The Case for Europe & Japan BetaShares WisdomTree ETFs

Transcription

1 The Case for Europe & Japan BetaShares WisdomTree ETFs

2 Important Information The information contained in this document is general information only and does not constitute personal financial advice. It does not take into account any person s financial objectives, situation or needs. It has been prepared by BetaShares Capital Limited (ABN , Australian Financial Services Licence No ) ( BetaShares ). The information is provided for information purposes only and is not a recommendation to make any investment or adopt any investment strategy. BetaShares assumes no responsibility for any reliance on the information in this document. Past performance is not indicative of future performance. Investments in BetaShares Funds are subject to investment risk and the value of units may go down as well as up. Any person wishing to invest in BetaShares Funds should obtain a copy of the relevant PDS from and obtain financial advice in light of their individual circumstances. WisdomTree is a registered trademark of WisdomTree Investments, Inc. WisdomTree Investments, Inc. makes no representation or warranty, express or implied, regarding the advisability of investing in securities generally or BetaShares WisdomTree Europe ETF Currency Hedged or BetaShares WisdomTree Japan ETF Currency Hedged in particular. Neither WisdomTree Investments nor any of its affiliates are involved in the operation or distribution of these Funds and neither WisdomTree Investments nor its affiliates shall have any liability for operation or distribution of these Funds or the failure of these Funds to achieve their investment objectives.

3 Your presenters David Bassanese is BetaShares Chief Economist. David has two decades of experience in economic and investment analysis, and has previously held roles at Macquarie Bank, the Federal Treasury, the OECD and The Australian Financial Review. Peter Harper is BetaShares Head of Capital Markets and Director- Distribution. Prior to BetaShares, Peter held senior equity derivative distribution roles with Macquarie Bank and ABN AMRO. Peter has also held roles in institutional/corporate FX sales with ABN AMRO and fixed interest trade support with UBS.

4 In this webinar we will 1.Make the investment case for Europe 2.Make the investment case for Japan 3.Describe new ways for investors to get exposure to the European and Japanese equities markets, via the BetaShares HEUR and HJPN ETFs

5 Contents The Economic Backdrop Why Invest in Europe? Why invest in Japan? BetaShares WisdomTree Europe ETF - Currency Hedged (HEUR) BetaShares WisdomTree Japan ETF Currency Hedged (HJPN)

6 Both Europe and Japan have recovered post-gfc

7 Business investment showing positive signs

8 Unemployment has been declining

9 But low inflation remains a concern

10 Contents The Economic Backdrop Why Invest in Europe? Why invest in Japan? BetaShares WisdomTree Europe ETF - Currency Hedged (HEUR) BetaShares WisdomTree Japan ETF Currency Hedged (HJPN)

11 Performance of European Equities vs S&P/ASX 200 Index Cumulative Return 29 June 2012 (Index inception) to 29 April Local Currency 90% 80% Wisdom Tree Europe Hedged Equity Index S&P/ASX 200 Index 70% 60% 50% 40% 30% 20% 10% 0% Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Source: Bloomberg. Graph shows performance of underlying index relative to S&P/ASX 200 index, not ETF performance and does not take into account ETF management costs. You cannot invest directly in an index. Past performance is not an indicator of future performance of index or ETF

12 Measures of Profitability & Shareholder Value for Listed Companies 10-yrs to end-april 2016 % Return on Common Equity Dividend yield Net Profit Margin S&P Euro S&P 500 Source: Bloomberg

13 Sector Weight Differences with S&P/ASX 200 Index* Consumer Discretionary Consumer Staples Industrials Information technology Wisdom Tree Europe Hedged Equity Index Health care Telecommunications Utilities Energy Materials Financials % Source: WisdomTree, Bloomberg *As as 31 December 2015

14 Equity Price to Nominal GDP Ratio Index: average since March 1995= S&P Euro US S&P Mar-95 Mar-00 Mar-05 Mar-10 Mar-15 Source: Bloomberg

15 Contents The Economic Backdrop Why Invest in Europe Why invest in Japan? BetaShares WisdomTree Europe ETF - Currency Hedged (HEUR) BetaShares WisdomTree Japan ETF Currency Hedged (HJPN)

16 Performance of Japanese Equities vs S&P/ASX 200 Index since Abenomics Cumulative Return from 30 November 2012 to 29 April % 100% Wisdom Tree Japan Hedged Equity Index S&P/ASX 200 Index 80% 60% 40% 20% 0% Nov-12 Nov-13 Nov-14 Nov-15 Source: Bloomberg. Graph shows performance of underlying index relative to S&P/ASX 200 index, not ETF performance and does not take into account ETF management costs. You cannot invest directly in an index. Past performance is not an indicator of future performance of index or ETF

17 Price vs. Earnings Expansion since start of Abenomics 30 November 2012 to 29 April % 100% 100% 80% 72% 60% 46% 40% 27% 20% 13% 17% 6% 0% -20% -6% TOPIX S&P 500 S&P/ASX 200 S&P Euro Earnings Prices Source: Bloomberg

18 Price to 1-Yr Forward Earnings TOPIX S&P 500 S&P/ASX 200 S&P Euro Apr-16 Nov yr Avg Source: Bloomberg

19 Measures of Profitability & Shareholder Value for Listed Companies 10-yrs to end-april 2016 % 15.0 Return on Common Equity Dividend yield Net Profit Margin Topix S&P Euro S&P 500 S&P/ASX 200 Source: Bloomberg

20 Japanese Govt. Pension Fund (GPIF) - Increasing Official Support for the Equity Market 40% 35% 30% Benchmark Dec-15 Allocation 35% 38% 25% 25% 23% 25% 23% 20% 15% 15% 14% 10% 5% 0% International Equity International Bonds Domestic Equities Domestic Bonds Short-term Assets 0% 3% Source: Bloomberg

21 Sector Weight Differences with S&P/ASX 200 Index* Consumer Discretionary Industrials Information technology Wisdom Tree Japan Hedged Equity Index Consumer Staples Health care Utilities Materials Energy Telecommunications Financials % Source: WisdomTree, Bloomberg *As at 31 December 2015

22 Japan continues to pursue policy of cheap Yen % of nominal GDP 90% 80% 70% 60% Bank of Japan Federal Reserve European Central Bank 50% 40% 30% 20% 10% 0% Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Source: Bloomberg

23 Historically Japanese market tends to outperform during periods of currency weakness JP Morgan Yen Index [LHS] Japan vs World MSCI Index [RHS] Feb-95 Feb-00 Feb-05 Feb-10 Feb-15 0 Source: Bloomberg. Past performance is not an indicator of future performance.

24 Contents The Economic Backdrop Why Invest in Europe? Why invest in Japan? BetaShares WisdomTree Europe ETF - Currency Hedged (HEUR) BetaShares WisdomTree Japan ETF Currency Hedged (HJPN)

25 BetaShares Product Range AAA QOZ QFN QRE HVST YMAX NDQ UMAX QUS WRLD HEUR HJPN BEAR BBOZ BBUS USD POU EEU AUST WRLD GEAR GGUS QAU OOO QCB QAG

26 BetaShares Product Range AAA QOZ QFN QRE HVST YMAX NDQ UMAX QUS WRLD HEUR HJPN BEAR BBOZ BBUS USD POU EEU AUST WRLD GEAR GGUS QAU OOO QCB QAG

27 Why Currency Hedged Equity Exposure? The easy money from a non-hedged exposure may have already been made Over the last 3 years the AUD has fallen by between 15%-25% against major global currencies (including EUR, JPY &USD) Get paid to hedge Hedging currency exposure to Europe or Japan currently provides a positive carry benefit of ~2.25% p.a. relative to an unhedged position Avoid a Currency War? Being hedged substantially removes currency risk Currency hedged solution should be better off should policy makers take steps to weaken currency Australian Domiciled Exposure No W8-BEN admin forms or U.S. Estate Tax concerns to worry about

28 BetaShares WisdomTree Europe ETF Currency Hedged ASX: HEUR Access to a strategy that had the largest inflows of any ETF in the world in 2015 Access to globally competitive, dividend paying European companies No exposure to the U.K. and so unlike comparable ETFs on the ASX will not be directly influenced positively or negatively by upcoming BREXIT concerns (see latest blog post here) Estimated dividend yield for the index the fund aims to track is currently 3.2%p.a.* Estimated 1 yr P/E for the index the fund aims to track is currently 14.8 x* No W8-BEN admin forms or U.S. Estate Tax concerns to worry about *Source: Bloomberg. As at 30 April Actual performance may differ materially from estimates.

29 BetaShares WisdomTree Europe ETF Currency Hedged Product Factsheet Product Name: BetaShares WisdomTree Europe ETF Currency Hedged ASX: HEUR Index Tracked & Description of Index Aims to track the performance of the WisdomTree Hedged Europe Equity Index, which is designed to provide exposure to the largest dividend-paying European companies that generate at least a portion of their revenues from outside of Europe, hedged to Australian dollars Key Information Top 10 Exposures 30 April 2016 Sector Allocation 30 April 2016 ASX Code Bloomberg Code Iress Code # of components Asset backing Management Fee Expense recovery ETF Inception Date HEUR HEUR AU HEUR.AXW 128 Equities 0.51% p.a Estimated at 0.07% p.a 10 May 2016 Company ANHEUSER-BUSCH INBEV SA/NV 6.3 SIEMENS AG-REG 5.3 UNILEVER NV-CVA 4.8 TELEFONICA SA 4.6 BANCO SANTANDER SA 4.4 SANOFI 4.0 DAIMLER AG-REGISTERED SHARES 3.9 BANCO BILBAO VIZCAYA ARGENTA 3.5 BAYER AG-REG 3.0 SAP SE 2.9 Index Weighting

30 HEUR brings the strategy of the most successful ETF globally of 2015 onto the ASX Top ETFs globally by Net Inflows: Calendar year 2015 Source: ETFGI

31 Benefits of HEUR Access - simple and cost-effective way to access a diversified portfolio of European equities Reduce currency risk - Euro exposure is hedged substantially back to the Australian dollar to reduce currency risk for Australian investors European exposure - exposure to the largest dividend paying European companies without the associated exposure to the Euro Diversification - diversify global equities allocation to European, which includes a number of sectors which are under-represented in the Australian equities market Low cost - cost of ETF is lower than traditional active managers focusing on European equities Reduced administrative burden - as an Australian domiciled fund, investors do not need to fill out W-8 BEN forms, or risk any potential U.S. estate tax issues ASX-traded - the ETF can be bought or sold like any share, and is not platform dependent Liquidity - trades on ASX during the day Transparent - portfolio holdings, value of ETF s assets and net asset value per unit available daily on BetaShares website

32 Contents The Economic Backdrop Why Invest in Europe? Why invest in Japan? BetaShares WisdomTree Europe ETF - Currency Hedged (HEUR) BetaShares WisdomTree Japan ETF Currency Hedged (HJPN)

33 BetaShares WisdomTree Japan ETF Currency Hedged Product Factsheet Product Name: BetaShares WisdomTree Japan ETF Currency Hedged ASX: HJ PN Index Tracked & Description of Index Aims to track the performance of the WisdomTree Hedged Japan Equity Index, which is designed to provide exposure to the largest dividend-paying Japanese companies that generate at least a portion of their revenues from outside of Japan, hedged to Australian dollars Key Information Top 10 Exposures 30 April 2016 Sector Allocation 30 April 2016 ASX Code Bloomberg Code Iress Code # of components Asset backing Management Fee Expense recovery ETF Inception Date HJPN HJPN AU HJPN.AXW 313 Equities 0.51% p.a Estimated at 0.07% p.a 10 May 2016 Company JAPAN TOBACCO INC 5.3 TOYOTA MOTOR CORP 4.3 MITSUBISHI UFJ FINANCIAL GRO 3.7 CANON INC 3.6 TAKEDA PHARMACEUTICAL CO LTD 2.9 NISSAN MOTOR CO LTD 2.9 MIZUHO FINANCIAL GROUP INC 2.9 HONDA MOTOR CO LTD 2.8 FANUC CORP 2.3 MITSUI & CO LTD 2.3 Index Weighting

34 BetaShares WisdomTree Japan ETF Currency Hedged ASX: HJPN HJPN invests in globally competitive, dividend paying Japanese companies The current estimated dividend yield for the index the Fund aims to track is 2.8%p.a.* The current estimated 1 yr P/E for the index the fund aims to track is 12.3 x* The Japanese equity market has seen P/E contraction over the last ~3 yrs from 15.1x to 12.9x as earnings have grown faster than equity prices No W8-BEN admin forms or U.S. Estate Tax concerns to worry about *Source: Bloomberg, as at 30 April Actual performance may differ materially from estimates.

35 Benefits of HJPN Access - simple and cost-effective way to access a diversified portfolio of Japanese equities Reduce currency risk - Yen exposure is hedged substantially back to the Australian dollar to reduce currency risk for Australian investors J apanese exposure - exposure to the largest dividend paying Japanese companies without the associated exposure to the Yen Diversification - diversify global equities allocation to Japan, which includes a number of sectors which are under-represented in the Australian equities market Low cost - cost of ETF is lower than traditional active managers focusing on Japanese equities Reduced administrative burden - as an Australian domiciled fund, investors do not need to fill out W-8 BEN forms, or risk any potential U.S. estate tax issues ASX-traded - the ETF can be bought or sold like any share, and is not platform dependent Liquidity - trades on ASX during the day Transparent - portfolio holdings, value of ETF s assets and net asset value per unit available daily on BetaShares website

36 Questions? Keep in touch