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Alliance trust investments

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  • 1. Alliance Trust Global Thematic Opportunities FundIlario Di Bon – Head of Global EquitiesJuergen Lanzer – Investment ManagerJune 2012
  • 2. Alliance Trust Global Thematic Opportunities Fund• A unique approach to global equity investing• High conviction, unconstrained, long-term• Thematic support to bottom-up stock picking• Entrepreneurial setting• Proven track record2
  • 3. Portfolio• High conviction, unconstrained, long-term global equity discipline Holdings 50 – 55 names Investment horizon 3 – 5 years Outperformance target +3 – 5% vs MSCI ACWI (gross, per annum through cycle) Tracking error 3 – 8% (reference only) Active share 85 – 95% Benchmark Benchmark agnostic (reference only – sector and region deviation +/-20% vs MSCI ACWI) Style Neutral / GARP bias Cap bias Large cap (typical mkt cap > USD 1B) Capacity USD 10B plus3
  • 4. Process – Idea Generation Structural themes underpin fundamental stock selection4
  • 5. Idea Generation – ThemesBottom-up process, with thematic roadmap supporting long-term forecasting5
  • 6. Idea Generation: Demographic Framework6
  • 7. Stock Example – Diagnósticos da América• Number one independent laboratory chain in Brazilian healthcare services industry.• Key consolidator, benefiting from structural growth of middle class in Brazil.• Economies of scale will allow further enhancement of margins over time.• Market is not pricing in superior financial performance – potential for ~30% upside.7
  • 8. Stock Example – Diagnósticos da América8
  • 9. Idea Generation: Environmental Framework9
  • 10. Idea Generation: Innovation Framework10
  • 11. Idea Generation: Global Realignment Framework11
  • 12. Appendix
  • 13. Global Equity Team Sector Company Industry Position Coverage Experience Experience Generalist & Ilario Di Bon Head of Team and Lead Manager 1 19 Consumer Generalist & Juergen Lanzer CFA Lead Manager 1 13 Financials James Twyman Global Sector Specialist Energy 1 21 Adrien Bommelaer Global Sector Specialist Technology 1 16 Colin Burchell CFA Global Sector Specialist Healthcare 7 7 Sam Ford CFA Global Sector Specialist Industrials 6 6 Laurie Don Analyst 9 2 Joseph Ridsdale Analyst 1 413
  • 14. Global Equity Team – Biography Ilario Di Bon Ilario joined Alliance Trust Investments as Head of Global Equities on 1st July 2011. Prior to joining Alliance Trust Investments, Ilario was Head of Institutional Global Equities at Fidelity International, managing Fidelity’s Global Opportunities Fund, which under his stewardship grew from $250 million to over $1 billion assets under management in under two years. During his time at Fidelity, the fund received a Morningstar Superior rating and was awarded Asian Investor Global Equity Fund of the Year 2010. Ilario previously spent almost eight years at UBS Global Asset Management, working in both London and Tokyo, and he held a number of senior roles in global and Japanese equities before becoming Lead Portfolio Manager, Global Equities, in 2005. Before joining UBS in 2000, Ilario worked for several years in industry, covering strategic and financial planning roles at Tektronix (now part of Danaher), Electrolux and Benetton. He holds a degree in Economics and Finance from the University of Bologna and an MBA from Manchester Business School.14
  • 15. Ilario Di Bon – Global Equity Track Record 6 months to 30/6/2009 12 months to 30/6/2010 Fidelity Global Opportunities Fund* 16.5 14.9 MSCI AC World Index 9.6 12.3 Relative Outperformance 6.9 2.6Past Performance is not a guide to future performanceSource: Financial Express. Figures are total return, bid to bid, expressed in US$, net of fees andexpenses.* The figures relate to Ilario Di Bon’s employment as Head of Global Equities at Fidelity International.15
  • 16. Global Equity Team – Biography Juergen Lanzer Juergen joined Alliance Trust Investments as a Senior Investment Manager for the Global Equity Team in October 2011. Previously, he worked at Schroders as Global Financials Sector Specialist, helping to run US$20bn in Global and EAFE equities, and was Lead Portfolio Manager for the Global Demographic Opportunities Fund since its inception. Before this, he was a buy-side analyst at UBS Global Asset Management in London, specialising in European insurance, financial services and property. Prior to this he spent more than three years working in Dusseldorf for WestAM. He holds a degree in Business Administration and is a CFA Charterholder.16
  • 17. Global Equity Team – BiographiesAdrien BommelaerAdrien joined Alliance Trust Investments in March 2012 as a Global Sector Specialist in Technology. He workedpreviously at Matrix Corporate Capital, where he covered the Semi-Conductor, Semi Cap and Telecom Equipmentsectors. In 2011, he was ranked second by Starmine for best stock-picking in the IT Hardware sector.He worked for two years as Principal and Senior Analyst at Piper Jaffrey, having spent 12 years at Credit Suisse,where he was head of the team covering Semi-Conductors, Semi Caps and Solar stocks.Adrien holds a degree in Finance & Strategic Management from EDHEC Graduate Business School, Lille.James TwymanJames joined Alliance Trust Investments in March 2012, as Global Sector Specialist in Energy and Mining. Before thishe worked at Alliance Bernstein where he was a senior member of the Global Growth team, covering global mining,oils and utilities. He specialised in emerging markets, where he was one of the company’s top performers.James moved to the buy-side after spending 17 years with UBS covering natural resources, oils, paper andpackaging where he was consistently highly ranked.James holds a degree in Economics from Bristol University.17
  • 18. Global Equity Team – BiographiesColin BurchellColin joined Alliance Trust in 2005 on the graduate training programme. He joined the US equities team in September2007, where he was responsible for the pharmaceuticals, healthcare and chemicals sectors in the US.He joined the Global Equity team in November 2011, as a Global Sector Specialist in Healthcare and Chemicals.Colin completed both his PhD and B.Sc (Hons) in Chemistry at the University of St. Andrews. He is a CFACharterholder.Sam FordSam Ford joined Alliance Trust in 2006 on the Alliance Trust’s graduate training programme before moving into theUK Equities team in December 2007 as an Investment Analyst. He joined the Pan Asia team as Investment Managerin July 2010.He joined the Global Equity team in October 2011, as a Global Sector Specialist in Industrials.Sam graduated from the University of Strathclyde, Glasgow with a MEng (Merit) in Chemical & Process Engineering.He is a CFA Charterholder.18
  • 19. Global Equity Team• Six Senior Investors – Two Lead Managers + four Sector Specialists• Team-based approach• Clear accountability for idea generation and decision making Lead Managers Idea generation, decision making, stock and portfolio monitoring Sector Specialists Idea generation, stock monitoring19
  • 20. Idea Generation – SustainabilityIdea generation and due diligence supported by four dimensions of sustainability• Investment  Long-term horizon• Thematic  Structural socio-economic and technological developments• Corporate  Sustainable competitive advantage and brand equity  Environmental, Social and Governance• Financial  Sustainable value creation20
  • 21. Idea Generation – ScreeningStock Screening – manufacturing and service sectors: • Sales and earnings: growth, sustainability • Cash flow: growth, reinvestment, other uses • Financial leverage • Return on invested capital: improvement, sustainabilityStock Screening – financial sector: • Capital adequacy • Funding • Loan book breakdown • Pre-provision profit growth • Valuation21
  • 22. Idea Generation – Stock AnalysisStock Analysis: • Industry structure and growth • Management quality and corporate governance • Competitive position • Financial performance • Long-term forecasting and scenario analysis22
  • 23. Idea Generation – ValuationLonger- term, flexible approach to valuationManufacturing and service sectors:• DCF (Holt)• EV/IC vs ROIC/WACC• Price/Sales, Price/Earnings, Price/Free Cash Flow, Price/BookFinancial sector:• Balance sheet-heavy: Price/Book, Price/Tangible Book• Balance sheet-light: Price/Earnings, Price/Free Cash Flow23
  • 24. Idea Generation – Valuation Where forecast returns are given, these are based on expected scenarios which may not occur as24 anticipated. The forecasts are not guaranteed and may differ substantially from the actual returns.
  • 25. Process – Portfolio Construction• Decision making – Stock selection and position-sizing based on three key parameters: Valuation Minimum 30% discount to long-term intrinsic value Conviction Original insights and downside protection Liquidity High scalability of discipline25
  • 26. Important Information• This presentation is intended for investment professionals only. It must not be distributed to, or relied upon by, retail investors.• Past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and is not guaranteed. You may not get back the amount invested.• Some of the funds have underlying holdings which are denominated in currencies other than Sterling and therefore may be affected by movements in exchange rates. Consequently, the value of these investments may rise or fall in line with exchange rates.• Where a fund invests in a concentrated number of securities, there is an increased risk of volatility which may result in frequent rises and falls in the fund’s share price.• Investments in emerging markets may involve a higher element of risk due to less well regulated markets and political and economic instability.• Where a fund invests in derivatives, this may lead to greater volatility in the price of a fund as the value of these instruments can fluctuate significantly.• Where annual management charges or performance fees are taken from capital, this may have the effect of constraining capital growth and may lead to capital erosion. Investors may be subject to tax on distributions.• Whilst care has been taken in compiling the content of this presentation, no representation or warranty, express or implied, is made by Alliance Trust Investments as to its accuracy or completeness. Some slides may been compiled from external sources. Whilst these sources are believed to be reliable, the information has not been independently verified and therefore no representation is made as to its accuracy or completeness.• Nothing said or covered by this presentation should be construed as being an invitation or inducement to engage in investment activity. No advice is given by Alliance Trust Investments.• Alliance Trust Investments is the trading name of Alliance Trust Asset Management Limited, which is registered in Scotland (no. 330862) with its registered office at 8 West Marketgait, Dundee and is authorised and regulated by the Financial Services Authority reference number 479764 (www.fsa.gov.uk).Alliance Trust Investments8 West Marketgait, Dundee DD1 1QNT 01382 321000www.alliancetrustinvestments.com26