Aberdeen World Growth and Income Fund NMA Conference and Awards  13 – 14 January 2011 For Professional Use Only Not for pu...
Agenda About Aberdeen Investment team Investment process Growth and income in a global context Aberdeen World Growth and I...
About Aberdeen Asset Management An independent asset management group Origins in Scotland  Still run today by its founders...
Global equity team EQ-GLO-001 310810 Stable team with collective responsibility for investment decisions A mix of youth an...
Key points of differentiation We are bottom-up stock pickers We rely on our own research We maintain high conviction portf...
Global equity process Regional desk interaction Regional teams (Pan Europe, Asia Pacific ex Japan, North America, Japan, E...
Step 1: Regional teams Quality Pass or fail? Potential revisit Portfolio construction Monitor Company visit note Watchlist...
Step 2: Comparative analysis – Global team Stocks on global equity buy-list have passed regional quality and valuation scr...
EQ-GLO-047 311010 Comparative analysis example – energy sector Source: Aberdeen Asset Management and all numerical data fr...
Focus on enhancing value over long term Being right in long term matters more than buying early Buying is only the beginni...
Income challenges for the UK investor UK dividends remain under pressure as the shape of contribution changes Source: FT; ...
Concentration of dividends within the UK market  Source: Morgan Stanley, Factset Mar 10 10 57.9 1.8 Tesco 8 56.1 3.3 Briti...
Ingredients for income growth  Same investment process which leads to the construction of the global equity model Universe...
Dividend growth from an international portfolio  Source: Bloomberg, Nov 10 Brazil 14 4.6 Souza Cruz Switzerland 15 3.8 Nov...
Murray International v. Aberdeen World Growth and Income EQ-GLO-007 300607 Source: Aberdeen Asset Management 30 Sep 10 Man...
Aberdeen World Growth and Income Portfolio is diversified from a country/regional perspective, however benchmark has consi...
Aberdeen World Growth and Income Portfolio is diversified from a sector perspective  If we can’t find value we will have z...
Aberdeen World Growth and Income A high conviction portfolio of stocks Various businesses spread across sectors and countr...
Summary  Equities Robust investment process Consistent across all desks Regional teams Conduct initial due diligence and f...
Appendix
Quality Business prospects/strategy Evidence of industry growth, clear strategy and execution Management  Motivation, expe...
Price Valuation: Use standard metrics, via P/E ratios, price/cashflow, NAV, dividend yield Different criteria depending on...
Global equity team GR-BIO-008 310710 Martin Connaghan, Investment Manager Stephen Docherty, Head of Global Equities Bruce ...
For professional use only Not for public distribution Investors should be aware that past performance is not a guide to fu...
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Aberdeen

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Aberdeen

  1. 1. Aberdeen World Growth and Income Fund NMA Conference and Awards 13 – 14 January 2011 For Professional Use Only Not for public distribution Bruce Stout, Senior Investment Manager
  2. 2. Agenda About Aberdeen Investment team Investment process Growth and income in a global context Aberdeen World Growth and Income Fund GR-TAG-016 010807
  3. 3. About Aberdeen Asset Management An independent asset management group Origins in Scotland Still run today by its founders AuM has grown to £178.7bn since inception in 1983 1,829 staff including over 500 investment professionals Geographically diverse – 31 offices in 24 countries Working with clients across Institutional, Wholesale and Charity sectors Asset Management is all that we do GR-AUM-131 300610 Source: Aberdeen Asset Management, 30 Sep 10 Property 12.1% Fixed Income 25.3% Equities 40.3% Money Market 6.0% Alternative Investment Strategies 16.3% Group AuM
  4. 4. Global equity team EQ-GLO-001 310810 Stable team with collective responsibility for investment decisions A mix of youth and experience Team members are all generalists Global equity team utilises proprietary research produced by regional teams Source: Aberdeen Asset Management, 31 Oct 10 2 2 SRI Analyst Fionna Ross 4 6 Assistant Investment Manager Ella-Kara Brown 6 22 Senior Investment Manager Stewart Methven 9 20 Senior Portfolio Analyst Ann Dewar 9 12 Senior Investment Manager Samantha Fitzpatrick 9 11 Investment Manager Martin Connaghan 3 3 SRI Analyst Jamie Govan <1 <1 SRI Researcher Gail McCullie 7 10 Global Trading Co-Ordinator Jill Sneddon 10 8 22 23 17 Years in industry 9 Head of SRI Research Cindy Rose 6 Senior Investment Manager Jamie Cumming 6 Senior Investment Manager Andrew McMenigall 9 Senior Investment Manager Bruce Stout 15 Head of Global Equities Stephen Docherty Years with firm Title Team members
  5. 5. Key points of differentiation We are bottom-up stock pickers We rely on our own research We maintain high conviction portfolios of 40-60 stocks We don’t own companies we don’t like, regardless of benchmark weight Typical average stock position c2% We use a buy-and-hold approach with low turnover; we are true company stakeholders We build diversified portfolios of companies We employ a team approach, consensual decision-making, but senior managers have final say We control risk at the stock level through rigorous process, discipline and filters
  6. 6. Global equity process Regional desk interaction Regional teams (Pan Europe, Asia Pacific ex Japan, North America, Japan, Emerging Markets) Same process = Common language = Ability to exchange thoughts across regions EQ-GLO-020 310807 Step 1 Comparative analysis Global team Model portfolio c50 stocks Monitor Risk checks Step 3 Step 2 Watchlist/review c280 stocks Global Equity Buy List C330 stocks
  7. 7. Step 1: Regional teams Quality Pass or fail? Potential revisit Portfolio construction Monitor Company visit note Watchlist/ review Aberdeen universe Price Cheap or expensive? EQ-GEM-002 300607 Model is default Filter for mandate Refine weightings Compliance checks Total universe of stocks Desk research: Pre-screen of candidate companies No quantitative filters Many stocks eliminated over time or self-excluding due to size/structure Risk controls
  8. 8. Step 2: Comparative analysis – Global team Stocks on global equity buy-list have passed regional quality and valuation screens Stocks with market cap < US$1bn are excluded from buy-list Global team makes comparisons across regions/sectors Global team focuses on the valuation differentials, where pricing anomalies are identified from a global perspective Unique companies are identified to help construct a diversified portfolio of businesses EQ-GLO-009 210307 We aim for a diversified portfolio, not driven by backward looking index composition
  9. 9. EQ-GLO-047 311010 Comparative analysis example – energy sector Source: Aberdeen Asset Management and all numerical data from Bloomberg, Nov 10 Companies marked in bold are held in the global equity portfolios. Model research example used for illustrative purposes only 5.3% 2.0% 4.2x 13.6x 15.5x 23.0x Asia PTT Exploration 17.8% 3.7% 1.0x 6.1x 7.5x 10.9x Europe ex UK OMV 16.5% 3.7% 1.7x 8.7x 8.5x 8.2x Latin America Petrobras 11.5% 3.0% 4.4x 5.5x 5.8x 6.6x EMEA Lukoil 17.0x 12.1x 6.6x 10.4x 8.7x 8.5x 14.4x 83.1x 12.0x 12.3x P/E10 18.7x 14.8x 9.3x 14.4x 11.4x 11.3x 37.5x 31.2x 19.9x 18.5x P/E09 3.2x 1.9x 1.3x 1.4x 1.3x 1.7x 1.5x 2.4x 2.0x 2.5x P/B 4.8% 5.3% 8.6x UK Royal Dutch Shell 26.8% 1.0% 15.9x UK BG Group 2.7% 3.2% 11.1x Asia PetroChina -14.6% 1.9% 6.4x UK BP 20.4% 8.7% 8.0x Europe ex UK Total 0.0% 0.6% 13.0x USA Hess Corporation 32.4% 0.6% 30.7x USA EOG Resources -5.8% 6.2% 7.8x Europe ex UK ENI 12.0% 0.5% 10.3x USA Apache Corporation 8.8% 2.4% 11.3x USA Exxon Mobil Dividend growth (5yr) (%) Dividend yield P/E11 Region Company
  10. 10. Focus on enhancing value over long term Being right in long term matters more than buying early Buying is only the beginning, not end, of company research Top-slicing/adding on weakness is main source of turnover Actual company name turnover is kept low We are owners of companies rather than buyers of stocks; we spread risk not by buying more stocks but by constructing a portfolio that invests in many different businesses
  11. 11. Income challenges for the UK investor UK dividends remain under pressure as the shape of contribution changes Source: FT; Aberdeen Asset Management FTSE All-Share Index Dividend Rate 12 month percentage change 1985 - 2009 Dec 86 Dec 88 Dec 90 Dec 92 Dec 94 Dec 96 Dec 98 Dec 00 Dec 02 Dec 04 Dec 06 Dec 08
  12. 12. Concentration of dividends within the UK market Source: Morgan Stanley, Factset Mar 10 10 57.9 1.8 Tesco 8 56.1 3.3 British American Tobacco 4 52.8 3.8 AstraZeneca -5 49.1 5.3 BHP Billiton 8 43.7 5.6 GlaxoSmithKline -1 38.2 6.4 HSBC Holdings 3 31.8 7.4 Vodafone Group -3 24.4 12.1 Royal Dutch Shell -5 12.3 12.3 BP 8 59.9 1.6 National Grid Consensus dividend growth 2010(%) Cumulative contribution to market dividend % of total market dividend Stock
  13. 13. Ingredients for income growth Same investment process which leads to the construction of the global equity model Universe expanded via the inclusion of stocks held within regional income portfolios Extended global buy list is screened for those companies with balance sheet strength, robustness of underlying cash flow a willingness to act in a shareholder friendly fashion and consequently the scope to deliver dividend growth Target a portfolio yield of 4.0% Quest for income orientated opportunities in a truly global capacity
  14. 14. Dividend growth from an international portfolio Source: Bloomberg, Nov 10 Brazil 14 4.6 Souza Cruz Switzerland 15 3.8 Novartis Germany 13 6.6 E.ON Singapore 13 4.6 Singapore Telecom Canada 19 4.1 Telus Taiwan 10 4.6 Taiwan Semiconductor Mexico 9 4.1 Kimberly Clark de Mexico Japan 13 4.6 Takeda Pharmaceutical Australia 15 7.6 QBE Switzerland 34 6.8 Zurich Financial Services Country Hist 5 year div growth % Yield % Stock
  15. 15. Murray International v. Aberdeen World Growth and Income EQ-GLO-007 300607 Source: Aberdeen Asset Management 30 Sep 10 Managed by the same team Uses the same investment approach All WGI stocks are held in MINT WGI could invest up to 10% in Fixed Income securities…but holds zero at present NAV c6% Premium / Discount c4.0% c3.2% Yield No c10% now Leverage Up to 10% c10% now Fixed Income? 39 60 Number of Stocks Aberdeen World Growth and Income Murray International
  16. 16. Aberdeen World Growth and Income Portfolio is diversified from a country/regional perspective, however benchmark has considerable exposure to the USA and no exposure to the emerging markets Relative country positions EQ-GLO-005 300607 Source: Aberdeen Asset Management, BPSS, Datastream. 30 Nov 10 -45.1 54.9 9.8 North America +11.3 0.4 11.7 Latin America +16.7 6.1 22.8 Asia Pacific ex Japan 100.0 100.0 Total +2.2 - 2.2 Cash -3.1 10.0 6.9 Japan +6.2 9.7 15.9 United Kingdom +11.8 18.9 30.7 Europe ex UK Accounts relative position (%) MSCI World (%) 30 Nov 10 (%) Country/Region
  17. 17. Aberdeen World Growth and Income Portfolio is diversified from a sector perspective If we can’t find value we will have zero exposure to a sector Relative sector positions EQ-GLO-005 300607 Source: Aberdeen Asset Management, BPSS, Datastream. 30 Nov 10 -10.6 10.6 0.0 Consumer Discretionary +13.1 4.3 17.4 Telecommunication Services +2.8 9.5 12.3 Healthcare -10.2 11.2 1.0 Industrials -6.2 11.9 5.7 Information Technology +6.3 10.6 16.9 Energy -6.1 8.0 1.9 Materials +2.2 - 2.2 Cash 100.0 100.0 Total +8.4 10.1 18.5 Consumer Staples +3.4 4.1 7.5 Utilities -3.1 19.7 16.6 Financials Accounts relative position (%) MSCI World (%) 30 Nov 10 (%) Sector
  18. 18. Aberdeen World Growth and Income A high conviction portfolio of stocks Various businesses spread across sectors and countries from around the world Top 20 portfolio holdings by market value EQ-GLO-007 300607 Source: Aberdeen Asset Management. 30 Nov 10 2.1 China Petrochina 20 3.0 Italy ENI 10 2.5 Brazil Souza Cruz 17 3.0 Switzerland Roche Holdings 7 59.9 Cumulative (%) 2.5 Mexico Kimberley-Clark de Mexico 19 3.0 UK Royal Dutch Shell 9 2.5 Japan Canon 18 3.0 UK British American Tobacco 8 2.6 Japan Takeda Pharmaceutical 16 3.3 Taiwan Taiwan Semiconductor 6 2.9 UK Standard Chartered 15 3.3 Italy Tenaris 5 3.0 USA Philip Morris 14 3.5 UK Vodafone Group 4 3.0 USA Johnson & Johnson 13 3.5 Switzerland Zurich Financial Services 3 3.0 Taiwan Taiwan Mobile 12 3.6 Singapore Singapore Telecoms 2 3.0 Sweden Nordea Bank 11 3.6 Australia QBE Insurance 1 % Country Name % Country Name
  19. 19. Summary Equities Robust investment process Consistent across all desks Regional teams Conduct initial due diligence and filtering on stocks for Global equity buy list Always meet and interview a company before investing Provide company research and ongoing due diligence Global Equities Pick stocks from a concentrated universe of what we believe are ‘best’ ideas from regional teams (Global equity buy list) Take advantage of the benefits and opportunities of a flexible universe Genuine team effort across all desks Concentrated portfolios – we back our judgements EQ-GLO-011 310307
  20. 20. Appendix
  21. 21. Quality Business prospects/strategy Evidence of industry growth, clear strategy and execution Management Motivation, experience and track record: do we trust individuals in charge? Financials Strong balance sheet, transparent Transparency Clean company structure, visible earnings, annual report Commitment to shareholder value Company is run for shareholders, not managers or controlling interests What can you expect to find in our chosen stocks? Prefer straightforward companies with clear-sighted management
  22. 22. Price Valuation: Use standard metrics, via P/E ratios, price/cashflow, NAV, dividend yield Different criteria depending on sector/industry Cross-border and industry comparisons Simple forward modelling of each investment using our own forecasts Conservative approach, focusing on downside Are risks in price? We avoid overpaying Relative value as important as absolute given limited number of portfolio names Risk control AND relative value Holistic approach – We identify where the value is and which stocks will work for us
  23. 23. Global equity team GR-BIO-008 310710 Martin Connaghan, Investment Manager Stephen Docherty, Head of Global Equities Bruce Stout, Senior Investment Manager Andrew McMenigall, Senior Investment Manager Stewart Methven, Senior Investment Manager Jamie Cumming, Senior Investment Manager Samantha Fitzpatrick, Senior Investment Manager Ella-Kara Brown, Assistant Investment Manager Ann Dewar, Senior Portfolio Analyst Jill Sneddon, Global Trading Coordinator
  24. 24. For professional use only Not for public distribution Investors should be aware that past performance is not a guide to future returns, the value of investments and the income from them can fall as well as rise and investors may get back less than the amount invested The views expressed in this presentation should not be construed as advice on how to construct a portfolio or whether to buy, retain or sell a particular investment. The information contained in the presentation is for exclusive use by professional customers/eligible counterparties (ECPs) and not the general public. The information is being given only to those persons who have received this document directly from Aberdeen Asset Management (AAM) and must not be acted or relied upon by persons receiving a copy of this document other than directly from AAM. No part of this document may be copied or duplicated in any form or by any means or redistributed without the written consent of AAM Issued and approved by Aberdeen Asset Managers Limited which is authorised and regulated by the Financial Services Authority in the United Kingdom GR-DIS-001 300909

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