Eastspring Investments Unit Trusts Dragon Peacock Fund

Transcription

1 Factsheet Singapore March 2018 All data as at 28 February 2018 unless otherwise stated Eastspring Investments Unit Trusts Dragon Peacock Fund FUND DETAILS Fund size (mil) 1,148.6 Fund base currency Fund dealing frequency SGD Daily Net asset value (Class SGD) SGD ISIN (Class SGD) Inception date (Class SGD) SG Jun-04 Benchmark (BM) 50% MSCI China Index & 50% MSCI India Index FUND MEASURES 3 year tracking error (Class SGD) year sharpe ratio (Class SGD) year volatility (Class SGD) 13.4 Source: Morningstar SECTOR WEIGHTS (%) Information technology 25.5 Financials 23.4 Consumer discretionary 13.8 Energy 9.1 Materials 7.0 Utilities 5.5 Industrials 4.3 Consumer staples 3.9 Health care 2.8 Cash and others 4.7 COUNTRY WEIGHTS (%) China related 54.8 India related 44.4 Cash and others 0.8 INVESTMENT OBJECTIVE The investment objective of the Eastspring Investments Unit Trusts - Dragon Peacock Fund is to maximize long-term total return by investing primarily in equity and equity related instruments of corporations, which are incorporated in, or listed in, or operating principally from, or carrying on significant business in, or derive substantial revenue from, or whose subsidiaries, related or associated corporations derive substantial revenue from, the People s Republic of China (PRC) and the Republic of India (India). PERFORMANCE Calendar year returns (%) (Class SGD) Offer-bid Bid-bid Benchmark Returns (%) Class SGD 1 m 3 m YTD 1 y 3 y 5 y 10 y Since inception Offer-bid Bid-bid Benchmark : per annum. Source: Eastspring Investments (Singapore) Limited. Returns are based in SGD and computed on bid-bid basis with net income reinvested, if any. Offer-bid is inclusive of sales charge which is subject to changes. Since inception returns for periods less than a year are not annualised. Calendar year returns are based on the relevant class performance for the year, and if the relevant class was incepted during a particular year, the returns shown relate to the performance of that class since its inception to the end of that calendar year. TOP 10 HOLDINGS (%) 1. TENCENT HOLDINGS INFOSYS LTD ALIBABA GROUP HOLDING-SP ADR CHINA CONSTRUCTION BANK-H IND & COMM BK OF CHINA-H JD.COM ADR REPRESENTING 2 CLASS A LARSEN AND TOUBRO LI NING BANK OF CHINA LTD-H PING AN INSURANCE GROUP CO-H 2.2 Page 1 / 5

2 RELEVANT CLASS DETAILS Class Currency Net asset value Bloomberg ticker ISIN Inception date Subscription method Initial sales charges% (max) Annual management fee % (Current) SGD SGD PRUDRPC SP SG Jun-04 Cash, SRS Class Currency Annual admin fee% (max) Minimum initial investment Minimum subsequent investment Distribution frequency Ex-date Dividend per unit SGD SGD Nil SGD 1,000 SGD 100 N.A. N.A. N.A. Distributions are not guaranteed. Distributions may be paid out of distributable income, capital or both. Important Notes: (i) Payment of distributions out of capital amounts to a return or withdrawal of part of an investor s original investment or from any capital gains attributable to that original investment; and (ii) Any distributions involving payment out of the Fund s capital may result in an immediate reduction of the net asset value per unit. "N.A." means that the relevant class does not distribute dividends. Returns (%) Calendar year returns (%) Since 3 y 5 y 10 y Class / currency 1 m 3 m YTD 1 y inception SGD Offer-bid Bid-bid Benchmark : per annum. Source: Eastspring Investments (Singapore) Limited. Returns are based in the relevant class currency and computed on bid-bid basis with net income reinvested, if any. Offer-bid is inclusive of sales charge which is subject to changes. Since inception returns for periods less than a year are not annualised. The benchmark for the hedged classes, if any, is also calculated on a hedged basis. Calendar year returns are based on the relevant class performance for the year, and if the relevant class was incepted during a particular year, the returns shown relate to the performance of that class since its inception to the end of that calendar year. Factsheet Singapore March 2018 All data as at 28 February 2018 unless otherwise stated Page 2 / 5

3 COMMENTARY Commentary sources 1.Eastspring Investments (Singapore) Limited Performance Review The Global equity markets endured a turbulent month as the selling momentum which began at the end of January on the back of inflation fears accelerated early February. Markets staged a recovery in the later part of the month to be back above where they started the year but almost all markets ended lower month-on-month in February with Developed and Emerging markets performing more or less in line with one another. At the beginning of the month, China equites were sold off due to inflation fears tracking declines in broad equity markets globally. The extent of the fall in China and Hong Kong was curtailed versus other markets due to continuation of the strong southbound fund flow into Hong Kong-listed blue chips such as banks, and the mainland s capital controls limiting volatility of the A share markets. However, in the final few days of February, mainland investors repatriated their funds back due to weak factory data from China and rekindled worries about faster rate rises in the US, dampening performance of the China equities. Due to the seasonality effect around Chinese New Year, trading volumes in the Greater China region were lower than average. The MSCI India total return index dropped 6.7% in USD terms; all sectors ended lower in an eventful month which started with unveiling the last full-year Union Budget of the current administration. Next General Elections in India are due by May In a measure to support growth and propel spending, the government relaxed their fiscal deficit target, pushing it down another year. In the bid to further rationalize taxation and boost receipts, India reintroduced a 10% long term capital gains tax on listed equities; long term being a year. Tax on gains on equities held for under a year remained unchanged at 15%. Sentiment dampened further after one of the biggest frauds in Indian banking history broke out at India s second-largest state owned bank, Punjab National Bank. Investors remained jittery to the end of the month as inflationary concerns lingered on at local India level as well as the US. Key Contributors The off-benchmark position in Li Ning, an overweight position in Guangdong Investment, and not owning a position in Vakrangee added to relative performance during the month. Li Ning's share price gained over 14% in February as the stock had significantly outperformed the broader China markets. The growth outlook for China's sportswear industry continues to rise as both international brands (Nike / Adidas) as well as Li Ning are all benefiting from the rise in demand from Chinese consumers. China's sportswear market has grown to over RMB200 billion and the industry is seeing a 12% year-onyear growth. Li Ning should also continue to benefit from its ecommerce distribution channel as its online platform is already contributing about 18% of the company's overall sales as its sales has grown steadily since Li Ning currently trades at a 2018e P/E of 19.8x earnings, which is lower than the 28x P/E for Nike and 22x P/E of Adidas. Guangdong Investment s (GDI) share price rose by nearly 3% in February as Hong Kong's main water provider continues to have strong free cash flows and a clear path to its dividend growth policy. With additional water investments in its water business in Guangdong, the company is expecting to see an increase in the RMB2.5 billion that it had injected into new water projects during Given the Chinese government's plans to link Hong Kong, Macau and Guangdong cities more closely, the company is expected to benefit through a higher volume output in its water and power projects in Shenzhen, Zhongshan and Zhaoqing. GDI currently trades at a 2018e P/E of 15.8x earnings while also providing a dividend yield of over 4%. Not owning Vakrangee aided performance as the company s stock price less than halved over the month on reports that the regulator may be investigating into stock price manipulation after it almost tripled during January 2016 to January 2017 period. Key Detractors The off-benchmark positions in BAIC Motor and Bank of Baroda, and not owning Baidu Inc. detracted from relative performance during the month. BAIC Motor share price corrected by 19% in February as investors started to take profit after seeing the share price rise for 5 consecutive months prior to February and having gained 75% from September 2017 to January The company is going through an asset restructuring as it tries to cut losses for some of its own named auto brands. Despite its reliance on foreign brands with its JV businesses, BAIC is also expected to introduce a number of new models under its own brand in 2018 as the company tries to enhance the profitability of its own branded operations. BAIC currently trades at a 2018e P/E of 9.5x earnings and is free cash flow positive while generating an expected dividend yield of around 3%. Sentiment towards the broad banks segment soured in India after the fraud broke out at Punjab National Bank. Market was quick to extrapolate the weak compliance and systems that led to the fraud to all state-owned banks. Shares in Bank of Baroda also suffered. Baidu's share price rose for a second consecutive month as the stock was up by another 2.2% in February. Despite some of the recent gains, the company posted its 4Q2017 results which were only 2% ahead of consensus. The company also reported that one of its subsidiary companies (iqiyi) has finally filed for an IPO in the US and Baidu is still expected to be a controlling shareholder in the Chinese online video provider. Despite Factsheet Singapore March 2018 All data as at 28 February 2018 unless otherwise stated Page 3 / 5

4 COMMENTARY this, the market had already widely anticipated the spin-off of iqiyi and the IPO filing was not a surprise to investors. While Baidu only trades at a 2018e P/E of 26x earnings, there are other more attractive IT companies to own within the Greater China equity universe. Fund Activity Among key trades, the Fund increased exposure to Hindustan Petroleum Corp Ltd., State Bank of India and Idea Cellular Ltd. The purchases were funded by reducing stakes in Bharat Petroleum Corp Ltd., China Construction Bank Corp., and Industrial and Commercial Bank of China Ltd. Outlook We continue to monitor China s balancing act of undertaking reforms while trying to rein in credit expansion and sustain economic growth. By continuing to have tighter controls and stronger financial oversight, President Xi Jinping should continue to help transform China s economy as it strives for quality over quantity. Given the slowdown that we had witnessed in China from as a result of the RMB4 trillion stimulus package after the global financial crisis, Chinese corporates earnings growth is once again on an upward trajectory in China with most expecting Chinese corporates to see earnings grow by around 16% per annum over the next two years. Given the cyclical turnaround for most Chinese corporates, the overall investment opportunity in China has once again become more attractive. India s economic recovery appears to be on a strong footing to achieve its potential real GDP growth aided by lower interest rates, strong reforms momentum, and a thrust on investments. A stimulus through investments and not subsidies should yield a better quality and sustainable growth in the long term. India s corporate earnings are expected to recover gradually, aided by higher demand, lower interest rates, and a favourable investment cycle. Valuations are fair in light of an impending recovery in earnings. Factsheet Singapore March 2018 All data as at 28 February 2018 unless otherwise stated Page 4 / 5

5 IMPORTANT INFORMATION Investment manager - Eastspring Investments (Singapore) Limited Disclaimer This document is solely for information and may not be published, circulated, reproduced or distributed in whole or part to any other person without the prior written consent of Eastspring Investments (Singapore) Limited ( Eastspring Singapore ) (Company Reg No H). This document is not an offer, solicitation of an offer, or a recommendation to transact in the investment units in the Fund. The information contained herein does not have any regards to the specific investment objectives, financial situation or particular needs of any person. A prospectus in relation to the Fund is available and a copy of the prospectus may be obtained from Eastspring Singapore and its distribution partners. Investors should read the prospectus and seek professional advice before making any investment decision. In the event that investor chooses not to seek advice, he should consider carefully whether the Fund in question is suitable for him. The value of units in the Fund and the income accruing to the units, if any, may fall or rise. Past performance of the Fund/Manager is not necessarily indicative of the future performance. Any prediction, projection or forecast on the economy, securities markets or the economic trends of the markets targeted by the Fund is not necessarily indicative of the future performance of the Fund. An investment in the Fund is subject to investment risks, including the possible loss of the principal amount invested. Whilst Eastspring Singapore has taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, Eastspring Singapore cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this document is subject to change without notice. The Fund/ underlying Fund(s) may use derivative instruments for efficient portfolio management and hedging purposes. Distributions are not guaranteed and may fluctuate. Past distributions are not necessarily indicative of future trends, which may be lower. Distribution payouts and its frequency are determined by the Manager, Eastspring Singapore, and can be made out of (a) income; or (b) net capital gains; or (c) capital of the Fund or a combination of (a) and/or (b) and/or (c). The payment of distributions should not be confused with the Fund s performance, rate of return or yield. Any payment of distributions by the Fund may result in an immediate decrease in the net asset value per unit. The preceding paragraph is only applicable if the Fund intends to pay dividends / distributions. Eastspring Singapore is an ultimately wholly-owned subsidiary of Prudential plc of the United Kingdom. Eastspring Singapore and Prudential plc are not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America. In case of discrepancy between the English and Chinese versions, the English version shall prevail. Notes: Please note that the Luxembourg-domiciled Eastspring Investments has established a similar sub-fund within the umbrella fund of Eastspring Investments having the same investment objective and focus as the Fund (the "Eastspring Investments sub-fund"). In the event that the Eastspring Investments sub-fund be approved by the Authority as a recognised scheme available for direct investment by the retail public in Singapore, Eastspring Investments (Singapore) Limited may, in consultation with the Trustee, and subject to the approval of the relevant authorities, (i) seek to terminate the Fund and exchange existing Units in the Fund for shares in the Eastspring Investments sub-fund; or (ii) change the investment policy of the Fund from a direct investment portfolio to a feeder fund investing all or substantially all of its assets into the Eastspring Investments sub-fund. Investors should note that in the event of an exchange Units for shares in the Eastspring Investments sub-fund, there is no assurance that the fees and charges of the Eastspring Investments sub-fund would not be higher than that of the Fund. Investors should not invest in the Fund in anticipation of investing in the Eastspring Investments sub-fund as there is no certainty whether the Eastspring Investments sub-fund may be recognized for offer to the retail public in Singapore. Investors should note that the net asset value of this Fund is likely to have a higher volatility due to its concentration of investment in two countries. For more information, please contact: Eastspring Investments (Singapore) Limited UEN: H 10 Marina Boulevard #32-01 Marina Bay Financial Centre Tower 2 Singapore T: (65) F: (65) eastspring.com.sg Factsheet Singapore March 2018 All data as at 28 February 2018 unless otherwise stated Page 5 / 5