The conviction of long term thinking


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The conviction of long term thinking

  1. 1. The Conviction of Long-term Thinking Ilario Di Bon, Head of Equities Tom Pearson, Director, Head of UK Retail Sales 17 – 18 October 2013 For investment professionals only
  2. 2. Alliance Trust Global Thematic Opportunities (GTO) A compelling approach to global equity investing: • Long-term – fundamental analysis supported by thematic framework and emphasis on sustainability • Unconstrained – investing wherever the best opportunities are available • High conviction – maximum impact of team’s insights • Entrepreneurial setting 2
  3. 3. GTO portfolio Long-term, unconstrained, high conviction 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) Capacity £7B plus Fund Size £197.6m Source internal as at 30/09/2013 3
  4. 4. GTO process – idea generation Number of stocks in investable universe Stocks Actively Researched High Conviction Portfolio Structural themes and sustainability underpin fundamental stock selection 4
  5. 5. GTO idea generation – themes Bottom-up process, with thematic roadmap supporting long-term forecasting Four clusters of investment themes: • Demographics – emergence of new middle classes and ageing populations • Environment – preservation of natural resources • Innovation – new scientific and technological paradigms • Global Realignment – West to East power shift and post-crisis adjustment 5
  6. 6. GTO idea generation – themes 6
  7. 7. GTO idea generation – valuation Where forecast returns are given, these are based on expected scenarios which may not occur as anticipated. The forecasts are not guaranteed and may differ substantially from the actual returns. 7
  8. 8. GTO ideas – sustainable transportation Secular trend in fuel efficiency Source: Borgwarner Source: Bourg Warner 8
  9. 9. GTO ideas – BorgWarner Industry leading growth for BorgWarner Source: BorgWarner 9
  10. 10. GTO ideas – personalised medicine Cost of human genome sequencing Source: National Human Genome Research Institute 10
  11. 11. GTO ideas – Roche Around 50% of non-small-cell lung cancer patients have a genetic mutation driving their cancer Drugs that target specific genetic mutations •Increase the probability of success •Reduce development times •Require smaller trials •Reduce overall drug costs for payers 11
  12. 12. GTO ideas – Enterprise Product Partners Tentacles from Texas to all major shale regions & Gulf Source: Enterprise Product Partners 12
  13. 13. GTO ideas – Enterprise Product Partners Dominates Natural Gas Liquids (NGL) pipeline market. Strong growth via shale oil and gas. 13
  14. 14. GTO ideas – Samsung Electronics • High end smart phone market is a profitable duopoly • Portfolio of mid range SPs will benefit from increasing emerging market penetration • Consolidation underpins DRAM and NAND margins sustainably • Leading edge Foundry business will underpin earnings in the LT • Scale provides best in class cost structure • Market underestimates LT revenue + margin potential • Strong FCF and solid Balance Sheet could lead to cash returns • Valuation undemanding on 6.3x 2014 PE 14
  15. 15. GTO ideas – Samsung Electronics SOTP suggests significant upside Source: Alliance Trust 15
  16. 16. Appendices
  17. 17. Alliance Trust Global Thematic Opportunities Gross Performance 1 month YTD 1 year Since launch (29/12/2011) Alliance Trust GTO Fund 0.28% 16.80% 18.60% 24.83% MSCI AC World Index 0.49% 15.35% 18.04% 28.09% Relative performance -0.21% 1.26% 0.48% -2.55% Source: Internal as at 30/09/2013; Gross cumulative returns. Past Performance is not a guide to future performance 17
  18. 18. Alliance Trust Global Thematic Opportunities Performance Source: FE as at 30/09/2013. Past performance is not a guide to future performance. 18
  19. 19. GTO portfolio – top 10 holdings As at: 30/09/2013 19
  20. 20. GTO portfolio – sector weights Weight Active vs ACWI CONSUMER DISCRETIONARY 11.23 -0.64 CONSUMER STAPLES 8.59 -1.46 ENERGY 6.49 -3.39 FINANCIALS 20.40 -1.16 HEALTH CARE 16.06 5.96 INDUSTRIALS 11.44 0.60 INFORMATION TECHNOLOGY 14.38 2.35 MATERIALS 5.96 -0.25 TELECOMMUNICATION SERVICES 2.19 -1.96 UTILITIES 1.95 -1.33 As at: 30/09/2013 20
  21. 21. GTO portfolio – region weights Weight Active vs ACWI North America 58.34 7.05 Europe ex-UK 16.18 -0.22 UK 12.46 4.28 Japan 4.55 -3.58 Developed Asia Pacific 2.40 -4.11 Emerging Asia 2.23 -2.88 - -2.15 2.52 0.29 EMEA Latin America As at 30/09/2013 21
  22. 22. Global Equities Team – biography Ilario Di Bon Ilario is the Lead Portfolio Manager of the Global Thematic Opportunities discipline. He joined Alliance Trust as Head of Global Equities in July 2011 and was promoted to Head of Equities in July 2012, when he also became Lead Manager of the Investment Trust. Prior to joining Alliance Trust, 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 eight years at UBS Global Asset Management, working in both London and Tokyo, and 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. 22
  23. 23. Global Equities Team – biographies Juergen Lanzer Juergen joined the Alliance Trust Investments as a Senior Investment Manager in October 2011. He is a Global Sector Specialist in Financials. Previously, he worked at Schroders as Global Financials 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 three years working in Dusseldorf for WestAM. He holds a degree in Business Administration and is a CFA Charterholder. Oliver Johnson Oliver joined Alliance Trust Investment in April 2012 as a Global Sector Specialist in Consumer. Oliver has held a variety of roles throughout his career – most recently as Vice President, Global Consumer Sector at Nomura Asset Management, and previously Research Analyst at Exane BNP Paribas, and Senior Strategy Analyst at KLM France. He also has extensive knowledge of the aircraft industry having worked for Air Mauritius and Airbus. Oliver holds an MBA from INSEAD in Finance & Strategy. 23
  24. 24. Global Equities Team – biographies Adrien Bommelaer Adrien joined Alliance Trust Investments in March 2012 as a Global Sector Specialist in Technology, Telecoms and Media. He worked previously at Matrix Corporate Capital, where he covered the Semiconductor, SemiCap and Telecom Equipment sectors. 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 Semiconductors, SemiCaps and Solar stocks. Adrien holds a degree in Finance & Strategic Management from EDHEC Graduate Business School, Lille. James Twyman James joined Alliance Trust Investments in March 2012, as a Global Sector Specialist in Energy, Mining and Utilities. Before this he 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 and packaging where he was consistently highly ranked. James holds a degree in Economics from Bristol University. 24
  25. 25. Global Equities Team – biographies Colin Burchell Colin joined Alliance Trust in 2005 on the graduate training programme. He joined the US equities team in September 2007, 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 CFA Charterholder. Sam Ford Sam Ford joined Alliance Trust in 2006 on the Alliance Trust’s graduate training programme before moving into the UK Equities team in December 2007 as an Investment Analyst. He joined the Pan Asia team as an Investment Manager in 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. 25
  26. 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. Investors 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 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. • The opinions expressed are those held by Alliance Trust Investments at date of issue and are subject to change. • Examples of stocks are provided for general information only to demonstrate our investment philosophy. It is not a recommendation to buy or sell and the view of the Investment Manager may have changed. • Alliance Trust Investments Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC330862, registered office, 8 West Marketgait, Dundee DD1 1QN; is authorised and regulated by the Financial Conduct Authority, firm reference number 479764. Alliance Trust Investments gives no financial or investment advice. Alliance Trust Investments 8 West Marketgait, Dundee DD1 1QN T 01382 321000 26