Credit Suisse (Lux) Global Dividend Plus Equity Fund 1

Transcription

1 Credit Suisse (Switzerland) Ltd. Credit Suisse (Lux) Global Dividend Plus Equity Fund 1 1 Formerly Credit Suisse SICAV One (Lux) Global Equity Dividend Plus April 2017

2 Credit Suisse (Lux) Global Dividend Plus Equity Fund Contents Summary Reasons to Invest Investment Process Product Information Appendix April

3 Credit Suisse (Lux) Global Dividend Plus Equity Fund Summary Investment Opportunities The Fund s Strengths Sustainable dividends offer a reliable source of income for investors. In fact, they generally make up the bulk of total returns on equities. Dividends are therefore regarded as an important symbol of a company s strength and future profitability. This gives dividend stocks the potential to generate above average performance. Thanks to the high level of distributions, dividend stocks can cushion share price losses and exhibit higher price stability than traditional stock market investments. A long-term performance comparison reveals positive results for investments in high dividend stocks. They have historically generated above average returns that were generally achieved at lower risk. As global economic growth and profits are expected to recover only gradually over the coming months and years, we predict that equity market returns will be positive but not outstanding. As a result, high, sustained dividends are likely to be responsible for a significant portion of equity market returns, making strategies involving high dividend yields particularly attractive. The fund offers the opportunity to gain exposure to an actively managed and globally diversified portfolio of companies that: pay out above average and high quality dividends have sound balance sheets, relatively stable earnings and cash flows, and robust growth prospects are attractively valued. The investment decisions are based on a robust, proven, and systematic investment process that combines quantitative selection procedures and the unique HOLT TM valuation tool from Credit Suisse. The Credit Suisse Global Dividend team has an outstanding track record and long-standing experience in selecting stocks that pay high dividends on a sustained basis. Risks and Benefits are presented on slide 24. HOLT is a corporate performance and valuation advisory service of Credit Suisse. April

4 Credit Suisse (Lux) Global Dividend Plus Equity Fund Contents Summary Reasons to Invest Investment Process Product Information Appendix April

5 Reasons to Invest Key Investment Arguments Dividend levels Investments are made in companies that can pay a high and potentially growing dividend on a sustained basis. Quality of dividends The focus is on well managed companies with sound balance sheets and relatively stable earnings and cash flows. The effect of compounding If dividend payments are not siphoned off but instead systematically reinvested, investors can benefit from the effect of compounding. Compounding is the process of generating returns on an stock's reinvested dividends buying more shares with dividend proceeds which will earn incremental dividends in the future. This plays a significant part in the long-term outperformance of dividend strategies. Interest rate environment Strategies with high dividend yields hold appeal in a low interest rate environment, as dividend income can be higher than bond yields. Defensive investments This is a relatively defensive equity strategy, which gives investors greater long-term protection against falling prices and offers more stable returns. April

6 Reasons to Invest What Does a High Dividend Yield Strategy Entail? High dividend yield strategy Share price gains Dividend yield Investors targeted total return The objective of a high dividend yield equity strategy is to build a portfolio that can be expected to generate a higher dividend yield than the broader equity market. Although price gains are an important consideration, there is less reliance on these for investors who follow an equity strategy that focuses on attractive dividend yields. An equity strategy with a high dividend yield is particularly suitable for conservative investors in equities who prefer stable income to high growth. For illustrative purpose only. April

7 Reasons to Invest Why Dividends are Important Dividends represent real cash flow; the conversion of surplus cash into dividends reduces the misuse of capital. Dividends are important indicators of a company s soundness and future profitability. Dividends are the management s vote of confidence in a company. In the past, dividend yields have made up the lion s share of total equity market returns. Source: Credit Suisse April

8 Reasons to Invest The Importance of Dividends Breakdown of real equity market returns across various countries (1970 to 2016, % per year) UK US France Germany Australia Canada Japan Multiple expansion Dividend growth Dividend Yield Total annualised returns Dividend yields have historically made up around two-thirds of total returns on the main stock markets. Historical performance indications and financial market scenarios are not reliable indicators of current or future performance. Sources: Credit Suisse, Société Générale As of April

9 Reasons to Invest High Dividend Stocks Beat the Broad Market Various empirical studies 1 have shown that over the long term a strategy based on high dividend yields achieves above average returns relative to the broad equity market (the chart shows cumulative outperformance of around 150 percentage points over the period). The strategy disappointed in periods when markets were moving from undervaluation to overvaluation (as in the dotcom bubble), and also during the recent financial crisis, since there was particularly high exposure to financial stocks at the end of MSCI World High Dividend Yield (NR) index versus MSCI World (NR) index, July 1995 to March % 450% 400% 350% 300% 250% 200% 150% 100% 50% 0% 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 MSCI World (NR) in USD MSCI World High Dividend Yield (NR) in USD Global strategies with high dividend yields significantly outperformed the market in this period. 1 For example: The Global Income Investor, Société Générale, October 2011; Quantitative Analysis, Global Dividend Strategy, Credit Suisse Equity Research, January Historical performance indications and financial market scenarios are not reliable indicators of current or future performance. Source: Factset As of April

10 Reasons to Invest Why Dividend Quality is Important Over the long term, securities with a high dividend yield achieved higher total returns than those with lower dividend yields. 1 Stocks with higher quality dividends (in terms of dividend cover 2 ) produced the most attractive returns within the dividend terciles. Annualised return Annualized total returns in USD, August 1996 to March % 12% 10% 8% 6% 4% 2% 0% Low dividend cover Mid dividend cover High dividend cover Low dividend cover Mid dividend cover High dividend cover Low dividend cover Mid dividend cover Low (or zero) dividend yield Mid dividend yield High dividend yield High dividend cover The analysis is based on the MSCI World universe (market capitalization over USD 1 billion), which is divided into terciles from high to low dividend yield. Each dividend yield tercile is divided into baskets representing high, mid and low dividend cover 2. Performance is calculated monthly using equal weightings and the baskets are rebalanced each month. The investment process factors in both criteria (high dividend yield and good dividend quality). 1 Historical performance indications and financial market scenarios are not reliable indicators of current or future performance. 2 Historically based EPS/dividend per share. Sources: UBS, Credit Suisse As of April

11 Reasons to Invest Why Choose a Fund with High Dividend Yields? And Why Now in Particular? Favorable economic situation As global economic growth and profits are expected to recover only gradually over the coming months and years, we predict that equity market returns will be positive but not outstanding. As a result, sustainable and high dividends are likely to be responsible for a significant portion of equity returns, making strategies involving high dividend yields particularly attractive. Defensive nature High dividend yield equity strategies take a relatively defensive approach designed to generate outperformance over the medium to long term. The focus is on companies with sound balance sheets and relatively stable earnings and cash flows, which ensure sustained and growing dividends. An advantageous asset class In the current low interest rate environment, strategies entailing high dividend yields should prove to be attractive investment opportunities, as dividend yields are higher than bond yields. April

12 Credit Suisse (Lux) Global Dividend Plus Equity Fund Contents Summary Reasons to Invest Investment Process Product Information Appendix April

13 Investment Process Introduction Our investment process combines quantitative screening and fundamental company analysis in a 4-step process: 1. Quantitative screening 2. Macroeconomic assessment 3. Stock selection 4. Portfolio construction 1. Quantitative screening Filtering the global equity universe based on: Dividend quality: positive historical dividend growth and high dividend cover. Above average dividend yields. 3. Stock selection, based on 4-factor model (quintile ranking). Qualitative assessment. Investment themes. Company valuation. 2. Macroeconomic assessment Input from our Investment Committee (IC) and our Core Sector Equity Strategy Committee. 4. Portfolio construction Portfolio construction (tracking error analysis, risk/return analysis). Implementation (best execution). Sell discipline. April

14 Investment Process Overview 4 Steps Global stock universe Global quality and high dividend universe Selection of the most attractive dividend ideas Quantitative screening Quality filter Positive dividend growth High dividend cover High dividend filter Macro assessment Sector allocation Regional allocation 3 Stock selection 4-factor model (quintile ranking) Qualitative assessment Investment themes Company valuation Portfolio construction Construction Execution/ Implementation Sell discipline Fund holdings Performance measurement and attribution Risk management Source: Credit Suisse April

15 Investment Process Quantitative Screening: Step 1 MSCI World Index Exclude: 1. Companies with negative dividend growth rate. 2. Companies with excessive payout. MSCI World Index quality dividends Select: Companies with dividend yield greater than or equal to the dividend yield of MSCI World Index. Global quality and high dividend universe Source: Credit Suisse April

16 Investment Process Macroeconomic Assessment: Step 2 The Global Dividend Team benefits from the macroeconomic expertise of various Credit Suisse committees. The final region/sector allocation takes into account the fund s dividend focus. Investment Committee (IC) Core Sector Equity Strategy Committee Senior Credit Suisse investment professionals. Fundamental examination of the major global economies. Currency and interest rate analysis. Assessment of global stock, bond and commodities markets. Senior Credit Suisse Equity specialists. Definition of the current equity market view. Definition of sector outlook. Focus on: Identification of key trends in financial markets. Outlook for main asset classes. Focus on: Sector preferences. Regional outlook and preferences The fund leverages Credit Suisse s global research platform at different stages of its investment process. April

17 Investment Process Stock Selection 4-Factor Model: Step 3 Value factors Momentum factors Estimate revisions factors Other factors Weighting: Weight: 30% Weighting: Weight: 20% Weighting: Weight: 30% Weighting: Weight: 20% HOLT valuation: Percent to best StarMine relative valuation score P/E EV/EBITDA Price/cash flow EV/sales Price/book Dividend yield Stock-specific price momentum 1 year StarMine ARM score Revenue revisions EBITDA revisions EPS revisions Recommendations revisions Dividend growth Individual Z-scores Weighted Z-score ranking Quintile ranking (Global quality and high dividend universe quintile ranked) Source: Credit Suisse April

18 Investment Process Stock Selection: Step 3 Qualitative Assessment Assessment of the sustainability and the growth potential of the dividend. Detailed financial statement analysis. In depth look at qualitative factors, including industry fundamentals and company characteristics. Regular meetings with company managements. Investment Themes Based on the identification of key cyclical and secular trends in financial markets. Company Valuation Rigorous evaluation of a stocks fair value on CS HOLT reasonable margin of safety required. The HOLT valuation model, at its foundation, is a type of DCF (discounted cash flow) model. Among the model s distinguishing features, along with the CFROI (cash flow return on investment), is the way by which the forecasted stream of net cash receipts (NCR s) is generated and the method by which the firm s discount rate (DR) is estimated. By using the Sensitivity Analyzer, the Estimator and the Forecaster, the portfolio manager models his own forecasts taking as a starting point the models default inputs (consensus earnings-per-share (EPS) estimates provided by Thomson I/B/E/S). The HOLT ValueSearch database includes data on over 20,000 companies globally. Portfolio management uses Credit Suisse s unique bottom-up tool HOLT for stock selection. April

19 Investment Process Portfolio Construction: Step 4 Construction Includes ex ante TE analysis, ex ante risk/return impact and ex ante beta evaluation. Execution/Implementation Separate trading desk evaluates liquidity and trades in line with Credit Suisse s Best Execution policy. Sell Discipline Strategic, based on regular reviews. Price target is reached based on fundamental valuation and market price. Change in company fundamentals. Change in portfolio manager s company assessment. Reassessment of the macro picture which leads to an adjustment of our macro view. The stock doesn t pass a significant screening criteria any more (e.g. a dividend cut that we expect to be permanent). April

20 Credit Suisse (Lux) Global Dividend Plus Equity Fund Contents Summary Reasons to Invest Investment Process Product Information Appendix April

21 Product Information Key Facts Investment Policy The fund invests in a broadly diversified global equity portfolio that can be expected to achieve an above average dividend yield and simultaneously to participate in equity market price gains. High dividend yield equity strategies are a relatively defensive approach likely to generate outperformance over the medium to long term. The focus is on companies with sound balance sheets and relatively stable earnings and cash flows, which ensure sustained and growing dividends. The fund benefits from a robust, proven, and systematic investment process that combines quantitative screening and Credit Suisse s unique HOLT valuation tool. Fund Information Benchmark MSCI World (NR) Single Swinging Pricing 1 Yes Portfolio manager Dr. Felix Maag, Aude Scheuer Domicile Luxembourg Structure Investment Fund 2 Subscription/redemption Daily ESD tax status in scope - no tax Sales registration Austria, Finland, France, Germany, Italy, Belgium, Liechtenstein, Luxembourg, Netherlands, Norway, Singapore, Spain, Sweden, Switzerland, Bahrain Unit class Valor no. ISIN Min. investment Management fees Distribution Inception Qualified Investor volume p.a. date USD share class A LU unit 1.60% Yes USD share class B LU unit 1.60% No USD share class DB LU AM mandate 0.00%* No QI USD share class EB LU unit 0.50% No QI USD share class IB LU USD 0.5 million 0.70% No CHF share class BH LU unit 1.60% No CHF share class IBH LU CHF 0.5 million 0.70% No USD share class UA LU unit 0.95% Yes USD share class UB LU unit 0.95% No CHF share class UBH LU unit 0.95% No EUR share class CBH LU unit 1.60% No * Plus 0.095% p.a. administration and custodian fees. 1 SSP is a method used to calculate the net asset value (NAV) of a fund, which aims to protect existing investors from bearing indirect transaction costs triggered by incoming and outgoing investors. The NAV is adjusted up in case of net inflows and down in case of net outflows on the respective valuation date. The adjustment in NAV might be subject to a net flow threshold. For further information, please consult the sales prospectus. April

22 Product Information Fund Performance Fund Credit Suisse (Lux) Global Dividend Plus Equity Fund Start date Portfolio manager Dr. Felix Maag, Aude Scheuer since , % 60% 30% 0% 3% 2% 1% 0% Benchmark MSCI World (NR) -30% -1% Currency USD -60% -2% Total net assets USD 140 million -90% Apr 10 Nov 10 Jun 11 Jan 12 Aug 12 Mar 13 Oct 13 May 14 Dec 14 Jul 15 Feb 16 Sep 16 Relative Return (right scale) Cumulative performance fund (left scale) Cumulative performance benchmark (left scale) -3% Gross periodical return in % (Annualized if > 1 year) YTD 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years Since Credit Suisse (Lux) Global Dividend Plus Equity Fund MSCI World (NR) Difference Tracking Error Information Ratio Historical performance indications and financial market scenarios are no reliable indicators of future performance. The performance data do not take into account the commissions and costs incurred on the issue and redemption of fund units. Sources: Credit Suisse AG / Statpro as of April

23 Product Information Portfolio Breakdown Key Figures Sector Allocation in % Fund Benchmark Relative Regional Allocation in % Fund Benchmark Relative Total net assets in mn USD 140 Ann. volatility Fund (ex-post, 3Y) in % 9.3 Ann. volatility Benchmark (ex-post, 3Y) in % 10.5 Beta (ex-post, 3Y) 0.85 Tracking error (ex-post, 3Y) in % 3.0 Number of positions 102 Top 10 Holdings in % Microsoft Corp 2.7 JPMorgan Chase & Co 2.5 Intel Corp 2.4 Merck & Co Inc 2.3 Altria Group Inc 2.3 Pfizer Inc 2.0 Chevron Corp 1.8 General Electric Co 1.8 Lockheed Martin Corp 1.7 Kimberly-Clark Corp 1.7 Financials Health Care Information Technology Consumer Discretionary Industrials Consumer Staples Energy Telecommunication Services Materials Utilities Real Estate Cash/Cash Equivalents Dividend Yield (FY1) in % Dividend yield Fund 3.8 Dividend yield Benchmark 2.5 Americas Europe Asia-Pacific ex Japan Japan Mideast/Africa Cash/Cash Equivalents This is an indicative asset allocation that may change over time. Historical performance indications and financial market scenarios are no reliable indicators of future performance. The performance data do not take into account the commissions and costs incurred on the issue and redemption of fund units. Sources: Credit Suisse AG / Statpro as of April

24 Product Information Benefits and Risks Benefits Offers a compelling investment strategy amid uncertainty over investment returns. Seeks to generate attractive dividend yields and additional capital growth. A robust, proven, and systematic investment process that combines quantitative screening with Credit Suisse s HOLT TM valuation tool. A stable investment team with a disciplined investment process, strong risk management, and independent controls. Risks No capital protection. Focusing on dividend yields can produce substantial sector concentrations. The total return (including capital growth) may fluctuate according to market conditions. Equity market returns can be volatile over the short term. Investments in foreign currency are not hedged. April

25 Credit Suisse (Lux) Global Dividend Plus Equity Fund Contents Summary Reasons to Invest Investment Process Product Information Appendix April

26 Appendix Management Team Dr. Felix Maag Dr. Felix Maag, Director, is a Senior Portfolio Manager in the Global Dividend Yield team. He completed his master s degree in Business Administration and Economics at the University of St. Gallen in He then worked as a research assistant at the Swiss Institute of Banking and Finance at the University of St. Gallen. Felix received his doctorate in Finance from the University of St. Gallen in From 1999 to 2001, he was a Portfolio Manager for Swiss equity mandates in Credit Suisse s division. He has been a Portfolio Manager for global equities since August 2001 and currently heads up the Global Dividend Yield team. From March to August 2002, Felix worked in equity research at Credit Suisse s unit in New York. He is a Chartered Financial Analyst (CFA). Nicola Nolè Nicola Nolè, Director, is a Senior Portfolio Manager in the Global Dividend Yield team, where he is jointly responsible for managing the high dividend equity yield funds and mandates. Before taking on this role, Nicola spent almost five years as a Senior Portfolio Manager with the European Equity team in Credit Suisse s Asset Management division, where he covered financial stocks. He previously worked in various functions in one of Credit Suisse s manager selection teams, where he also looked after discretionary mandates. Nicola completed a banking apprenticeship before qualifying as a Certified Business Administrator (HF). He began his career in 1984 at what was then the Swiss Bank Corporation. He is a Certified European Financial Analyst (CEFA). Aude Scheuer Aude Scheuer, Director, is a Senior Portfolio Manager in the Global Dividend Yield team within Credit Suisse s division. She is jointly responsible for managing high dividend yield equity products and mandates. She was previously responsible for the European energy sector, including the MACS European equity funds. Aude worked as an M&A analyst at Credit Suisse s Investment Bank division from 2006 to During her studies, she spent six months working as an equity analyst for a value investing company in Beijing. Aude holds a bachelor s degree in Economics from the University of St. Gallen and is a Chartered Financial Analyst (CFA). April

27 Appendix Disclaimer The information provided herein constitutes marketing material. It is not investment advice or otherwise based on a consideration of the personal circumstances of the addressee nor is it the result of objective or independent research. The information provided herein is not legally binding and it does not constitute an offer or invitation to enter into any type of financial transaction. The information provided herein was produced by Credit Suisse Group AG and/or its affiliates (hereafter "CS") with the greatest of care and to the best of its knowledge and belief. The information and views expressed herein are those of CS at the time of writing and are subject to change at any time without notice. They are derived from sources believed to be reliable. CS provides no guarantee with regard to the content and completeness of the information and does not accept any liability for losses that might arise from making use of the information. If nothing is indicated to the contrary, all figures are unaudited. The information provided herein is for the exclusive use of the recipient. Neither this information nor any copy thereof may be sent, taken into or distributed in the United States or to any U. S. person (within the meaning of Regulation S under the US Securities Act of 1933, as amended). It may not be reproduced, neither in part nor in full, without the written permission of CS. Equities are subject to market forces and hence fluctuations in value, which are not entirely predictable. The fund is domiciled in Luxembourg. The representative in Switzerland is Credit Suisse Funds AG, Zurich. The paying agent in Switzerland is Credit Suisse AG, Zurich. The prospectus, the simplified prospectus and/or the Key Investor Information Document (KIID) and the annual and half-yearly reports may be obtained free of charge from Credit Suisse Funds AG, Zurich or from any branch of Credit Suisse AG in Switzerland. For Liechtenstein the document may only be distributed by licensed entities. The shares offered are exclusively offered to a limited group of investors. This document may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have personally been sent. This material and the transactions described therein are not nor have been subject to the review and supervision of the Liechtenstein Financial Market Authority. Copyright 2017 Credit Suisse Group AG and/or its affiliates. All rights reserved. April