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© All rights reserved. Lombard Odier Investment Managers
LO Funds – Emerging Consumer
September 2013
FOR PROFESSIONAL INVESTORS USE ONLY
Lombard Odier Investment Managers Please see important information at the end of the document.
1 2 3 4
Key investment beliefs
We expect that the
consumer goods and
retail sectors in the
emerging markets will
benefit from a super cycle
of growth, driven by a
population boom,
increased wealth, and
industry consolidation
We have identified c. 300
high quality domestic or
international companies
servicing EM consumers,
with strong brands, market
share and retail franchise
We think such opportunities
are best captured in a
concentrated but well
diversified portfolio,
invested in equities (70 to
80 stocks with 20-25 core
positions generally
representing 50% of
portfolio)
Emerging markets carry
higher liquidity, volatility,
political, currency risks than
developed markets, which
call for disciplined
portfolio construction
rules and stringent risk
control
2
Lombard Odier Investment Managers Please see important information at the end of the document.
Contents
The case for Emerging Consumer equities
Strategy highlight
Investment Process and Team
Risk Management
Portfolio Characteristics
Performance & Attribution
Why invest in this Fund?
Appendix
3
Lombard Odier Investment Managers
The case for Emerging Consumer equities
4
Lombard Odier Investment Managers Please see important information at the end of the document.
We believe China and India (40% of emerging markets population) will drive the largest expansion of the middle
class in history.
Rapid middle-class expansion: the number of people
with annual income exceeding USD 6,000 should
double over the next decade, to 3.8 bn by end of 2020
Why invest in emerging markets?
5
The average yearly salary in China has increased by
almost five times since 1999
Source: Goldman Sachs Sustain, Equity Research, July 14, 2011 ; Deutsche Bank.
EMERGING MARKETS POPULATION BY INCOME BAND YEARLY SALARY IN CHINA [USD]
1980 1990 2000 2010 2020 2030 2040 2050
0
1
2
3
4
5
6
7
8
9
10
Other (not
forecast)
Over USD30K
USD6–30K
Under USD6K
BIL
LIO
NS
OF
PE
OP
LE
0
1,000
2,000
3,000
4,000
5,000
6,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Lombard Odier Investment Managers Please see important information at the end of the document.
How to invest in emerging markets?
We believe that the traditional EM Index does not fully capture the real dynamics of Emerging Markets because:
6
CAPITAL ALLOCATION BY COUNTRY OF MSCI EM
South Korea and Taiwan are still considered
as emerging markets but are they?
Source: LOIM, as of July 2013.
They may target lower returns for investors than
private companies because they target
governments best interests not shareholders.
They represent 35% of the constituents but 70%
of the earnings/market cap generated by the MSCI
EM index.
Investing in emerging markets brings hidden
political, currency and corporate governance risks
that passive investment in ETF cannot neutralize.
These risks can only be assessed by an active
manager.
Country allocation of MSCI EM Index
is mainly invested in four countries State governed companies are mainly
represented in MSCI EM Index 2 1
Lombard Odier Investment Managers Please see important information at the end of the document.
Current situation
7
Source: State Street Global Markets
GLOBAL EQUITY ETF FLOWS
EMERGING MARKETS EQUITIES TRADE AT 37% DISCOUNT TO THE US POSITIONING IS AT 2008 TYPE
MSCI EM VS S&P 500 SHARE PRICE PERFORMANCE
Asian crisis, EM down 30%
Russian crisis, EM down 40%
EM down 55%
Source: Bloomberg
DECREASING FLOWS IN ETF, LOW VALUATIONS AND WIDENING OF THE SPREAD BETWEEN DEVELOPED AND EMERGING
MARKETS STOCKS
Past performance is not a guarantee for future results.
Source: J.P. Morgan, Bloomberg.
Source: State Street Global Marekts.
Lombard Odier Investment Managers Please see important information at the end of the document.
EM investors are extremely bearish
Flows are very negative for EM bonds, equities and currencies
EM market positioning is 2008 type
EM macro has been/is deteriorating everywhere with higher inflation, slower growth and sharp imbalances
(current account and budget deficits)
2013 is not 1991 (Indian worst crisis ever), 1997 (Thailand, Malaysia, South Korea bankruptcies) or 1998 (Russian collapse)
Valuations have come down a long way
China is now clearly recovering (last PMI above 50 for 2 months in a row and consumption bouncing back rapidly)
Russia’s growth should accelerate in 2014, cushioned by solid oil prices, low unemployment and high real wage growth
Brazil, Colombia, Peru and Mexico are all stabilizing and GDP growth is expected to accelerate in the last quarter of the year
FX will now be a huge boost for Brazilian, South African and Indian exports as long as Europe and US are holding up.
Russia’s economy is in good shape and consumption growth is now accelerating
All Sub-Saharan African countries with the exception of South Africa are keeping a very high GDP growth rate (7%+). Except
from Argentina and Venezuela, no countries are on the verge of collapse
Even for India, the situation is better than in 1991
Why invest now?
HOWEVER, THERE ARE SIGNS OF RECOVERY
8
MACRO HAS DETERIORATED RAPIDLY IN THE EMERGING MARKETS
Lombard Odier Investment Managers Please see important information at the end of the document.
Please see slide 31 for more details on performance figures. Past performance is not a guarantee for future results.
PERFORMANCE CHART SINCE LAUNCH (31 OCTOBER 2011)1
LOF – Emerging Consumer
9
Source: LOIM, 1 Dividend accumulated private client share class, net performance in USD
90
100
110
120
130
140
31/10/2011 03/02/2012 08/05/2012 11/08/2012 14/11/2012 17/02/2013 23/05/2013 26/08/2013
LOF Emerging Consumer MSCI World MSCI Emerging Markets
Lombard Odier Investment Managers
Strategy highlight
10
Lombard Odier Investment Managers Please see important information at the end of the document.
Overview
11
INVESTMENT UNIVERSE Emerging and Developed Equities within the Consumer and Retail sectors excluding financials, consumer finance, telecom, media, auto
OBJECTIVE The portfolio aims to beat the MSCI World index over the long term and not to track the index over the short term
For performance analysis, we use a blended benchmark which better represents our universe. It is composed of 55% MSCI EM Consumer Staples, 15% MSCI EM Consumer Discretionary, 25% MSCI World Consumer Staples and 5% MSCI World Consumer Discretionary
INVESTMENT APPROACH Deep experience: team members have covered the global consumer space for 20-25 years (developed and emerging)
Research-intensive approach: team invests in companies with leading market shares, high return on capital employed, strong balance sheet, a long and verifiable track-record and quality corporate governance. Focus on constant dialogue with companies in the portfolio
Differentiated view on macro: bottom-up input
Portfolio construction: the maximum weighting for individual positions is systematically determined in order to meet the volatility target (10%) and liquidity target. Rules include geographic diversification, balanced sector weighting, strategy weighting (Growth/Value/Event) and position sizing capped according to stock’s liquidity, volatility and correlation with rest of the portfolio
Highly disciplined risk control: 1) Currency risk: active hedging of local currencies in the Emerging Markets, typically 75-80% of the invested portfolio; 2) Tail risk/drawdown risk: managed via options (put spreads on highly liquid ETFs) and active monitoring of cash exposure
PERFORMANCE SINCE INCEPTION (31.10.2011 to 30.08.2013)1
Performance (net): +26.9% cumulative, +13.9% annualized
Volatility of 7.9% (Blended benchmark: 13.4%)
Sharpe ratio of 1.7 (Blended benchmark: 0.6)
The Fund generated 5.12% of annualized alpha since inception compared to our blended benchmark
1 Source: LOIM, Dividend accumulated private client share class, net performance in USD
Please see slide 31 for more details on performance figures. Past performance is not a guarantee for future results.
Target performance/risk represents a portfolio construction goal. It does not represent past performance/risk and may not be representative of actual future performance/risk.
Lombard Odier Investment Managers
Investment process and Team
12
Lombard Odier Investment Managers Please see important information at the end of the document.
Team: entrepreneurial, experienced and dedicated
EDOUARD DE COURNON
PRODUCT SPECIALIST
21 years experience
PANY SOUKALOUN
RESEARCH ANALYST & PRODUCT
SPECIALIST
3 years experience
DIDIER RABATTU
PORTFOLIO MANAGER
26 years of experience
THUY-MAI HOANG
EQUITY ANALYST
1 year experience
LAJLA AGANOVIC,
EQUITY ANALYST
5 years experience
ODILE LANGE-BROUSSY
SENIOR EQUITY ANALYST
20 years experience
Coverage: Asia, Global Players and
Risk Management Coverage: Asia and Eastern Europe Coverage: Latin America, Africa
and Middle East
13
Lombard Odier Investment Managers Please see important information at the end of the document.
Definition of the investable universe
440 Consumer stocks and 560 Retail
stocks
Sectors include: Food & Beverage
manufacturing, HPC, supermarkets,
food service/restaurants, clothing retail,
specialty retail, luxury goods, tobacco
Companies with a significant amount of
business in emerging markets (*)
14
Thematic universe
Investable Universe
Total universe
~1000 stocks (tot. market cap. USD 8trn)
Analysed universe
~300 stocks (tot. market cap. C. USD 2trn)
(*) Either listed in an Emerging country or listed in a Developed Country but with >50% of revenues/profits /in EM. Exceptions can only account for max. 10% of portfolio overall
For illustrative purposes only. Allocations are subject to change.
Tobacco 10
Beverages 40
Food Manufacturing 65
Food Drug Retail 55
Health & Personal Care 35
Restaurants 10
Specialty Retail 25
Apparel Clothing 10
Department stores 20
Luxury 15
Others 15
Strict rules:
Number 1 or 2 brands / strategic
market share in Consumer Staples
Highly profitable
No debt in retail
Clean corporate governance
Lombard Odier Investment Managers Please see important information at the end of the document.
Investment Process: Overview
15
Currency: Hedge min. 50% of the currency exposure to local currencies
Tail risk/Drawdown risk: Cash (actively monitored) and options (hedge the portfolio with liquid instruments)
2. Macro: key input from
bottom-up trends
Insights into bottom-up trends
are a key differentiating input
Classic top down inputs
Macro view feeds into portfolio
construction
3. Portfolio Construction
Geographic diversification
Sector weighting (Staples vs Discretionary)
Blended approach: balanced weight for each of
the three strategies (Growth/Value/Event)
Position sizing
1. Bottom-up stock selection
The team has in-depth understanding of
Global Consumer and Retail Space
Focus on constant dialogue with
companies’ top management
Highly disciplined, number-based
approach
Strong read-across capabilities from
datapoints on 300+ peer companies
Additional corporate governance checks
EMERGING
CONSUMER
PORTFOLIO
RISK MANAGEMENT
Lombard Odier Investment Managers Please see important information at the end of the document.
1. Bottom-up stock selection
16
Two team-members have covered global consumer stocks (developed and emerging) for the last 20-25 years
Long-standing knowledge of relationships with the management, board members and shareholders of most of the 300 companies in our investable universe
In-depth understanding of the global consumer and
retail space
Around 400 meetings or one-on-one conference calls per year with companies in the portfolio Focus on constant
dialogue with companies’ top management
Rigorous decision-making, based on detailed models and independent forecasts
Proprietary adjustments made to ROCE (e.g. to reflect real estate value of retailers) and to enterprise value (e.g. to reflect outstanding commitments on lease payments or pensions)
Detailed sector peer comparisons across countries (cost structure, growth, capex intensity, balance sheet structure, ROCE)
Valuation is based on multiples (EV/EBITDA, EV/Sales, P/E) and ROCE, which are cross-checked across sector/country/regional peers
Highly disciplined, running the numbers approach
Strong read-across capabilities given wide
universe analysed
Current trends are monitored via data-points (quarterly sales, costs, margings) for 300+ companies in
10 sub-sectors for 25 countries
Additional corporate governance checks
Board composition, relative Board independence, involvement with sister companies, management
share ownership, off-balance sheet items
2. Macro: key
input from
bottom-up
trends
3. Portfolio
Construction
1. Bottom-up
stock selection EMERGING
CONSUMER
PORTFOLIO
Lombard Odier Investment Managers Please see important information at the end of the document.
2. Macro: key input from bottom-up trends
17
Macro view
feeds into portfolio
construction
Top-down economic backdrop analysis
GDP growth, capital spending, inflation, interest rates, FX reserves,
monitoring of government /central bank intervention, close monitoring of
commodity prices
Bottom-up monitoring of trends gives our macro analysis an edge
Continuous discussion with consumer companies. First-hand feedback on staff cost inflation, rental cost trends,
consumers’ readiness to trade up, price increase absorption by the consumer, etc.
Early view on macro-economic indicators, and feeds into our conviction on each country
Example 2: Positive on Philippines
Bottom-up feedback solid: restaurants and mall operators showing resilient Same-Store-Sales-Growth. Little staff and rental infllation
Top-down strong: 7.6% GDP growth in H1, steady rise in remittances, low CPI, new sin tax helping government’s finances
Example 1: Prudent on Indonesia
Negative bottom-up feedback in Q1 and Q2 2013: consumer companies reported robust sales/volume growth; however EBIT growth has almost stopped (wage/fuel/electricity)
Top-down concerns: FX weakening, jump in CPI in July 2013/August 2013
2. Macro: key
input from
bottom-up
trends
3. Portfolio
Construction
1. Bottom-up
stock selection EMERGING
CONSUMER
PORTFOLIO
Lombard Odier Investment Managers Please see important information at the end of the document.
EXAMPLE 1: BATA (INDIA)
Leading player with deep reach in a growing market
which is becoming more organized. Bata has 22%
share of the organized market, which is only 40% of
total shoe market. Have more than 1300 points of
sales and are present in 500 cities.
Management aiming for EBITDA margin of c.
17-18% in 3Y (+15% in 2012), driven by mix and
efficiency. Excellent past track record on top and
bottom line.
Valuation attractive vs Indian retail peer group. We
believe that Bata India will shortly be the largest
country of the parent Company.
Nb 2 beer player in China with 15% market share.
We think that the market size could at least double.
Tsingtao beer could gain market share organically
almost every quarter for more than 2 years.
Clear long term story (market share consolidation +
margins moving up as EBIT/hl still low in China).
Many examples in Emerging and developed markets
of increasing local market share leading to higher
margins (AmBev Brazil in last 10 years, Anheuser
Busch in USA 1980-2008).
Valuation well-supported by recent M&A deals in
China.
EXAMPLE 2: TSINGTAO (CHINA)
Examples of company investment cases
18
Lombard Odier Investment Managers Please see important information at the end of the document.
3. Portfolio Construction
19
Portfolio widely diversified in China (c. 20%), India (c. 15%), LatAm (c. 15%), Other Asia (c. 7%), Eastern
Europe/Middle East (c. 7%) Frontier Africa (c. 5%), Developed markets (c. 20%)
Low correlation between different regions
Minimization of volatility
Geographic
diversification
Staples
Discretionary
Example: in China, currently slowly building discretionary part to reflect improving data points and low
valuations
Sector
weighting
Fundamental Growth: high multiples supported by high growth and high returns max 60% of the portfolio
Fundamental Value: FCF yield/dividend yield max 40% of the portfolio
Corporate Events: expected disposals/acquisitions, corporate restructuring max 20% of the portfolio
Three-tiered
strategy
Target: liquidate 30% of the book in 1 day, and close to 70% of the book in 5 days (based on the 6-month
average daily volume and without representing more than 20% of daily volume and without any blocks). There
is however 10% of the book which would need more than 20 days to liquidate.
Maximum weighting at position level according to its volatility, correlation to the rest of the book and liquidity
Position
sizing
2. Macro: key
input from
bottom-up
trends
3. Portfolio
Construction
1. Bottom-up
stock selection EMERGING
CONSUMER
PORTFOLIO
For illustrative purposes only. Allocations are subject to change.
Lombard Odier Investment Managers Please see important information at the end of the document.
3. Portfolio Construction – Position sizing
20
Maximum weighting at position level:
Contribution to portfolio’s volatility (**)
– Position must not contribute more than 5% to portfolio’s volatility
Liquidity
– Position must be liquidable in max. 20 days without representing more
than 20% of daily volume (assuming no blocks).
– Calculation is based on 6-month average for daily volumes.
Maximum weighting is the minimum between these two limits (*).
Some Illustrations Intrinsic
volatility
Correlatio
n factor
Max weight to respect
portfolio volatility
constraint
Daily
volume in
USD
Max weight to respect
portfolio liquidity
constraint
Max weight
for total risk
Current
weight in
Portfolio
YUM! BRANDS 25% 4.0 6.0% 255.1 145.2% 6.0% 4.3%
TSINGTAO BREWERY 25% 5.0 4.9% + 11.7 6.6% = 4.9% 2.5%
VIET NAM DAIRY PRODUCTS 29% -0.4 N/A 1.6 0.9% 0.9% 0.3%
NESTLE NIGERIA 33% 0.5 34.8% 1.4 0.8% 0.8% 0.8%
Targets at book level:
Volatility target: 10%
Liquidity target: at least 30% of book within 1 day and close to 70% of book
within 5 days
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 5 10 15 20 25 30 35 40 45 50
DAYS TO LIQUIDATE
(*) 5% tolerance
(**) Contribution of stock 𝑖 is the product of the following factors:
Position’s weight 𝑤𝑖, stock’s intrinsic volatility 𝜎𝑖 and stock’s correlation with other holdings in the portfolio ∑𝑗𝑤𝑗𝜎𝑗 𝜌𝑖𝑗, where𝜌𝑖𝑗 is the correlation between stock 𝑖 and stock 𝑗. Allocations are subject to change. Target performance/risk represents a portfolio construction goal. It does not represent past performance/risk and may not be representative of actual future performance/risk.
2. Macro: key
input from
bottom-up
trends
3. Portfolio
Construction
1. Bottom-up
stock selection EMERGING
CONSUMER
PORTFOLIO
BOOK’S LIQUIDITY
Lombard Odier Investment Managers
Risk Management
21
Lombard Odier Investment Managers Please see important information at the end of the document.
THE TEAM MANAGES THE RISK ON 2 LEVELS:
Risk Management
22
1 2 Currency
Tail risk/Drawdown Risk
Hedge minimum 50% of the currency exposure to local
currencies
Cash: actively monitored
Options: Hedge the portfolio with liquid instruments
Lombard Odier Investment Managers Please see important information at the end of the document.
1. Currency
23
Currency-risk hedging
Due to the volatile environment which characterizes emerging
markets (which constitute around 70-75% of the portfolio), we
protect the portfolio by hedging minimum 50% of the currency
exposure to local currencies
There are some exceptions:
– Pegged currencies (HKD, SAR) or quasi pegged (TWD)
– Currencies too expensive to hedge (NGN, KES, VND)
because of interest rate too high
– Strong currencies with favorable macro indicators (PEN,
COP, SGD, MYR, THB) are only partially hedged (*)
Structurally weak currencies (ZAR, IDR, INR, BRL, RUB)
are usually hedged above 70% (*)
Implicit exposures: very important, also taken into account.
For example a stock like Carlsberg is quoted in DKK but
operates the most in Russia. Carlsberg has most of its profits
sensitive to RUB (implicit exposure). If the RUB depreciates,
the Carslberg stock will follow. To limit this we hedge our
positions with currency forwards
Dynamic currency hedging over time (market
conditions/costs)
(*) Final hedging level subject to judgment call.
For illustrative purposes only. Target performance/risk represents a portfolio construction goal. It does
not represent past performance/risk and may not be representative of actual future performance/risk.
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
nov
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dec
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jan
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feb
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mar
12
apr
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may
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jun
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jul 1
2
aug
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sep
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oct 1
2
nov
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dec
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jan
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feb
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mar
13
apr
13
may
13
jun
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jul 1
3
aug
13
TOTAL EXPOSURE TO USD AND PEGGED CURRENCIES
Lombard Odier Investment Managers Please see important information at the end of the document.
OPTIONS
The options are part of the portfolio’s hedging strategy (also including FX hedging and cash utilisation)
– Options are used to hedge the tail risk, typically a 7-12% markets’ fall
– It can help to reduce our volatility
– The strategy is not directional but protective
Options strategy is implemented mainly through put spreads on extremely liquid ETFs and tries to mimic the portfolio’s geographical breakdown (EEM US, FXI US, SPY US, ILF US, EWZ US, XLP US, XRT US, SX3P, SXRP, etc.)
– The strikes are generally out-of-the-money (3-5% below spot for the long leg and 10-12% for the short leg)
– The maturity is generally 1 to 3 months
Option premia spent over a given calendar year can not exceed 2% of average NAV (in 2012, we only spent 0.20% of NAV, while we were hedged most of the time and markets have gone up)
We usually buy the options when volatility is getting low and when hedging is likely to be inexpensive
We are aware of our strategy’s bias: we are typically long consumer and retail stocks through the portfolio but short the general market through geographical indices options
2. Market tail risk/Drawdown risk strategy
24
For illustrative purposes only. Target performance/risk represents a portfolio construction goal. It does
not represent past performance/risk and may not be representative of actual future performance/risk.
Lombard Odier Investment Managers Please see important information at the end of the document.
2. Market tail risk/Drawdown risk strategy (cont.)
25
Cash
– Cash exposure is actively monitored. Having cash is a
discretionary decision of the portfolio manager
– We usually have part of the portfolio in cash either if the
volatility of the equity markets goes up a lot or if we feel
that sector rotation is significant enough for us to hold
cash for a certain period
– Cash management helps to reduce the volatility of the
overall portfolio
VOLATILITY(*) TOTAL RETURN(**)
Portfolio Excluding Cash &FX 9.9% 24.8%
Portfolio Including Cash & FX 7.9% 26.92%
(*) Volatility as of August 31, 2013.
(**) All returns on a gross dividend basis. Returns calculated from 31 October 2011 to 31 August 2013.
For illustrative purposes only. Target performance/risk represents a portfolio construction goal. It does not represent past performance/risk and may not be representative of actual future performance/risk.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
nov
11
dec
11
jan
12
feb
12
mar
12
apr
12
may
12
jun
12
jul 1
2
aug
12
sep
12
oct 1
2
nov
12
dec
12
jan
13
feb
13
mar
13
apr
13
may
13
jun
13
jul 1
3
aug
13
CASH EXPOSURE SINCE INCEPTION
Lombard Odier Investment Managers
Portfolio Characteristics
26
Lombard Odier Investment Managers Please see important information at the end of the document.
CURRENT NUMBER OF EQUITY HOLDINGS: 74
TURNOVER (LAST 12 MONTHS): 65%
Top positions in emerging and developed markets
27
(31.08.2013)
Source: LOIM.
TOP 5 POSITIONS IN DEVELOPED MARKETS
YUM BRANDS 4.4%
CARLSBERG B 4.3%
FAMILY MART 3.1%
DANONE 2.5%
SHISEIDO 2.4%
TOP 15 POSITIONS IN EMERGING MARKETS
TINGYI HOLDING (China) 3.3%
TSINGTAO BREWERY (China) 2.7%
FEMSA (LaTam) 2.3%
SUN ART (China) 2.2%
O'KEY GROUP (Russia) 2.0%
NUTRESA (Colombie) 2.0%
NESTLE INDIA (India) 1.9%
CHINA RESOURCES (China) 1.9%
CHEDRAUI (Mexico) 1.8%
ARCOS DORADOS (LaTam) 1.7%
CENCOSUD (LaTam) 1.7%
BATA INDIA (India) 1.6%
COCA-COLA HBC 1.6%
ESPRIT HOLDINGS (China) 1.5%
BRITANNIA INDUSTRIES (India) 1.4%
The portfolio information provided in this document is for illustrative purposes only and does not
purport to be recommendation of an investment in, or a comprehensive statement of all of the
factors or considerations which may be relevant to an investment in, the referenced securities.
They illustrate the investment process undertaken by the manager in respect of a certain type of
investment, but may not be representative of the Fund's past or future portfolio of investments as
a whole and it should be understood that they will not of themselves be sufficient to give a clear
and balanced view of the investment process undertaken by the manager or of the composition
of the investment portfolio of the Fund. As the case may be, further information regarding the
calculation methodology and the contribution of each holding in the representative account to
the overall account’s performance can be obtained by the Fund or the Management Company.
Lombard Odier Investment Managers Please see important information at the end of the document.
EM CONSUMER ASSET BREAKDOWN EM CONSUMER SECTOR BREAKDOWN
Portfolio breakdown: asset, sector, strategy and geography
28
EM CONSUMER GEOGRAPHICAL BREAKDOWN EM CONSUMER STRATEGY BREAKDOWN
For illustrative purpose only. Holdings and/or allocations are subject to change.
Source: LOIM.
1.2% 18.7%
6.0%
11.4%
13.8% 1.2% 4.9%
5.1%
25.6%
12.1% Korea
China
Other Asia
India
LatAm
Middle East
Africa
Eastern Europe
Global Players
Cash
87.9%
12.1%
-0.8% Equities
Cash and non equities
Options
14.3%
2.9%
7.4%
5.6%
9.3%
20.9%
4.7%
11.1%
11.8%
12.1% Beer Spirits
Tobacco
Food Manufacturers
Noodles
Other Food
Food Drug Retail
HPC
Restaurant
Retail Disc
Cash
26.6%
16.7%
56.7%
Fundamental Value
Event Driven
FundamentalGrowth
(31.08.2013)
Lombard Odier Investment Managers
Performance & Attribution
29
Lombard Odier Investment Managers Please see important information at the end of the document.
OUR FUND IS NOT BENCHMARK-DRIVEN AND THE PORTFOLIO IS A REFLECTION OF OUR “BEST IDEAS”
Traditional existing benchmarks (MSCI World & MSCI Emerging Markets) are of limited relevance because:
– In MSCI World, US accounts for 53% and Japan for 9% of the benchmark, rest is Europe (EM is 2%)
– 39% of our fund’s current holdings belong to neither MSCI World nor MSCI EM universes
– The opportunity cost against our official benchmark represents 2.5%, which is the cost of hedging the
currency risk
The benchmark that best reflects our universe is a Blended Benchmark constructed by LOIM Risk:
– 70% MSCI Emerging (15% EM Consumer Discretionary and 55% EM Consumer Staples)
– 30% MSCI World (5% World Consumer Discretionary and 25% World Consumer Staples)
Since inception to 31.08.2013, the fund LOF – Emerging Consumer (+27%) would have outperformed
the Blended Benchmark (+17%) by 10% (9% annualized)
LOF EM Consumer – non replicable universe
30
Lombard Odier Investment Managers Please see important information at the end of the document.
Performance (1/2)
LOF EMERGING CONSUMER – FUND PERFORMANCE SINCE INCEPTION*
31
90
95
100
105
110
115
120
125
130
135
140
Oct-2011 Jan-2012 Apr-2012 Jul-2012 Oct-2012 Jan-2013 Apr-2013 Jul-2013
LOF Emerging Consumer MSCI World
MSCI Emerging Markets Blended benchmark
* Dividend accumulated private client share class, net performance in USD
** US accounts for 53% and Japan for 9% of the benchmark, rest is Europe (Emerging Markets account for 2%)
*** Blended Benchmark constructed by LOIM Risk, in the process of being complianced, represents 70% MSCI Emerging (15% EM Consumer Discretionary and 55% EM Consumer Staples) and 30% MSCI
World (5% World Consumer Discretionary and 25% World Consumer Staples).
Past performance is not a guarantee of future results. The MSCI World ND is used as the primary index of the Fund while the MSCI Emerging Market ND index is used for comparison purposes as the Fund
investment approach focuses on companies listed in an emerging country or with a significant business exposure (>50%) to emerging markets.
SINCE INCEPTION
AS OF 31.08.2013
ANNUALIZED
RETURN VOLATILITY
MONTHLY MAX
DRAWDOWN
CORRELATION TO LOF EM
CON FUND
LOF Emerging Consumer(*) 13.9% 7.9% -4.1%
MSCI World(**) 14.8% 10.0% -6.6% 0.67
MSCI Emerging Markets -1.2% 13.6% -11.2% 0.68
Blended Benchmark (***) 8.8% 9.5% -8.7% 0.78
(31.08.2013)
Lombard Odier Investment Managers Please see important information at the end of the document.
LOF EMERGING CONSUMER – EXCESS RETURN**
Performance (2/2)
32
Past performance is not a guarantee of future results
*Inception date 31st Oct 2011. Only complete months included in the calculations (partial months excluded).
** Dividend accumulated institutional client share class, net performance in USD. Return compounded monthly.
*** Blended Benchmark represents 70% MSCI Emerging (15% EM Consumer Discretionary and 55% EM Consumer Staples) and 30% MSCI World (5% World
Consumer Discretionary and 25% World Consumer Staples).
LOF EMERGING CONSUMER – HISTORICAL PERFORMANCE**
3.49%
0.23%
4.77% 5.12%
0%
1%
2%
3%
4%
5%
6%
2011 2012 2013 (YTD) ITD (Annualized)
Excess Return
Annualized
ITD 1Y
[Since Nov 2011]*
Performance Statistics Fund Blended
Bench Fund Blended
Bench
Return 13.89% 8.77% 12.69% 7.06%
Volatility 7.90% 13.36% 7.92% 12.61%
Sharpe Ratio 1.69 0.63 1.56 0.53
Alpha Statistics
Excess Return 5.12%
5.64%
Tracking Error 9.33% 7.60%
Information Ratio 0.55 0.74
CLASS PA
USD JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Fund Bench***
Excess
Return
2011 0.69% 1.05% 1.74% -1.75% 3.49%
2012 1.56% 4.95% 2.67% 0.59% -4.09% 1.38% 1.37% 2.02% 2.45% 2.80% 2.39% 1.53% 21.19% 20.96% 0.23%
2013 2.59% -0.70% 1.82% 3.02% 1.48% -3.30% 1.56% -3.35% 2.93% -1.84% 4.77%
Source: LOIM
Lombard Odier Investment Managers Please see important information at the end of the document.
STOCK PICKING IS THE KEY CONTRIBUTOR TO PERFORMANCE
With a 24.8% absolute performance (including takeovers) and 8.2% relative performance compared to our universe
(Blended Benchmark)
Performance attribution
33
Source: LOIM
* Source: LOIM, Dividend accumulated private client share class, net performance in USD.
** 70% MSCI Emerging (15% EM Consumer Discretionary and 55% EM Consumer Staples), 30% MSCI World (5% World Consumer Discretionary and 25% World Consumer Staples).
Past performance is not a guarantee of future results.
24.8% -3.0%
5.1% 26.9%
0%
5%
10%
15%
20%
25%
30%
Stocks Tail Risk/Drawdownmanagement with cash
FX Hedging Fund Performance
Performance Attribution Since Inception (as of 31.08.2013)*
BENCHMARK
SINCE INCEPTION
AS OF 31.08.2013
CUMULATIVE
RETURN
MSCI World 28.7%
MSCI Emerging Markets -1.2%
Blended Benchmark** 16.6%
Lombard Odier Investment Managers
Why invest in this Fund?
34
Lombard Odier Investment Managers Please see important information at the end of the document.
Why invest in this Fund
35
Access to the
super-cycle of
consumer growth
in Emerging
Markets, including
poorly covered
markets (eg. India,
Indonesia,
Columbia) and
Frontier Markets
(eg.Vietnam,
Nigeria, Zimbabwe)
Portfolio
construction
approach seeks to
achieve low
volatility and high
liquidity, through
maximum-
weighting rules
Management team’s
experience
covering global
consumer names
for 20-25 years
Rigorous selection
of stocks based on
very frequent
communication with
company
management,
number-intensive
approach,
datapoints on
around 300
companies, bottom-
up insights into
macro
1 2 3 4 Active risk control:
dynamic FX
hedging,
management of
market tail risk and
drawdown risk
5
Lombard Odier Investment Managers
Appendix
36
Lombard Odier Investment Managers
Key figures
37
Lombard Odier Investment Managers Please see important information at the end of the document.
HIGH CONVICTION, HYBRID LONG-ONLY, ACTIVELY MANAGED, RESEARCH-DRIVEN, RISK FOCUSED
LOF Emerging Consumer – Key figures
38
AUM USD 681 million
Potential capacity USD 1 billion
Launch date 31.10.2011
Performance since inception (*) +26.9%
Performance YTD (*) +2.9%
Volatility ex-ante/ex-post 13%/7%
Portfolio Beta (inc cash, ex options/FX) 0.6x
Portfolio Beta EM Share (inc cash, ex options/FX) 0.45x
Annualized Sharpe ratio >1x
Maximum monthly drawdown (May 2012) 4%
% of stocks close to 2 years low/high 25%/40%
2014 P/E, EV/EBITDA, Div yield 20x , 10x, 2.0%
2013 Book Earnings Growth (value/growth) 12%/18%
(*) Dividend accumulated private client share class, net performance in USD
Source: LOIM.
Past performance is not a guarantee of future results.
(31.08.2013)
Lombard Odier Investment Managers
Stocks – some examples
39
Lombard Odier Investment Managers Please see important information at the end of the document.
The share price of leading US breweries increased manifold over the last 30 years, despite constant beer per
capita consumption, thanks to industry consolidation and retail price increases; the same trend is at is infancy
in India and China.
Beer consumption per capita stagnated
in the US between 1980 and 2010; it
was 80l/capita in 1980 and 82l/capita in
2010
Market share of Anheuser Busch rose
from 28% to 53% over the same period
and its share price rose by 5,600%
Current beer consumption is 30l/capita
in China; Tsingtao’s market share is
15% – the market is expected to
consolidate
Current beer consumption is 1l/capita in
India; United Breweries market share is
50% – the market is expected to grow
United Breweries and Tsingtao vs Anheuser Busch
40
SHARE PRICE PERFORMANCE OF BREWERIES IN US, INDIA AND CHINA
Source: LOIM.
Past performance is not a guarantee of future results.Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It
should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document
Lombard Odier Investment Managers Please see important information at the end of the document.
AMBEV PRICE CHART
Nigerian Breweries vs AmBev
41
NIGERIAN
BREWERIES
AMBEV
(2000)
AMBEV
(2013)
Country Nigeria Brazil (70%
of EBITDA)
Brazil (70%
of EBITDA)
Market share 60% 60% 70%
Beer consumption
per cap.
(l/inhabitant)(*)
9 51 65
Population 167m 170m 194m
Population growth
rate +2.3% +1.3% +1.1%
NIGERIAN BEER SECTOR IS 10/15 YEARS
BEHIND BRAZIL
Source: LOIM.
(*) compared to an average of 14.6 for Africa, 78 for Europe and a global average of 22. Source: The Economist/ Industry sources
Past performance is not a guarantee of future results.Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should
not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document
Lombard Odier Investment Managers Please see important information at the end of the document.
Jubilant: leading fast food chain in India
Family core shareholders, own the Domino
Pizza franchise for all of India
575 stores, directly operated, opening at least
125 new stores per annum
High ROCE (41%): home delivery highly
successful (high sales/store), side-orders
growing, negative WC
Excellent multi-year track record of delivering
store openings and maintaining margins
Fast-food chains under-developed in India:
250 Pizza Huts, 200 KFCs, < 200 McDonald’s
2012: awarded the franchise for Dunkin
Donuts in India
42
NB: figures based on FY ended March 2013 (Jubilant), Dec 2012 (Domino’s UK), June 2012 (Domino’s
Australia)
Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold
or directly invest in the company or securities. It should not be assumed that the recommendations made
in the future will be profitable or will equal the performance of the securities discussed in this document
Jubilant Domino’s UK Domino’s
Australia
First store
opened
1996 1985 1983
Current number
of stores
576 727 559
ROCE 41% 44% 52%
Net profit USD
million
24 53 28
Mkt cap USD
million
(02.09.2013)
1’039 1’481 1’112
Country population
(million)
1’300 56 22
Similar number
of stores
Very similar
returns
Similar
market cap
Growth potential in a different league : India is 20x
bigger than the UK and 60x bigger than Australia!
COMPARING DOMINO PIZZA FRANCHISEES IN
INDIA, UK AND AUSTRALIA
Lombard Odier Investment Managers Please see important information at the end of the document.
AN EXCELLENT WAY OF PLAYING EXPANSION OF DISCRETIONARY CONSUMPTION IN SAUDI ARABIA
Herfy is a leading fast food restaurant chain in Saudi Arabia. It
operates in four different segments:
fast food chain (80% of revenues – 200 restaurants as of June
2012), bakery (14% of revenues), rusk (Shaborah) (2% of
revenues), and meats (4% of revenues)
The company plans to open 20-25 additional restaurants per
year, on top of the 212 existing ones (end 2012)
Discretionary consumption is expected to benefit from the
acceleration in the Saudi Arabian per-capita consumption trend
Some Metrics:
– Revenues growth: 12% CAGR 2013-2017
(vs.17% CAGR 2006-2011)
– EBIT margin of 21%
– Dividend Yield of 3.5%
– Net ROCE 2013E of 37%-40%
The company is valued at an EV/EBITDA 2013E of 12.6x and
2014E of 10.9x and an P/E 2013E of 15.9x and 2014E of 13.8x
Herfy, fast food chain in Saudi Arabia
43
Source: LOIM estimates
12.6
12.4
12.1
12.3
12.7
13.5
15 17.4
20 21.2 22.5
25 29
32 35
38
42
47
324 375
466 518
580
709
874
987
1111
1242
1381
1530
0
200
400
600
800
1000
1200
1400
1600
1800
0
10
20
30
40
50
60
70
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
E
2013
E
2014
E
2015
E
2016
E
2017
ES
AR
Millio
ns
SA
R T
ho
usa
nd
s
Saudi per-capita consumption
Herfy revenues
Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should
not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document
Lombard Odier Investment Managers
Macro Analysis – some examples
44
Lombard Odier Investment Managers Please see important information at the end of the document.
India
45
US rates increase and ensuing outflows
Oil price increase (12% higher in July-Aug than in H1 13) offset the fuel price hikes
passed by government in H1
No inflows triggered by the liberalization of FDI in retail and in aviation
Populist measures taken as general election is due in May 2014 (eg. Food Security Bill
will decrease GDP growth by 30bp). Concern other such measures may follow.
Remaining risk: FII (foreign ownership) in equities remain high vs historical levels
200m Indians have no phone, TV or radio
Urbanization much lower than China’s: 30% of Indians live in cities
Share of food in rural wallets = 40%
INDIAN RUPEE VS US DOLLAR
FX reserves Sept 2013 at 6-7 months of imports (vs 2 weeks prior to the
25% devaluation in 1991)
GDP growth expected by government in 2013 is > 5% (1.1% in 1991)
Good monsoon => summer crop should be up 9% yoy, bringing down
inflation and boosting rural consumers’ income from October 2013.
Large government investment projects (in power, infrastructure) have
been approved and money should begin to flow in Q4
India Inc’s salary inflation 2013 should be c. 11% (12-13% 2012)
Rural demand still strong (high food prices higher income),
but urban poor (hence discretionary items) suffering
Consumer stocks (defensive, good corporate governance)
outperformed in 2012, are still expensive and have been hurt
by sector rotation
Discretionary suffering in the short term
Source: LOIM Past performance is not a guarantee of future results.
30
40
50
60
70
Why we believe the situation is better than in 1991
Recent run on Rupee caused by external and internal factors
Consumer story clear in the long term
Source: Bloomberg
Lombard Odier Investment Managers Please see important information at the end of the document.
Peru and Colombia
46
Population of 30Mn people with a GDP per capita (PPP adjusted) of 10’500 USD
Average unemployment rate in 2012 was at 7.2%
Government has been stable and pro-business for the last years
Consumption is mainly fuelled by the rapidly growing Peruvian middle class. It has doubled in the last 10 years and currently
represents 56% of the urban population
As 75% of food retail sales (20 Bn USD) still occur within traditional/wet markets but modern retail expanding very fast
2 attractive assets: InRetail and Alicorp
Source: Londoño and Navas (2011) and BBVA Research
Peru
Colombia
Population of 50Mn people with a GDP per capita (PPP adjusted)
of 10’000 USD
Average unemployment rate in 2012 was at 10.5%
Government has managed to stabilize the political situation in the
last years
Government has managed to integrate the country with North and
South American neighbours in terms of Trade.
Middle class (B/C) increasing at a fast rate
Organized retail represents 50% of total retail and growing fast
3 attractive assets: Nutresa, Exito and Pricemart
Only in supermarkets
Mostly in supermarkets,
followed by mini-marts
Proportionally in local stores, markets,
mini-marts and supermarkets
Mostly in local stores
Only in local stores
0,5%
5,5%
20%
COLOMBIA CONSUMPTION IN USD/YEAR AND POPULATION PERCENTAGE
Lombard Odier Investment Managers Please see important information at the end of the document.
Nigeria, super regional power?
47
Independent since 1960, Nigeria finally transitted from a military rule to a civilian government in 1999
The government is facing two major issues:
– Reform a petroleum-based economy, highly corrupted and mismanaged
– Manage longstanding ethnic (North-South) and religious (Muslim-Christian) tensions
Source: Ecomomic data from Trading Economics, 2012 CIA WORLD FACTBOOK AND OTHER SOURCES, www.theodora.com
Nigerian population doubled in the last 30 years to reach 162Mn in 2012
Young population: 43% of Nigerians are below 15
GDP per capita (PPP) has been growing at an annual rate of 7%, reaching 2530 USD in 2012
Average unemployment rate of 14.6% (2006-2012 period)
Nigeria recorded a Government Debt to GDP of 18% in 2011, down from all time high of 88% in December 2001
Strong economical growth driven by oil
Political situation stabilizing
Nigeria is today similar to Brazil twenty/thirty years ago, with a rapidly growing middle class. Modern retail (supermarkets/ hypermarkets)
is nascent but expanding fast with infrastructure (roads/ motorways being built up)
EM Consumer invests in major food/beverage companies accross the country, mainly subsidiaries of Unilever (Unilever Nigeria), Nestle
(Nestle Nigeria), Diageo (Guinness Nigeria) and Heineken (Nigerian Breweries), listed locally and with highly rated corporate governance
Supportive consumption patterns
Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should
not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document..
Lombard Odier Investment Managers
Biographies of the team
48
Lombard Odier Investment Managers Please see important information at the end of the document.
ODILE LANGE-BROUSSY, SENIOR EQUITY ANALYST – GENEVA
EXPERIENCE
2011 to date Lombard Odier Investment Managers, senior equity analyst of LOF-
Emerging Consumer and LOF – Vital Food. Coverage: Asia and Eastern
Europe
2010-2011 Amber Capital ARC fund, analyst covering agriculture, emerging markets
consumer and retail stocks with focus on India
2006-2010 Merrill Lynch, analyst covering the Russian consumer sector
1998-2005 Deutsche Bank, analyst covering the European retail and luxury sectors
1993-1998 SG Warburg, Investment Banking – Mergers and Acquisitions
QUALIFICATIONS
Finance degree, HEC (Ecole des Hautes Etudes Commerciales), Paris (1993)
Team: entrepreneurial, experienced and dedicated
49
DIDIER RABATTU, HEAD OF GLOBAL EQUITIES – GENEVA
EXPERIENCE
2011 to date Lombard Odier Investment Managers, head portfolio manager of
LOF – Emerging Consumer and LOF – Vital Food
2010-2011 Amber Capital, portfolio manager of ARC Fund
2008-2010 Talaris Capital, partner in charge of consumer and retail
2006-2007 Deutsche Bank, global co-head of consumer and research in the
investment banking division
2005 BGAM, hedge fund manager – global consumer and retail stocks
1995-2005 Deutsche Bank, retail and consumer, global head of research
1987-1995 SG Warburg, research analyst – consumer and retail stocks
QUALIFICATIONS
Member of the Société Française des Analystes Financiers (SFAF) – Adjusted title
26.2.13
EDOUARD DE COURNON, PRODUCT SPECIALIST – GENEVA
EXPERIENCE
2012 to date Lombard Odier Investment Managers, product specialist for LOIM – Global
Equities funds
2009-2011 Lombard Odier Investment Managers, Head of Fund Sales Switzerland,
marketing LOIM Funds to Lombard Odier Private Bank
2007-2009 Lombard Odier & Cie, Co-Head of the Open Architecture Team
2001-2009 HSBC Private Bank, Head of the fund selection team
1999-2001 CCF Holding, Marketing and communication
1992-1999 BNP Paribas (Suisse) SA, Marketing development for international private
banking 1992 BNP Paribas, Marketing and communication team
QUALIFICATIONS
Berkeley (CA, USA), Tokyo (Japan) and Beijing (China) in 1990
Master’s degree in business, Institut Supérieur de Gestion (International Cycle)
THUY-MAI HOANG, EQUITY ANALYST – GENEVA
EXPERIENCE
2012 to date Lombard Odier Investment Managers, equity analyst of LOF- Emerging
Consumer and LOF – Vital Food. Coverage: Asia, Global Players and Risk
Management
QUALIFICATIONS
Master degree in Quantitative Finance, joint program of ETHZ and University of Zurich,
(2011)
Bachelor degree in Mathematics, EPFL Lausanne (2010)
LAJLA AGANOVIC, EQUITY ANALYST – GENEVA
EXPERIENCE
2008 to date Lombard Odier Investment Managers, equity analyst of LOF-
Emerging Consumer and LOF – Vital Food. Coverage: Latin
America, Africa and Middle East
QUALIFICATIONS
Master’s degree in telecom engineering, EPFL (2008)
Holds a minor in entrepreneurship
PANY SOUKALOUN, RESEARCH ANALYST & PRODUCT SPECIALIST –
GENEVA
EXPERIENCE
2013 to date Lombard Odier Investment Managers, research analyst of LOF-
Emerging Consumer and LOF – Vital Food. Product Specialist of
LOF – Emerging Consumer
2009 – 2012 BNP Paribas Wealth Management, Portfolio Analyst – Singapore
QUALIFICATIONS
Bachelor’s degree in Finance, ISC Paris (2010)
Academic exchange program in International Relations, International University,
Geneva
Lombard Odier Investment Managers Please see important information at the end of the document.
Glossary (1)
Hybrid: long-only fund using cash and options
Volatility ex-ante: annualized standard deviation of fund’s historical daily movements in % since inception
Volatility ex-post: squared root of weigted sum of each position’s correlation factor times their intrisic volatility
Portfolio Beta (inc cash, ex option/ FX): weighted sum of each position’s beta with respect to the MSCI World
Annualized Sharpe ratio: difference between annualized fund’s return and riskfree rate divided by the fund’s volatility ex-post
Maximum monthly drawdown: highest historical drop in % over 1 calendar month
Realized volatility: Volatility ex-post
Tracking error: annualized standard deviation of the time series of difference between fund’s and benchmark’s daily movements in %
Information ratio: difference between annualized fund’s and benchmark’s returns divided by the fund’s volatility ex-post
FCF yield: free cash flow per share divided by current market price per share
Dividend yield: dividend per share divided by current market price per share
Covariance: mean average of both stocks’ time series multiplied of differences between daily movements in % and mean average of
daily movements in %
Correlation: covariance divided by both stocks’ volatilities
Tail risk: risk of portfolio moving down more than 3 times its standard deviation
Put spreads: strategy consisting of buying a put option and short selling another put option of the same underlying, same maturity but
different strikes (long leg’s strike is higher than short leg’s)
Strikes: price level at which the option can be exercised
50
Lombard Odier Investment Managers Please see important information at the end of the document.
Glossary (2)
Pegged currencies: currencies for which the exchange rate is fixed against USD
Forward EV/Sales: current entreprise value divided by estimated sales of next year
Forward EV/EBITDA: current entreprise value divded by estimated EBITDA of next year
EBITDA: earnings before interest, tax, depreciation and amortization
ROCE: return on capital employed
PPP: purchasing power parity
GDP: gross domestic product
CDS: credit default swap
SSSG: same stores sales growth
CPI Inflation: consumer price index inflation
51
Lombard Odier Investment Managers Please see important information at the end of the document.
Risk Profile
Prices of the underlying assets in the Fund determine the price of the Fund’s units. These may fluctuate on a daily
basis and therefore unit price may at any time fall below the purchase price at which the customer acquired the unit
in the fund
Performance of financial products depends on the development of the capital markets. Capital markets react to
actual general conditions as well as irrational factors (emotions, opinions and rumours)
The Fund invests in equities which exposes the shareholder to market, sector as well as company specific risk.
The Fund may make investments in derivative instruments including financial futures, swaps, contract for difference,
options and other derivative instruments. The associated risks include the risk that a small movement in the market
to result in a disproportionately large movement, unfavourable or favourable, in the price of the derivative instrument
and risks of default by a counterparty. The Fund will typically use leverage.
The Fund invests in emerging markets which are considered to carry higher risks than more developed markets
(above average volatility, political risks, currency risks, etc.)
The fund reduces its currency exposure to non-USD currencies by implementing a currency hedging strategy that is
aimed at protecting the portfolio from non-USD currency fluctuation. As a result, the fund is mainly exposed to USD
Please refer to the prospectus and the KiiD documents for an in depth description of eventual risk exposure
52
Lombard Odier Investment Managers Please see important information at the end of the document.
LOF – Emerging Consumer
53
LOF EMERGING CONSUMER – PRODUCT
DETAILS
Inception Date 31.10.11
Legal Structure SICAV – UCITS Compliant
Custodian Bank CACEIS Bank Luxembourg
Central Administration CACEIS Bank Luxembourg
Investment Terms Class I Class P Class M
Management fee 0.75% 0.75% 0.75%
Distribution fee - 0.75%% -
Performance fee 10% (rel. High Water Mark vs MSCI World)
10% (rel. High Water Mark vs MSCI World)
-
Liquidity Weekly, Wednesday Weekly, Wednesday Weekly, Wednesday
Non dealing NAV Daily Daily Daily
Subs. & redemp.
deadline T-1, 15:00 CET T-1, 15:00 CET T-1, 15:00 CET
Subs. & redemp. payment date T+3 T+3 T+3
Redemption penalties - - -
Minimum investment CHF 1'000'000 (or equivalent) EUR 3'000 (or equivalent) EUR 3'000 (or equivalent)
Reference currency USD USD USD
ISIN Accumulating Distributing Accumulating Distributing Accumulating Distributing
USD share class LU0690088793 LU0690088876 LU0690088280 LU0690088363 LU0866417040 LU0866417123
EUR (hedged) share class LU0690087043 LU0690087126 LU0690086581 LU0690086664
CHF (hedged) share class LU0690087985 LU0690088017 LU0690087555 LU0690087639
Lombard Odier Investment Managers Please see important information at the end of the document.
Disclaimer
54
This document is issued by Lombard Odier Asset Management (Europe) Limited, a private limited company incorporated in England and Wales with registered number 07099556, having its registered office at Queensberry House, 3 Old Burlington Street, London, United Kingdom, W1S 3AB, authorised and regulated by the Financial Conduct Authority (the “FCA”) and entered on the FCA register with registration number 515393. Lombard Odier Investment Managers (“LOIM”) is a trade name.
The fund mentioned in this document (hereinafter the “Fund”) is a Luxembourg investment company with variable capital (SICAV). The Fund is authorised and regulated by the Luxembourg Supervisory Authority of the Financial Sector (CSSF) as a UCITS within the meaning of EU Directive 2009/65/EC, as amended. The management company of the Fund is Lombard Odier Funds (Europe) S.A. (hereinafter the “Management Company”), a Luxembourg based public limited company (SA), having its registered office at 5, Allée Scheffer, L-2520 Luxembourg, authorized and regulated by the CSSF as a Management Company within the meaning of EU Directive 2009/65/EC, as amended. The Fund is only registered for public offering in certain jurisdictions. This document is not a recommendation to subscribe to and does not constitute an offer to sell or a solicitation or an offer to buy the Fund’s shares nor shall there be any sale of the Fund’s shares in any jurisdiction in which such offer, solicitation or sale would be unlawful. Consequently, the offering of the Fund’s shares may be restricted in certain jurisdictions. Prospective investors must inform themselves of, and observe, such restrictions, including legal, tax, foreign exchange or other restrictions in their relevant jurisdictions. Neither this document nor any part of it shall form the basis of, or be relied on in connection with, any contract to purchase or subscription for the Fund’s shares. Any such acquisition may only be made on the basis of the official documents of the Fund each in their final form. The articles of association, the prospectus, the Key Investor Information Document, the subscription form and the most recent annual and semi-annual reports are the only official offering documents of the Fund’s shares (the “Offering Documents”). They are available on http//:funds.lombardodier.com or can be requested free of charge at the registered office of the Fund or of the Management Company, from the distributors of the Fund or from the local representatives as mentioned below. Austria. Supervisory Authority: Finanzmarktaufsicht (FMA), Representative: Erste Bank der österreichischen Sparkassen AG, Graben 21, A-1010 Wien - Belgium. Supervisory Authority: Autorité des services et marchés financiers (FSMA), Representative: CACEIS Belgium S.A.,Avenue du Port 86C, b320, 1000 Brussels - France. Supervisory Authority: Autorité des marchés financiers (AMF), Representative: CACEIS Bank, place Valhubert 1-3, F-75013 Paris - Germany. Supervisory Authority: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Representative: DekaBank Deutsche Girozentrale, Mainzer Landstraße 16, D-60325 Frankfurt am Main - Italy. Supervisory Authority: Banca d’Italia (BOI), Paying Agents: Société Générale Securities Services S.p.A., Via Benigno Crespi, 19/A - MAC 2, 20159 Milano, State Street Bank S.p.A. Via Ferrante Aporti, 10, 20125 Milano, Banca Sella Holding S.p.A., Piazza Gaudenzio Sella, 1, 13900 Biella, Allfunds Bank S.A., filiale italianaVia Santa Margherita 7, 20121 Milano, - Liechtenstein. Supervisory Authority: Finanzmarktaufsicht Liechtenstein (“FMA”), Representative: Verwaltungs- und Privat-Bank Aktiengesellschaft, Aeulestrasse 6, LI-9490 Vaduz - Netherlands. Supervisory Authority: Autoriteit Financiële Markten (AFM). Representative: Lombard Odier Darier Hentsch & Cie (Nederland) N.V., Weteringschans 109, 1017 SB Amsterdam (telephone: +31 20 522 0 522) - Spain. Supervisory Authority: Comisión Nacional del Mercado de Valores (CNMV). Representative: Allfunds Bank S.A. C/Nuria, 57 Madrid - Switzerland. Supervisory Authority: FINMA (Autorité fédérale de surveillance des marchés financiers), Representative: Lombard Odier Asset Management (Switzerland) SA,
6 av. des Morgines, 1213 Petit-Lancy; Paying agent: Lombard Odier Darier Hentsch & Cie, 11 rue de la Corraterie, CH-1204 Geneva. UK. Supervisory Authority: Financial Conduct Authority (FCA), Representative: Lombard Odier Asset Management (Europe) Limited, Queensberry House, 3 Old Burlington Street, London W1S3AB, which has
approved this document for issuance in the UK to professional clients or eligible counterparties and is authorised and regulated
by the FCA.NOTICE TO RESIDENTS OF THE UNITED KINGDOM The Fund is a Recognised Scheme in the United Kingdom under the Financial Services & Markets Act 2000. Potential investors in the United Kingdom are advised that none of the protections afforded by the United Kingdom regulatory system will apply to an investment in LO Funds and that compensation will not generally be available under the Financial Services Compensation Scheme. This document does not itself constitute an offer to provide discretionary or non-discretionary investment management or advisory services, otherwise than pursuant to an agreement in compliance with applicable laws, rules and regulations. Representative: Lombard Odier Asset Management (Europe) Limited, Queensberry House, 3 Old Burlington Street, London W1S3AB, which has approved this document for issuance in the UK to professional clients or eligible counterparties and is authorised and regulated by the Financial Conduct Authority. An investment in the Fund is not suitable for all investors. Making an investment in a Fund is speculative. There can be no assurance that the Fund's investment objective will be achieved or that there will be a return on capital. Past or estimated performance is not necessarily indicative of future results and no assurance can be made that profits will be achieved or that substantial losses will not be incurred. This document does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before making an investment in the Fund, an investor should read the entire Offering Documents, and in particular the risk factors pertaining to an investment in the Fund, consider carefully the suitability of such investment to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of LOIM and is addressed to its recipient exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This document contains the opinions of LOIM, as at the date of issue. The information and analysis contained herein are based on sources believed to be reliable. However, LOIM does not guarantee the timeliness, accuracy, or completeness of the information contained in this document, nor does it accept any liability for any loss or damage resulting from its use. All information and opinions as well as the prices indicated may change without notice. The contents of this document are intended for persons who are sophisticated investment professionals and who are either authorised or regulated to operate in the financial markets or persons who have been vetted by LOIM as having the expertise, experience and knowledge of the investment matters set out in this document and in respect of whom LOIM has received an assurance that they are capable of making their own investment decisions and understanding the risks involved in making investments of the type included in this document or other persons that LOIM has expressly confirmed as being appropriate recipients of this document. If you are not a person falling within the above categories you are kindly asked to either return this document to LOIM or to destroy it and are expressly warned that you must not rely upon its contents or have regard to any of the matters set out in this document in relation to investment matters and must not transmit this document to any other person. Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income. © 2013 Lombard Odier Investment Managers – all rights reserved