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European outlook enero 2012
 

European outlook enero 2012

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European Outlook de Event Matt Siddle, Portfolio Manager Equity de Fidelity.

European Outlook de Event Matt Siddle, Portfolio Manager Equity de Fidelity.

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    European outlook enero 2012 European outlook enero 2012 Presentation Transcript

    • European OutlookMadrid Perspectives Event17 January 2013 Matt Siddle Portfolio Manager EquityThis presentation is for investment professionals only and should not be relied upon by private investors.
    • Why Invest in a European Fund? European companies are in better shape than economies Europe has unique franchises which produce globally competitive products European companies reward shareholders and are cheap in absolute and relative terms Invest in European companies, not just Euro economies2
    • Economic summary The European economy requires major surgery ECB actions are an anaesthetic, buying more time… …but critical questions remain – will politicians seize the opportunity?Europe needs growth too – 3 options for politicians:1. Increase government expenditure to ‘buy growth’ in the short term2. Seek debt forgiveness, exit the € to become cheaper than neighbours3. Drive long term growth through increased competitiveness No quick fix – likely to have ongoing macro volatility3
    • Peripheral Europe has lost competitiveness since 1997 Source: Hourly compensation costs in manufacturing, U.S. dollars, and as a percent of costs in the United States Bureau of Labour Statistics, last available data as in December 2012. (1) With the exception of Estonia, 1997 is the first year data for all countries are available to BLS.4
    • Germany vs. FranceUnit labour costs compared to unemployment ratesGermany vs. France – Unit Labour Cost Germany vs. France – Unemployment Rate Unemployment Rate Higher in Germany Unemployment Rate Higher in France Labour market reform in Germany drove improved job growthSource: Absolute Strategy Research. Left - Annual data as in December 2012. Right - latest available Quarterly data as on 3 January 2012.5
    • Relative Eurozone unit labour costs Unit labour costs improving but more needed – especially in Italy & FranceSource: Absolute Strategy Research, 2 January 2012.6
    • Global economic fundamentalsUS Durable Goods Orders and Shipments Global Industrial Production Orders have declined, but production has not. This is not 2009.Source: Left chart - Absolute Strategy Research, latest available on 2 January 2013.Right chart- Netherlands Bureau for Economic Policy Analysis and Fidelity, December 2012.7
    • European brands benefit from global growth Top 100 Global Brands in 2012 according to Interbrand – European namesSource: Interbrand Top 100 Global Brands and FIL, December 2012Third party trademark, copyright and other intellectual property rights are and remain the property of their respective owners. Brandscircled in red are represented in FF European Growth Fund as at November 2012.8
    • Global exposure helps drive EPS growthDespite lagging European real GDP …Europe is ahead on earnings growthgrowth…Source: State Street, annual data till 2011, latest available on 31 December 2012. Source: State Street, 31 December 2012.9
    • European equities are cheap, absolute & relativeEuropean Market Forward PE European Market PBShiller 10 Year Average PE % of European stocks with dividend yields > corporate bond yield 52%Source: Top charts - Datastream, 31 December 2012. Bottom left chart – Absolute Strategy Research, 31 December 2012.Bottom right chart – Goldman Sachs ECS Research, 30 November 2012. Corporate bond yield is the aggregate European Corporate bond yield (75%iShares Markit iBoxx Eur Corporate Bonds and 25% iShares Markit iBoxx £ Corporate Bonds). Index used for dividend yields – Europe Stoxx 600.10
    • Quality / value matrix Tactical opportunities Good businesses with improving fundamentalsLow Valuation to High Valuation 5 Sweet spot – Strategic focus Good businesses with attractive valuations Tactical opportunities Poorer businesses 1 that are VERY cheap 5 1 Low Quality to High Quality Buy good businesses with attractive valuations – not just the best businessesSource: FIL Limited.11
    • Quality focusAdd value and reduce downside risk Despair Hope Growth Overall 21 months 7 months 50 months 78 months Quality stocks outperform in long term & do well in difficult timesSource: Fidelity and Societe Generale, based on MSCI Europe Index, Number of months denote the average number of months per cycle. Data is from January 1991 till March2012. For illustrative purposes only.12
    • Long term performance of Matt SiddleReducing downside risk in tough times European FF European Larger FF European UK Portfolios Growth Fund Pilot Companies Fund Growth Despair HopeSource: Fidelity & Morningstar Workstation for all data, For Matt Siddle: March 2012. Q3 07 to Q2 08 = UK Unconstrained Pilot ,internal FIL portfolio, Comparative Index used forreference= FTSE All Share. Q3 08 to Q3 09 = FIF UK Growth + Income Fund, Basis: bid-bid, net income reinvested at UK basic rate of tax in UK Sterling, BM = FTSE All Share,available to UK investors only. April 10 to September 10 = European Pilot , internal FIL portfolio, Comparative Index used for reference = MSCI Europe. From October 2010 toDecember 2012 = FF European Larger Companies Fund, Comparative Index for reference = MSCI Europe. From July 2012 to December 2012 = FF European Growth Fund,Comparative Index for reference = FTSE World Europe. nav-nav, net of fees, gross income reinvested, in euros. Comparative Index used for reference = MSCI Europe. In Q4 2009and Q1 2010, Matt was not managing any funds. Pilots - These figures reflect performance of an internal Fidelity portfolio which was not available for purchase by clients. Publicfund performance may differ slightly from this representative performance based on the impact of (1) expenses associated with public fund administration, (2) client inflows andoutflows, and (3) the cash position.13
    • Career performanceQuarterly excess return vs. Index FF European Larger FF European Larger Companies Q4 2012 Companies Q3 2012 FF European FF European Growth Q4 2012 Growth Q3 2012 Quality focus delivered outperformance, particularly in weaker marketsSource: Fidelity & Morningstar Workstation for all data, For Matt Siddle: March 2012. Q3 07 to Q2 08 = UK Unconstrained Pilot ,internal FIL portfolio, Comparative Index used for reference= FTSE All Share.Q3 08 to Q3 09 = FIF UK Growth + Income Fund, Basis: bid-bid, net income reinvested at UK basic rate of tax in UK Sterling, BM = FTSE All Share, available to UK investors only. April 10 to September 10 =European Pilot , internal FIL portfolio, Comparative Index used for reference = MSCI Europe. From October 2010 to December 2012 = FF European Larger Companies Fund, Comparative Index for reference= MSCI Europe. From July 2012 to December 2012 = FF European Growth Fund, Comparative Index for reference = FTSE World Europe. nav-nav, net of fees, gross income reinvested, in euros. ComparativeIndex used for reference = MSCI Europe. In Q4 2009 and Q1 2010, Matt was not managing any funds. Pilots - These figures reflect performance of an internal Fidelity portfolio which was not available forpurchase by clients. Public fund performance may differ slightly from this representative performance based on the impact of (1) expenses associated with public fund administration, (2) client inflows andoutflows, and (3) the cash position.14
    • Performance overview in % (EUR) – 31 December 2012FF European Growth Fund Period Fund Index Excess Rank Count 3 Months 3.1 4.7 -1.6 188 266 6 months (Tenure*) 8.8 12.5 -3.7 238 263 1 Year 17.0 18.8 -1.8 157 257 3 Years 15.86 21.4 -5.5 139 214FF European Larger Companies Fund Period Fund Index Excess Rank Count 3 Months 3.0 4.4 -1.4 191 266 6 Months 9.9 12.0 -2.1 207 263 1 Year 20.3 17.3 +3.0 66 257 3 Years 23.8 19.8 +4.1 56 214 Since Tenure** 26.3 14.7 +11.6 7 227 Please note that past performance is not a guide to future performanceSource: Fidelity and Standard & Poor’s. As on 31 December 2012. Basis: nav-nav, gross income reinvested in euros. Excess may not appear to be thedifference between the fund and index returns as they are rounded off to one decimal place.Comparative Index used for reference for FF European Growth Fund= FTSE World Europe Index. Morningstar peer group - Europe Large-Cap Blend Equity .*Tenure since 1 July 2012. Comparative Index used for reference for FF European Larger Cos Fund= MSCI Europe Index. Morningstar peer group - EuropeLarge-Cap Blend Equity . **Tenure since 1 October 2010.15
    • Stock example – WPP QualityInvestment thesis ValuationQuality: Strong in key EM markets (#1 in China & India), now 30% sales growing at ~10% Strong in digital capability, now over 30% sales and growing at high single digit rates WPP Share Price (rebased)Valuation: 11.6x PE, discount to peers and still cheap on EV/Sales vs. historic range Leader in EM marketing services on a cheap valuationSource: Fidelity, Datastream, 31 December 2012, in euro terms. Reference to specific securities should not be construed as a recommendation to buy or sell these securities, but isincluded for the purposes of illustration only. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity.16
    • Stock example – Sanofi QualityInvestment thesis ValuationQuality: Investors worry about patent expiries, yet these products are now only 7% of sales ‘Growth Platforms’ like Diabetes and EM are 66% sales and give solid recurring growth Sanofi Share Price (rebased)Valuation: 11.6x PE, discount to peers and still cheap vs. historic EV / Sales Under-recognised growth in most of its businessesSource: Fidelity, Datastream, 31 December 2012, in euro terms. Reference to specific securities should not be construed as a recommendation to buy or sell these securities, but isincluded for the purposes of illustration only. Investors should also note that the views expressed may no longer be current and may have already been acted upon by Fidelity.17
    • Why Invest in a European Fund? European companies are in better shape than economies Europe has unique franchises which produce globally competitive products European companies reward shareholders and are cheap in absolute and relative terms Invest in European companies, not just Euro economies18
    • Regulatory risk warnings / important notes /complianceThis information is for Investment Professionals only and should not be relied upon by private investors. It must not be reproduced or circulated without prior permission. This communication is not directed at,and must not be acted upon by persons inside the United States and is otherwise only directed at persons residing in jurisdictions where the relevant funds are authorised for distribution or where no suchauthorisation is required. Fidelity/Fidelity Worldwide Investment means FIL Limited and its subsidiary companies. Unless otherwise stated, all views are those of Fidelity.Top security holdings are thosesecurities in which the largest percentage of the fund’s total assets are invested. Holdings in different securities issued by the same company are listed separately and any exposure achieved by derivatives isnot shown. This means that the data may not always represent the total exposure of the portfolio to any given company. A full list of holdings, including derivatives is available on request. Reference in thisdocument to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Investors should also note that the viewsexpressed may no longer be current and may have already been acted upon by Fidelity. The research and analysis used in this documentation is gathered by Fidelity for its use as an investment manager andmay have already been acted upon for its own purposes. Fidelity only offers information on its own products and services and does not provide investment advice based on individual circumstances. Fidelity,Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are trademarks of FIL Limited. Fidelity Funds is an open-ended investment company established in Luxembourg withdifferent classes of shares. Reference to FF before a fund name refers to Fidelity Funds. Holdings can vary from those in the index quoted. For this reason the comparison index is used for reference only.This document may not be reproduced or circulated without prior permission. No statements or representations made in this document are legally binding on Fidelity or the recipient. Past performance is not areliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested. For funds that invest in overseas markets, changes in currencyexchange rates may affect the value of an investment. Foreign exchange transactions may be effected on an arms length basis by or through Fidelity companies from which a benefit may be derived by suchcompanies. Barra. Inc.’s analytics and data (www.barra.com) were used in the preparation of this document. Copyright 2013 BARRA, INC. All rights reserved. Third party trademark, copyright and otherintellectual property rights are and remain the property of their respective owners. Materials might use company logos when giving stock examples, then these should be accompanied by the following footnote:“Third party trademark, copyright and other intellectual property rights are, and remain, the property of their respective owners. We recommend that you obtain detailed information before taking anyinvestment decision. Investments should be made on the basis of the current prospectus, which is available along with the current annual and semi-annual reports free of charge from our distributors, from ourEuropean Service Centre in Luxembourg;Growth Investments Limited is licensed by the MFSA. Fidelity Funds are promoted in Malta by Growth Investments Ltd in terms of the EU UCITS Directive and LegalNotices 207 and 309 of 2004. The Funds are regulated in Luxembourg by the Commission de Surveillance du Secteur Financier; from our legal representative in Switzerland: BNP Paribas Securities Services,Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich. Paying agent for Switzerland is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich from your financialadvisor or from the branch of your bank in Italy ; For the purposes of distribution in Spain, Fidelity Funds is registered, with the CNMV Register of Foreign Collective Investment Schemes under registrationnumber 124, where complete information is available from Fidelity Funds authorised distributors. The purchase of or subscription for shares in Fidelity Funds shall be made on the basis of the Key InvestorInformation Document (KIIDS) that investors shall receive in advance. The Key Investor Information Document (KIIDS) is available free of charge and for inspection at the offices of locally authoriseddistributors as well as at the CNMV ; In Portugal, Fidelity Funds are registered with the CMVM and the legal documents can be obtained from locally authorised distributors; from your financial advisor or fromthe branch of your bank in the Nordic countries ;Please note that not all funds in the SICAV fund range are suitable for UK investors and tax advice should be sought before investing. Fidelity Funds arerecognised under section 264 of the Financial Services and Markets Act 2000. Investors should note that loss caused by such recognised funds will not be covered by the provisions of the Financial ServicesCompensation Scheme (or by any similar scheme in Luxembourg) if the fund is unable to meet its obligations, however claims for loss in regards to such recognised funds against a FSA authorised firm suchas Fidelity will be. The Full Prospectus and Key Investor Information Document (KIIDS) for these funds are available from Fidelity on request by calling 0800414181. The UK distributor of Fidelity Funds isFidelity Worldwide Investments;In the Netherlands, the documents are available from FIL (Luxembourg) S.A., Netherlands Branch (registered with the AFM), World Trade Centre, Tower H, 6th Floor, Zuidplein52, 1077 XV Amsterdam (tel. 0031 20 79 77 100). Fidelity Funds is authorised to offer participation rights in The Netherlands pursuant to article 2:66 (3) in conjunction with article 2:71 and 2:72 FinancialSupervision Act.We recommend that you obtain detailed information before taking any investment decision. Investments should be made on the basis of the current prospectus/Key Investor InformationDocument (KIIDS), which is available along with the current annual and semi-annual reports free of charge from our European Service Centre in Luxembourg , and from Fastnet Belgium S.A., the financialservice provider in Belgium which head office is based avenue du Port 86C, b320, 1000 - Bruxelles.Issued by FIL Investments International (FSA registered number 122170) a firm authorised and regulated bythe Financial Services Authority. FIL Investments International is a member of the Fidelity Worldwide Investment group of companies and is registered in England and Wales under the company number1448245. The registered office of the company is Oakhill House, 130 Tonbridge Road, Hildenborough, Tonbridge, Kent TN11 9DZ, United Kingdom. Fidelity Worldwide Investment’s VAT identification number is395 3090 35. FEEP1250-0713 For Professional Investors only Not for public distribution19