UNCOVERING INVESTMENT OPPORTUNITIES IN A WORLD OF DISRUPTION

Transcription

1 Wifi: Heads Together PW: Newton2016 #Newton2016 UNCOVERING INVESTMENT OPPORTUNITIES IN A WORLD OF DISRUPTION Rob Stewart Portfolio manager, Multi-asset Fati Naraghi Global analyst, Technology Tim Lucas Global analyst, Cyclicals Scott Freedman Analyst and portfolio manager, Fixed income Rosie Bichard Global analyst, Consumer Paul Schenk Global analyst, Financials Source: Shutterstock, November 2016.

2 Fati Naraghi Global analyst, Technology The global opportunity set Technology 2,400bn Market cap Newton investments in the sector 4.2bn Source: MSCI AC World 18 November 2016; Newton, 14 November 2016.

3 SELF DRIVING CARS The securities mentioned are only for illustrating the investment process of Newton Investment Management. These opinions should not be construed as investment or any other advice and are subject to change. This slide is for information purposes only and does not constitute an offer or solicitation to invest.

4 ADVANCED DRIVER ASSISTANCE SYSTEMS (ADAS) LEVELS OF AUTOMATION $338 of semiconductor content in an average car +$700 of semiconductor content in an average car +$1,000 of semiconductor content in an average car 0 No Automation Driver only 1 Feet Off Assisted 2 Hands Off Partial Automation 3 Eyes Off Conditional Automation 4 Brain Off High Automation 5 Robot Taxis No Drivers Source: Infineon, SAE, Shutterstock, November 2016.

5 CONNECTED CAR: AN ATTRACTIVE INVESTMENT OPPORTUNITY Secular growth Significant barriers to entry Operating leverage GROWTH OF ELECTRIC VEHICLES AND/OR AUTONOMOUS VEHICLES WILL BE FURTHER SUPPORT

6 Tim Lucas Global analyst, Cyclicals The global opportunity set Cyclicals 1,008bn Market cap Newton investments in the sector 3.3bn Source: Bloomberg, MSCI AC World 18 November 2016; Newton, 14 November 2016.

7 The securities mentioned are only for illustrating the investment process of Newton Investment Management. These opinions should not be construed as investment or any other advice and are subject to change. This slide is for information purposes only and does not constitute an offer or solicitation to invest.

8 FINANCIAL PERFORMANCE Revenue growth +3% +3% +3% +3% +3% Source: RELX investor overview presentation, November 2016.

9 FINANCIAL PERFORMANCE Adjusted operating profit growth +5% +6% +5% +5% +5% Source: RELX investor overview presentation, November 2016.

10 FINANCIAL PERFORMANCE Dividend per share growth +6% +7% +8% +11% +10% Source: RELX investor overview presentation, November 2016.

11 78%legacy products 70% Source: RELX investor overview presentation, November 2016.

12 LEGAL DIVISIONAL OPERATING PROFITS Underlying adjusted operating profit growth +12% Assess the benefit of settling % +4% +5% +6% +7% H Assess the probability of new law passing Analyse the success of a law firm Source: RELX legal teach-in, 10 November 2016.

13 Scott Freedman Analyst and portfolio manager, Fixed income The global opportunity set Energy companies 1,708 Recommended lists 10 companies Source: Bloomberg, 21 November The securities mentioned are only for illustrating the investment process of Newton Investment Management. These opinions should not be construed as investment or any other advice and are subject to change. This slide is for information purposes only and does not constitute an offer or solicitation to invest.

14 Fixed income Equity Responsible investment 51

15 Fixed income Equity Responsible investment 52

16 Strong balance sheet Asset value Cash generation Diversified business model Attractive valuation

17 Environmental Drilling in the ultra-highly sensitive region of Alaska given the associated environmental risks Stranded assets in general (risk of assets becoming economically unviable) Social Health and safety and the bribery and corruption risks in Brazil Governance Appropriate pay for the CEO given the company s performance

18 Rosie Bichard Global analyst, Consumer The global opportunity set Consumer staples 1,200bn Market cap Newton investments in the sector 3.0bn Source: Bloomberg, MSCI AC World 18 November 2016; Newton, 14 November The securities mentioned are only for illustrating the investment process of Newton Investment Management. These opinions should not be construed as investment or any other advice and are subject to change. This slide is for information purposes only and does not constitute an offer or solicitation to invest.

19 STRONG PERFORMANCE DESPITE HEADWINDS 400 Total return, with dividends reinvested 15.2% CAGR (P.A.) (%) CAN THIS CONTINUE? /10/06 31/08/07 30/06/08 30/04/09 26/02/10 31/12/10 31/10/11 31/08/12 28/06/13 30/04/14 27/02/15 31/12/15 1. Compound Annual Growth Rate (Per Annum) Source: Bloomberg, Tobacco Sector Index 31 October September 2016 with dividends reinvested

20 TOBACCO INNOVATION Source: PMI, September 2016.

21 TOBACCO INNOVATION MARKET TRANSITION FORECAST Potential combined demand? Next generation tobacco products: iqos, Vaping technology etc., Demand Time Traditional tobacco products: cigarettes, etc. TIME WILL TELL Source: Newton, November For illustrative purposes only.

22 Paul Schenk Global analyst, Financials The global opportunity set Banks 3,005bn Market cap Newton investments in bank stocks from the RRL 0.8bn Source: MSCI AC World 18 November 2016; Newton, 14 November 2016 RRL = Research Recommended List. 59

23 A STRONGLY MANAGED COMPANY AHEAD ABLE TO MAXIMISE THE OPPORTUNITY 3rd 40% largest mortgage lender in India with ~10% market share owned by the Life Insurance Company of India Nationwide distribution through 1.5m insurance agents Source: LIC Housing Finance, October 2016 Shutterstock.com, Kenneth Dedeu Photography. The securities mentioned are only for illustrating the investment process of Newton Investment Management. These opinions should not be construed as investment or any other advice and are subject to change. This slide is for information purposes only and does not constitute an offer or solicitation to invest. 60

24 1.3bn people 2/3 under 35 yrs 20% of the world s workforce Source: Global Demographics September 2015 Shutterstock.com, Arthimedes. For illustrative purposes

25 1in5 workers globally in 10 years Source: Global Demographics September 2015 Shutterstock.com, Arthimedes. For illustrative purposes

26 88% Mortgage debt outstanding as a % of GDP 81% 41% 26% 29% 17% 20% 9% India Thailand China Korea Malaysia Hong Kong USA UK Source: European Mortgage Federation, HOFINET & HDFC December 2015.

27 Housing for all Real estate and bankruptcy laws Increased funding and reduced capital requirements Richer credit bureau data National ID scheme Tax incentives Source: Government of India, November

28 Almost every other day the government does something or other to make the environment more favourable for all of us. Gagan Banga, Vice Chairman & Managing Director, Indiabulls Housing Finance September 2016 results Source: Shutterstock.com, Pocketnewsalert.com 65 Fredex

29 Source: Shutterstock.com, Szefei November

30 Important information For professional investors only This is a financial promotion. Issued in the UK by Newton Investment Management Limited, The Bank of New York Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England No Newton Investment Management is authorised and regulated by the Financial Conduct Authority. Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. Past performance is not a guide to future performance. Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendations. Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell this security, country or sector. Past or current yields are not indicative of future yields Where an index is used as a comparative index, this strategy does not aim to replicate either the composition or the performance of the comparative index. Where representative data is used this is for illustrative purposes only. Where projected model portfolio data is used, this is not based on actual trading history. There are no guarantees that, if launched, the strategy s actual portfolio will reflect the model data. Where Newton Funds are referenced you should read the Prospectus and the Key Investor Information Document (KIID) for each fund in which you want to invest. The Prospectus and KIID can be found at Compared to more established economies, the value of investments in Emerging Markets may be subject to greater volatility due to differences in generally accepted accounting principles or from economic, political instability or less developed market practices. The value of overseas securities will be influenced by fluctuations in exchange rates. Except where specifically noted, performance is stated gross of management fees. The impact of management fees can be material. A fee schedule providing further detail is available on request. The opinions expressed in this document are those of Newton and should not be construed as investment advice. Newton Investment Management Limited BNY Mellon Centre 160 Queen Victoria Street London EC4V 4LA Tel: Registered in England No BNY Mellon Fund Managers Limited BNY Mellon Centre 160 Queen Victoria Street London EC4V 4LA Tel: Registered in England No Registered office: as above. Both firms are authorised and regulated by the Financial Conduct Authority, are members of the IA and are Bank of New York Mellon Companies SM