Frontier Markets
Introduction TRUSTUS Capital Management Boutique Investment Company Established in 1978 TCM Investments Funds TRUSTUS Wealth Management Independently owned 21 employees Focus on High Dividend Strategies TCM High Dividend Equity Funds Strong trackrecord More than 10 years experience in Frontier Markets 2
Award winning Year Fund Category 2017 TCM Investment Funds (WINNER) Boutique Management Group of the Year (Single Strategies) 2016 TCM Vietnam High Dividend Equity Fund (FINALIST) Specialist Management Group of the Year 2015 TCM Vietnam High Dividend Equity Fund (FINALIST) Specialist Management Group of the Year Emerging Markets Single Country Fund Emerging Markets Single Country Fund Year Fund Category 2016 TCM Vietnam High Dividend Equity Fund (FINALIST) Best ASEAN Fund Year Fund Category 2015 TCM Vietnam High Dividend Equity Fund (FINALIST) Emerging Equity Fund 2014 TCM Global Frontier High Dividend Equity Fund (WINNER) Emerging Market Fund 3
Frontier Markets Characteristics
All markets have been Frontier Markets 1700 1750 1800 1850 1900 1950 2000 2050 United States 1792 People s Republic of China 1980 Colombia until 2011 5
Frontier Markets at a glance World Land Mass: 24% World GDP: 7% Frontier Markets World Population: 19% World Market Cap: 2% Sources: United Nations, World Bank, FactSet, EIU. 6
Why Invest in Frontier Markets?
Why invest in Frontier Markets? Frontier Markets: is a global theme is much more than a commodity or oil bet is worth the risk/reward profile improving politics and governance reclassification to Emerging Markets offers opportunities liquidity is improving are less affected by rising intrest rates devaluations tend to boost stock markets no exposure by your Emerging Markets investments have outperformed Emerging Markets valuations are relative attractive... demographics; younger, faster growing and urbanizing 8
1. A Global Theme A FAIR REPRESENTATION OF ALL GLOBAL REGIONS Europe Africa Middle East Asia Latin America Bulgaria3 Botswana3 Bahrain1 Bangladesh1 Argentina1 Bosnia3 Egypt2 Iran Cambodia Chile2 Croatia1 Ghana3 Iraq Georgia Colombia2 Cyprus Kenya1 Jordan1 Indonesia2 Ecuador Czech Rep. 2 Mauritius1 Kuwait1 Malaysia2 Jamaica3 Estonia1 Morocco1 Lebanon1 Myanmar Peru2 Georgia Namibia Oman1 Pakistan2 Panama3 Kazakhstan1 Nigeria1 Qatar2 Phillipines2 Trinidad & Tobago3 Latvia Tanzania Saudi Arabia3 Sri Lanka1 Lithuania1 Tunisia1 U. A. E. 2 Thailand2 Romania1 Zambia Vietnam1 Serbia1 Slovakia Slovenia1 Ukraine3 Zimbabwe3 WAEMU4 1. Member of the MSCI Frontier Market Index 2. Country with Emerging Markets status with < 3% weighting in MSCI Emerging Markets Index 3. MSCI Standalone Market Index 4. WAEMU West African Economic and Monetary Union consists of the following countries: Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo. Latin America & Caribbean 22% Middle East 30% Europe 9% Africa 25% Asia 14% Source: MSCI. Pie chart depicts MSCI weights by region. 9
2. Much more than a commodity or oil bet ENERGY AND MATERIALS REPRESENT 12% OF THE FRONTIER MARKETS INDEX % weight in MSCI FM Index Financials 44,3% Telecommunications Consumer Staples Energy Real Estate Industrials Materials Utilities Health Care Information Technology Consumer Discretionary 13,4% 11,4% 8,0% 6,8% 4,0% 4,1% 3,7% 2,8% 1,0% 0,4% 0% 10% 20% 30% 40% 50% Oil importing countries Oil exporting countries Sources: TCM, MSCI 10
3. The risk/reward profile is worth it FACT: FRONTIER MARKETS ARE ONE OF THE LEAST VOLATILE EQUITY CLASSES AND LOW CORRELATIONS. THIS GIVES MAJOR DIVERSIFICATON BENEFITS 16% MSCI WORLD ANNUALIZED 5YR RETURN IN USD (% PER ANNUM) 14% 12% 10% 8% 6% 4% 2% TCM GL FRONTIER HIGH DIV MSCI FRONTIER MARKET MSCI JAPAN MSCI AC ASIA x JAPAN MSCI EUROPE MSCI EM 0% MSCI Emerging Markets Europe M MSCI EM LATIN AMERICA -2% 8% 13% 18% 23% Sources: TCM, Bloomberg STANDARD DEVIATION 5YR (% PER ANNUM) 11
4. Improving politics and governance FACT: PERCEPTIONS HAVE IMPROVED OVER THE PAST 5 YEARS Frontier Africa, Asia, Europe and Latin America improve beyond World Average. Frontier Middle East stays behind. Source: www.transparency.org 12
5. Reclassification to EM offers opportunities OVER THE LAST 10 YEARS ONLY 3 UPGRADES TO EM Country Reclassification Year moved CATCH THE STRONG RUN BEFORE THE EM PERFORMANCE DISAPPOINTS! 280 Pakistan FM to EM 2017 Qatar FM to EM 2014 230 United Arab Emirates FM to EM 2014 Morocco EM to FM 2013 180 MSCI UNITED ARAB EMIRATES Argentina EM to FM 2009 130 MSCI QATAR Jordan EM to FM 2008 80 MSCI PAKISTAN Source: Factset, MSCI. MSCI Upgrade announcement MSCI Upgrade date 13
6. Liquidity is improving IMPROVED LIQUIDITY OVER THE LAST 5 YEARS Source: HSBC, Thomson Reuters Datastream, MSCI. * Based upon MSCI Index constituents 14
7. Less affected by rising intrest rates FRONTIER MARKETS ARE HISTORICALLY LESS AFFECTED BY THE FED INTREST RATE CYCLE Source: MSCI, Bloomberg 15
8. Devaluations tends to boosts stock markets DEVALUATION OF FRONTIER MARKETS CURRENCIES CAN GIVE A BOOST TO FRONTIER MARKETS STOCKS AND INDICES 5 Year Currency Devaluation 400 300 350 250 300 200 250 200 150 150 100 100 50 50 - Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 USD-NGN X-RATE 130,5% USD-EGP X-RATE 179,5% USD-KZT X-RATE 121,1% USD-ARS X-RATE 278,9% Sources: TCM, Bloomberg 16 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 5 Year Index Performance (Total Return in USD) NIGERIA STCK EXC ALL SHR -27,5% EGX 30 INDEX 10,5% ARGENTINA MERVAL INDEX(RS) 177,8% Kazakhstan KASE Stock Ex 30,7%
9. EM investments minimal exposure to FM GLOBAL EMERGING MARKETS PORTFOLIOS HAVE MINIMAL, IF ANY EXPOSURE TO FRONTIER MARKETS The 15 largest actively managed Emerging Markets Funds measured by AuM had an average exposure of 0.83% to Frontier Markets (2017) Research done within the Morningstar universe, which include all domiciles To invest in Frontier Markets you need a dedicated Frontier Markets investment 17
10. Have outperformed Emerging Markets FACT: ON A LONG TERM BASIS FM HAVE PERFORMED BETTER THAN EM, EVEN AFTER THE UNDERPERFORMANCE OF FM AGAINST EM IN THE RECENT RISK-ON RALLY 180 5 Year indexed Total Return performance of MSCI FM & MSCI EM in USD 160 140 120 100 80 60 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 MSCI FRONTIER MARKET 53,13% MSCI EM 26,84% Sources: TCM, Bloomberg 18
11. Valuations relative attractive FRONTIER MARKETS HAVE STILL PLENTY OF ROOM TO RUN WHILE VALUATIONS ARE RELATIVELY ATTRACTIVE VERSUS EMERGING MARKETS Sources: TCM, Bloomberg 19
12. Demographics POPULATION IN FM ARE YOUNGER, FASTER GROWING AND URBANIZING - DEPENDENCY RATIO* OF FM IS AT LEVELS OF EM 30 YEARS AGO DEPENDENCY RATIO IS DEPENDENT POPULATION AS % OF THE INDEPENDENT POPULATION Sources: TCM, United Nations Population Division 20
Why invest in Frontier Markets? Instability and uncertainty in Frontier Markets have made room for improving politics, peace, investments and growth. The opportunities in these markets will become significantly larger over time. Frontier Markets is a must have for diversified portfolios, because correlations are still low. Not only with Developed Markets, but also among Frontier countries. Besides low correlation, volatility is lower than one might expect. Valuations in Frontier Markets are attractive compared with Developed and Emerging Markets. Companies deliver results and high dividend yield. Demographic developments is in favour of Frontier Markets, where working age population is growing and dependency ratio is declining. 21
Disclaimer No rights may be derived from this presentation. You are referred to the prospectus and KIID for the fund's terms and conditions. The manager has obtained a license for the fund from the Netherlands Authority for the Financial Markets in accordance with the provisions of the Financial Supervision. Do not expose yourself to unnecessary risks. Read the KIID. 22