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Data at Investing in the Swiss market with BCV Swiss Equity 31 March 2018
Data at
Investing in the Swiss marketwith BCV Swiss Equity
31 March 2018
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Contents
The Swiss stock market: attractive dividends underpin high valuations
A robust and rigorous investment process
BCV Swiss Equity consistently outperforms
BCV Swiss Small & Mid Caps Equity provides exposure to attractive market segments
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Reasonable earnings estimates
Source: Thomson Reuters Datastream
P/E ratio
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But attractive yields compared to bonds
Source: Thomson Reuters Datastream
Dividend yield of SPI companies
5
A structurally attractive market thanks to high dividends
Source: Thomson Reuters Datastream
• 1/3 of Swiss listed companies have dividend yields of > 3%
• Swiss companies are often leaders in their segments and have successfully rolled out their operations globally
• Compared with other countries, Switzerland has a high percentage of companies with healthy balance sheets and good cash flow
At Generous dividend policies
Dividend payouts of SMI companies (CHF billions)
31 March 2018
0
5
10
15
20
25
30
35
40
45
50
0.6-1 1-2 2-3 3-4 4-5 5-6 6-7 >7
Nu
mb
er
co
mp
an
ies
Dividend Yield (%)
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Low growth and rising indicators
Source: Thomson Reuters Datastream
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Manufacturing recovery
Source: Thomson Reuters Datastream
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Construction market buoyed by mortgage demand
Source: Thomson Reuters Datastream
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Threat of deflation fading; some spare capacity
Source: Thomson Reuters Datastream
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Order books are shrinking
Source: Thomson Reuters Datastream
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Unemployment still low
Source: Thomson Reuters Datastream
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Earnings estimates heavily influenced by exchange rates
Source: Thomson Reuters Datastream
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Leveraging Swiss companies’ global footprint
Swiss companies are key beneficiaries of globalisation
– Sales breakdown of companies in the SPI (as %)
Source: Bloomberg
Europe ex-UK = 24%
Other = 20%
Switzerland = 15%
North America = 22%
Emerging markets
= 7%
Asia ex-Japan
= 10%
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BCV: A trusted asset manager
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Macroeconomic outlook
Growth
Inflation
Interest rates
Exchange rates
1. Investment ideas
- Company visits
- Meetings with CEOs, CFOs & IR officers
- Investor presentations
- Meetings with analysts & brokers
2. Fundamental analysis & valuation
- Quantitative screening
- Absolute & relative valuations
- EBO valuation model
3. Behavioural research
- Technical analysis
- Stock trading volumes
- Proprietary model
3-step investment process
Risk management
BCV Swiss Equityportfolio
50 % 30 % 20 %
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1. Investment ideas
Resources
The company’s business model
Current position & outlook
Company visits
One-to-one meetings with management
Meetings with analysts & brokers
Investor presentations
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Business model assessments
Close review of business model
• Current position & outlook
• Porter’s Five Forces
• SWOT analysis
• Corporate governance
Key factors
• Company strategy
• Management’s experience and credibility
• Industry trends & outlook
• Market positioning (market share)
• Innovation
• Profit margins
• M&A
• Barriers to entry
• Technological risks
• Competitive benchmarking (key figures)
• Over 100 meetings/year with CEOs, CFOs, IR officers, and analysts
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2. Fundamental analysis
Quantitative screening
– Database of all listed companies (~220)
– Shortlist using valuation ratios:
P/E, EV/EBITDA, EV/Sales, P/CF, FCF yield, etc.
Absolute & relative valuations
– Comparisons with industry peers and over time
Edwards-Bell-Ohlson (EBO) valuation model
– The EBO model uses the present value of future residual income (ROE - ke), with the book value per share as the initial stock price.
TtT1Tt
T
1i1iti
ittt BV*
ke)(1*ke
ke)(ROEBV*
ke)(1
ke)(ROEBVP +
++
=−+
+
+
−+
+
−+= ∑
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3. Behavioural analysis model
1. Our proprietary model uses:
– Series of highs and lows
– Moving averages
– Momentum
2. We spot medium-term trends and short-term buy/sell signals on:
– Indices (SPI, SMI, SMIM)
– Sectors
– Stocks
– Styles (large vs. small caps, high vs. low beta)
– Market depth
3. Used in conjunction with fundamental research, our model lets us:
– Pick the best-performing sectors, stocks, and styles
– Spot trend reversals
– Determine entry and exit points
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Example: trends, reversal signals, buy/sell signals
Example of our model
Source: BCV
Mid-cap index/SMI
Timing
Trend note
RSI
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Application: indices, ratios, sectors, and stocks
Source: BCV
CH
Name Weight Beta Trend Bollinger Timing
INDICESSPI 1 -1.0 0
SMI 1 -1.0 0
SMIM 1 -1.1 0
SPI Extra 1 -1.1 0
SPI Equal-Weight 1 -1.4 0
Custom High Beta 1 -1.2 0
Custom Low Beta 2 -1.2 0
RATIOSSPI vs SMI 3 0.9 0
SPI Extra vs SMI 4 0.8 1
SMIM vs SMI 4 0.8 1
SPI Equal-Weight vs SPI 2 0.6 0
Custom High Beta vs Custom Low Beta 2 -0.8 0
Absolute
CH
Name Weight Beta Trend Bollinger Timing Trend Bollinger Timing Rank Change
INDICES
SMI MEMBERSAbb 3.5% 1.10 1 -1.3 0 0 -1.5 0 17 0
Actelion 1.2% 1.14 1 -2.0 0 1 -2.3 0 16 -13
Adecco 1.1% 1.15 1 -1.3 0 3 -1.2 0 9 -4
Richemont 3.8% 1.18 1 0.1 -1 3 1.2 0 6 3
Credit Suisse 3.4% 1.13 1 -1.5 0 1 -2.0 0 14 -3
Geberit 1.0% 1.12 1 -0.8 -1 4 1.3 0 10 3
Givaudan 1.3% 0.96 2 -1.5 0 2 -2.6 0 7 0
Julius Baer 0.9% 1.21 0 -0.5 -1 1 0.1 -1 13 5
LafargeHolcim 2.8% 1.16 0 -1.4 0 0 -1.6 0 20 -1
Nestle 20.6% 0.89 4 0.6 1 5 1.7 0 1 0
Novartis 21.0% 1.06 1 -1.3 0 1 -2.5 0 7 0
Roche 19.4% 0.96 0 -0.8 -1 2 1.3 0 5 5
SGS 1.2% 0.99 1 -0.3 -1 5 2.1 0 3 3
Swatch 1.7% 1.07 2 -0.9 0 4 -0.5 1 4 -1
Swiss Re 2.7% 0.83 1 -0.6 -1 4 1.4 0 2 0
Swisscom 2.2% 0.63 1 -1.3 0 1 -1.4 0 14 1
Syngenta 2.6% 0.96 1 -1.1 0 0 -1.1 0 19 1
Transocean 0.4% 1.11 2 -0.8 0 2 -0.1 0 12 0
UBS 6.2% 1.19 1 -1.1 0 2 -1.1 0 11 3
Zürich 3.2% 0.95 1 -1.5 0 0 -1.8 0 18 -2
Absolute Relative Matrix Ranking
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Meticulous risk management
Daily
Performance tracking
Continuous tracking using Bloomberg’s
PORT function
Contribution analysis (+/-)
Sector allocation and stock picking
Technical analysis
Market & sector indicators
Over/underweight positions
Twice monthly
Performance review
Review of main over/underweight positions (stocks and sectors)
and risk factors with the CIO for equities
Monthly
Risk & return report
Written by our independent Performance & Risk Analysis team for the head of the Asset Management
Department
Quarterly
Supervisory committee meeting with Gérifonds (fund manager)
Review of risks, returns, and compliance
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Sample performance assessment data
Source: BCV
Risque
TotalTotal Factor
Non-
FactorCountry Greeks Industry Style Currency
Risque Actif 0.71 0.42 0.57 Risque factoriel 0.05 0.00 0.24 0.30 0.00
Exp. Risque Exp. Risque
0.00 Contrib. Active Contrib.
LEONTEQ AG 0.84 14.41
LONZA GROUP AG-REG 1.26 8.79
LAFARGEHOLCIM LTD-REG -0.73 8.36
GIVAUDAN-REG -1.03 7.80
FORBO HOLDING AG-REG 1.05 7.48
Sous-total 0.00 Sous-total 46.85
Exposition au marché: 99.68%
Principaux contributeurs Principaux contributeurs
Stats 3M (daily)
Fonds Indice
Volatilité 22.35 22.24
Ratio de Sharpe (0.54) (0.59)
Tracking error 1.00
Ratio d'information 0.98
Bêta 1.00
Prév
Fonds Indice
Volatilité 16.51 16.55
Ratio de Sharpe
Tracking error 0.71
Ratio d'information
Bêta 0.96
Attribution 1 mois
DU 31.08.2015 AU 30.09.2015
Poids Diff. Perf Diff. Industrie SecteurStock-
picking
Contrib
active
TOTAL 100.00 100.00 0.00 -3.50 -3.43 -0.07 0.10 0.01 -0.18 -0.07
Financials 20.33 19.29 1.04 -7.41 -6.50 -0.91 -0.03 -0.01 -0.17 -0.21
Industrials 9.78 12.03 -2.25 -6.69 -6.78 0.09 0.08 -0.01 0.03 0.10
Technology 1.18 0.84 0.34 7.63 3.21 4.42 0.02 0.01 0.04 0.07
Health Care 37.90 36.31 1.59 -4.37 -4.35 -0.02 -0.01 0.02 -0.03 -0.02
Sous-total 69.19 68.47 0.06 0.01 -0.14 0.00 0.00 -0.07
Principales Positions Relatives
Titres %
NESTLE SA-REG 1.83
LONZA GROUP AG-REG 1.26
FORBO HOLDING AG-REG 1.05
GIVAUDAN-REG -1.03
GEBERIT AG-REG -0.90
Sous-total (absolu) 6.07
Excess returnSliding tracking error & volatility
Risk
PositionsAttribution
Statistics
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Steady returns…
Source: Thomson Reuters Datastream, Lipper, BCV
Returns at
3-year statistics* Comparable peer group
31 March 2018
*Calculated using annualised weekly data for the C share class
Quartile
YTD 4
1 year 3
3 year 2
5 year 2
YTD 2017 2016 2015 2015-2017
BCV Swiss Equity C -5.34% 19.61% -0.07% 3.36% 23.54%
SPI TR -5.22% 19.92% -1.41% 2.68% 21.39%
Relative performance vs SPI TR -0.11% -0.30% 1.34% 0.68% 2.15%
Fonds Index
Volatility 14.32% 14.30%
Sharpe Ratio 0.35 0.31
Tracking error 0.91%
Information Ratio 0.60
Beta 1.02
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2
3
4
5
6
7
8
- 1 2 3 4 5 6
Re
nd
em
en
t [%
]
Tracking Error [%]
…that compare well with our peer group
Source : Lipper, BCV
Annualised net returns at 31 March 2018
BCV
Special peer group
Active fund management
Re
turn
(%
)
The special peer group is comprised of:
• Swiss-registered funds • Active fund managers (no ETFs)• AuM of ≥ CHF 50m
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And are consistent over time
Source: Gérifonds, BCV
Monthly returns (%)
C share class
Jan Feb March April May Jun July Aug Sept Oct Nov Dec
Fund -7.0 8.1 2.7 0.8 2.1 -4.9 7.8 -6.2 -3.5 5.1 1.2 -1.3
Benchmark -6.7 8.0 2.4 0.8 1.8 -4.9 7.2 -6.0 -3.4 5.2 1.1 -1.5
Difference -0.3 0.1 0.3 -0.0 0.2 -0.0 0.6 -0.2 -0.1 -0.1 0.2 0.2
Fund -7.0 8.1 2.7 0.8 2.1 -4.9 7.8 -6.2 -3.5 5.1 1.2 -1.3
Benchmark -6.7 8.0 2.4 0.8 1.8 -4.9 7.2 -6.0 -3.4 5.2 1.1 -1.5
Difference -0.3 0.1 0.3 -0.0 0.2 -0.0 0.6 -0.2 -0.1 -0.1 0.2 0.2
Fund -5.5 -4.1 1.0 2.9 1.9 -2.7 2.2 1.2 0.1 -3.1 0.5 3.7
Benchmark -5.3 -4.2 0.8 3.0 2.2 -2.6 1.9 1.0 -0.4 -3.4 0.5 4.0
Difference -0.1 0.1 0.2 -0.1 -0.3 -0.1 0.3 0.2 0.5 0.4 -0.0 -0.2
Fund 1.0 3.4 2.9 3.6 2.6 -1.2 1.6 -1.4 2.8 1.6 0.6 0.7
Benchmark 1.1 3.4 2.9 3.5 2.7 -1.2 1.8 -1.3 2.7 1.5 0.7 0.7
Difference -0.1 0.0 -0.0 0.1 -0.1 -0.0 -0.2 -0.1 0.1 0.1 -0.0 -0.0
Fund -0.1 -4.6 -0.7 - - - - - - - - -
Benchmark -0.1 -4.5 -0.7 - - - - - - - - -
Difference 0.0 -0.1 -0.0 - - - - - - - - -
2014
2017
2015
2018
2016
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An experienced, steadfast fund management team
Strategist and Investment Manager: Eric Chassot, CFA
Eric Chassot joined BCV as Swiss equities investment manager in May 2010. He previously worked as a Swiss equities analyst and fund manager at Bordier & Cie and Union Bancaire Privée in Geneva (for a fund awarded 4 stars by Lipper), then at Liechtensteinische Landesbank in Vaduz, where in 2008 Lipper rated his fund the best in the “Equity Switzerland, Small and Mid Caps” category over five years. He holds a degree in Economic and Social Sciences from the University of Fribourg and a Master’s in Advanced Studies in International Management from the University of Linz in Austria. He is a Chartered Financial Analyst (CFA).
Replacement: Sylvain Bornand, CIIA, Senior Strategist Investment Manager
CIO for Equities: Jean Niklas, CPA, CFA, CMT
Sylvain Bornand joined BCV in 2001 after having worked at Fiduciary Trust in New York and Maerki Baumann in Zurich. He holds a Master’s degree from the Business and Economics Faculty of the University of Lausanne and is a Certified International Investment Analyst (CIIA). Sylvain has over 20 years of professional experience in European equity portfolio management, financial analysis, and stock selection for a variety of products, most notably the BCV Europe Equity fund.
Jean Niklas joined BCV as CIO for Equities in August 2013. He is a member of BCV’s investment committee and chairs the real-estate committee. He previously worked at Pury Pictet Turrettini, where he was jointly in charge of institutional asset management and was responsible for asset allocation strategies. Prior to that he served as Financial Officer for Pargesa Group; his roles included valuing the company’s real-estate portfolio, located mainly in Switzerland. He holds a degree from the Business and Economics Faculty of the University of Lausanne. He is also a Certified Public Accountant (CPA), a Chartered Financial Analyst (CFA) and a Chartered Market Technician (CMT).
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Main contributions to performance (+/-)
Source: Bloomberg, BCV
2016 sector allocation (bp) 2016 stock picking (bp)
YTD sector allocation (bp) YTD stock picking (bp)
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Sector positioning
Source: Bloomberg, BCV
Absolute (%) Relative (%)
Preferred sectors
Basic resources, Financials
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Stocks selected according to our convictions
Source: Bloomberg, BCV
Main relative over/underweight positions (%) Key valuation & risk figures
Preferred approach
4 large caps and 1 mid capwith a strong growth outlook
Fund Index
P/E 12M forward 15.8 16.15
P/CF 12M forward 13.1 13.2
P/B 2.28 2.33
Dividend yield 3.18 3.13
Beta 0.99
Tracking error 0.67
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BCV Swiss Small & Mid Caps Equity
A good opportunity to gain exposure to attractive small and large-cap segments
– More innovative
– Stronger growth
– Shares that are less covered by analysts
– More M&A activity
BCV Swiss Equity can count on a proven investment process
– A steady investment process
– A focus on direct contact and meetings with company management
– Cross-fertilisation of investment ideas and themes
High-conviction portfolio
– 80-100 stocks
– Tracking error of around 3%
– Preference for value stocks
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A market dominated by blue chips…
Breakdown by market cap
Source: Thomson Reuters Datastream
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…and the healthcare and consumer goodssectors
Source: Thomson Reuters Datastream
SPI® sector breakdown
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Basic resources
Industry
Consumer goods
Healthcare
Consumer Services
Telecom
Utilities
Financials
IT
Large Caps Mid Caps Small Caps
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Small and mid caps have sharply outperformed…
Share price appreciation by segment
Source: Thomson Reuters Datastream
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Investing in the Swiss market with BCV Swiss Equity
•
•
•
•
•
•
•
•
A reasonably-priced market
Expected to stay flat
Supported by dividends
A well-performing fund
Dynamic asset allocation
Conviction-based stock picking
Seasoned asset managers
Robust investment process
Meticulous risk management
A portfolio positioned for Europe’s recovery
Steady, consistent returns
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Fund characteristics
Legal structure Swiss investment fund
Registered in Switzerland
Custodian bank Banque Cantonale Vaudoise (BCV), Lausanne, Switzerland
Auditor PricewaterhouseCoopers SA, Pully, Switzerland
Fund manager Gérifonds, Lausanne, Switzerland
Benchmark SPI
Liquidity Daily
Inception 30 April 1997
Management fees (pa)
Class A: 1.10%
Class B: 0.55% (min. CHF 5m)
Class C: 0.35% (min. CHF 30m)
Class CP: 0.35%
Base currency CHF
ISIN A: CH0006018706 B: CH0022987967 C: CH0022988015 CP: CH0226525399
Telekurs A: 601870 B: 2298796 C: 2298801 CP: 2265239
Bloomberg A: GERBCAS SW B: AMCPSEB SW C: AMCPSEC SW CP: BCVSWCP SW
More info https://www.bcv.ch/en/Asset-Management/Produits/Investment-funds/AMC-PROFESSIONAL-FUND/BCV-Swiss-Equity-A/BCV-Swiss-Equity
https://www.bcv.ch/en/Asset-Management/Produits/Investment-funds/AMC-PROFESSIONAL-FUND/BCV-Swiss-Equity-A/BCV-Swiss-Equity
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Disclaimer
Important legal information
The information contained in this document was obtained from reliable sources at the time of publication. BCV disclaims all liability for any loss or damage of anykind relating to such information, which may be changed at any time without notice. This document is for information purposes only and was drawn up by BCV’sAsset Management & Trading Division. It is not a financial analysis within the meaning of the Swiss Bankers’ Association’s “Directives on the Independence ofFinancial Research”, nor is it equity research or an offer or recommendation to buy or sell specific products. Interim and annual reports, prospectuses, fund contractsand simplified prospectuses concerning the funds may be obtained free of charge from BCV (Place St-François 14, 1003 Lausanne, Switzerland) or from the fundmanagement company. The risks inherent in certain investments, particularly alternative investments, derivatives, and investments in emerging markets, may not besuitable for all investors. For more detailed information on these risks, please read the Swissbanking brochure “Special Risks in Securities Trading.” Pastperformance is no guarantee of current or future performance, and does not take into account commissions or fees for the issuance/purchase or redemption/sale ofunits. The contents of this publication may have been used for transactions by BCV Group prior to their communication. The distribution of this document and/or thesale of certain products may be prohibited or subject to restrictions for persons in jurisdictions other than Switzerland (e.g. EU, UK, USA) and for US Persons. Thedistribution of this document is authorized only to the extent allowed by the applicable law. The BCV logo and trademark are protected. This document is subject tocopyright and may not be reproduced unless the reproduction mentions its author, copyright and all the legal information it contains. Prior written authorization fromBCV is required to use this document for public or commercial purposes. Phone calls to BCV may be recorded. By using this means of communication, you acceptthis procedure.
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℡
℡
The Asset Management specialists
Eric Chassot
Strategist and Investment Manager
021 212 20 31
Jean Niklas
CIO for Equities
021 212 27 98
Watch our video for expert insight from Fund Manager Eric Chassothttp://www.kaltura.com/tiny/jdfir
http://www.kaltura.com/tiny/jdfirhttps://www.kaltura.com/index.php/extwidget/preview/partner_id/1339381/uiconf_id/24869931/entry_id/1_892pgh1w/embed/auto?
Slide Number 1ContentsReasonable earnings estimatesBut attractive yields compared to bondsA structurally attractive market thanks to high dividendsLow growth and rising indicatorsManufacturing recoveryConstruction market buoyed by mortgage demandThreat of deflation fading; some spare capacityOrder books are shrinkingUnemployment still lowEarnings estimates heavily influenced by exchange ratesLeveraging Swiss companies’ global footprintBCV: A trusted asset manager3-step investment process1. Investment ideasBusiness model assessments2. Fundamental analysis3. Behavioural analysis modelExample: trends, reversal signals, buy/sell signalsApplication: indices, ratios, sectors, and stocksMeticulous risk managementSample performance assessment dataSteady returns……that compare well with our peer groupAnd are consistent over timeAn experienced, steadfast fund management teamMain contributions to performance (+/-)Sector positioningStocks selected according to our convictionsBCV Swiss Small & Mid Caps EquityA market dominated by blue chips……and the healthcare and consumer goods sectorsSmall and mid caps have sharply outperformed…Investing in the Swiss market with BCV Swiss EquityFund characteristicsDisclaimerThe Asset Management specialists
