Sandra Crowl, CAIA. Member of the Investment Committee

Transcription

1 Sandra Crowl, CAIA Member of the Investment Committee 1

2 An Independent and Entrepreneurial Group, Focused on a Single Vocation 26 YEARS OF INDEPENDENCE AND CONVICTION 57 BILLION EUROS IN ASSETS UNDER MANAGEMENT 1.9 BILLION EUROS EQUITY CAPITAL 242 EMPLOYEES WITH 30 FUND MANAGERS AND ANALYSTS 24 FUNDS (15 INVESTMENT STRATEGIES) COMMERCIAL DISTRIBUTION IN 13 COUNTRIES (12 IN EUROPE AND SINGAPORE) 2 Source: Carmignac, 30/06/2015

3 Risk Managers 3

4 Carmignac Patrimoine: 26 years of Conviction and Risk Management Strong long-term conviction based upon major structural themes Tactical management substantiated by significant adjustments in times of turbulent markets 1991 Gulf War Performance since launch 1994 Credit crash 1997 Asian crisis 2000 Tech bubble 2008 Subprime crisis 2008 Global financial Crisis +762% CARMIGNAC PATRIMOINE A EUR acc +336% REFERENCE INDICATOR* September 11th 2011 European sovereign Debt crisis 4 *50% MSCI ACWI (EUR) (net dividends reinvested) + 50% Citigroup WGBI All Maturities (EUR) Source: Carmignac at 30/06/2015 Past performance is not a reliable indicator of future performance.

5 Riding the market A complex combination of time horizons SHORT- TERM RISK THE SECULAR TREND 5

6 Carmignac Patrimoine 3 performance drivers to take advantage of worldwide opportunities Global Bonds Min 50% Government and corporate bonds of both developed and emerging countries INTEREST RATE RISK A broad modified duration range Global Equities Max 50% Global stock-picking based upon our long-term investment themes and macroeconomic analysis EQUITY RISK Flexible equity exposure 0% 50% Currencies Taking advantage of the appreciation or protecting against the depreciation of currencies 6

7 Long Term Opportunities 7

8 Looking for New Investment Opportunities since 1989 Anticipating long term investment themes Launch of Carmignac Investissement Launch of Carmignac Patrimoine 1989 Global Equities: 51% of emerging stocks in 1989 Launch of Carmignac Emergents 1997 Launch of Carmignac Portfolio Commodities 2003 Recruitment of David Older to manage technology holdings 2015 Global Equities: 30% of technology stocks in

9 China: Opening of Financial Markets will provide Opportunities as Long As Risks Are Managed Country weight of the MSCI EM Index (Emerging Markets) Russia 3,8% Mexico 4,6% India 7,0% Brazil Others 17,0% 7,3% S. Africa 7,4% Current Status Emerging Markets China 25.3% Taiwan 13,0% CHINA 25.3% S. Korea 14,6% Potential Initial Step: a partial inclusion of 5% of A-shares and ADRs Russia 3,7% Mexico 4,3% India 6,5% Brazil 6,8% Others 16,0% Emerging Markets S. Africa 6,9% Taiwan 12,1% China 30.0% CHINA 25.2% S. Korea 13,7% CHINA A-Shares 1,3% CHINA Overseas 3,5% Potential Full Inclusion (including all the Chinese markets) Russia 3,0% Mexico 3,6% India 5,2% Brazil 5,5% S. Africa 5,6% Taiwan 9,8% Others 12,8% Emerging Markets S. Korea 10,9% China 43.6% CHINA 20.3% CHINA A-Shares 20,5% CHINA Overseas 2,8% 9 Source: MSCI Inc. CONSULTATION ON CHINA A-SHARES INDEX INCLUSION ROADMAP, June 2015

10 Example of Chinese «A-share»: Midea Leading Chinese air conditioning and electrical appliances manufacturer MIDEA Evolution of Midea s share price (CNY) and the A-Shares market index Fundamentals Strong R&D, a new range of smart appliances that should support a solid revenue growth. Strong positions in small electrical appliances (+16%) and air conditioning (+10%) Earnings growth estimates of +20% thanks to a margin expansion driven by productivity and lower raw material input prices Reasonable 2015 P/E 11x Our view Urbanisation will support the demand for small electrical appliances; current penetration rate is low Drivers: product innovation and revenue growth Entry point A-shares +31.8% Midea +31.5% 10 Source: Carmignac, Bloomberg, 31/07/2015 Base 100 as of 03/12/2014

11 Technology: Discovering Tomorrow s Growth Internet leaders United States / Latin America Amazon Facebook Google Mercado Libre Biotechnologies China Baidu Tencent 30% of C. Investissement United States Celgene Intercept Pharmaceuticals Thermo Fisher Scientific 11 Source: Carmignac, 30/06/2015

12 Valuation Issues? Avoid Market Short-Termism and Focus on Long Term Earnings Growth Facebook EPS (USD) 4,00 3,00 2,00 Actual Best Standard 1,00 0,00-1, Source : Bloomberg, July 2015

13 Long Term Earnings Power Analysis: Key to Leverage Market Short-Termism Altice-Numericable: strong case of Industry consolidation Club Internet 5% Cable 5% Tele2 3% Liberty Surf 3% Alice 3% AOL 4% Neuf 13% Iliad 18% 18/03/2014: Positions on Altice and Numericable initiated in global Funds* Further market consolidation likely France Telecom 47% Numericable 4% Bouygues 8% Iliad 22% Others 3% SFR 21% France 2005 France 2012 Stock performance since IPO We took some profits We rebuilt our positions Orange 41% Altice +337% Numericable +210% Stoxx Europe % Short term catalysts: why Altice over Bouygues? Lower regulatory risk Easier to value equity component as Numericable is listed SFR/Numericable synergies underestimated by market Medium to long term catalysts Investment Case Leaner cost structures in cable industry Not subject to tight regulation like Telco Scarce infrastructure Not many listed players left: France is the last opportunity in Europe Now looking at applying the same strategy he used in France to Portugal Telecom This is in our view the proof that the value creation journey is still in its early phase 13 *Carmignac Patrimoine and Carmignac Investissement Source: Carmignac, Bloomberg as of 30/06/2015

14 Credit: European Bank Bonds Continue to Offer Solid Advantages Spreads (bp) 800 European subordinated financial sector Subordinated financials Industry Attractive credit spreads Promising fundamentals: A sector benefiting from the long process of improving and shrinking banks balance sheets The European subordinated and contingent convertible segments have proved resilient Source: Bloomberg, 31/05/2015

15 Credit: Bonds Offering the Widest Spreads Have Cushioned the Impact of Higher Yields 6% Performance since January 2015 Sensitivity to interest rates 4% 2% 0% -2% 15 Source: RBS Credit Strategy, BoAML, 24/06/2015

16 Short Term Risks 16

17 United States: the Markets Are Pricing In a Rise Below that of the Federal Reserve s Forecasts The convergence job has not been completed risk of higher interest rates Median of Fed members - March 2015 US 2-year rate Fed fund futures * Estimates Source: Evercore ISI, Portfolio Strategy, 25/06/2015

18 Average Equity Markets Performance for a 100bp Increase in the US 10-Year Yield* 16% 14% 12% In 11 periods out of 12 emerging markets returned a positive performance 10% 8% 6% 4% 2% 0% US (S&P 500) Europe (Stoxx 600) Japan (Nikkei) Emerging Markets (MSCI EM) 18 * In the 12 periods where US rates have increased significantly Source: Carmignac, Bloomberg, 03/07/2015

19 The Case for RMB Devaluation and further depreciation China and EM FX index against the US dollar RMB/USD spot deviation from PBOC fixing Chinese RMB Appreciation pressures Band Max Depreciation EM currency Depreciation pressures Band Min Chinese foreign exchange reserves Evolution of USD/RMB over the last year (inverted scale) Total reserves FX reserves 6,0 6,1 6,2 6,3 6,4 6,5 19 Sources: Top LHS: Base 100: January Emerging Advisors Group, August 2015 Top RHS: Carmignac, CEIC, August 2015 Bottom: Bloomberg, 18/08/2015

20 The RMB Devaluation Will Add to a Weak EM Currency Trend Asian currencies have felt the rotation form tradable sector to service sector YTD performance of Asian currencies vs the USD (as at 19/08/2015) Hong Kong Dollar (HKD) Taiwanese Dollar (TWD) Chinese Renminbi (RMB) Offshore Chinese Renminbi (CNH) Philippine Peso (PHP) Indian Rupee (INR) Japanese Yen (JPY) Singapore Dollar (SGD) Thai Baht (THB) South Korean Won (KRW) Indonesian Rupiah (IDR) Malaysian Ringgit (MYR) -14,32% -10,23% -7,52% -7,95% -5,67% -2,39% -2,95% -3,45% -3,45% -3,48% -3,64% -0,01% -16% -14% -12% -10% -8% -6% -4% -2% 0% 20 Source Bloomberg, 19/08/2015

21 China+ slowdown can great bigger headwinds for DM Exports to China and Hong-Kong and Pac Rim* (% of total exports, 3-month average) Japan Jun: 52.5% Exports to China and Hong-Kong and Pac Rim* (% of nominal GDP) Japan 2014: 8.0% US May: 21.0% Germany 2014: 4.5% US 2014: 1.9% Germany May: 11.1% 21 *India, Korea, Taiwan, Indonesia, Malaysia, Philippines, Singapore, Thailand Source: Cornerstone Macro, 28/08/2015

22 Macro-economic Backdrop 22

23 The Shape of Growth Post-2008 GDP Normal cycle United States Eurozone Time Bottom of cycle Bottom of cycle 23 Source: Carmignac

24 QE Prevented Depression but did not Create Growth 6% GDP growth, yoy 4% United States 2% 0% -2% -4% Japan -6% US QE set up -8% -10% Source: Bloomberg, 16/06/2015

25 Japanese Consumer Spending has not Yet Recovered After Last Year s VAT Hike, in Part Due to Still-Depressed Wages Japan real consumer spending Japan real average monthly earnings (seasonally adjusted, 3-month average) Q2 2015: trillion yen June: Source: Cornerstone Macro, 28/08/2015

26 Europe: the Debt Burden Needs Inflation and/or Low Interest Rates Europe must also pursue its structural reforms to ensure the Eurozone debt s sustainability Primary Budget Surplus needed to stabilize Debt Levels Current primary budget surplus Difference Germany -0.5% 2.0% 2.5% France 1.3% -2.0% -3.3% Italy 4.2% 1.5% -2.7% Spain 1.3% -3.0% -4.3% Greece 0.0% 6.5% 0.0% -6.5% Ireland -1.3% 0.0% 1.3% Portugal 1.6% 0.0% -1.6% 26 Source : Carmignac at 08/07/2015

27 Underlying Trends are Deflationary, a RMB Depreciation Won t Turn This Trend Producer inflation Asia PPI 1 OECD PPI Average of China, Singapore, Hong-Kong, Thailand, Malaysia, India, Pakistan, South Korea, Philippines. (local currency prices) 2. USD prices Source: OECD, DataStream, NBER; Minack Advisors

28 Sovereign Yields: Past The Absolute Low, But Lower For Longer 30 year treasury yields: Japan, Germany & US US recession started Q Euro recession started Q Japan recession started Q US (top dates) Japan (bottom dates) Germany (top dates) 28 Source: Bloomberg, Datastream, Minack Advisors Japan 30 year estimated pre-1999

29 Choosing the Appropriate Global Style SPECULATIVE Value + Growth (GARP) High risk Distressed stocks Small & Mid caps Momentum SCARCE GROWTH Growth Low risk High quality Large caps Momentum SPECULATIVE SCARCE GROWTH 1 2 CAPITAL PRESERVATION CAPITAL PRESERVATION 3 4 RECOVERY RECOVERY Low risk High quality Large caps Value High risk Distressed stocks Small & Mid caps Momentum Source: Carmignac 29

30 Example of Positioning in a Scarce Growth Environment Carmignac Investissement: Evolution of Sector Breakdown in % Carmignac Investissement Breakdown as % of assets 30% 25% Sector Health Care 31/12/ /12/ % 20.5% 20% 15% 10% 5% Finance Information technology Materials 31.8% 17.3% 8.5% 14.0% 5.4% 3.2% 0% Energy 7.0% 2.7% IT Health Care Material Finance Energy 30 Source: Carmignac at 30/01/2015

31 Carmignac Patrimoine 31

32 Our Performance Drivers and Risk Management Global growth remains moderate Structural opportunities in reformist emerging countries OUR CONVICTION- BASED MANAGEMENT Gradual normalisation of the US Federal Reserve s key interest rates Management of risks surrounding the Greek crisis 32

33 Carmignac Patrimoine: Bond Allocation Fixed Income Strategy Core strategies/long-term convictions Focus on spreads Tactical strategies/management of modified duration and currency exposure Core government bonds 316 bp Credit 180 bp Finance: 125 bp Others: 55 bp Emerging market local debt 33 bp Brazil: 18 bp India: 15 bp Peripheral sovereign debt 228 bp Portugal: 93 bp Ireland: 51 bp Spain: 45 bp Italy: 30 bp Greece: 6 bp US: 341 bp UK: -25 bp Total modified duration: 759 bp 33 NB: the list of contributions is not exhaustive. Source: Carmignac, 27/08/2015

34 Carmignac Patrimoine Portfolio Construction Tactical Management INTEREST RATE 10% 18% EM STRUCTURAL REFORMS GLOBAL LEADERS CREDIT 23% 176 bp Interest Rate Sensitivity Overall Germany US % US STRUCTURAL GROWTH PERIPHERAL SOVEREIGN DEBT 18% 250 bp Equity exposure EQUITY 0% 50% 4% OTHERS EQUITIES EM LOCAL DEBT 0% CURRENCY 11% CASH 36 bp USD EUR 0% 100% 0% 100% 34 Source : Carmignac Left: 31/07/2015 Right: 27/08/2015

35 Carmignac Investissement Portfolio Construction Tactical management 39.2% GLOBAL LEADERS ENERGY 1.3% EQUITIES 28.6% US STRUCTURAL GROWTH GOLD MINES 0.6% MATERIALS 1.2% OTHER 5.8% EXPOSURE EQUITIES 79% 0% 100% MAIN DERIVATIVE POSITIONS EURO STOXX 50-5% CHINA -9% NIKKEI -3% CURRENCIES 22.5% EMERGING MARKET STRUCTURAL REFORMS CASH 0.8% USD EUR JPY 56% 0% 10% 100% 0% 100% 9% 0% 100% 35 Source : Carmignac Left: 31/07/2015 Right: 21/08/2015

36 Carmignac Patrimoine Equity Exposure Evolution 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 36 Source: Carmignac Gestion, 31/08/2015

37 Dollar: Tactically Managing the Exposure of the Greenback Dollar allocation of Carmignac Patrimoine (%) Source: Carmignac, 27/08/2015

38 Our Global Hedging Strategy Following China Growth Weakness and RMB Devaluation Stock trimming of China sensitive stocks after good performance Midea Tencent Inditex Fixed income modified duration tactical management US T note protection Global Hedging Strategy Tactical equity hedging HSI H Shares Nikkei Eurostoxx S&P Euro reweighting, hedges on vulnerable EM currencies RMB SGD BRL WON * new 38

39 Equity exposure Active Management of Exposure Levels A comprehensive approach Carmignac Patrimoine Dollar exposure Modified duration Dollar Exposure Equity exposure Euro Stoxx 50 exposure Modified Duration 39 Source: Carmignac, 30/07/2015

40 Why Carmignac Patrimoine? 1 LONG TERMPERFORMANCE VIA A CONVICTION BASED INVESTMENT APPROACH Long term investment themes that are strong performance drivers 2 3 DIVERSIFICATION THANKS TO A TRUE GLOBAL APPROACH Great freedom to pick the best asset classes, countries, financial instruments CONTINUOUS RISK MANAGEMENT VIA A FLEXIBLE APPROACH Great leeway in terms of equity exposure, modified duration management and active currency management 40

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