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Investec Asset Management 13 march 2014

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  • Because local share prices are generally too high relative to the risks, we are maintaining a conservative equity weighting. Although we generated returns well ahead of inflation in 2013, our conservative weighting in South African equities detracted from relative performance. If the volatility continues it should present good buying opportunities.
  • Highly differentiated 'global franchise' philosophy Invests in high quality, financially sound and highly cash generative global companies;That consistently and reliably compound shareholder wealth at superior rates of return over the long term;At affordable valuationsSeeks long-term outperformance by participating meaningfully in up markets with smaller draw-downs in down markets and lower than average absolute volatilityConcentrated portfolio and not benchmark constrained25-40 stocksLow correlation with traditional benchmarksManaged by a globally integrated investment team based in London and Cape TownLed by a highly experienced portfolio managerTeam of 6 investment professionals with specialist research experience
  • Transcript

    • 1. The Senate Group High quality solutions in uncertain markets 13 March 2014
    • 2. Page 2 | CONFIDENTIAL: 16938 Agenda ● Reflecting back on 2013 ● Offshore asset class returns and valuations ● Implications for asset allocation ● Investec Global Franchise − High quality solutions in uncertain markets
    • 3. Page 3 | CONFIDENTIAL: 16938 South African Equities 2013 in review: A very narrow market 71% of the ALSI’s total return came from 5 stocks: Naspers, Rich emont, SABMi ller, Sasol and MTN -63% -53% -30% -27% -26% 21% 29% 40% 48% 57% 68% 103% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% GoldFields AngloGold Massmart Truworths ImpalaPlat ALSI MTN SAB Sasol Richemont Steinhoff Naspers
    • 4. Page 4 | CONFIDENTIAL: 16938 SA Equities: Trailing PE Ratio 20 years to 28 February 2014 (17.9x) Source: I-Net Bridge Mean: 14.82 Std Dev: 2.48
    • 5. Page 5 | CONFIDENTIAL: 16938 Taking a closer look at 2013’s equity returns Dividend Yield: 2.7% Earnings growth: -6.4% Re-rating: 25.1% Total Return: 21.4% ALSI return in 2013 Rolling 12-months %-change
    • 6. Offshore asset class returns and valuations
    • 7. Page 7 | CONFIDENTIAL: 16938 Global Equities 12-months to 28 February 2014 (All in US Dollars) Source: I-Net Bridge Nikkei225 (US$): 16.5% S&P 500 (US$): 22.8% MSCI Emerging Market (US$): -5.7% MSCI ACWI (US$): 18.8% FTSE100 (US$): 18.2% ALSI (US$): 3.1% 2011 2012 2013 Jan 2014 Feb 2014 MSCI ACWI (US$) -5.0% 16.5% 23.4% -3.98% 4.88% MSCI Emerging Market (US$) -18.2% 18.5% -2.3% -6.47% 3.33% S&P500 (US$) 0.0% 11.7% 29.6% -3.56% 4.31% FTSE100 (US$) -7.2% 7.4% 16.7% -4.25% 6.56% Nikkei225 (US$) -13.4% 8.4% 28.1% -5.56% -0.49% ALSI (US$) -15.90% 21.8% -4.4% -9.03% 8.38%
    • 8. Page 8 | CONFIDENTIAL: 16938 Global Equities: PE Ratio Developed & Emerging markets Source: I-Net Bridge MSCI ACWI PE Ratio (16.88x) Mean: 16.94 Std Dev: 3.74
    • 9. Implications for asset allocation
    • 10. Page 10 | CONFIDENTIAL: 16938 Investec Cautious Managed Income generation and real returns at lower volatility Source: Investec Asset Management as at 31 December 2013 Domestic - equities 19.1% Offshore - equities 20.6% Domestic - cash 25.4% Domestic - bonds 27.1% Offshore - bonds & cash 3.1% Commodities - gold 1.8% Domestic - unit trust 2.9% ● High quality stocks to provide real capital growth in volatile markets with lower levels of risk SA Equities ● Preferred asset class ● High quality global franchises on attractive valuations Offshore Equities ● Uncorrelated returns – provides protection in uncertain marketsGold ● Bonds and ILBs provide a superior return to cash which yields a negative real return SA Fixed Interest ● Cash – looking to take advantage of bond opportunitiesCash
    • 11. Page 11 | CONFIDENTIAL: 16938 Investec Opportunity Fund Positioned to provide investors with inflation-beating returns Source: Investec Asset Management as at 31 December 2013 Domestic - equities, 36.4% Offshore - equities, 21.4% Domestic - cash , 18.1% Domestic - bonds, 16.1% Offshore - cash, 3.3% Commodities - Gold, 2.4% Offshore - bonds, 2.3% ● High quality stocks to provide real capital growth in volatile markets with lower levels of risk SA Equities ● Preferred asset class ● High quality global franchises on attractive valuations Offshore Equities ● Uncorrelated returns – provides protection in uncertain marketsGold ● Bonds provide a superior return to cash which yields a negative real return SA Fixed interest ● Waiting for more attractive entry points on select equity opportunities Cash
    • 12. Page 12 | CONFIDENTIAL: 16938 Investec Opportunity fund A proven investment philosophy ● A strong capital preservation bias through a strong focus on Quality businesses with attractive valuations and risk characteristics ● Aims to provide an attractive long-term rate of return regardless of the outlook for equity markets in the short term ● We expect a higher proportion of excess returns to be generated in falling markets Superior returns with lower than average absolute volatility Investec Opportunity Equity carve- out ALSI General Equity sector 10 12 14 16 18 20 22 24 10 11 12 13 14 15 16 Annualisedreturn(%p.a.) Standard deviation (%p.a.) Investec Opportunity Equity carve- out ALSI General Equity sector 10 12 14 16 18 20 22 24 26 10 11 12 13 14 15 16 17 Annualisedreturn(%p.a.) Standard deviation (%p.a.) 5 years 10 years
    • 13. Page 13 | CONFIDENTIAL: 16938 Investec Asset Management International Funds – Core Range Global Fixed Income Global Multi-Asset Global Equity ExpectedReturn Worldwide Equity Feeder (ZAR) Global Equity (USD) Global Opportunity Income FoF (ZAR) Money Market (USD, EUR, GBP) Global Strategic Managed Feeder (ZAR) Global Strategic Managed (USD) Global Opportunity Equity FoF (ZAR) Global Franchise (USD) Volatility ModerateLow High
    • 14. Investec Global Franchise Fund High quality solutions in uncertain markets Abrie Pretorius
    • 15. Page 15 | CONFIDENTIAL: 16938 Agenda ● Key facts ● Key benefits ● Performance ● Why invest in global franchise companies? ● Current positioning ● Summary
    • 16. Page 16 | CONFIDENTIAL: 16938 Investec GSF Global Franchise Fund Key facts Align left Portfolio manager Domicile Fund structure Objective Performance comparison index Fund launch Fund size Stategy size Share classes Ongoing charges Performance target* Source: Investec Asset Management, March 2014 * Performance target may not necessarily be achieved, losses may be made. Subject to change w ithout notification. MSCI AC World NR (MSCI World NR pre 1/10/11) 10 April 2007 US$ 1,859.5 million (28 February 2014) US$ 2.9 billion (28 February 2014) A, F, IX, C, S, J, I 1.92% (A-Share class) 3%-5% p.a. outperformance (gross) over a full market cycle The Fund aims to achieve long-term capital growth primarily through investment in shares of companies around the world. The Fund will have a blend of investments and will be unrestricted in its choice of companies either by size or industry, or in terms of the geographical make-up of the portfolio. The Fund will focus investment on stocks deemed to be of high quality which are typically associated with global brands or franchises. Clyde Rossouw Luxembourg Luxembourg-based SICAV, UCITS compliant
    • 17. Page 17 | CONFIDENTIAL: 16938 Key benefits ● Differentiated 'global franchise' philosophy ● We are long term holders of quality compounders ● Concentrated, global, high conviction portfolio ● Record of long-term outperformance: − Participating meaningfully in up markets − With smaller draw-downs in down markets − Lower than average absolute volatility We seek to invest in companies with business models which can provide some certainty in uncertain markets
    • 18. Page 18 | CONFIDENTIAL: 16938 Investec Global Franchise sufficiently uncorrelated to SA equities Sector composition ALSI Investec Global Franchise Basic Materials 24.7%  Avoid. High capital intensity, no pricing power Financials 18.7% ~ Typically low exposure. High leverage Consumer Goods 23.4%  Consumer staple bias Consumer Services 11.9%  Consumer staple bias Telecommunication 7.0%  Avoid. High capital intensity, no pricing power Oil & Gas 4.6%  Avoid. High capital intensity, no pricing power Industrials 6.2% ~ Selected niches Health Care 3.2%  Typically high exposure Technology 0.4%  Selected niches 100.0% As at 30 September 2013
    • 19. Page 19 | CONFIDENTIAL: 16938 Investec GSF Global Franchise Fund Performance track record Annual performance in USD Cumulative performance in USD -60% -40% -20% 0% 20% 40% 60% Apr 07 Jan 09 Sep 10 May 12 Feb 14 Investec GSF GlobalFranchise AAcc MSCI AC World NR (MSCI World NR pre 1/10/11) 41.8 18.5 Past Performance figures are not audited and should not be taken as a guide to the future Source: Lipper, dates to 28 February 2014, NAV based, (inclusive of all annual management fees but excluding any initial charges), gross income reinvested, in USD. *Inception date: 10 April 2007. The performance is based on the OEIC Investec Global Select Equity Fund from 10 April 2007 which then merged into the Luxembourg-domiciled Investec GSF Global Franchise Fund on 03 September 2009. Quartile rankings within Lipper Global Equity Global Sector 3 months YTD 1 year 3 years p.a. 5 years p.a. Since inception p.a.* Investec GSF Global Franchise A Acc 0.5% 0.6% 10.1% 12.0% 18.7% 5.7% MSCI AC World NR (MSCI World NR pre 1/10/11) 2.4% 0.6% 18.2% 8.5% 19.1% 2.8% Relative performance -1.9% -0.1% -8.1% 3.5% -0.3% 2.9% Quartile ranking 4 3 4 1 2 1 3 months YTD 1 year 3 years p.a. 5 years p.a. Since inception p.a.* chise A Acc 0.5% 0.6% 10.1% 12.0% 18.7% 5.7% I World NR pre 1/10/11) 2.4% 0.6% 18.2% 8.5% 19.1% 2.8% -1.9% -0.1% -8.1% 3.5% -0.3% 2.9% 4 3 4 1 2 1 5.9% -32.6% 36.1% 5.9% 7.4% 14.7% 15.3% 0.6% 3.9% -40.7% 30.0% 11.8% -5.9% 16.1% 22.8% 0.6% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 2007 (Apr) 2008 2009 2010 2011 2012 2013 2014 (YTD) Investec GSF GlobalFranchise A Acc MSCI AC World NR (MSCI World NR pre 1/10/11)
    • 20. Page 20 | CONFIDENTIAL: 16938 -60% -40% -20% 0% 20% 40% 60% 80% Volatility Positive months % Negative months % Max Drawdown Worst month Best month Tracking Error Investec GSF Global Franchise Fund MSCI AC World (net) Investec GSF Global Franchise Fund 14.3% 65% 35% -40.8% -12.14% 12.03% 8.57% MSCI AC World (net) 18.7% 52% 48% -53.7% -18.96% 11.22% - Attractive relative risk characteristics Past performance should not be taken as a guide to the future, losses may be made. Data is not audited Source: Investec Asset Management. Data to 28 February 2014. Performance is gross of fees in USD Returns are calculated on a bid to bid basis of the S class with gross income reinvested in USD. Relevant fund TERs have been added back. Inception date: 30 April 2007. Risk statistics since inception to 28 February 2014
    • 21. Why invest in global franchise companies?
    • 22. Page 22 | CONFIDENTIAL: 16938 Highly differentiated 'global franchise' philosophy High Quality Sustainable Growth Compelling Valuation Measure value in absolute terms based on the free cashflow yield for each investment Above Average Yield Enduring franchises that consistently support high returns Sustainable and free cashflow growthConsistently shown to compound shareholder wealth at superior rates of return over the long term
    • 23. Page 23 | CONFIDENTIAL: 16938 High quality Reflected by high returns on invested capital with low leverage Attractive Valuation High Quality Sustainable Growth Above Average Yield Q1 Q2 Q3 Q4 Global Franchise -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Global Franchise ROIC vs. the market ROIC Source: Investec Asset Management analysis of FactSet data For the full research methodology, please refer to our recent white paper entitled ‘Tracking down great ideas – why return on invested capital is a crucial metric’ Market (MSCI ACWI) Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Telecommunication Services Utilities 40% 50% 60% 70% 80% 90% 100% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Percentage of companies maintaining 1st quartile returns ● Strong business models and management ● Low capital intensity ● Strong balance sheets ● By actively managing companies with high barriers to entry, the Global Franchise Fund has been able to maintain an ROIC typically 10% higher than the overall market
    • 24. Page 24 | CONFIDENTIAL: 16938 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 1998 2000 2002 2004 2006 2008 2010 2012 Nestlé Anglo American plc -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 1998 2000 2002 2004 2006 2008 2010 2012 Nestlé Anglo American Why we shun capital intensity Free Cashflow Margin Capital Expenditure (US$) Source: Investec Asset Management, Bloomberg ● Nestlé generated $131bn of free cashflow returning over $80bn to shareholders ● Anglo American generated a mere $11bn of free cashflow, returning $22bn to shareholders during the best commodity bull market in 50 years
    • 25. Page 25 | CONFIDENTIAL: 16938 High quality Reflected by high returns on invested capital with low leverage ● Strong business models and management ● Low capital intensity ● Strong balance sheets ● Portfolio has AA average credit rating ● CDS spreads below many AAA and AA sovereigns ● Average age of companies held within the portfolio is 110 years Sources: Investec Asset Management and FactSet, 28 February 2014. Investec GSF Global Franchise Fund re-weighted excluding cash and equivalents Attractive Valuation High Quality Sustainable Growth Above Average Yield Low leverage (Net debt to EBITDA) Superior returns (Return on Invested Capital) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Apr-07 Aug-09 Nov-11 Feb-14 Global Franchise Fund MSCI ACWI 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Apr-07 Aug-09 Nov-11 Feb-14 Global Franchise Fund MSCI ACWI
    • 26. Page 26 | CONFIDENTIAL: 16938 Sustainable growth Strong business models provide sustainable long-term growth prospects ● The Global Franchise Fund has demonstrated long-term sustainable free cashflow growth benefitting from: − Competitive advantages that are difficult to erode or replicate (brands, patents…etc.) − Stable growing industries − Disciplined capital allocation Sources: Investec Asset Management and FactSet, 28 February 2014. Investec GSF Global Franchise Fund re-weighted excluding cash and equivalents Attractive Valuation High Quality Sustainable Growth Above Average Yield Global Franchise: Growth Rates 0% 2% 4% 6% 8% 10% 12% 14% Apr-07 Aug-09 Nov-11 Feb-14 Investec Global Franchise 7-yr Free Cash Flow Compound Growth Rate (CAGR)
    • 27. Page 27 | CONFIDENTIAL: 16938 Above average yields Excess cash returned to shareholders Sources: Investec Asset Management and FactSet, 28 February 2014. Investec GSF Global Franchise Fund re-weighted excluding cash and equivalents ● Strong cash generation – free cashflow is our preferred operating and valuation metric ● History of returning a high proportion of free cashflows to shareholders through dividends and share repurchases. Attractive Valuation High Quality Sustainable Growth Above Average Yield Return of capital to shareholders 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Apr-07 Aug-09 Nov-11 Feb-14 Total Return of Capital Dividend Yield Share Repurchase Yield
    • 28. Page 28 | CONFIDENTIAL: 16938 Compelling valuations Absolute valuations are attractive ● Despite being composed of high quality companies with strong growth prospects, the Global Franchise Fund remains at a valuation discount to the MSCI ACWI on a free cashflow basis This is not a buy or sell recommendation for any particular stock Sources: Investec Asset Management, Company reports, FactSet, 28 February 2014 Global Franchise free cashflow yield vs. MSCI ACWI Attractive Valuation High Quality Sustainable Growth Above Average Yield 0% 2% 4% 6% 8% 10% 12% Apr 07 Aug 09 Nov 11 Feb 14 Global Franchise MSCI All Country World (excluding Financials)
    • 29. Page 29 | CONFIDENTIAL: 16938 Portfolio construction We aim to remain fully invested at all times. Cash can build up temporarily as a result of our inability to find undervalued stocks Position size ● At least 1% at purchase ● Maximum individual position size: 10% ● Typical number of stocks: 25-40 ● Maximum industry position size: 20% ● Unconstrained at sector level Sector ● Sector and industry weightings are a product of our bottom-up stock selection process ● The characteristics that we seek are typically found in companies producing branded consumer goods, and pharmaceuticals, media and advertising Country ● Country weightings are a product of our bottom-up stock selection process. The typical concentrations in our portfolios are Europe (non-UK), North America and the UK These internal parameters are subject to change, not necessarily with notice to shareholders Industry defined in accordance with the Global Industry Classification Standard (GICS)
    • 30. Current positioning
    • 31. Page 31 | CONFIDENTIAL: 16938 Name Weight P/E FCF Yield Dividend Yield EM % Sales Nestle (Nescafé, Maggi, Nesquik, Nespresso) 6.7% 21.7x 4.5% 3.1% 49% Reckitt Benckiser Group (Nurofen, Finish, Vanish, Dettol, Strepsils) 5.5% 21.2x 5.1% 2.6% 39% Japan Tobacco (Camel, Winston, Mild Seven, B&H) 5.2% 14.2x 5.5% 2.8% 27% Microsoft (Windows 8, Office365, Skype, Bing, Xbox One, Surface) 5.0% 14.5x 7.3% 2.6% 13% Imperial Tobacco (Davidoff, Gauloises, West) 4.7% 14.0x 7.0% 4.8% 27% Roche (MabThera, Herceptin, Avastin, Pegasys) 4.7% 20.8x 5.1% 2.8% 18% International Business Machines (IBM) 4.7% 12.0x 7.3% 2.0% 40% Anheuser-Busch InBev (Budweiser, Beck's, Stella Artois) 4.5% 12.6x 6.1% 2.6% 56% Novartis (Gleevec, Diovan, Lucentis, Gilenya) 4.5% 20.7x 5.1% 3.2% 10% Samsung (Samsung, Galaxy) 4.3% 6.1x 13.0% 1.1% 48% 49.8% 15.8x 6.6% 2.8% 33% Global Franchise Top 10 An attractive mix of Value and Growth Not a buy, sell or hold recommendation. The portfolio may change significantly over a short period of time. Financial metrics are based on blended forward and trailing financial data according to individual constituent company fiscal year ends Source: FactSet, as at 28 February 2014 A concentrated portfolio
    • 32. Page 32 | CONFIDENTIAL: 16938 Top holdings Reckitt Benckiser ● 19 Powerbrands are global number 1 & 2 in fast growing categories driving 70% of net revenue ● Since 2000 revenue and profit more than doubled and market cap quadrupled ● 12 years of high quality above market growth Growth Free Cash Flow Quality 178 256 386 527 644 650 745 929 841 1117 1790 1374 1576 1722 1921 2039 2162 0 500 1000 1500 2000 2500 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F FreeCashFlow($m) 18.5% 14 year CAGR Source: Bloomberg This is not a recommendation to buy, sell or hold a particular security. The specific companies listed or discussed herein are included as representative transactions of the portfolio. No representation is being made that any investment will or is likely to achieve
    • 33. Page 33 | CONFIDENTIAL: 16938 735.2 250.4 124.3 0 100 200 300 400 500 600 700 800 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TotalShareholderReturn(Rebasedto100) Reckitt Benckiser HPC Competitors (Average) MSCI ACWI Top holdings Reckitt Benckiser ● Returned 60% of FCF to shareholders ● Superior shareholder return of CAGR of 18.5% vs. the market of 2.3% over the last 13 years Valuation Share price and EPS in GBP Yield Shareholder returns 0.2 0.7 1.2 1.7 2.2 2.7 5 10 15 20 25 30 35 40 45 50 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Price (LHS) EPS 12m fwd. (RHS) Source: Bloomberg, as at 31 December 2012 Source: FactSet, as at 31 May 2013 Past performance should not be taken as a guide to the future This is not a recommendation to buy, sell or hold a particular security. The specific companies listed or discussed herein are included as representative transactions of the portfolio. No representation is being made that any investment will or is likely to achieve
    • 34. Page 34 | CONFIDENTIAL: 16938 ● World's third largest tobacco company with brands sold in 120 countries ● Dominant market share in two of the worlds largest markets, namely Japan and Russia. 0% 2% 4% 6% 8% 10% 12% 14% Top holdings Japan Tobacco – Looking beyond the country Quality Strong and improving profitability Return on Invested Capital Growth 10 Year CAGR in operating profit of 11% Source: Company reports, 2014 0% 5% 10% 15% 20% 25% 30% 35% - 100 200 300 400 500 600 700 Operating Profit Operating Profit Margin
    • 35. Page 35 | CONFIDENTIAL: 16938 ● Structural changes in local market and privatisation driving improved capital allocation and growth Yield Attractive shareholder return profile Improving Capital Allocation Valuation Growth potential not recognised by market Top holdings Japan Tobacco – Looking beyond the country Source: Bloomberg, 2014 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 0 20 40 60 80 100 120 Dividend per share Payout Ratio 5.0 7.0 9.0 11.0 13.0 15.0 17.0 19.0 21.0 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 PE Ratio '- 1 Stdev Average '+ 1 Stdev
    • 36. Page 36 | CONFIDENTIAL: 16938 Top holdings Microsoft Corp... re-inventing itself ● Uniquely poised to take advantage of opportunities in enterprise, cloud, search and mobile Source: Company data, Investec Asset Management, August 2013. This is not a recommendation to buy, sell or hold a particular security. The specific companies listed or discussed herein are included as representative transactions of the portfolio. No representation is being made that any investment will or is likely to achieve Growth Well positioned in large scalable markets Quality Strong and improving profitability 20% 30% 40% 50% 60% 70% 1996 2000 2004 2008 2012 Incremental ROIC
    • 37. Page 37 | CONFIDENTIAL: 16938 Top holdings Microsoft Corp... re-inventing itself Yield Attractive shareholder return profile Total return of capital Valuation Growth potential not recognised by market ● Track record of attractive shareholder returns ● Market discounts perpetual decline and value destruction Source: FactSet, October 2013. This is not a recommendation to buy, sell or hold a particular security. The specific companies listed or discussed herein are included as representative transactions of the portfolio. No representation is being made that any investment will or is likely to achieve 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Apr-07 Dec-08 Jul-10 Feb-12 Sep-13 Global Franchise Fund MSCI All Country World Information Technology Microsoft 6.1% -2.8% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% Mar-04 Oct-05 May-07 Dec-08 Jul-10 Feb-12 Sep-13 Actual Sales Growth Implied Terminal Growth Rate
    • 38. Page 38 | CONFIDENTIAL: 16938 Sector and geographic allocation Sector allocation Geographic allocation The portfolio may change significantly over a short period of time Source: Investec Asset Management, FactSet, as at 28 February 2014 Consumer Staples 51.7% Information Technology 18.5% Health Care 18.3% Consumer Discretionary 6.2% Financials 2.7% Other 0.3% Cash 2.3% North America 42.6% Europe ex UK 25.4% United Kingdom 19.8% Japan 5.2% Emerging Markets 4.3% Other 0.3% Cash 2.3%
    • 39. Page 39 | CONFIDENTIAL: 16938 Current portfolio characteristics Focus on quality and value ● Low gearing, low capital intensity (growth requires less capital) ● Overweight consumer staples (defensive and ideal for declining equity markets) ● No banks, but selected financials Global Franchise MSCI ACWI* Free Cashflow Yield 5.9% 5.0% Dividend Yield 2.5% 2.4% Return on Invested Capital 18.9% 9.5% P/E 16.3x 15.2x Average Market Capitalisation** $144bn $85bn Tracking error 8.6% Current Beta 0.69 The portfolio may change significantly over a short period of time. Source: FactSet, Investec Asset Management. The above reflects the portfolio characteristics of the Investec GSF Global Franchise Fund reweighted excluding cash and cash equivalents, as at 28 February 2014. Financial metrics are based on blended forward and trailing financial data according to individual constituent company fiscal year ends *Comparative index has changed to MSCI AC World Index from 1 October 2011 **Market Capitalisation is market weighted
    • 40. Summary
    • 41. Page 41 | CONFIDENTIAL: 16938 0.45 0.50 0.55 0.60 0.65 0.70 0.75 Apr-07 Aug-09 Nov-11 Feb-14 Global Franchise Portfolio Beta (7-yr Sample) 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Apr-07 Aug-09 Nov-11 Feb-14 Total Return of Capital Dividend Yield Share Repurchase Yield Low market sensitivity (Beta to MSCI ACWI) Investec GSF Global Franchise Fund What is important to us… Superior returns (Return on Capital) Low leverage (Net debt to EBITDA) Return of capital to shareholders Sources: Investec Asset Management and FactSet, 28 February 2014. Investec GSF Global Franchise Fund re-weighted excluding cash and equivalents 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Apr-07 Aug-09 Nov-11 Feb-14 Global Franchise Fund MSCI ACWI 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Apr-07 Aug-09 Nov-11 Feb-14 Global Franchise Fund MSCI ACWI
    • 42. Page 42 | CONFIDENTIAL: 16938 Attractive risk-adjusted returns Since inception annualised return & risk versus peer group* Past performance should not be taken as a guide to the future, losses may be made. Data is not audited Source: Lipper, data to 28 February 2014, NAV based, (inclusive of all annual management fees but excluding any initial charges), in USD. *Inception is 30 April 2007. The fund performance is based on the OEIC Investec Global Select Equity Fund from 10 April 2007 which then merged into the Luxembourg-domiciled Investec GSF Global Franchise Fund on 03 September 2009 MSCI AC World NR (MSCI World NR pre 1/10/11) Investec GSF Global Franchise A Acc Lipper Global Equity Global -15.0 -10.0 -5.0 0.0 5.0 10.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.0 30.0 32.0 34.0 Annualisedperformance%change Annualised standard deviation
    • 43. Page 43 | CONFIDENTIAL: 16938 Conclusion ● Advantages for a South African Client − Differentiated and clearly defined philosophy and process − Non correlated − attractively valued − Developed market centric exposure ● Consistent and relative predictability in our investment results ● Attractive real return and below peer group volatility ● Bottom-up, fundamental research-based approach ● Manage the absolute risks that are most likely to jeopardise the achievement of long- term total returns
    • 44. Thank you www.investecassetmanagement.com
    • 45. Page 45 | CONFIDENTIAL: 16938 Disclaimer This document or any of its content may not be in whole or in part, be copied, modified, distributed, retransmitted, redistributed, or released to any third party. The user represents and warrants that it will not use or permit the use of the document or any of its content for any purpose other than authorised internal use and warrants that it will not, without the prior written consent of Investec Asset Management, directly or indirectly redistribute, or knowingly facilitate redistribution of, all or any portion of the document. All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such information or opinion without appropriate professional advice after a thorough examination of a particular situation. We endeavour to provide accurate and timely information but we make no representation or warranty, express or implied, with respect to the correctness, accuracy or completeness of the information and opinions. We do not undertake to update, modify or amend the information on a frequent basis or to advise any person if such information subsequently becomes inaccurate. Any representation or opinion is provided for information purposes only. Investec Asset Management will not be held liable or responsible for any direct or consequential loss or damage suffered by any party as a result of that party acting on or failing to act on the basis of the information provided by or omitted from this document. This document may not be amended, reproduced, distributed or published without the prior written consent of Investec Asset Management. In the event that specific collective investment schemes in securities (unit trusts) are mentioned please refer to the relevant fact sheet in order to obtain all the necessary information in regard to that unit trust. Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of charges, fees and adviser fees is available on request from the manager. Additional adviser fees may be paid and if so, are subject to the relevant FAIS disclosure requirements. Forward pricing is used. The scheme trustee is FirstRand Bank Ltd (011) 371 2111. Certain Investec Asset Management funds are offered as long-term insurance policies issued by Investec Assurance Limited, a registered insurer in terms of the Long-term Insurance Act. Investec Asset Management is an authorised financial services provider.
    • 46. Page 46 | CONFIDENTIAL: 16938 Investec Asset Management South African Funds – core range Fixed Income Multi-Asset Equity ExpectedReturn Value Equity Absolute Income Diversified Income Money Market Opportunity Cautious Managed Managed Expected Volatility ModerateLow High Opportunity Income

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