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    Eudf citywire switzerland ga   sept 13 presi Eudf citywire switzerland ga sept 13 presi Presentation Transcript

    • Time to invest for growth Greg Aldridge, Fund Manager CITYWIRE Gstaad 2013 September 2013
    • 2 Greg Aldridge • June 2004 : joined M&G as an analyst from McKinsey & Co where he worked with industrial and consumer goods clients on strategy and organisational issues • May 2007: appointed manager of the M&G Global Growth Fund, following a period as deputy manager • February 2008: appointed co-manager of the Vanguard International Growth Fund • January 2011: appointed co-manager of the M&G European Fund and M&G Pan-European Fund • Holds an MA in economics from Cambridge University and an MBA from INSEAD Fund Manager
    • 3 M&G Pan European Fund • Inception: September 1989 • Fund managers: Greg Aldridge and Charles Anniss (since January 2011) • Fund size: €222 million • Benchmark: MSCI Europe Index (since 1 January 2012 – previously FTSE World Europe Index) • Fund manager objective: ‘Long-term capital growth from a portfolio of European companies’ Source: M&G, 30 June 2013. Ratings as at 31 May 2013. and should not be taken as a recommendation Fund overview © 2012 Morningstar. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of Morningstar OBSR, (2) may not be copied or redistributed, (3) do not constitute investment advice offered by Morningstar OBSR, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a security, and (5) are not warranted to be correct, complete, or accurate. Morningstar OBSR shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Morningstar OBSR Analyst Rating™ is subjective in nature and reflects Morningstar OBSR’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, Morningstar OBSR does not guarantee that a fund will perform in line with its Morningstar OBSR Analyst Rating. Likewise, the Morningstar OBSR Analyst Rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision. An S&P Capital IQ fund grading represents an opinion only and should not be relied on when making an investment decision. Past performance is not indicative of future results. Currency exchange rates may affect the value of investments. Copyright © 2012 by McGraw-Hill international (UK) Limited (S&P), a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved.
    • 4 2011 % 2012 % 2013 YTD % Manager tenure from 21 Jan 11 %pa M&G Pan European Fund -13.2 20.1 9.3 6.1 MSCI Europe Index -7.5 18.1 8.9 6.0 Morningstar Europe Large-Cap Blend Equity sector avg. -10.0 18.8 9.7 5.8 Quartile ranking 4 2 3 2 Calendar year performance Source: Morningstar Inc, Pan European database, 31 August 2013, sterling A class shares, net income reinvested, price to price. * since 21/01/2011 M&G Pan European Fund
    • 5 Market focus has been: • Bonds • Defensives • Safety M&G Pan European Fund What we are offering We are offering: • Some diversification • Some cyclicals • A core equity fund
    • 6 M&G Pan European Fund • Find great companies • Avoid overpaying • Invest for the long term Our investment approach
    • 7 What types of companies do we invest in? European companies you would love to manage, but hate to compete against Source: M&G, August 2013
    • 8 How does a company become great? Year 1 Year 2 Year 3 Year 4 Year5 Sales Market cap The growth engine Great companies reinvest to grow The Growth Engine
    • 9 How does a company stay great long-term? To stay great, a company needs scarce assets Scarce assets - enabling companies to stay great for longer Tangible Intangible Organisational Inventory Land/property Capacity Mines Location Culture Project management Product engineering Commercial expertise Manufacturing know-how Innovation skills Types of scarce assets IP/technology Pricing power Brands Patents/licenses Market share Installed base Distribution access Networks
    • 10 A focus on organisational scarce assets The right culture can enable companies to stay great for longer Enabling companies to stay great for longer Organisational Culture Project management Product engineering Commercial expertise Manufacturing know-how Innovation skills • Leveraging Greg’s consultant background • Understanding what drives great companies • Proprietary metrics e.g. profit per employee • Asking the ‘off-spreadsheet’ questions
    • 11 Top 10 holdings – scarce assets Fund weight % 3.6 3.6 3.4 3.1 3.0 2.6 2.5 2.5 2.4 2.3 M&G Pan European Fund Source: M&G, as at 31 July 2013                        More than just tangible scarce assets 
    • 12 Reinvestment opportunity examples To grow, companies need to reinvest Industry shifts Oil & gas extraction Global opportunities New market roll-outs Focused opportunities Growing customer base Source: M&G, 31 August 2013
    • 13 Growing the customer base Installed base example 0 2 4 6 8 10 12 Year 1 Year 2 Year 3 Year 4 Year 5 Equipment Sales Numberofmachines 0 20 40 60 80 100 120 140 160 Year 1 Year 2 Year 3 Year 4 Year 5 Total Installed Base Numberofmachines Source: M&G hypothetical example, total installed base in year 0 = 92 Zero growth Continued growth
    • 14 Growing the customer base SAP Revenue(millionEuros) 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Software revenue 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Support revenue Revenue(millionEuros) Source: SAP, M&G 2013
    • 15 12 14 16 18 20 22 24 4 6 8 10 12 14 We avoid overpaying Source: Credit Suisse, 15 July 2013 Valuation comparison Benchmark Fund Quality of Company* LowvalHighval *CFROI **Economic P/E Higher quality companyLower quality company Attractivenessofvaluation** ‘Sweet spot’ Valuation – turning a great company into a great investment
    • 16 Investing for the long-term 2012 Purchases Sales January Siemens February Fidessa March De la Rue April May GFK June PostNL July Temenos August September Shaftesbury Bwin Party Digital, TNT Express October November Svenska Handelsbanken Weatherford Intl, Wienerberger December CFAO 2013 January February March Danone April May Pandora June Rheinmetall July Petrofac, Spectris Source: M&G, to 31 July 2013 Complete purchases & sales since January 2012 A low turnover, long-term investment approach
    • 17 Case study 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* Market Cap Sales £m £m Publicis • One of the world’s greatest media companies • Fantastic scarce assets, especially organisational • Attractively valued • Held on the fund since 2011 Source: Bloomberg *2013 data - Market Cap and Consensus Sales Estimate at 6th September 2013
    • 18 The key elements of our investment philosophy Scarce assets Enable sustainable high returns Valuation Can turn great companies into great investments We believe we have an edge Growth drivers Enable reinvestment opportunities Taking a long-term view Investing for the long term
    • 19 Focusing on high-return companies has worked Source: GS Research, November 2012; European data since 2000, sector relative 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 1 Year 2 Years 3 Years 4 Years 5 Years Annual outperformance of companies sustaining higher than average returns (European universe) Holding period High-return companies have outperformed…and the longer you held them, the more powerful the returns have been
    • 20 German 10 year yield over 2013 Time to invest for growth Source: Bloomberg, August 2013 Bond yields have been rising in response to improving growth expectations 1.0 1.2 1.4 1.6 1.8 2.0 2.2 %
    • 21 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Time to invest for growth Source: Bloomberg, August 2013 Bond yields have not risen markedly in a historical context % German 10 year yield since 1990
    • 22 Time to invest for growth Source: GS, August 2013. Global data since 1980. ROIC – Return on Invested capital Historically cyclical stocks have performed best in a rising yield environment 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% Q1 ROIC Sector Defensives Cyclicals
    • 23 Market valuation Certain defensive segments of the market look expensive Source: Citi, July 2013 Relative P/E valuation: Europe consumer staples v MSCI Europe Index Consumer staples valuation 0.4 0.6 0.8 1.0 1.2 1.4 1.6 xtimes
    • 24 Source M&G Portfolio Construction & Risk team, as at 31 July 2013 The majority of the fund is invested in cyclical stocks Weights 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Defensive Cyclical M&G Pan European Fund Cyclical and defensive exposures
    • 25 Market valuation Credit Suisse HOLT market implied discount rates Europe looks cheap relative to the US Market valuations: Europe versus United States Implieddiscountrate,% 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 Europe United States Source: Credit Suisse HOLT. © September 2013 Credit Suisse and its subsidiaries and affiliates. Used by permission. All rights reserved. CFROI® is a registered trademark of Credit Suisse or its affiliates in the United States and other countries
    • 26 • We invest in great companies • We avoid overpaying • We invest for the long term • We believe it’s time to invest for growth M&G Pan European Fund Summary
    • Prices may fluctuate and you may not get back your original investment. For Investment Professionals only. Not for onward distribution. No other persons should rely on any information contained within. For Switzerland: Distribution of this document in or from Switzerland is not permissible with the exception of the distribution to qualified investors according to the Swiss Collective Investment Schemes Act, the Swiss Collective Investment Schemes Ordinance and the respective Circular issued by the Swiss supervisory authority ("Qualified Investors"). Supplied for the use by the initial recipient (provided it is a Qualified Investor) only. In Spain the M&G Investment Funds are registered for public distribution under Art. 15 of Act 35/2003 on Collective Investment Schemes as follows: M&G Investment Funds (1) reg. no 390, M&G Investment Funds (2) reg. no 601, M&G Investment Funds (3) reg. no 391, M&G Investment Funds (5) reg. no 972, M&G Investment Funds (7) reg. no 541, M&G Investment Funds (8) reg. no 1100, M&G Investment Funds (9) reg. no 930, M&G Global Dividend Fund reg. no 713, M&G Dynamic Allocation Fund reg. no 843, M&G Global Macro Bond Fund reg. no 1056 and M&G Optimal Income Fund reg. no 522. The collective investment schemes referred to in this document (the "Schemes") are open-ended investment companies with variable capital, incorporated in England and Wales. In the Netherlands, all funds referred to, are registered with the Dutch regulator, the AFM. This information is not an offer or solicitation of an offer for the purchase of investment shares in one of the Funds referred to herein. Purchases of a Fund should be based on the current Prospectus. The Instrument of Incorporation, Prospectus, Key Investor Information Document, annual or interim Investment Report and Financial Statements, are available free of charge, in paper form, from the ACD: M&G Securities Limited, Laurence Pountney Hill, London, EC4R 0HH, GB, or one of the following: M&G International Investments Limited, German branch, mainBuilding, Taunusanlage 19, 60325 Frankfurt am Main, the German paying agent J.P. Morgan AG, Junghofstraße 14, D-60311 Frankfurt am Main, the Austrian paying agent, Raiffeisen Bank International A.G., Am Stadtpark 9, A-1030 Wien, the Luxembourg paying agent, J.P. Morgan Bank Luxembourg S.A., European Bank & Business Center, 6 c route de Treves, 2633 Senningerberg, Luxembourg, the Danish paying agent, Nordea Bank Danmark A/S Issuer Services, Securities Services, Hermes Hus, Helgeshøj Allé 33, Postbox 850, DK-0900, Copenhagen C, Denmark, Allfunds Bank, Calle Estafeta, No 6 Complejo Plaza de la Fuente, La Moraleja, 28109, Alcobendas, Madrid, M&G International Investments Limited, the French branch, or from the French centralising agent of the Fund: RBC Dexia Investors Services Bank France. For Switzerland: Please refer to M&G International Investments Ltd., mainBuilding, Taunusanlage 19, 60325 Frankfurt am Main, or, for Sweden, from the paying agent, Skandinaviska Enskilda Banken AB (publ), Sergels Torg 2, 106 40 Stockholm, Sweden. For Italy, they can also be obtained on the website: www.mandgitalia.it Before subscribing you should read the Prospectus, which includes investment risks relating to these funds. This financial promotion is published by M&G International Investments Ltd. Registered Office: Laurence Pountney Hill, London EC4R 0HH, authorised and regulated by the Financial Conduct Authority in the UK. Registered in England, No. 4134655. It also has a branch located in France, 34 avenue Matignon, Paris 75008, registered on the Trade Register of Paris, No. 499 832 400 and is also registered with the CNMV in Spain. Past performance is not a guide to future performance. Performance stats are quoted gross of Italian tax on capital gains.
    • 28 Top 10 holdings Fund % MSCI Europe Index % Relative % HSBC 3.6 2.7 0.9 Nestle 3.6 2.8 0.8 Novartis 3.4 2.1 1.3 Unilever 3.1 0.8 2.3 Roche 3.0 2.2 0.8 Zurich Financial 2.6 0.5 2.1 Total 2.5 1.5 1.0 EADS 2.5 0.4 2.1 Publicis 2.4 0.2 2.2 Ericsson 2.3 0.5 1.8 M&G Pan European Fund Source: M&G, 31 July 2013
    • 29 Capitalisation split Fund % MSCI Europe Index % Relative % >€ 50 billion 19.7 33.2 -13.5 €25 - €50 billion 16.2 24.8 -8.6 €5 - €25 billion 26.0 31.9 -6.0 €2.5 - € 5 billion 18.7 8.1 10.6 €1 - € 2.5 billion 15.2 1.9 13.3 <€ 1 billion 2.8 0.0 2.8 M&G Pan European Fund Source: M&G, 31 July 2013
    • 30 Sector active positions (%) % Source: M&G, 31 July 2013. Active weights versus MSIC Europe -8 -6 -4 -2 0 2 4 6 8 10 12 • Overweight in Consumer Discretionary, Information Technology, Materials • Underweight in Financials, Utilities, Telecommunications, Consumer Staples M&G Pan European Fund Active weights by sector
    • 31 Active weights by country -12 -10 -8 -6 -4 -2 0 2 4 6 Fund active weights by country (%) % Source: M&G, 31 July 2013. Active weights versus MSCI Europe • Overweight in ‘core’ Europe • Underweight in UK and “peripheral” Europe M&G Pan European Fund
    • 32 Positive Negative Stock name Rel weight at start % Contribution to performance % EADS 2.0 0.66 Wincor Nixdorf 1.7 0.60 Amer Sports 1.5 0.59 Publicis 1.9 0.55 Societe Generale 0.7 0.50 Stock name Rel weight at start % Contribution to performance % Hochschild Mining 1.1 -0.77 Tullow Oil 1.4 -0.67 G4S 1.7 -0.49 Fresenius Medical Care 1.2 -0.47 Delticom 0.9 -0.44 M&G Pan European Fund – 1 year to 31 July 2013 Source: M&G Xamin, 31 July 2013. Investment returns (gross of fees) relative to MSCI Europe Index, calculated in sterling. Preliminary data. Performance drivers – stock level
    • 33 Source: M&G Xamin, 31 July 2013. Investment returns (gross of fees) relative to MSCI Europe Index, calculated in sterling. Preliminary data. % -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 Stock selection Asset allocation M&G Pan European Fund – 1 year to 31 July 2013 Performance attribution – sector level
    • Prices may fluctuate and you may not get back your original investment. For Investment Professionals only. Not for onward distribution. No other persons should rely on any information contained within. For Switzerland: Distribution of this document in or from Switzerland is not permissible with the exception of the distribution to qualified investors according to the Swiss Collective Investment Schemes Act, the Swiss Collective Investment Schemes Ordinance and the respective Circular issued by the Swiss supervisory authority ("Qualified Investors"). Supplied for the use by the initial recipient (provided it is a Qualified Investor) only. In Spain the M&G Investment Funds are registered for public distribution under Art. 15 of Act 35/2003 on Collective Investment Schemes as follows: M&G Investment Funds (1) reg. no 390, M&G Investment Funds (2) reg. no 601, M&G Investment Funds (3) reg. no 391, M&G Investment Funds (5) reg. no 972, M&G Investment Funds (7) reg. no 541, M&G Investment Funds (8) reg. no 1100, M&G Investment Funds (9) reg. no 930, M&G Global Dividend Fund reg. no 713, M&G Dynamic Allocation Fund reg. no 843, M&G Global Macro Bond Fund reg. no 1056 and M&G Optimal Income Fund reg. no 522. The collective investment schemes referred to in this document (the "Schemes") are open-ended investment companies with variable capital, incorporated in England and Wales. In the Netherlands, all funds referred to, are registered with the Dutch regulator, the AFM. This information is not an offer or solicitation of an offer for the purchase of investment shares in one of the Funds referred to herein. Purchases of a Fund should be based on the current Prospectus. The Instrument of Incorporation, Prospectus, Key Investor Information Document, annual or interim Investment Report and Financial Statements, are available free of charge, in paper form, from the ACD: M&G Securities Limited, Laurence Pountney Hill, London, EC4R 0HH, GB, or one of the following: M&G International Investments Limited, German branch, mainBuilding, Taunusanlage 19, 60325 Frankfurt am Main, the German paying agent J.P. Morgan AG, Junghofstraße 14, D-60311 Frankfurt am Main, the Austrian paying agent, Raiffeisen Bank International A.G., Am Stadtpark 9, A-1030 Wien, the Luxembourg paying agent, J.P. Morgan Bank Luxembourg S.A., European Bank & Business Center, 6 c route de Treves, 2633 Senningerberg, Luxembourg, the Danish paying agent, Nordea Bank Danmark A/S Issuer Services, Securities Services, Hermes Hus, Helgeshøj Allé 33, Postbox 850, DK-0900, Copenhagen C, Denmark, Allfunds Bank, Calle Estafeta, No 6 Complejo Plaza de la Fuente, La Moraleja, 28109, Alcobendas, Madrid, M&G International Investments Limited, the French branch, or from the French centralising agent of the Fund: RBC Dexia Investors Services Bank France. For Switzerland: Please refer to M&G International Investments Ltd., mainBuilding, Taunusanlage 19, 60325 Frankfurt am Main, or, for Sweden, from the paying agent, Skandinaviska Enskilda Banken AB (publ), Sergels Torg 2, 106 40 Stockholm, Sweden. For Italy, they can also be obtained on the website: www.mandgitalia.it Before subscribing you should read the Prospectus, which includes investment risks relating to these funds. This financial promotion is published by M&G International Investments Ltd. Registered Office: Laurence Pountney Hill, London EC4R 0HH, authorised and regulated by the Financial Conduct Authority in the UK. Registered in England, No. 4134655. It also has a branch located in France, 34 avenue Matignon, Paris 75008, registered on the Trade Register of Paris, No. 499 832 400 and is also registered with the CNMV in Spain. Past performance is not a guide to future performance. Performance stats are quoted gross of Italian tax on capital gains.