A different path to yield

Transcription

1 A different path to yield New ways to reach your destination For qualified investors only This document is reserved and must be given in Switzerland exclusively to Qualified Investors as defined by the Swiss Collective Investment Scheme Act of 23 June 2006 (as amended from time to time, CISA). Index Insights September 2017

2 Lyxor ETF Yield alternatives New ways to reach your destination Treading a new path 4 European yield alternatives 6 US yield alternatives 8 Global yield alternatives 10 Our product range 12 Knowing your risk 14 Lyxor International Asset Management ( LIAM ) or its employees may have or maintain business relationships with companies covered in its research reports. As a result, investors should be aware that LIAM and its employees may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Please see appendix at the end of this report for the analyst(s) certification(s), important disclosures and disclaimers. Alternatively, visit our global research disclosure website

3 3 Welcome Sometimes, the route you take is as important as your final destination Whether it s for the scenery, the exercise or the culture, getting off the beaten track to find what you re really looking for can be quite rewarding. And, because they are low-cost ETFs, you won't be paying your whole yield back in fees. Our range of yield alternatives - including listed infrastructure, property, and private equity companies provides a few new ways to get you what you need. Current dividend yields in different equity markets US listed real estate European core infrastructure Global listed real estate European listed real estate US core infrastructure Global listed private equity Global equities 4.22% 4.06% 3.99% 3.82% 2.95% 2.90% 2.42% Source: Lyxor International Asset Management, Bloomberg, FTSE Russell, as at 30 July Past performance is not a reliable indicator of future results. Figures correspond to dividend yield of the following indices: MSCI Daily TR Net World USD, FTSE USA Core Infrastructure Capped Net Tax Index, FTSE Developed Europe Core Infrastructure Capped Net Tax Index, FTSE EPRA/NAREIT Developed Index Net TRI USD, FTSE EPRA/NAREIT United States Index Net TRI USD, FTSE EPRA/NAREIT Developed Europe Net Return Index, Private Equity Total Index in USD.

4 Lyxor ETF Yield alternatives Treading a new path Alternative paths to yield may be found in listed infrastructure, property and private equity companies. Where will your search take you? US If passed, Trump s large scale fiscal spending plans could prove beneficial for core US infrastructure companies. US core infrastructure yield = 2.95% US equities don t tend to pay high dividends. Look for opportunities in listed real estate companies and REITs. US listed real estate companies/reits yield = 4.22% 2.95% 4.22% Global Listed international real estate stocks can play a key part in a globally-oriented income portfolio. Global listed real estate companies/reits yield = 3.99% Listed private equity firms open the doors to a traditionally illiquid asset class. 3.99% 2.90% Global listed private equity yield = 2.90%

5 5 Europe Europe s structural recovery could lift the construction sector and core infrastructure companies. European core infrastructure yield = 4.06% Real estate prices are moving north, and higher rates may lead to greater opportunities. 4.06% 3.82% European listed real estate companies/reits yield = 3.82% Source: Lyxor International Asset Management/Bloomberg, 30 July Past performance is not a reliable indicator of future results.

6 Lyxor ETF Yield alternatives European yield alternatives Rising GDP growth, soaring consumer confidence and tighter labour markets show recovery in Europe is underway. The story is becoming structural. Listed infrastructure companies Building activity is accelerating. Public investment is heavily focused on infrastructure. Investing in listed infrastructure companies can help you build income and provide some protection from rising inflation The FTSE Developed Europe Core Infrastructure Capped Net Tax Index provides exposure to European companies which derive at least 65% of their revenue from core infrastructure activities in Transportation, Telecommunications and Energy The companies own, operate, manage or maintain a network, structure or facility, and are inved in the processing or moving of goods or services, not the goods or services themselves Listed real estate companies and REITs Utra-low borrowing costs are driving real estate prices north. The threat of higher rates could create long-term opportunities. Listed real estate companies and REITs can offer a higher-than-average dividend yield, act as a natural inflation hedge and help diversify portfolios The FTSE EPRA/NAREIT Developed Europe Net Return Index comprises approximately 100 European real estate stocks and REITs What is a REIT? A Real Estate Investment Trust, or REIT, is a company that owns or finances income-producing real estate. Unlike typical real estate companies (which focus on developing properties to resell them), REITs generally buy and develop properties to hold them in their own investment portfolios. REITs aim to provide a regular income, a diversified portfolio of underlying properties and a link to the capital values of the portfolio holdings. A shareholder earns a share of the income, without actually having to go out and buy or finance a property.

7 7 The numbers that matter Listed infrastructure companies Index Number of stocks Top 3 sectors Top 3 countries Current dividend yield FTSE Developed Europe Core Infrastructure Capped Net Tax 33 Industrials 42.6% Telecommunication 34.1% Consumer Discretionary 9.2% Spain 25.5% UK 23.3% Italy 22.4% 4.01% 8.4% 90.4% 11.1% 11.3% MSCI Europe 444 Financials 21.1% Consumer Staples 14.1% Industrials 13.2% UK 24.7% France 15.8% Germany 14.6% 3.39% 13.54% 62.31% 9.66% 15.41% Source: Lyxor International Asset Management, Bloomberg, FTSE Russell. Data as at 31/07/2017. Past performance is not a reliable indicator of future results. Europe set to invest - EMU fixed capital formation (EU Commission forecast % GDP) Global economies need to invest US$3.3 trillion in infrastructure annually between 2016 and 2030* Private Sector, lhs General Government, rhs Chart source: Lyxor Cross Asset Research. Data as at April Past performance is not a reliable indicator of future results. *Source: McKinsey, Bridging Global Infrastructure Gaps, June Listed real estate companies and REITs Index Number of stocks Top 3 sectors Top 3 countries Current dividend yield FTSE Developed Europe Core Infrastructure Capped Net Tax 102 Real estate 89.5% Financials 9.6% Consumer Discretionary 0.7% Spain 25.5% UK 23.3% Italy 22.4% 3.82% -0.95% 71.05% 11.96% 15.39% MSCI Europe 444 Financials 21.1% Consumer Staples 14.1% Industrials 13.2% UK 24.7% France 15.8% Germany 14.6% 3.39% 13.54% 62.31% 9.66% 15.41% Source: Lyxor International Asset Management, Bloomberg, FTSE Russell. Data as at 31/07/2017. Past performance is not a reliable indicator of future results. Why Lyxor for European yield alternatives? Unique #1 The only European exposure to core infrastructure High yielding Dividend yields ranging from 3.8% to 4%* 7yrs Accomplished Lengthy track record for our FTSE EPRA/NAREIT Europe ETF *Source: FTSE Russell, as at 30 June Past performance is not a reliable indicator of future results

8 Lyxor ETF Yield alternatives US yield alternatives Talk of Trump s fiscal push was everywhere at the start of the year, yet its passage has been problematic. Should it eventually live up to expectations, real assets could be in for a boost. Listed infrastructure companies Trump plans to invest $1 trillion in US infrastructure. That s great news for the companies operating in the sector and investors looking to allocate to them. ETFs tracking listed infrastructure companies benefit from diversification, enhanced liquidity and low fees The FTSE USA Core Infrastructure Capped Net Tax Index provides exposure to US companies which derive at least 65% of their revenue from core infrastructure activities in Transportation, Telecommunications and Energy These core companies tend to be more defensive than broader infrastructure sectors Why core infrastructure works best The FTSE Core Infrastructure indices are focused purely on companies that own, operate, manage or maintain a particular network, structure or facility, and derive at least 65% of their revenue from infrastructure. Their main benefits are: Higher than average dividend yields Built-in inflation-linking Stabler revenues and cash flows Less sensitivity to short-term economic cycles Listed real estate companies and REITs Rate hikes may not, on the face of it, be good for REITs. They could however signal a stronger economy and property markets could be long-term beneficiaries. REITS investors may enjoy capital appreciation, generate aboveaverage income, and protect themselves against inflation. ETFs offer liquid and low cost access to s linked to a traditionally illiquid and expensive asset class The FTSE EPRA/NAREIT United States Index Net TRI USD comprises approximately 130 US real estate stocks and REITs

9 9 The numbers that matter Listed infrastructure companies Index Number of stocks Top 3 sectors Current dividend yield FTSE Developed Europe Core Infrastructure Capped Net Tax 64 Utilities 50% Industrials 21.9% Financials 14.3% 2.95% 12.7% 65.8% 10.4% 9.9% MSCI USA 634 Information Technology 22.9% Financials 16.0% Healthcare 14.2% 1.96% 15.31% 92.77% 7.90% 12.05% Source: Lyxor International Asset Management, Bloomberg, FTSE Russell. Data as at 31/07/2017. Past performance is not a reliable indicator of future results. What are you actually holding in the Core USA Infrastructure index? Category Breakdown ICB Subsector Breakdown Energy 60% Transportation 24% Telecomms 16% Trad electricity 35% Railroads 23% Speciality REITS 16% Multiutilities 10% Pipelines 10% Gas distribution 3% Water 2% Transport service 1% Telecomms equiment Chart source: Lyxor International Asset Management, FTSE Russell. Data as at 30 June 2017 Listed real estate companies and REITs Index Current Number of stocks Top 3 sectors dividend yield FTSE EPRA/NAREIT United States Index Net TRI USD 135 Real estate 54.8% Financials 44.3% Consumer Discretionary 0.7% 4.22% -7.20% 44.71% 13.89% 14.46% MSCI USA 634 Information Technology 22.9% Financials 16.0% Healthcare 14.2% 1.96% 15.31% 92.77% 7.90% 12.05% Source: Lyxor International Asset Management, Bloomberg, FTSE Russell. Data as at 31/07/2017. Past performance is not a reliable indicator of future results. Why Lyxor for US yield alternatives? #1 7yrs Unique The only US exposure to core infrastructure High yielding Dividend yields ranging from c. 3% to 4.2%* Accomplished Lengthy track record for FTSE EPRA / NAREIT United States ETF *Source: FTSE Russell, as at 30 June Past performance is not a reliable indicator of future results.

10 Lyxor ETF Yield alternatives Global yield alternatives Recent economic prints in the eurozone and Japan are flashing green. The underlying trend remains strong in the US. Economic recovery may finally be going global. Could it be time to broaden your horizons? Listed real estate companies and REITs REITs can provide a long-term inflation hedge, as growing inflation can lead to higher property values and rising rents The FTSE EPRA/NAREIT Developed Index Net TRI USD comprises approximately 330 real estate stocks and REITs from around the developed world Listed private equity firms Tracking a global index of the top listed private equity companies can offer the upside of diversified private equity performance combined with daily liquidity. The Private Equity Total Return index (PRIVEXD) tracks the performance of the 25 largest and most liquid global private equity stocks The index is diversified across firms inved in a number of activities, including leveraged buy-outs, venture capital and growth capital Why listed private equity with the PRIVEXD index? Unlike traditional unlisted private equity, PRIVEXD provides transparent exposure to private equity firms with no entry / exit constraints and no minimum investment amounts. Its main benefits are: Access to a representative benchmark of the entire publicly listed private equity universe More income than the MSCI World* Intraday liquidity and full transparency Potential outperformance over the long term * Source: Lyxor International Asset Management/Bloomberg, 30 July Past performance is not a reliable indicator of future results. Indices used in dividend yield comparison are the MSCI Daily TR Net World USD and the Private Equity Total Index in USD.

11 11 The numbers that matter Listed real estate companies and REITs Index Number of stocks Top 3 sectors Top 3 countries Current dividend yield FTSE EPRA/NAREIT Developed Index Net TRI USD 335 Real estate 70.2% Financials 28.9% Consumer Discretionary 0.6% US 53.2% Japan 10.3% Hong Kong 7.8% 3.99% -2.84% 41.14% 10.03% 10.87% MSCI World 1,654 Financials 19.1% Information Technology 15.9% Consumer Discretionary 12.4% US 57.1% Japan 8.7% UK 6.9% 2.43% 16.12% 73.32% 6.92 % 10.73% Source: Lyxor International Asset Management, Bloomberg, FTSE Russell. Data as at 31/07/2017. Past performance is not a reliable indicator of future results. Listed private equity firms Index Number of stocks Top 3 sectors Top 3 countries Current dividend yield Private Equity Total Return index in USD 24 Financials 100% Sweden 24.9% Canada 19.3% Japan 17% 2.90% 29.93% % 8.94% 14.00% MSCI World 1,654 Financials 19.1% Information Technology 15.9% Consumer Discretionary 12.4% US 57.1% Japan 8.7% UK 6.9% 2.43% 16.12% 73.32% 6.92 % 10.73% Source: Lyxor International Asset Management, Bloomberg, FTSE Russell. Data as at 31/07/2017. Past performance is not a reliable indicator of future results. The Private Equity index has outperformed MSCI World over 5 years by 45.8%* July 2012 July 2013 July 2014 July 2015 July 2016 July 2017 MSCI Daily TR Net World Index Private Equity Total Return Index *Source: Lyxor International Asset Management, Bloomberg. Data period from 31/07/2012 to 31/07/2017. Past performance is not a reliable indicator of future results. Why Lyxor for Global yield alternatives? #1 Low cost The first and cheapest ETF tracking global listed private equity* High yielding Dividend yields ranging from c. 2.9% to 4%* 7yrs Accomplished Over 7 years track record for FTSE EPRA / NAREIT Global ETF *Source: Lyxor International Asset Management, Bloomberg, FTSE Russell, as at 31/07/2017. First and lowest cost listed private equity ETF is in relation to the European ETF market. Past performance is not a reliable indicator of future results.

12 Lyxor ETF Yield alternatives Product Snapshot ETF Name ISIN Main Ticker TER (bp) Income treatment Trading currency Index currency Benchmark ticker Europe Lyxor FTSE Developed Europe Core Infrastructure Capped UCITS ETF Lyxor FTSE EPRA/NAREIT Developed Europe UCITS ETF LU MAKE FP 50 Distributing EUR EUR FDECICN FR LYMEH SW 40 Distributing EUR EUR NEPRA US Lyxor FTSE USA Core Infrastructure Capped UCITS ETF Lyxor FTSE EPRA/NAREIT United States UCITS ETF LU BUIL FP 50 Distributing EUR USD FUCICN FR LYMUA SW 40 Distributing USD Global Lyxor FTSE EPRA/NAREIT Global Developed UCITS ETF FR MWO FP 45 Distributing EUR GBP USD TRNGLU Lyxor PRIVEX UCITS ETF FR LYPVX SW 70 Distributing EUR USD PRIVEXD *Source: Lyxor International Asset Management, as at 31/07/2017

13 Venture further for yield Discover 25 ways to capture income With rate rises and tapering top of mind, income seekers could be in for a bumpy ride. We ve gone further than most to find the world s best equity and fixed income opportunities. Come and explore our range if you want to avoid the turbulence. Follow our lead. The original pioneers. lyxoretf.ch This communication is for qualified investors only. This document is for the exclusive use of investors acting on their own account and categorised either as Eligible Counterparties or Professional Clients within the meaning of Markets In Financial Instruments Directive 2004/39/EC. These products comply with the UCITS Directive (2009/65/EC). Lyxor International Asset Management (Lyxor ETF) recommends that investors read carefully the investment risks section of the product s documentation (prospectus and KIID). The prospectus and KIID in English are available free of charge on and upon request to client-services-etf@lyxor.com. Lyxor International Asset Management (Lyxor AM), société par actions simplifiée having its registered office at Tours Société Générale, 17 cours Valmy, Puteaux (France), RCS Nanterre, is authorized and regulated by the Autorité des Marchés Financiers (AMF) under the UCITS Directive and the AIFM Directive (2011/31/EU). Lyxor ETF is represented in the UK by Lyxor Asset Management UK LLP, which is authorised and regulated by the Financial Conduct Authority in the UK under Registration Number

14 Lyxor ETF Yield alternatives Knowing your risk It is important for potential investors to evaluate the risks described below and in the fund prospectus on our website Capital at risk ETFs are tracking instruments: Their risk profile is similar to a direct investment in the Underlying index. Investors capital is fully at risk and investors may not get back the amount originally invested. Replication risk The fund objectives might not be reached due to unexpected events on the underlying markets which will impact the index calculation and the efficient fund replication. Counterparty risk Investors are exposed to risks resulting from the use of an OTC swap with Société Générale. In-line with UCITs guidelines, the exposure to Société Générale cannot exceed 10% of the total fund assets. Physically replicated ETFs may have counterparty risk resulting from the use of a securities lending programme. Concentration risk Smart Beta ETFs select stocks or bonds for their portfolio from the original benchmark index. Where selection rules are extensive it can lead to a more concentrated portfolio where risk is spread over fewer stocks than the original benchmark. Underlying risk The Underlying index of a Lyxor ETF may be complex and atile. When investing in commodities, the Underlying index is calculated with reference to commodity futures contracts exposing the investor to a liquidity risk linked to costs such as cost of carry and transportation. ETFs exposed to Emerging Markets carry a greater risk of potential loss than investment in Developed Markets as they are exposed to a wide range of unpredictable Emerging Market risks. Currency risk ETFs may be exposed to currency risk if the ETF is denominated in a currency different to that of the Underlying index they are tracking. This means that exchange rate fluctuations could have a negative or positive effect on s. Liquidity risk Liquidity is provided by registered market-makers on the respective stock exchange where the ETF is listed, including Société Générale. On exchange, liquidity may be limited as a result of a suspension in the underlying market represented by the Underlying index tracked by the ETF; a failure in the systems of one of the relevant stock exchanges, or other market-maker systems; or an abnormal trading situation or event.

15 This document has been provided by Lyxor International Asset Management that is solely responsible for its content. The funds that are specified as being licensed by FINMA in the chart comprised in this document (Registered Funds) are collective investment schemes approved by the Swiss Financial Market Supervisory Authority FINMA (FINMA) as foreign collective investment schemes pursuant to article 120 of the Swiss Collective Investment Schemes Act of 23 June 2006 (as amended from time to time, CISA) for distribution in Switzerland to non-qualified Investors as defined in the CISA. The funds that are not specified as being licensed by FINMA in the chart comprised in this document (non-registered Funds, and together with the Registered Funds, the Funds) are collective investment schemes not approved by the FINMA as foreign collective investment schemes pursuant to article 120 of the CISA for distribution in Switzerland. Accordingly, the non-registered Funds may be offered in Switzerland exclusively to Qualified Investors as defined in the CISA and its implementing ordinance. Any information in this document is given only as of the date of this document and is not updated as of any date thereafter. This document is for information purposes only and does not constitute an offer, an invitation to make an offer, a solicitation or recommendation to invest in collective investment schemes. This document is not a prospectus as per article 652a or 1156 of the Swiss Code of Obligations, a listing prospectus according to the listing rules of the SIX Swiss Exchange or any other exchange or regulated trading facility in Switzerland, a simplified prospectus, a key investor information document or a prospectus as defined in the CISA. An investment in collective investment schemes inves significant risks that are described in each prospectus or offering memorandum. Each potential investor should read the entire prospectus or offering memorandum and should carefully consider the risk warnings and disclosures before making an investment decision. Any benchmarks/indices cited in this document are provided for information purposes only. This document is not the result of a financial analysis and therefore is not subject to the Directive on the Independence of Financial Research of the Swiss Bankers Association. This document does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investments in financial products. The Representative and the Paying Agent of the Funds in Switzerland is Société Générale, Paris, Zurich Branch, Talacker 50, 8001 Zurich. The prospectus or offering memorandum, the key investor information documents, the management regulation, the articles of association and/or any other constitutional documents as well as the annual and semi-annual financial reports may be obtained free of charge from the Representative in Switzerland. In respect to the units/shares of the Funds distributed in and from Switzerland, place of performance and jurisdiction is at the registered office of the Representative in Switzerland. Fund name Sub-fund name Domicile Registered in Switzerland Lyxor Index Fund Lyxor FTSE Developed Europe Core Infrastructure Capped UCITS ETF Luxembourg No Fonds Commun de Placement LYXOR FTSE EPRA/NAREIT Developed Europe UCITS ETF Paris Yes Lyxor Index Fund Lyxor FTSE USA Core Infrastructure Capped UCITS ETF Luxembourg No Fonds Commun de Placement LYXOR FTSE EPRA/NAREIT UNITED STATES UCITS ETF France Yes Fonds Commun de Placement LYXOR FTSE EPRA/NAREIT Global Developed UCITS ETF France Yes Fonds Commun de Placement LYXOR PRIVEX UCITS ETF France Yes

16 Find us online