The document summarizes an investment outlook report from Goodbody Wealth Management for the second quarter of 2015. It finds that: 1) The euro area recovery is gaining momentum, driven by quantitative easing from the ECB, low oil prices, a weak euro, and improved economic forecasts. 2) Euro area equities are positioned to continue performing well due to both external factors benefiting exports as well as signs of sustainable recovery in the domestic economy. 3) While bond markets lack value, central bank actions globally should limit downside risks, and absolute return strategies may provide modest gains with similar risk levels.

1. Investment Outlook
Goodbody Wealth Management | April 2015

2. The divergence in central bank policies is
definitely having an impact on financial
markets in 2015, with quantitative easing
in the euro area driving a major turnaround
in performance. Low oil prices, a weak
euro and improved economic forecasts all
continue to support a positive outlook.

3. Q2 Picks pg 15
 DAX
 iShares Euro Stoxx Banks ETF
 BNP Paribas
 AMP Irish Infrastructure Fund
 HICL
 CRH
 Ferrovial
 iShares US Consumer Services ETF
 Paddy Power
 First Trust Nasdaq 100 Technology Sector Index Fund
 FTSE EPRA Europe THEAM EASY UCITS ETF
 Hibernia REIT
Investment Outlook Q2, 2015
Contents
Market outlook
Solid start with QE pg 2
Euro area equities
Fundamental factors add strength pg 4
UK equities
Stability the key to performance pg 6
Infrastructure
Spending growth drives returns pg 8
Currencies
Policy divergence supports dollar pg 10
Sector strategy
Finding the earnings winners pg 14
Property
Europe follows Ireland’s lead pg 12

4. 2 Goodbody Q2 Investment Outlook 2015
The year has started well for financial markets with all asset
classes registering positive returns. The big story behind this
strong start has been the turnaround in the euro area. Lower
energy prices, a weaker euro and improved economic forecasts
have all been positive. But the major catalyst for the change
in fortunes has undoubtedly been the announcement and
implementation of full-blown quantitative easing (QE) by the
European Central Bank (ECB), which began its programme of
€60 billion in monthly asset purchases in March. Markets have
responded positively.
After a period of continual downgrades in 2014, economic data
from the euro area has been surprisingly strong (see Economic
Surprise Indices below). This improvement, combined with
the impact of lower energy prices and a weaker euro, has led
to better forecasts for economic growth in the region for both
this year and next. For 2015 the consensus growth forecast has
moved from 0.9% to 1.5% during the quarter.
Much of the buoyancy in the euro area has been coming from
the consumer, but there are signs of positive momentum
spreading into investment growth, which should provide greater
balance to the current expansion. The ECB has recently increased
its growth forecasts for the region, yet at the same time its
projections show inflation remains below target levels out to
2017. This indicates the bank will be in easing mode until then,
lending further support to the recovery.
At the end of 2014 the US and UK were exhibiting solid
performance and this has continued during the first quarter.
Momentum is advancing in the UK as the labour market keeps
strengthening. The quarterly data reveals real earnings growth in
the UK for the first time since the recovery began. The housing
market had been slowing down in the second half of 2014, but
could be stabilising now as pricing and activity indicators are
starting to improve slightly. Meanwhile, in the US, the labour
market has continued to power ahead with job growth reaching
its highest level since 2000.
Divergence still a major theme
However, the ‘two-track world’ we have been talking about
since last year remains a feature of the global economy.
While the developed world has been powering ahead, the
outlook for developing economies continued to deteriorate
and growth forecasts continued to be reduced. China made
headlines in January after the authorities cut the country’s
official growth forecast for 2015 from 7.5% to 7.0% - its weakest
expansion in 25 years. Russia and Brazil also remain in difficulty.
On the plus side, we have seen some countries reduce interest
rates (e.g. China, Indonesia and South Korea) and provide other
forms of monetary stimulus, so the policy response has already
started. We see that as positive.
Central Bank actions have in general been more supportive
than we expected at the start of the year. We have already
noted the more aggressive QE policy of the ECB and the cuts
in interest rates in emerging economies. But there was good
news elsewhere, too. In the UK the Bank of England increased
its forecast economic growth rates, but pulled back its inflation
forecasts. Now its target rate will not be reached until 2017.
Even the Fed has calmed down expectations of interest rate
increases, which the market had pencilled in for June.
Market outlook
Euro area takes the lead
After a long wait, the European Central Bank has finally started its quantitative easing programme. Equity markets in the
developed world have responded well so far and should kick on from here.
Q1 Total returns in euros
FTSE ALL World Index 15.5%
Merrill Lynch EMU Broad Market Index 3.3%
UCITS Alternative Index Global* 2.6%
US dollar euro -11.3%
Sterling euro -6.7%
* To end February
Economic growth relative to trend
Source: Goodbody
Slowdown Recession ExpansionRecovery
Rising
- Inflation
- Interest rates
Stalling
- Unemployment
- Budget deficit
Rising
- Unemployment
- Budget deficit
Falling
- Inflation
- Interest rates
Stalling
- Inflation
- Interest rates
Falling
- Unemployment
- Budget deficit
Rising
- Inflation
- Interest rates
Falling
- Unemployment
- Budget deficit
Emerging
Economies
US | UK
Japan
Euro area

5. Goodbody Q2 Investment Outlook 2015 3
“The euro area was the big question mark
heading into the year, but ECB actions and the
management of political risk mean markets
have done better than expected”.
Bernard Swords, Chief Investment Officer
Dangers averted
At the start of the year we had concerns about when the Fed
would start tightening, political risk in the euro area and a
slowing Chinese economy. The outlook has improved for some
of these.
At the end of last year there was considerable momentum in the
US economy, which raised the possibility that the Fed might hike
interest rates sooner than expected. The market impact of such
a move would have been negative. But the declining oil price
and significant strengthening in the US dollar this year do seem
to be slowing the manufacturing side of the economy. The Fed
acknowledged this at its last meeting in March and cut its growth
and inflation forecasts. Interest rate policy in the US - record low
rates for even longer - could now be a pleasant surprise.
The election in Greece of the anti-austerity party Syriza was
worse, from a market point of view, than expected. Nonetheless
it does look like Greece and its official creditors want to reach
an agreement and that the degree of compromise required
from the troika will not be excessive. Events in Greece and
the Ukraine did cause some concern during the last quarter,
but once a ceasefire was agreed in the Ukraine and the new
Greek government showed movement towards conciliation,
these issues receded from market view for the most part.
These developments reduce the potential impact of the
forthcoming Spanish elections in May.
As a result of these improvements we expect equity markets
to make further progress during the year so we are increasing
our target returns for the year slightly. Much of this is due to
the greater weakening of the euro than we expected. While we
expect some short-term recovery in the euro, it is likely to end
the year close to parity. Thus equity markets should deliver a
low double-digit return rather than the high single-digits we
expected at the start of the year.
Fixed income value still hard to find
Bond markets got off to a good start to the year with the Broad
Euro Bond Index returning 3.3%. QE was always likely to give
one further push to the euro bond markets, an effect that will
probably fade as the year progresses. International bond markets
have had a tougher time in delivering 1.9%, but the weakening
euro turned this into a respectable 10.8% return.
We still find it difficult to detect value in bond markets but,
at the same time, we are not especially pessimistic about their
outlook either, with central banks across the world either cutting
rates or extremely nervous about increasing them.
With little potential return in bond markets, we continue to look
at absolute strategies as a means of enhancing returns while
not altering risk levels. These strategies had a good start to the
year and by the end of February had delivered a return of 2.5%.
Some of the strategies within this universe have benefited from
the extreme moves in currencies and commodities that occurred
in the early part of the year, as well as from expectations of US
interest rate increases. We do not expect this rate of return to
be maintained for the full year, but we do expect further modest
progress. Volatility across asset markets remains close to all-time
lows and any increase here will help this sector.
Overall we do not see much change in the positioning of the
different blocs across the economic cycle (see chart on page 2).
We are more confident than before that the euro area is firmly
established in the recovery phase, but the US may be stalling at
the cusp of the expansion phase. In the background, economic
growth forecasts have remained relatively static overall, but
easier monetary policy has been a powerful tonic for real assets.
World equities had a total return of 15.5% in euro terms, but a
good portion of this came from a weakening in the euro. In local
currency terms, the total return has been a more subdued 4.9%.
In the short term it is difficult to see this changing much.

6. 4 Goodbody Q2 Investment Outlook 2015
iShares Euro Stoxx Banks ETF performance
Source: Bloomberg
Euro area GDP consensus forecasts
Source: Bloomberg
Banks ETF Relative to Euro Stoxx
17
16.5
16
15.5
15
14.5
14
13.5
13
12.5
12
0.051
0.049
0.047
0.045
0.043
0.041
0.039
0.037
0.035
2015 2016
Jan 14 Jan 14Mar 14 Mar 14May 14 May 14Jul 14 Jul 14Sep 14 Sep 14Nov 14 Nov 14Jan 15 Jan 15Mar 15 Mar 15
Euro area equity markets have risen sharply this year by 18.7%
due to an improving outlook for the region. Much attention has
focused on the external factors behind this improvement, such
as a lower oil price, a weaker currency and quantitative easing.
However, this is only part of the story. There are many other
significant intrinsic forces at work in the euro area economy
which suggest that the improvement is self-sustaining.
There have been many false dawns in the euro area as the
region struggled to emerge from the economic crisis that
began in 2008. But this time really is different. We think the
internationally focused sectors should continue to do well due
to the aforementioned external dynamics. But we also expect
the recovery in fortunes to broaden out to the domestic sectors,
too, as internal factors improve.
External factors in place
The 50% fall in the oil price since mid-2014 should have a
positive impact on the euro area economy and will probably
lead to an increase in GDP. Cheaper oil supports increased
consumption as households have higher disposable incomes.
It can also lead to increased investment as input costs decline.
Analysis by the ECB shows that a 10% decline in the oil price
would increase GDP by 0.2% over two years. Given a 50% oil
price decline already, the overall impact should be much greater
than that. For equity markets, the decline in commodity sector
earnings should, in time, be more than compensated by gains
in the rest of the market.
The decline in the euro versus the US dollar receives most of
the headlines, but the euro’s value versus other currencies the
euro area trades with (trade-weighted-euro) is more significant.
The positive impact of the decline will be felt first by exporting
companies, sectors and countries which will get a boost in
competitiveness leading to export growth. A weaker euro
can also boost domestic demand due to improving business
confidence and investment prospects. Analysis by the ECB shows
that a 10% decline in the trade-weighted-euro would increase
GDP by 0.5% over two years.
Internal forces getting to work
Much of the decline in the euro can be attributed to the ECB’s
policy of QE. The announcement of QE in January - and its
scale - was a positive surprise for markets generally. What was
once unthinkable is now reality. It has had a positive economic
impact by weakening the currency. It has also demonstrated the
commitment of the ECB to act. This has reduced deflation fears,
even if inflation is still weak and below target.
Economic indicators now exceeding expectations
For much of 2014, each economic statistic released proved to
be worse than investors and the market expected. This series
of economic disappointments bottomed out in October 2014
and started to become better from that point. Since the start
of 2015, each economic statistic has exceeded expectations.
This positive momentum is a welcome change for the euro area
and has led to growth upgrades.
Euro area equities
Signs of sustainable recovery start to emerge
Growth forecasts, corporate earnings and economic indicators have turned around in the euro area, meaning the real
economy can start carrying the momentum from QE, a weak euro and cheap oil.
1.8%
1.7%
1.6%
1.5%
1.4%
1.3%
1.2%
1.1%
1.0%

7. Goodbody Q2 Investment Outlook 2015 5
Upgrades to economic growth forecasts
The euro area recovery has been patchy so far with several false
dawns as a series of crises repeatedly interrupted any positive
economic momentum, making it difficult for a recovery to get
traction. However, the period of positive economic surprises
since the start of the year (and improvement from the worst
in October 2014) seems to rest on stronger foundations (lower
oil price, weaker currency, QE and improving confidence).
This has led to economic upgrades from official sources (ECB)
and investors. Consensus GDP growth forecasts for the euro area
for 2015 have increased from +1.1% in December 2014 to +1.3%
now and for 2016 from +1.5% in December to +1.6% now.
Corporate earnings improving
Earnings growth forecasts for the euro area are proving much
more resilient than for the rest of the world. This is a remarkable
turnaround from the experience over the past number of years
when euro area earnings underperformed other markets.
Since the start of the year earnings growth forecasts for 2015
for the euro area have increased to +15.4% from +14.4%. This
contrasts with global earnings forecasts, which have declined to
+4.1% from +8.3%. In 2016, euro area earnings growth forecasts
have increased to +14.0% from +12.6% while global earnings
forecasts have increased to +12.7% from +11.6%. Euro area
earnings are proving resilient due to a weaker euro (stronger
foreign profits), lower commodity costs (lower input costs)
and lower interest rates (lower interest expense).
Declining unemployment
The euro area is seeing some gradual improvements in
employment, which should improve further with upgrades
to economic growth and confidence. Unemployment,
at 11.4%, has gradually declined from the 2013 high of 12.0%.
Admittedly this is much higher than the 2008 low of 7.3%.
This difference demonstrates the scope for improvement.
For example, US unemployment at 5.7% is significantly below
the 2009 high of 9.9% and approaching the 2006 low of 4.4%.
Improving consumer confidence and retail sales
While employment is a lagging economic indicator, more timely
indicators of economic health, such as consumer confidence and
retail sales, are at multi-year highs.
Manageable political risk
Political risk, which hasn’t gone away, seems more manageable
than at the start of the year. Even though the Greek election
result was less favourable to markets than expected, the new
government and its official creditors have proven more amenable
to compromise than expected. The Ukraine ceasefire has reduced
risk here, too.
“While quantitative easing has received a lot of attention we
think there are other important forces that suggest the current
improvement in fortunes is sustainable and not exclusively
dependent on external factors”.
Jude O’Reilly, Senior Research Analyst
Greater investor interest in euro area
What does this all add up to? The improving economic conditions
and better earnings momentum has led to increased investor
interest in the euro area. For much of the second half of 2014
equity investors, both domestic and international, reduced
their holdings. This trend has reversed in 2015, although we
are still some way off peak 2014 weightings. As a result, equity
valuations have expanded. Yes, share prices and valuations are
at multi-year highs, but bond yields and cash yields are at record
lows, providing limited alternatives.
From currency weakness to domestic recovery
While euro area equities have performed strongly since the start
of the year, most of that has actually been currency related. For
an international investor the equity gains have been cancelled
out by currency depreciation.
The performance of euro area and global equities have been
the same. Even when we look within the euro equity market,
we can see that the companies with high levels of international,
developed market sales and profits are outperforming (LVMH,
Kerry or Glanbia), companies with high domestic sales and
profits are performing in-line, while companies with high
emerging markets sales and profits are underperforming. The
improving economic momentum should lead to a broadening of
equity performance to include domestic, cyclical sectors in time.
This includes Euro area banks, represented by iShares Euro Stoxx
Banks ETF, which should outperform (see chart on page 4).

8. 6 Goodbody Q2 Investment Outlook 2015
Current support for the parties
Source: BBC as at 31 March 2015
Labour 34%
Conservative 34%
UKIP 13%
Lib Dems 8%
Green 5%
SNP 5%
Plaid Cymru 1%
This should be an important quarter for UK equities. The UK
general election on May 7 looks set to be the least predictable
in a generation. We know that equity markets do not like
uncertainty. The coming weeks before the election are almost
certain to offer it in abundance. This recommends being shy of
UK equities over this period. While that may well be the case in
general, we aim to be more specific and ask which sectors could
be impacted and why.
What does history tell us?
UK equities actually saw little or no impact relative to European
equities around each of the last five elections. We think this
election will be different. The rise of alternative parties has
eroded support for the traditionally dominant Labour and the
Conservatives, making plausible a wide set of outcomes.
That was not the case in each of the last five elections.
We have to go back to 1974 for the last time there was the
real possibility of an unstable government. The Conservative
government called for early elections in February 1974 to face
down a miners’ strike, after which an unstable Labour minority
government was formed. It proved unworkable and elections
followed again in October 1974. The UK equity market corrected
strongly around the February election and also ahead of the
October election. However, once a stable government was
formed, UK equities performed strongly. There is a lesson here.
The possibility of unstable outcomes raises uncertainty and that
should negatively impact the domestic equity market. We think
that as we get closer to the election, the noise around these
scenarios could see UK equities underperform.
UK election outcomes
The total number of seats is 650 with one seat for the speaker.
So 325 is required to gain a majority. The two main parties are
running neck and neck, each with 30% - 35% of the electorate
on their side, while backing for the Liberal Democrats (Lib Dems)
has fallen. There are five realistic scenarios as we see it:
Weak coalition
This scenario looks the most likely and is the main reason we
think this election is different to the last five. It would require
including more than one partner and might see a coalition deal or
a minority government. Either way, policy implications resulting
from such a scenario would be minimal and the necessity to
strike political compromises will substantially reduce their scope.
Conservative-led strong coalition
The Conservatives could be in a position to re-form the current
coalition. It is unclear whether the Lib Dems would re-enter
coalition with the Conservatives, but they might also support
a minority government. Policies would likely be similar to the
current government, albeit the Lib Dems would probably block
an EU membership referendum.
Labour-led strong coalition
Labour recently ruled out a coalition with the Scottish National
Party (SNP). However, we still think that it could form one with
either the SNP or the Lib Dems in this outcome. An agreement
with the SNP would entail more support for redistributive tax
policies, tighter regulation and possibly demands around Scottish
devolution. The Lib Dems would look to secure a credible fiscal
adjustment path and mix.
UK equities
Stock performance hangs in election balance
It has been 40 years since a UK vote has been this uncertain. In this scenario, equities are likely to underperform - at least
until a stable government takes shape.
UK equity market relative performance around general elections
Election date Result - 12m - 6m + 6m + 12m
28/02/1974 Hung -9% -2% -18% -9%
10/10/1974 Labour -17% -10% 19% 53%
03/05/1979 Conservative 22% 30% -11% -3%
09/06/1983 Conservative -1% -5% -6% -4%
11/06/1987 Conservative 16% 34% -3% -1%
09/04/1992 Conservative -5% -3% -3% 1%
01/05/1997 Labour 7% 0% 1% -6%
07/06/2001 Labour 7% 2% 2% 2%
05/05/2005 Labour -1% 0% -2% -7%
06/05/2010 Hung 7% 5% -1% -5%
Average performance 3% 3% 5% -2%
Source: Goodbody (Performance relative to MSCI Europe, in GBP and total return)

9. Goodbody Q2 Investment Outlook 2015 7
“The lessons of the past tell us there will be
opportunities in any post-election rebound,
provided a strong government can emerge after
the vote”.
Brian Flavin, Senior Research Analyst
Yet a weaker sterling would help overseas earners such as media,
food and beverage, tobacco, industrials and pharmaceutical
companies. A Conservative minority government would raise
the possibility of a Brexit referendum, which could also lead to
higher gilt yields.
Conservative-led strong coalition
UK equity markets would cheer a return of the current coalition
because it would represent the most stable outcome and
Brexit would be put on the backburner. Any initial rally would
depend on the size of any pre-election sell down, but we think
domestic cyclical sectors should lead it. Banks in particular
should respond well.
Labour-led strong coalition
Certain sectors of the UK equity market would initially respond
favourably, especially if there is a sell-off prior to the event.
A left-leaning Labour government would favour non-financial
domestic stocks. UK utilities should also underperform,
particularly the non-regulated power companies.
Conservative or Labour majority
Equities should initially respond favourably to a stable outcome.
However, the Brexit risk will be much higher with a Conservative
majority - around 50:50. Over the medium term, that could
unsettle consumer confidence, which could damage the GDP
growth outlook. Sterling could weaken and gilt yields could rise
more quickly. That would favour overseas earners. A Labour
majority should see an initial bias towards non-financial domestic
equities other than utilities.
Failure to form a government
The prolonged uncertainty this would cause might impact
consumer confidence and damage the growth outlook.
UK equities are unlikely to recover from any pre-election sell
off in this outcome and we would be faced with the same
scenarios all over again with another election.
Conservative or Labour majority
This cannot be ruled out entirely. Policy implications would be
more radical. Based on public statements, Labour’s fiscal policy
would be looser, seeking to achieve a current budget surplus
‘as soon as possible’. It would engage in more ambitious tax
reform and look to increase regulation of the financial and
utilities sectors. On the other hand, Conservatives would
aggressively cut public spending and call for an EU referendum.
Failure to form a government
New elections would have to be called. This could also happen if
a minority or coalition government proved unstable, as in 1974.
Impact on equities
For markets the really important difference between
Conservative and Labour policies is the commitment of the
Conservatives to hold a referendum by the end of 2017 on a UK
exit from the EU. We think the only realistic scenario where that
could happen is in the event of a Conservative majority, which
seems unlikely. So we think that British exit (Brexit) may be an
overstated risk, but it can’t be entirely ruled out. If the outcome
is a stable government with no Brexit, we could see a strong
rebound in areas that may be sold off prior to the election.
Weak Coalition
A coalition under this scenario would probably be a Labour-led
one. Labour has more options when choosing potential
partners. In this case UK equities would recover quickly from
any pre-election sell off. That should favour UK domestic
consumer stocks such as retailers, travel and leisure, and
housing-related stocks. Banks, utilities and capital goods
would continue to underperform.
The second possibility is a minority government. This is
a much less stable proposition. This outcome would
unsettle consumer confidence, weaken sterling and hit
GDP growth. Domestic stocks would fail to recover quickly.

10. 8 Goodbody Q2 Investment Outlook 2015
AMP Irish Infrastructure Fund NAV per unit since inception
Source: Irish Life Investment Managers
Infrastructure investments outperform volatile markets
Source: Bloomberg
Investor interest in global infrastructure has grown considerably
in recent years because it has delivered attractive risk-adjusted
and genuine absolute returns. The nature of infrastructure assets
also means that they are typically able to increase prices in line
with inflation, providing a stable and growing distribution yield
over time. This income characteristic has significant value in a
lower-for-longer interest rate environment like we are in now.
But are these returns sustainable and, if so, what should we
invest in?
It is useful to explain what infrastructure actually is.
Infrastructure can generally be classified into four broad
sectors: transportation, utilities, communications and social
infrastructure. Infrastructure businesses generally have a strong
market position, often operating within regulatory frameworks,
or with revenues underpinned by strong, long-term contracts.
They can be described as essential, either because they
are fundamental to economic activity and economic growth,
such as utilities or transport infrastructure, or because they
support important social functions, such as education or
healthcare facilities.
Key features of this asset class include:
▪▪ Capital-intensive, high barriers to entry.
▪▪ High EBITDA margins.
▪▪ Some degree of inflation linkage, such as index linked
tariff structures.
▪▪ Low cyclical volatility.
▪▪ Predictable, income-oriented returns once operational.
▪▪ Potential for capital growth.
Outlook for infrastructure spending
According to a 2014 PWC report, worldwide capital project and
infrastructure spending is expected to total more than $9 trillion
per year by 2025, up from $4 trillion in 2012. Overall, close to
$78 trillion is expected to be spent globally between 2014 and
2025. This represents 6% - 7.5% growth per annum over the
next decade.
This growth rate varies by region, which is important for us to
consider when deciding where to invest. The fastest growth
should come from Asia-Pacific, growing by 7% - 8% per year to
reach $5.3 trillion by 2025. North America is the next largest
region, growing to $1.3 trillion annual spend. The US makes
up $1 trillion of this, growing around 3.5% per annum over the
decade while Canada grows faster at 4%. In western Europe,
growth is slowest at 2.7% to reach $777 billion but, within this,
Sweden (3.7%), UK (3.5%), France (3%) and Germany (2.9%)
should outperform the region.
Drivers of infrastructure spend
To a large extent, this has to do with economic growth and the
drive for improved economic performance and competitiveness.
Other drivers of investment are globalisation and the emergence
of new markets and new players that will help lengthen supply
chains and alleviate congestion around key ports, airports and
transit corridors. However, infrastructure needs will also be
shaped by other factors:
▪▪ Demographic developments such as ageing populations,
population growth or decline, urbanisation trends,
and population movements to rural and coastal areas.
Infrastructure
Laying the groundwork for income
With interest rates set to stay near record lows for some time, investors are looking for stable and increasing returns.
Infrastructure and essential services could be the answer.
HICL Average Listed Infrastructure FTSE 100
10%
0%
-10%
-20%
-30%
-40%
-50%
-60%
1180
1130
1080
1030
980
Six volatile market episodes since 2007
Financial
crisis
End QE1 US Debt Eur Crisis US
Tightening
Eur Growth
Scare
-16.5% 1.5% -0.8% -0.9% 0.1% -0.2%
Mar 12 Jul 12 Nov 12 Mar 13 Jul 13 Nov 13 Mar 14 Jul 14 Nov 14

11. Goodbody Q2 Investment Outlook 2015 9
Listed infrastructure - HICL
This investment company is listed on the London Stock
Exchange and specialises in social infrastructure investments,
predominantly in the UK. More recently, it has invested overseas
as competition in the UK increases, making pricing there less
attractive. HICL has delivered a total shareholder return of 158%,
adjusted for reinvesting dividends, since inception in 2006. That
compares to the FTSE 100 return of 66.1% over the same period.
Perhaps the greatest risk for HICL is the prospect of rising gilt
yields, but we think as long as rate normalisation is a gradual
process, it should be manageable.
“We think the attractive risk adjusted returns of this asset class
are sustainable in the medium term and we think it should be a
natural inclusion in any diversified portfolio”.
Brian Flavin, Senior Research Analyst
Direct exposure - Ferrovial
Spanish-listed company Ferrovial is one of the world’s leading
transportation infrastructure and construction and contracting
companies. Its two largest assets are a 25% stake in Heathrow
Airport and a 43% stake in a tolled highway in the Toronto area.
Although many of Ferrovial’s businesses have some of the
defensive features of an infrastructure investment, such as
inflation-protected income, the stock does not benefit from
them in a downturn. On the other hand, it does stand to benefit
most from increasing volumes from areas such as air and road
traffic in an improving economic environment. Although it has
no stated dividend policy, recent payouts and a strong cash
position suggest a prospective dividend yield of around 3.6%.
Indirect exposure - CRH
CRH is indirectly exposed to the infrastructure markets of
Europe and the US. Its latest proposed deal to buy certain assets
from Holcim and Lafarge will help transform its end-market
exposure and should see profits grow strongly in the coming
years. The stock has performed strongly year to date and in
our view is close to being up with these events. However, any
weakness in the share should be used as an opportunity to buy
into what should be a positive story in the medium term.
▪▪ Increasing constraints on public finances.
▪▪ Environmental factors, such as climate change and
rising quality standards.
▪▪ Technological progress especially in information and
communications technology.
▪▪ Trends towards decentralisation and local government
▪▪ The expanding role of the private sector.
▪▪ The growing importance of maintenance, upgrading
and rehabilitation of existing infrastructures.
Because of these reasons, infrastructure investments can
offer attractive, sustainable and growing dividends that
have significant value when interest rates are at historically
low levels. This translates into superior risk-adjusted returns.
For instance, in the UK, which is one of the most developed
markets, the listed infrastructure sector has consistently
delivered total shareholder returns in excess of the FTSE 100
- with two thirds of the volatility. The market opportunity
is strong.
Infrastructure: four ways to play
Here we suggest four ways to play the infrastructure theme,
each with very different investment characteristics.
Irish infrastructure - AMP Irish Infrastructure Fund
Although Ireland is a small market in comparison to other
European countries, the opportunities for higher returns are
greater. This is due to the prolonged recession, which saw
a significant fall in investment, as well as a lower level of
competition for assets. Pricing is generally more attractive
as a result, allowing for higher expected returns. First or early
mover advantage is important here.
The AMP Irish Infrastructure Fund is a unique opportunity
to access the Irish market at an early stage. The fund’s net
asset value per unit has grown almost 20% since inception
in 2012. In 2013, it started paying dividends representing
over 4% of funds invested. The fund currently owns two assets
with a third due to close shortly. It targets a portfolio of
10 - 15 assets with a valuation of between €500 million
and €1 billion.

12. 10 Goodbody Q2 Investment Outlook 2015
Trade weighted euro index
Source: Bloomberg
100
98
96
94
92
90
88
86
84
82
80
Jan 14 Mar 14 May 14 Jul 14 Sep 14 Nov 14 Jan 15 Mar 15
Currencies
No peak yet for the dollar
Monetary policy divergence is only getting more pronounced, which means there is more to come as the dollar ascends
and the euro continues to devalue under pressure from quantitative easing.
The course of diverging monetary policies that dictated price
action in foreign exchange markets through to the end of last
year has continued into 2015. If anything, it has become even
more pronounced. The US dollar’s reign accelerated in the first
quarter of the year with the dollar index increasing by more than
10% following its 12% rise over all of 2014. Much of the dollar’s
strength can be attributed to the weakness in the euro and,
to a lesser extent, the Japanese yen and commodity currencies.
With the European Central Bank (ECB) commencing its asset
purchase programme, Japanese inflation remaining subdued and
the prospect of further rate cuts in commodity reliant countries,
the US dollar looks set to enjoy its continued outperformance
in the quarter ahead despite the short term weakness it has
recently exhibited.
Beware of sharp reversals as dollar climbs
We recognise that the pace of the dollar’s ascent so far this
year is unsustainable. This leaves investors susceptible to
sharp reversals that may be driven by positioning rather
than fundamental factors. The March Federal Open Market
Committee (FOMC) meeting was perhaps the most important
event of the year so far, marking the beginning of a short term
reversal for the dollar.
The key development from this meeting was the committee’s
transition from a date-dependent approach to forward guidance
to a data-dependent one. Two references appear to have
dictated the dollar’s move down: the first was to a slowdown in
export growth and the second was a comment that economic
growth had moderated. The fact that Q1 growth is tracking lower
than expectations requires an adjustment to growth forecasts
for the year. Despite this downgrade, investors need to be aware
that the committee still expects growth to be above trend.
The moderation in economic growth echoes Q1 2014 when
the US economy contracted yet failed to deter the Fed from
their course of tapering asset purchases as planned. This gives
significant credence to the Fed’s plan to move further towards
policy normalisation, potentially as early as Q2. Fed chair Janet
Yellen also recognised, when questioned, that a stronger dollar
was one of the factors affecting export growth, though the Fed’s
view of the stronger dollar remains unclear with no mention of
its ascent in the recent statement.
Yields drive investors away from euros
The acceleration of the euro’s slide in the year to date has been
driven by a number of factors. One is the prospect of a Greek exit
from the euro and, thus, an indication that monetary union may
indeed be reversible. While this concern appears to have abated
following the extension of Greece’s bailout programme, it will
likely re-emerge in the coming months.
However, the most obvious and most important catalyst was
the commencement of the ECB’s asset purchase programme -
otherwise known as quantitative easing - which has cemented
the diverging monetary policy stances between the US and
Europe. The ECB is now buying €60 billion worth of assets per
month. Officials have committed to purchasing those assets
at whatever the price once they have a yield greater than the
deposit rate of -0.2%. This precludes German 2 year bonds from
the programme, while both 3 year and 5 year German bonds are
edging deeper into negative territory.
US - German 2 year spread
Source: Bloomberg US 2 year yield German 2 year yield
0.8
0.6
0.4
0.2
0
-0.2
-0.4
Jan 14 Apr 14 Jul 14 Oct 14 Jan 15

13. Goodbody Q2 Investment Outlook 2015 11
“A strong US economy and the prospect of a Fed
rate hike this year means there will be a
premium for investors who hold the dollar”.
Rod McAuliffe, Advisory FX Specialist
Both central banks have adopted a policy stance that aims
to increase economic growth and in turn increase inflation.
Of course by definition a weaker currency is supposed to boost
exports, but evidence suggests that at present this is
not happening at the expense of rival economies.
Taking the situation in Asia first: in the time when the Japanese
yen has weakened over 20%, Chinese exports continues to trend
higher with the February year on year rate increasing 48% while
Japanese exports have risen by 17% in the same time frame.
Despite the pressure on the yen-yuan rate it is difficult to make
a case that Japanese companies are using the exchange rate to
gain market share at the expense of their Chinese counterparts.
Europe tells a similar tale with the UK trade gap narrowing to
its lowest level in 14 years despite lacklustre demand from
the greater euro area. UK exports to non-European countries
continue to gain momentum while German exports to non-euro
area countries continue to flatline despite the euro weakening
some 10% this year against sterling. That being said, at some
point currency depreciation will open up greater trade deficits
between those countries leading the recovery - the US and UK
in particular - while also transferring some of the growth and
inflation outperformance to those trading partners.
The divergence in monetary policies has cemented our belief
that the US dollar will maintain its outperformance over the
medium to long term. As of late, there have been suggestions
in market debate that the dollar has peaked in value. We are
less confident. The prospect of the first Fed rate hike in nearly
a decade coupled with ECB purchases set to last until at least
September 2016 signifies that this divergence has not yet peaked
and is unlikely to do so for another five quarters. Going forward,
investors should pay particular attention to significant data
developments from the US, particularly on the labour market
and inflation, which will undoubtedly determine the timing of
the fast approaching Fed rate hike.
These forces have combined to remove what incentives were left
for global investors to continue to hold euros. Take Germany,
for example. Since the beginning of the year the German 10 year
bond yield has fallen from 0.54% to 0.2%, at time of writing.
In addition, on a 2 year basis, investors have to pay more to lend
to the German government than they would pay on deposit.
With ECB asset purchases only just commencing, one has to
question whether or not we could see an even larger move lower
in European yields in general.
The US on the other hand offers an enormous premium relative
to German yields. Consider the interest rate differentials on both
2 year and 10 year bonds. The US offers an 80bp premium over
Germany on a 2 year basis, while the US 10 year offers a 175bp
premium over the German 10 year. With a significantly higher
yield on US assets coupled with a stronger dollar relative to the
euro, investors are clearly being paid to hold US dollars.
Competitive devaluation overstated
Europe and Japan have welcomed the recent currency
devaluations. However, their policies have been tainted by
comparison to the ‘beggar thy neighbour’ style of the 1930s.
The competitive devaluations of the 1930s were part of a
rotation away from the gold standard in an attempt to exercise
greater power in implementing monetary policies. Such currency
devaluations provided little or no stimulus for recovery in the
depreciating economy and were blamed for transmitting beggar
thy neighbour impulses to the rest of the world. In essence what
occurred was this: countries that engaged in aggressive currency
devaluations often competed for the same foreign business and,
as such, in order to maintain a competitive exchange rate, those
countries were forced to continuously undercut each other’s
currencies. This effectively was an attempt to steal the wealth of
rival economies.
To suggest that current monetary policies being implemented by
the ECB and BOJ are doing the same thing is misleading.

14. 12 Goodbody Q2 Investment Outlook 2015
Irish commercial property annual total returns 1995 - 2014
Source: IPD
Irish commercial property was among the best performing
asset classes in the world during 2014. According to Investment
Property Databank (IPD), Irish commercial property delivered
a total return of 40.1% for the full year to December 2014. This
exceptional annual return is significantly ahead of the 20 year
average total return from Irish commercial property of 10.5%.
Furthermore, turnover in commercial investment transactions
exceeded €4.6 billion during 2014. This record volume was more
than double the 2013 turnover of €1.92 billion and was 30%
higher than the previous record of €3.6 billion set in 2006.
This exceptional performance has been driven by strengthening
investor sentiment towards Ireland and improving occupier
activity across all sectors with central Dublin offices being the
standout performer. The improving economic backdrop, together
with a shortage of good quality buildings in central locations, is
supporting rental growth and strong investor interest in Dublin
offices. Rents are expected to continue to rise over the next
24 months as the shortage of Grade A accommodation and
competition for that space becomes more acute. Rental growth
is expected in residential rent and is also beginning to emerge in
well located, high quality retail and industrial assets.
Limited development activity is now beginning to emerge to
meet rising demand for offices. Given the nature of construction
programmes it will be late 2016 or early 2017 before newly
completed offices will be available to incoming tenants. We are
also seeing a broadening appetite from investors who had largely
been entirely focused on central Dublin office investments. Now
a wider cohort is actively acquiring office, residential, retail and
industrial assets in suburban Dublin and the regional cities.
The quest for yield - a broader European story
This story is not just an Irish story. It is part of a common
theme playing out across Europe and around the globe.
Virtually all western European countries saw significantly higher
investment activity during 2014. According to CBRE, the total
value of commercial property investment across the region
was €218 billion during the year. Annual transaction volume
increased by 32% from the previous year. Along with Ireland’s
record breaking transaction numbers both Sweden (€14.5 billion)
and Spain (€10.2 billion) also recorded all time record levels
of investment activity. At €77 billion for the year, the United
Kingdom was also within 10% of its previous record year in 2006.
Generally investment demand for property has been growing.
The ECB’s quantitative easing programme is driving considerable
interest in income yielding property. There is limited new supply
on the market to meet this demand. Increasing competition for
assets ultimately is also giving way to upward pressure on pricing
in many European markets.
As the quest for yield intensifies across Europe, we are seeing
investor interest broadening into other ‘peripheral’ markets.
Along with Ireland, the Netherlands, Italy, Portugal and Spain
also saw a significant increase in activity last year. Investors are
also expanding their reach within these markets to regional cities
and also riskier secondary assets.
DTZ estimates that there is $1,224 billion of capital seeking
global real estate assets over the next three years. For example,
large global institutional investors such as the Norwegian
Government Pension Fund Global, the largest pension fund
Property
Investment demand continues to grow
Supply shortages and the hunt for yield are still driving prices higher in Irish commercial property. Now opportunities are
beginning to arise in other European markets as cash chases returns.
Commercial investment property yearly turnover
Source: Goodbody
4700
4000
3500
3000
2500
2000
1500
1000
500
0
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Retail Office Industrial All Property 20 year average
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

15. Goodbody Q2 Investment Outlook 2015 13
Debt levels remain low relative to the previous peak. Much of
the transaction activity is equity funded as investors seek an
income return on cash. Bank lending is available to high credit
grade borrowers but there is still limited availability of debt
to less attractive borrowers. This restriction naturally controls
additional risk permeating the system. Average loan to value
ratios across broader European property markets are currently
30%, considerably lower than the 45% witnessed at the peak
of the last cycle.
“As the quest for yield intensifies across Europe, we are seeing
investor interest broadening into other ‘peripheral’ markets”.
David Clarke, Head of Property
A severely tempered appetite for development risk has followed
the Great Recession. Funding for development has been highly
restricted. Very little new building has been undertaken since
2008/2009. Rising rents resulting from supply constraints are
prompting new development activity in certain cities (notably
Dublin, Brussels and London). The broader development pipeline
across Europe is expected to be relatively subdued.
Diversify but Ireland remains preferred
A diversification strategy will broaden the portfolio exposure to
a wider set of differing economic cycles, sectors and markets.
Market stimulus, the depreciation of the euro against other
major currencies, ultra-low interest rates and ongoing positive
yield spreads on property assets are expected to benefit real
estate markets in Europe for some time. Also, double-digit rent
growth is expected in London in 2015 where vacancy levels
are at historical lows and near-term supply and speculative
development remains subdued.
Irish commercial property is our preferred market. The all
property equivalent yield in Ireland peaked at 8.9% in 2012
and it now stands at 6.5%. We expect to see some further
yield compression in Ireland leading to further increases in
commercial property values. However, rental growth in Dublin
offices and emerging in prime retail and industrial assets will
be a more significant contributor total returns across the year.
Total returns from Irish commercial property are again expected
to exceed the long term average of 10.5% per annum but at
more modest levels than 2014.
in Europe, is increasing its exposure to real estate. The $870
billion fund, built from Norway’s oil revenue, began investing in
property in 2010 and currently holds assets of over €18 billion
in some of the largest cities around the world. Property was
the fund’s best performing asset class in 2014. Recently the
fund announced plans to double its holding in coming years.
Europe’s 10 largest pension fund investors have increased real
estate allocations in portfolios to circa 11%, according to Towers
Watson/JLL data. The average allocation in the largest pension
funds in Australia, Canada, Japan, Netherlands, Switzerland,
UK and US is 6% and is expected to increase further.
Listed property - strong run in the year to date
Real estate investment trusts (REITs) and other listed property
companies provide investors with an opportunity to indirectly
invest in high quality assets in diverse portfolios which are
managed by professional management teams. Listed property
companies and REITs also tend to have solid balance sheets,
low financing costs and durable access to capital through
the financial markets. REITs specifically have high minimum
distribution requirements which, backed by strong rental cash
flows, generate attractive dividend income.
Listed European REITs and property companies have had a strong
run in the year to date. The listed property sector as measured
by European Public Real Estate Association’s (EPRA) Developed
Europe Index is up 19.7% in the year to date and circa 41% over
the last 12 months. Investors have been increasingly drawn to
the relatively attractive dividend income (circa 3% per annum)
and the anticipation that European real estate will be a direct
beneficiary of the ECB’s stimulus measures.
Given the strong recent performance it is reasonable to
be cautious towards the prospect of positive momentum
continuing. However, a number of positive factors remain.
Risk premiums on property assets across European markets
remain healthy when compared to the peak in the last cycle
when the risk premium for buying prime commercial assets was
zero or negative. Real interest rates across the G7 economies
have trended below 0%. Further yield compression, with a
resultant increase in property values, can be expected as
investors continue to seek substitutes for negative return bonds.

16. 14 Goodbody Q2 Investment Outlook 2015
Technology sector valuation
Source: Bloomberg
Sector strategy
Focus now on profit growth
Earnings have been hampered by the impact of lower oil prices on the energy sector, but investors still have to be
discerning when looking beyond performance to profits.
2015 Earnings growth forecast
YTD Performance Dec 2014 Mar 2015
Healthcare 9.4% 9.7% 7.5%
Consumer discretionary 7.8% 16.2% 15.7%
Materials 5.5% 11.5% 6.2%
Telecoms 5.1% 4.2% 5.4%
Industrials 4.4% 12.5% 10.8%
Consumer staples 4.3% 7.3% 3.9%
Financials 3.6% 11.1% 10.3%
Technology 2.3% 10.8% 10.4%
Energy -1.8% -12.9% -42.0%
Utilities -2.5% 7.1% -6.0%
Global 4.9% 8.3% 4.1%
Source: Bloomberg Historic PE (LHS) Historic PE re to SP 500
22
20
18
16
14
12
10
1.25
1.20
1.15
1.10
1.05
1.00
.95
.90
Apr 10 Feb 11 Dec 11 Oct 12 Aug 13 Mar 14 Nov 14
Equity market performance has got off to a good start in 2015
but profit growth has been more challenging. We believe that
delivering on profit expectations will become increasingly
important through the year. For sector selection we will be
looking for industries that are expected to deliver above market
growth and where the year to date revisions have been minor.
The areas of attraction will be sectors where earnings forecasts
have been resilient but price performance has been subpar.
At the start of the year earnings were expected to grow by
over 8% but the latest consensus forecast is just over 4%.
However much of this is due to the impact of the extremely
weak oil price on the energy sector. If we exclude the energy
sector the consensus forecast for profit growth has declined
from 10.4% to 9.2% - still lower, but not terrible.
The major influences on results so far this year have been lower
commodity prices, currency impacts and weaker emerging
economy demand. These trends have persisted up to the
time of writing and thus corporate results released in the next
quarter are going to be heavily influenced by these trends again.
Consequently the earnings winners - those sectors that have
produced results close to forecast year to date - should
maintain this position into the second quarter.
Three sectors stand out for us: consumer discretionary,
financials and technology. For consumer discretionary profit
growth is expected to be nearly four times the global average.
Lower oil prices are good for discretionary spending, as are
increasing employment levels. The weak euro is also a major
plus for European-based companies. However this has not gone
unrecognised by the market, as the sector is the second best
performing year to date. It is still attractive, but care is needed
given some of the strong performances. We still like Paddy
Power and the iShare US Consumer Services ETF as good ways
to play the earnings power of the consumer discretionary sector.
Sectors that have delivered on profits but where share price
reactions have been more subdued are financials (in particular
banks) and technology. Amongst the financials we still rank
the euro area banks as the most attractive. They are major
beneficiaries of a resurgent euro area and from the decline in
political risk. Financials are a domestic orientated sector that has
been to some extent ignored in the rush to buy overseas earners
as the euro declined rapidly. Should this rate of decline ease then
more attention should be focused on the banks. BNP and the
Euro Stoxx Banks ETF provide good exposure to this theme.
The technology sector also attracts us. In 2014 the sector
appreciation just matched the earnings growth, so there was
no change in the valuation. So far this year we have seen little
change in the 2015 earnings growth forecast while the growth
rate for the broader market has been reduced. As a result the
sector has become cheaper against the broader market since
the start of the year even though it is expected to deliver faster
profit growth. We feel that there is the potential for the sector to
match the expected earnings growth for the year and to recoup
the lost valuation. Hence a return of close to 10% from here
looks feasible. At the start of the year we favoured a large cap
approach to the sector which has outperformed year to date.
We would now switch this to smaller cap exposure and thus
would recommend the First Trust Nasdaq ETF.

17. 15Goodbody Q2 Investment Outlook 2015
Euro area equities DAX  iShares Euro Stoxx Banks ETF  BNP Paribas
Germany’s DAX Index has been a strong performer year to date (+21%), but this comes after a
relatively poor 2014. There have been a number of drivers of this, including a weaker euro, lower oil
prices, better credit and the ECB’s QE programme. These are likely to remain in force during the next
quarter, when we expect to see continued outperformance from the DAX.
The iShares Euro Stoxx Banks ETF tracks the performance of banks in the euro area, principally
Spain (35%), France (21%), Italy (18%) and the Netherlands (9%). It will benefit from economic
improvement in the euro area, especially the periphery, and from policy actions already taken by the
ECB, including reduced funding costs and QE, improved capital positions and capital transparency.
The sector has lagged the region slightly but has been outperforming since the announcement of QE.
BNP Paribas is a large European retail bank that will benefit from European economic improvements
and ECB policy action. Recent results have been good with better revenues, lower bad debts and
improving capital strength. It has little exposure to the periphery.
Infrastructure AMP Irish Infrastructure Fund  HICL  CRH  Ferrovial
The AMP Irish Infrastructure Fund was set up in 2012 with a €250 million commitment from the
National Pension Reserve Fund to invest in infrastructure assets in Ireland. The fund targets a
total return of 12% - 15% per annum, which reflects the recovery potential in the Irish market.
It currently holds two investments: one in wind farms and the second in telecom towers, while
a third investment in the National Convention Centre is due to complete in the coming months.
The aim is to have a portfolio of 10 - 15 assets with a valuation of €500 million - €1 billion.
HICL is an investment company specialising in infrastructure investments predominantly in
operational, social and transportation infrastructure schemes with public sector clients. The share’s
attraction includes a low correlation with the public equity market while still returning a total
10.9% per annum since inception in 2006. This is well above its stated target of 7% - 8% per annum.
The average life of these schemes is currently 22 years and the company continues to assess new
investment opportunities in the UK, Australia, North America and selected European countries.
CRH’s investment case was attractive even before the announcement of its transformational
deal to acquire assets from Lafarge and Holcim. With around 60% of profits coming from the US,
it represents one of the best European plays on the US construction cycle. That cycle is at least
12 - 18 months ahead of Europe, which favours CRH’s exposure to infrastructure spend. This should
be compounded by positive currency effects. After a strong run, we expect a pause in the share’s
performance and would look at any weakness as an opportunity to accumulate or buy.
Ferrovial is listed in Spain and operates across four different business segments: construction,
services, toll roads and airports. It owns 25% of Heathrow Airport as well as a 50% stake in a JV
ownership of Aberdeen, Glasgow and Southampton airports. It also owns a 43% stake in the ETR
(Express Toll Route) 407 toll road in Greater Toronto. We believe the opportunity for Ferrovial
equity investors lies in its investments in toll roads in the United States as well as upside in Spanish
construction projects and services.
Improving economy and
quantitative easing make
banks attractive
Strong income potential
underpins this asset class
Outlook Q2
Our picks
Signs of a solidifying recovery in Europe mean our view of a two-track world continues to be valid. Economic strength in the
US remains important to our sector strategy, while the hunt for yield is still driving property returns.

18. 16 Goodbody Q2 Investment Outlook 2015
Sector strategy iShares US Consumer Services ETF  Paddy Power  First Trust Nasdaq 100 Technology
Sector Index Fund
The iShares US Consumer Services ETF is an effective way of gaining exposure to consumption
growth in the recovering US economy. Its sector make-up is attractive - general retailers (34%),
media (29%), travel and leisure (23%), and food and drug retailers (14%). It is well diversified with
189 holdings, including Walmart, Home Depot, Amazon, Walt Disney and 21st Century Fox in its
top 10. It has modestly outperformed the SP 500 year to date (+3%) and we believe there is
more to come.
Paddy Power remains a compelling growth and shareholder return story into 2015. The company is
showing strong momentum in online, Australia and Italy. It has also reduced exposure to the more
uncertain area of UK retail compared to its UK peer group. As the UK market rationalises and capital
expenditure moderates, cash flow is improving at the company and is being put towards shareholder
returns via an ongoing buyback.
First Trust Nasdaq 100 Technology Sector Index Fund is an equal weighted ETF which covers the top
100 members of the Nasdaq Technology Index. As it is equal weighted it has a higher exposure to
smaller companies than the index itself. While it does have holdings in the larger companies such as
Intel and Microsoft, its largest holdings are more specialised companies such as Micron Technology,
Catamaran, Broadcom and Qualcomm. Year to date smaller cap technology companies have
underperformed their large cap counterparts, but we expect this to reverse in the next quarter.
Property FTSE EPRA Europe THEAM EASY UCITS ETF  Hibernia REIT
The FTSE EPRA Europe THEAM EASY UCITS ETF is an effective way of gaining exposure to European
and UK property. The sector make-up is diversified (47.27%), retail (17.30%), residential (6.71%)
and office (15.04%). It is well diversified with 89 company holdings across 15 European countries
including the UK (38.57%), France (23.19%), Germany (14.58%), Switzerland (5.71%) and Sweden
(6.91%). The combined market capitalisation of the constituents is over €189 billion. The top 10
companies in the index comprise over 50.8% of the total value and include: Unibail Rodamco, Land
Securities, Klepierre, Deutsche Annington Immobilien and British Land. In the 12 months to the end
of February the ETF has shown a 39.88% return with 19.44% in the year to date. Expected dividend
yield is circa 2.5% per annum.
Hibernia REIT has assembled a high quality Dublin property portfolio comprising 17 properties
including two high quality residential schemes. Approximately 87% of the portfolio is in central
Dublin offices, where strong rental growth can be expected over the medium term. The portfolio
also includes two prime development sites in Dublin’s South Docks, adjacent to two buildings
already owned. Hibernia still has capacity to acquire a further €400 million of assets. The company
has announced nominal dividend payments which are expected to increase as the investment phase
nears completion. Hibernia is likely to enter the EPRA index by the end of the summer.
Outlook Q2
Our picks
Look for earnings growth
and good value
Diversification makes sense
at this stage

19. www.goodbody.ie

20. Dublin
Ballsbridge Park, Ballsbridge, Dublin 4
T +353 1 667 0400
Cork
City Quarter, Lapps Quay, Cork
T +353 21 427 9266
Galway
19 Eyre Square, Galway
T +353 91 569 744
Kerry
13 Denny Street, Tralee
T +353 66 710 2752
www.goodbody.ie Wealth Management | Corporate Finance | Capital Markets
Prepared by:
Bernard Swords, Chief Investment Officer (does not hold a position in any of the listed stocks)
Brian Flavin, Senior Research Analyst (holds positions in HICL, Paddy Power)
Jude O’Reilly, Senior Research Analyst (does not hold a position in any of the listed stocks)
Rod McAuliffe, Advisory FX Specialist (holds a position in GBP/JPY)
David Clarke, Head of Property (holds a position in Hibernia REIT)
All prices as at market close, 31 March 2015
Disclaimer
This publication has been approved by Goodbody Stockbrokers. The information has been taken from sources we believe to be reliable, we do not guarantee their accuracy or
completeness and any such information may be incomplete or condensed. All opinions and estimates constitute best judgement at the time of publication and are subject to change
without notice. The information, tools and material presented in this document are provided to you for information purposes only and are not to be used or considered as an offer
or the solicitation of an offer to sell or to buy or subscribe for securities.
This document is not to be relied upon in substitution for the exercise of independent judgement. Nothing in this publication constitutes investment, legal, accounting or tax advice,
or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. Goodbody
Stockbrokers does not advise on the tax consequences of investments and you are advised to contact an independent tax advisor. Please note in particular that the basis and levels
of taxation may change without notice. Private customers having access to this document, should not act upon it in anyway but should consult with their independent professional
advisors. The price, value and income of certain investments may rise or may be subject to sudden and large falls in value. You may not recover the total amount originally invested.
Past performance should not be taken as an indication or guarantee of future performance; neither should simulated performance. The value of securities may be subject to exchange
rate fluctuations that may have a positive or adverse effect on the price or income of such securities. Goodbody Stockbrokers and its associated companies and/or its officers may from
time to time perform banking or Corporate Finance services including underwriting, managing or advising on a public offering for, or solicit business from any company recommended
in this document. They may own or have positions in any securities mentioned herein and may from time to time deal in such securities. Goodbody Stockbrokers is a registered Market
Maker to each of the Companies listed on the Irish Stock Exchange. Protection of investors under the UK Financial Services and Markets Act may not apply. Irish Investor Compensation
arrangements will apply. For US Persons Only: This publication is only intended for use in the United States by Major Institutional Investors. A Major Institutional Investor is defined
under Rule 15a-6 of the Securities Exchange Act 1934 as amended and interpreted by the SEC from time-to-time as having total assets in its own account or under management in excess
of $100 million.
All material presented in this publication, unless specifically indicated otherwise is copyright to Goodbody Stockbrokers. None of the material, nor its content, nor any copy of it,
may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of Goodbody Stockbrokers.
Registered Office: Ballsbridge Park, Ballsbridge Dublin 4, Ireland. T: +353 1 667 0400. Registered in Ireland No. 54223.
Goodbody Stockbrokers acts as broker to: AIB, Datalex, FBD, First Derivatives, Grafton Group, Greencore, Hibernia REIT, Irish Continental Group, Kingspan, NTR,
Origin Enterprises, Paddy Power, United Drug and UTV Media.
Goodbody Stockbrokers, trading as Goodbody, is regulated by the Central Bank of Ireland. Goodbody is a member of the Irish Stock Exchange and the London Stock Exchange.
Goodbody is a member of the FEXCO group of companies. 000592_0415