary is based on underlying company assets This information is for illustrative purposes only and is supplemental to the GIPS Composite Information. 76 Lazard Asset Management

8 Sector Focus: UK Water Companies Derated on Political Interference Risk Premium (Discount) to RAB (%) Average premium of 6.4% Jun 90 Jun 91 Jun 92 Jun 93 Jun 94 Jun 95 Jun 96 Jun 97 Jun 98 Jun 99 Jun 00 Jun 01 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Start of new regulatory period Period of regulatory review Historically, listed UK water companies have on average traded on a 6.4% premium to RAB (Regulated Asset Base). At small premium to RAB we recently have initiated positions in the strategy. As of 31 December 2017 Past performance is not a reliable indicator of future results. Source: Bloomberg, Ofwat and Lazard. 78 Lazard Asset Management

9 UK Water Companies Expensive Transactions by Private Equity Investors continue Premium (Discount) to RAB (%) 80% 70% Dee Valley 60% 50% 40% 30% 20% 10% 0% -10% -20% Jul-95 Southern Wessex Chester South Staff Yorkshire Anglian Average premium to RAB > 22% Kelda East Surrey Bristol Southern Thames South Staff Northumbrian Water Thames Mid Kent Hartlepool South Downs Southern Wessex Northumbrian Dwr Cymru Southern Dwr Cymru Northumbrian Bristol Mid Kent Jul-97 Jul-99 Jul-01 Jul-03 Jul-05 Jul-07 Jul-09 Affinity Water Sutton & East Surrey NWG AWG Veolia Water South Staffordshire Thames Water Southern Water Bournemouh Water Bristol Water Jul-11 Jul-13 Jul-15 Jul-17 Private equity funds have paid, on average, a 21.8% premium to RAB (Regulated Asset Base) to acquire UK water assets. This is consistently higher than the premium or discount paid by investors in the listed UK Water stocks. As of 31 December 2017 Past performance is not a reliable indicator of future results. The securities identified are not necessarily held by Lazard and should not be considered a recommendation or solicitation to purchase or sell these securities. It should not be assumed that any of the referenced securities were or will prove to be profitable. The securities discussed may not represent the account s entire portfolio. Source: Ofwat, Lazard 89 Lazard Asset Management

10 Lazard Preferred Infrastructure Universe Value Rank by Sector Stage 1 Initial Filtering Stage 2 Qualitative Risk Ranking Stage 3 Fundamental Analysis and Value Ranking Stage 4 Portfolio Construction Expected return 1 (%) 40% 30% 20% 10% 0% -10% -20% -30% Inflation + 5% Airports Communications Infra Diversified Utilities Electricity Utilities Gas Utilities Marine Ports Oil & Gas Pipelines Railways Tollroads Water Utilities -40% -50% -60% Preferred Infrastructure Universe ranked by expected returns The Value Rank illustrates the expected returns of each stock within the Preferred Infrastructure universe. As of 31 December Over 3 years, assuming all the stocks trade at our valuation in 3 years time. The opinions and estimates contained in this graph are based on current information and are subject to change. It should not be assumed that any investment was, or will be profitable. Expected returns do not represent a promise or guarantee of future results and are subject to change. Shown for illustrative purposes only. Each bar represents an individual stock s expected return per annum for the next three years. This is based on a comparison of Lazard s Global Listed Infrastructure team s intrinsic valuation of the stock three years out, the market price of the stock today and the interim forecast dividends. 109 Lazard Asset Management

11 Top 10 Holdings Lazard Global Listed Infrastructure Equity Fund Company Country Sector % Atlantia Italy Tollroads 7.8 Snam Italy Gas Utilities 7.7 Terna Italy Electricity Utilities 7.6 VINCI France Tollroads 7.0 Abertis Infraestructuras Spain Tollroads 5.3 Norfolk Southern United States Railroads 4.6 National Grid United Kingdom Diversified Utilities 4.6 Transurban Australia Tollroads 4.5 United Utilities United Kingdom Diversified Utilities 4.5 Fraport Germany Airports 4.2 As of 31 December The allocations and specific securities mentioned are based upon a portfolio that represents the proposed investment for the Lazard Global Listed Infrastructure Equity Fund. Allocations and security selection are subject to change. The securities mentioned are not necessarily held by Lazard for all client portfolios, and their mention should not be considered a recommendation or solicitation to purchase or sell these securities. It should not be assumed that any investment in these securities was, or will prove to be, profitable, or that the investment decisions we make in the future will be profitable or equal to the investment performance of securities referenced herein. There is no assurance that any securities referenced herein are currently held in the portfolio or that securities sold have not been repurchased. The securities mentioned may not represent the entire portfolio. This information is for illustrative purposes only and is supplemental to the GIPS Composite Information. Source: Lazard Lazard Asset Management

12 Financial Statistics Lazard Global Listed Infrastructure Earnings Yield (%) Dividend Yield (%) EV:EBITDA Multiple EBITDA Margin (%) (x) Lazard Global Listed Infrastructure FTSE Developed Core Infrastructure 50/50 Index MSCI World Index As of 31 December 2017 Lazard estimates based on historical financial accounts of companies held in the Lazard Global Listed Infrastructure strategy. All estimates are based on current information and are subject to change. This information is for illustrative purposes only and is supplemental to the GIPS Composite Information. Source: Lazard, Factset, FTSE, MSCI Lazard Asset Management

13 Upside Downside Capture Lazard Global Listed Infrastructure March 2012 to December 2017 Volatility (Standard Deviation) 1 Beta 1 Lazard Global Listed Infrastructure MSCI World Index (Local) Upside Capture MSCI World Index (Local) Lazard Global Listed Infrastructure 92% 35% Lazard Global Listed Infrastructure MSCI World Lazard Global Listed Infrastructure Downside Capture MSCI World MSCI World Index (Local) Lazard Global Listed Infrastructure As of 31 December Since Inception: March 2012 All data in GBP. Please refer to the attached disclosures for a description of this composite. The performance quoted represents past performance. Past performance may not be indicative of future results. This information is for illustrative purposes only and is supplemental to the GIPS Composite Information. Source: Lazard, MSCI Lazard Asset Management

14 Fair Value Assessment Lazard Global Listed Infrastructure Lazard GLI: 3.7% premium to fair value invested Lazard's Fair Value Lazard Global Listed Infrastructure The fair value of a 100 investment into Lazard Global Listed Infrastructure is worth approximately 96. Which means, on 31 December 2017, our strategy was trading at approximately 3.7% premium to fair value. Fair value of stocks held as of 31 December Fair value of stocks are calculated over 3 years, assuming all stocks trade at our valuation in 3 years time; annualised in GBP. The information presented is theoretical and is shown for information purposes only. It is based on Lazard s assumptions underlying the calculation of fair value as at 31 December 2017 and is subject to change should our assumptions change. The information does not represent a promise or guarantee that the stocks will achieve fair value. Source: Lazard Asset Management Lazard Asset Management

15 GIPS Composite Information Lazard Global Listed Infrastructure (GBP Hedge) Reporting Date: 30 September 2017 Composite Inception Date: 01 September 2006 Reporting Currency: Pound Sterling Composite Description The composite returns represent the total returns of all fully discretionary portfolios with a Global Listed Infrastructure (GBP Hedge) investment mandate and a minimum of 5 million in assets under management. Lazard Global Listed Infrastructure (GBP Hedge) strategy reflects a long-only, valuation-driven investment approach that seeks long-term, defensive, low volatility returns by investing in a range of companies around the world that Lazard considers to be "Preferred Infrastructure." The Preferred Infrastructure approach focuses primarily on companies that own assets that meet certain preferred criteria, such as revenue certainty, profitability, and longevity. The strategy typically invests in equity securities of companies that fall within the Preferred Infrastructure framework, and have a minimum market capitalization of $250 million at purchase. The strategy invests in foreign currency exposures substantially hedged back to the British Pound. Therefore, the composite returns provided are in hedged British Pound terms only. Calculation of Performance Returns Additional information regarding policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. Net returns for Lazard mutual funds included in this composite are net of all fees. The composite returns are reported net of foreign withholding taxes on dividends, interest and capital gains. The composite returns presented represent past performance and is not a reliable indicator of future results, which may vary. Fee Schedule Lazard s standard fee schedule for Global Listed Infrastructure (GBP Hedge) accounts is 0.80% of the first 25 million of assets (1.00% if less than 10 million), 0.70% on the next 25 million, 0.65% on the next 50 million, 0.60% on the next 100 million, 0.55% on assets above 200 million. Actual account fees, inclusive of performance-based fees (if applicable) are used in the construction of composite net of fee performance unless otherwise noted. A complete list and description of all Lazard composites is available upon request. Benchmark Information The Lazard Global Listed Infrastructure (GBP Hedge) Composite has no benchmark, as an appropriate index does not exist. GIPS Compliance and Verification Status Lazard Asset Management claims compliance with the Global Investment Performance Standards (GIPS ) and has prepared and presented this report in compliance with the GIPS standards. Lazard Asset Management has been independently verified for the period of January 1, 1993 through December 31, The verification reports are available upon request. 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. Verification does not ensure the accuracy of any specific composite presentation. Lazard Asset Management is the Firm to which the GIPS Standards apply (Frankfurt office included in Firm definition as of January 1, 2003). GIPS is a registered trademark of CFA Institute. CFA Institute has not been involved in the preparation or review of this presentation. The composite creation date is March Calendar Annualized QTD YTD YR 3 YR 5 YR 10 YR Since Inceptio n Lazard Rate of Return (%; Gross of Fees) Lazard Rate of Return (%; Net of Fees) Composite Standard Deviation (3-yr. Ann.) N/A N/A # of Portfolios Composite Dispersion (Asset Wtd. Std. Dev.) N/A N/A N/A N/A Composite Assets (GBP Millions) Total Firm Assets (GBP Billions) Lazard Asset Management

16 Regulatory Disclosures All data contained herein are sourced by Lazard Asset Management or affiliates unless otherwise noted. This is a financial promotion and is not intended to constitute investment advice. This is a sub-fund of Lazard Global Active Funds plc, an Irish-registered Open Ended Investment Company ("OEIC") and recognised Undertaking for Collective Investments in Transferable Securities ("UCITS"). The relevant Key Investor Information Document (KIID) must be read before the investment in the relevant share classes. Copies of the Prospectus, Key Investor Information Document and Report and Accounts in English and German are available on request or at The performance or the fees may be different between the relevant share classes of the sub-fund. The applicable fees are indicated in the KIID related to the relevant share class which the investor intends to subscribe. Please consult your independent financial advisor or the Fund Manager if you require further information. The Representative in Switzerland is ACOLIN Fund Services AG, Affolternstrasse 56, CH Zurich, whilst the Paying Agent is NPB Neue Privat Bank AG, Limmatquai 1, P.O. Box, CH-8024 Zurich. Please take all information from our website, the Swiss Representative or from The Prospectus, the Articles of Association, the Key Investor Information Document (KIID) as well as the semi-annual and annual reports may be obtained free of charge at the registered office of the Swiss Representative. The current document is intended for information purposes only and shall not to be used as an offer to buy and/or sell shares. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming shares. Past performance may not be reliable guide to future performance. The portfolio may be affected by changes in the exchange rate between the portfolio's base currency, the currency of your investments and your home currency. Any yield quoted is gross and is not guaranteed. It is subject to fees, taxation and charges within the Fund and the investor will receive less than the gross yield. Emerging and developing markets can face significant political, economic or structural challenges. The fund may experience delays in buying, selling and claiming ownership of investments and there is an increased risk that the fund may not get back the money invested. There can be no assurance that the Fund's objectives or performance target will be achieved. Any views expressed herein are subject to change. Shares of this fund are not allowed to be distributed or sold neither within the United States of America nor to or for the account for US citizens or US-based US citizens Lazard Asset Management