AMG Managers Pictet International Fund (Class N: APINX / Class I: APCTX / Class Z: APCZX) September 2017

Transcription

1 AMG Managers Pictet International Fund (Class N: APINX / Class I: APCTX / Class Z: APCZX) September 2017

2 Table of contents AMG Funds Overvie Pictet Firm Overvie AMG Managers Pictet International Fund Appendix Biographies AMG Appendix 2

3 AMG Funds Overvie The largest netork of institutional quality boutique investment solutions through a single point of access More than 100 actively managed products covering the risk spectrum for investors searching beyond the index Unrivaled access to insights of over 30 independent and autonomous investment managers $69.6 billion Assets Under Management & Service SMA $18.4 billion Sub-advisory $10.1 billion Mutual Funds $41.1 billion Assets Under Management Funds: $36.1 billion SMA: $235.7 million Assets Under Service Funds: $5.0 billion SMA: $18.1 billion Sub-advisory: $10.1 billion As of September 30,

4 Pictet Firm Overvie 4

5 The Pictet Group Oned and managed by 6 Partners and 37 Equity Partners $500B in assets under management and custody as of June 30, 2017 Prime 1/Aa2 (Moody s) F1+/AA- (Fitch) 3 Divisions Asset Management Wealth Management Asset Servicing Founded in 1805: Succession and transmission model is unchanged for over 200 years 3,932 employees 26 offices in 17 countries Please note that the assets stated above exclude double counting. Source: Banque Pictet & Cie SA, as of June 30,

6 The Pictet Group has one focus: Asset and ealth management Asset Management Asset management for institutions and financial intermediaries Mission: To build lasting partnerships ith our clients by exceeding their expectations for investment performance and service Pictet Group Wealth Management Private banking, ealth solutions and family office services Asset Services Fund services, custody and trading 6

7 Pictet Asset Management Since 1980 Assets Under Management USD 185 billion June 30, 2017 Non-Siss clients > 75% of revenues 17 offices orldide 7 investment centres 836 employees 1 External clients > 90% of revenues 147 Portfolio Managers 86 Analysts, Strategists & Economists 1 Including 300+ investment professionals: portfolio managers, analysts, strategists, economists, traders, risk managers. Source: Pictet Asset Management, as of June 30,

8 AMG Managers Pictet International Fund 8

9 Pictet investment philosophy We invest in businesses that have the ability to generate strong cash flos, reinvest those flos in high-returning businesses, and that trade belo a conservative estimate of intrinsic value. We believe that this approach conducted in a disciplined ay leads to superior returns. Pictet Asset Management 9

10 Pictet s approach focuses on 4 driver Cash flo Cash cannot be manipulated or distorted by accounting policies Cash is the life blood of a company and gives the ability to gro and pay dividends Groth and reinvestment opportunities We seek businesses ith scope to gro by investing the cash they generate in a ay that drives groth in free cash flo per share Return on investment Cash flo groth needs to be profitable after taking into account the capital employed to generate those cash flos While history is a guide, e focus on the incremental rate and sustainability of future investment returns Value Pictet s objective is simple: establish hat something is orth, and pay a lot less for it Pictet s assessment of this absolute or intrinsic value creates the key reference point for a patient and disciplined investment process Cash flo is the net amount of cash and cash-equivalents moving into and out of a company. 10

11 Pictet s competitive edge What e do... What e don t do... Behavior Think and act long term Only invest in companies e understand Accountable and passionate team Trade on quarterly expectations Follo the crod Consensus investing Information Conduct independent research Rely on third-party advice Process Focus on cash flo and reinvestment rate Seek opportunities off the beaten track Base Pictet s vie on earnings Emphasize relative valuations Focus on benchmark constituents 11

12 EAFE investment professionals Developed Equities Group European Equities (4) Fund s Portfolio Management Team Fabio Paolini 1 See-Kheng Lee Benjamin Beneche Charles Price 2 Far East Equities (6) Global Sector Analysts (8) Tokyo Analysts (3) Specialist Units Sector & Theme Funds (34) Emerging Market Equities (21) Small Cap Equities (4) 1 Lead Portfolio Manager ( PM ) for the Fund 2 Product Specialist 12

13 Pictet s philosophy influences every step of its investment process for the Fund Investment Philosophy: discipline at every step of the process Narro the universe Who Idea Generation Core Research List Team experience Intelligent application of Pictet Asset Management ( PAM ) research resource Screening Fund s PMs PAM Equity Analysts Emerging Markets, Theme Fund, Small Cap Short List In-depth fundamental analysis Idea discussion Team revie/challenge Research focus Cash groth Value creation Intrinsic value Who Fund s PMs PAM Equity Analysts Build and monitor Who Fund Portfolio Highest-conviction ideas balancing risk/return Volatility/liquidity adjusted positions Diversified investment drivers Buy/sell discipline Fund s PMs Universe ü û Short List ü? û Fund Portfolio Watch List There is no guarantee that the investment strategies shon on pages ill ork under all market conditions, and each investor should evaluate his or her ability to invest for the long term, especially during periods of donturns in the market. 13

14 What e look for in companies Focused Fundamental Analysis: Groth Value creation Valuation Ho e define it Future groth / sustainability of cash flos Profitable future groth A price that fails to reflect long-term groth and value-creation potential Focus of fundamental analysis Business models e understand Industry dynamics Business franchise Management strategy Detailed financial analysis Cash-flo and invested capital modelling Management strategy and corporate governance Incorporate ESG factors into our assessment of business risk Cash flo. Why? 1) Hard to manipulate 2) Can be reinvested into the business Cash-flo life cycle; FCF yield, 5-year IRR, DCF/CFROI 1 Quantify both upside and donside risk What e like to see Clear and predictable groth drivers Long-term durability Differentiated vie Business models e understand Detailed financial analysis Potential to reinvest cash flo at rates above the company s cost of funding Good capital allocation Company trading belo a conservative assessment of intrinsic value 1 Please see definitions on page 21 14

15 AMG Managers Pictet International Fund Portfolio Characteristics Approach Horizon Universe Style Bottom-up driven Focus on absolute value Long-term focus Lo turnover Flexibility to go here the best investments exist Active management ith GARP style Holdings Highly active Allocation Position sizing c. 70 names as of 09/30/17 Active share >80% Driven by stock selection Sector +/-10% active Region +/-20% active Small Cap max 20% Emerging Markets max 10% Min +0.5% active Max 4% active The tracking error (TE) shon above indicates an approximation of the anticipated difference beteen the Fund's returns and those of its benchmark index, and provides an indication of the probable characteristics in normal market conditions. It is not intended to be a prediction or guarantee of future performance. Please see definitions on page

16 Fund Characteristics (as of 09/30/17) Characteristics 1 Net Assets ($M) Holdings Weighted Avg. Trailing 5-Yr EPS Market Cap ($M) Weighted Avg. P/E 2 Groth (%) 3,4 Fund , MSCI EAFE Index , Sector Weightings (%) 5 Sector Fund Index Consumer Discretionary Industrials Financials Consumer Staples Health Care Telecommunication Services Information Technology Energy Materials Utilities Real Estate Cash & Other Top Five Countries (%) Country Fund Index Japan United Kingdom France Spain Belgium Total Top Five Holdings (%) 6 Company % of Net Assets Anheuser-Busch InBev SA 3.69 GlaxoSmithKline PLC 2.69 Vinci SA 2.62 SoftBank Group Corp 2.57 Japan Tobacco Inc 2.46 Total Source: FactSet. Past performance is no guarantee of future results. 1 Characteristics derived from FactSet. 2 Weighted harmonic average. 3 Weighted average. 4 Annualized. 5 Weightings may not total 100% due to rounding. 6 Mention of a specific security should not be considered a recommendation to buy or a solicitation to sell that security. Holdings and portfolio characteristics are subject to change. 16

17 Fund Profile Geographic profile (%) Fund Benchmark Active Weight Market capitalization profile (%) Fund Benchmark Active Weight Total Europe Austria Belgium Denmark Finland France Germany Ireland Italy Luxembourg Netherlands Noray Portugal Spain Seden Sitzerland United Kingdom Asia ex Japan Australia China Hong Kong Mega Cap (> USD 75B) Large Cap (USD 10B 75B) Mid Cap (USD 3B 10B) Small Cap (< USD 3B) Ne Zealand Singapore South Korea Portfolio characteristics are subject to change. Fund rebalanced to exclude cash. Benchmark: MSCI EAFE Index. Source: AMG Funds, as at September 30,

18 Fund Performance Average Annual Returns (%) 1,2 (as of 9/30/17) QTD YTD 1 Yr 3 Yr Since Inception APINX (Class N) APCTX (Class I) APCZX (Class Z) MSCI EAFE Index Fund Facts Share Class Ticker Expense Ratio (Gross/Net) 5 Minimum Initial Investment 12b-1 Fees Class N APINX 1.27%/1.26% $2, % Class I APCTX 1.02%/1.01% $100,000 Class Z APCZX 0.95%/0.94% $5,000,000 The performance data shon represents past performance. Past performance is not a guarantee of future results. Current performance may be loer or higher than the performance data quoted. The investment return and the principal value of an investment ill fluctuate so that an investor s shares, hen redeemed, may be orth more or less than their original cost. For performance information through the most recent month s end, please call or visit our ebsite at amgfunds.com. 1 Returns for periods less than one year are not annualized. 2 Prior to October 1, 2016, the Fund as knon as ASTON/Pictet International Fund. 3 Since the inception of the Fund s Class N and I shares on April 14, Since the inception of the Fund s Class Z shares on September 29, The Fund s Investment Manager has contractually agreed, through at least October , to limit Fund operating expenses. The net expense ratio reflects this limitation, hile the gross expense ratio does not. Please refer to the Fund s prospectus for additional information on the Fund s expenses. 18

19 Why the AMG Managers Pictet International Fund? Information Efficient leverage of broad resources Independent thinking Process Informed by philosophy at every step Disciplined execution Behavior Think and act long term Small-team accountability Performance Strong 3-year and since inception track record 19

20 Appendix 20

21 Definitions Standard Deviation: A statistical measure of the range of a portfolio's performance. A high standard deviation suggests a ider range of returns and indicates that there is a greater potential for volatility. By definition, approximately 68% of the time, the total return is expected to differ from its mean total return by no more than plus or minus the standard deviation figure. Ninety-five percent of the time, the portfolio's total return should be ithin a range of plus or minus to times the standard deviation from its mean. (These ranges assume that returns fall in a typical bell-shaped distribution.) For example, an investor can compare to portfolios ith the same average monthly return of 5.0%, but ith different standard deviations. The first has a 3-year standard deviation of 2.0, hich means that its range of returns for the past 36 months has typically remained beteen 1% and 9%. On the other hand, assume that the second has a 3-year standard deviation of 4.0 for the same period. This higher deviation indicates that this portfolio has experienced returns fluctuating beteen -3% and 13%. Trailing 5-Year Earnings: The eighted median of earnings annualized from the previous 5 years. Tracking Error (TE): Is the divergence beteen the price behavior of a position or a portfolio and the price behavior of a benchmark. Internal Rate of Return (IRR): A metric used in capital budgeting measuring the profitability of potential investments. Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flos from a particular project equal to zero. Discounted Cash Flo (DCF): A valuation method used to estimate the attractiveness of an investment opportunity. DCF analysis uses future free-cash-flo projections and discounts them to arrive at a present-value estimate, hich is used to evaluate the potential for investment. Active Share: The proportion of stock holdings in a mutual fund's composition that as different from the composition found in its benchmark. The greater the difference beteen the asset composition of the fund and its benchmark, the greater the active share. Cash Flo Return on Investment (CFROI): A valuation model that assumes the stock market sets prices based on cash flo, not on corporate performance and earnings. Free Cash Flo (FCF): A measure of financial performance calculated as operating cash flo minus capital expenditures. Free cash flo (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base. Weighted Average Market Capitalization: A stock market index eighted by the market capitalization of each stock in the index. In such a eighting scheme, larger companies account for a greater portion of the index. Most indices are constructed in this manner, ith the best example being the S&P 500. Earnings Per Share (EPS): A company s profits per share of common stock. Price/earnings Ratio (P/E): A comparison of the company's closing stock price and its trailing 12-month earnings per share. Groth at a Reasonable Price (GARP): An equity investment strategy that seeks to combine tenets of both groth investing and value investing to find individual stocks. 21

22 Biographies 22

23 Portfolio Management Biographies Fabio Paolini Head of EAFE Equities EAFE Equities Team Fabio Paolini joined Pictet Asset Management in 1997 and is Head of EAFE Equities in the Developed Equities team, ith a focus on European Equities. He began his career in Pictet s Financial Research department in 1994, initially in the Economics team and then in the European equities research team. Fabio graduated ith a degree in Economics from the University of Siena in Italy. He obtained a CFPI/AZEK diploma in 1996 and is a Chartered Financial Analyst (CFA) charterholder. See-Kheng Lee Senior Investment Manager EAFE Equities Team See-Kheng Lee joined Pictet Asset Management in 2007 and is a Senior Investment Manager in the Developed Equities team ith specific responsibility for EAFE and Asian Equities. She began her fund management career at Norich Union in 1995 (no Morley Fund Management, part of AVIVA) as a fund manager focusing on Asian/Emerging Markets. She has previously orked for Phillips and Dre (no part of UBS), The Central Bank of Malaysia and the Economist Intelligence Unit. See-Kheng has a BA in Philosophy, Politics and Economics (PPE) and a PhD in Economics from Oxford University. She is also an associate membership of the UK Society of Investment Professionals (UKSIP). Benjamin Beneche Senior Investment Manager EAFE Equities Team Benjamin Beneche joined Pictet Asset Management in 2008 and is a Senior Investment Manager in the EAFE Equities team ith a specific focus on Japanese Equities. Ben graduated from York University ith a first class honours degree in Economics and Economic History. He also holds the Investment Management Certificate (IMC) and he is a Chartered Financial Analyst (CFA) charterholder. 23

24 Portfolio Management Biographies Charles Price Senior Product Specialist Developed Equities Charles Price joined Pictet Asset Management in November 2008 and is a Product Specialist in the Developed Equities team. Before joining Pictet, his entire investment career had been spent ith Schroder Investment Management in London here he started as a graduate in During his 17 years ith the firm he orked as an equity analyst, a UK equity fund manager, and also held client-facing roles. For the last seven years he orked as a product manager, initially for the Japanese Equity product, and more recently the Global and EAFE Equity products. Charles graduated from Oxford University ith a BA (Hons) in Zoology. 24

25 Disclosures Investors should carefully consider the Fund s investment objectives, risks, charges and expenses before investing. For this and other information, please call or visit amgfunds.com for a free prospectus. Read it carefully before investing or sending money. A short-term redemption fee of 2% ill be charged on shares held for less than 90 days. Investments in international securities are subject to certain risks of overseas investing, including currency fluctuations and changes in political and economic conditions, hich could result in significant market fluctuations. The Fund is subject to the risks associated ith investments in emerging markets, such as erratic earnings patterns, economic and political instability, changing exchange controls, limitations on repatriation of foreign capital, and changes in local governmental attitudes toard private investment, possibly leading to nationalization or confiscation of investor assets. Investing in initial public offerings (IPOs) is risky, and the prices of stocks purchased in IPOs tend to fluctuate more idely than stocks of companies that have been publicly traded for a longer period of time. Stocks purchased in IPOs generally do not have a trading history, and information about the companies may be available for very limited periods. The Fund is subject to risks associated ith investments in mid-capitalization companies such as greater price volatility, loer trading volume, and less liquidity than the stocks of larger, more-established companies. The Fund is subject to risks associated ith investments in small-capitalization companies, such as erratic earnings patterns, competitive conditions, limited earnings history and a reliance on one or a limited number of products. The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. The MSCI EAFE Index consists of the folloing 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, Ne Zealand, Noray, Portugal, Singapore, Spain, Seden, Sitzerland and the United Kingdom. Please go to msci.com for most current list of countries represented by the index. Unlike the Fund, the MSCI EAFE Index is unmanaged, is not available for investment and does not incur expenses. AMG Funds are distributed by AMG Distributors, Inc., a member of FINRA/SIPC. Not FDIC Insured May Lose Value Not Bank Guaranteed PT518 25