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The Senate GroupHigh quality solutions in uncertain markets
13 March 2014
Page 2 | CONFIDENTIAL:16938
Agenda
● Reflecting back on 2013
● Offshore asset class returns and valuations
● Implications for asset allocation
● Investec Global Franchise
− High quality solutions in uncertain markets
Page 3 | CONFIDENTIAL:16938
South African Equities 2013 in review: A very narrow market
71% of the
ALSI’s total
return came
from 5 stocks:
Naspers,
Richemont,
SABMiller,
Sasol and
MTN
Go
ld F
ield
s
An
glo
Go
ld
Ma
ssm
art
Tru
wo
rth
s
Imp
ala
Pla
t
AL
SI
MT
N
SA
B
Sa
sol
Ric
he
mo
nt
Ste
inh
off
Na
spe
rs
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
-63%-53%
-30% -27% -26%
21%28%
40%48%
57%68%
103%
Page 4 | CONFIDENTIAL:16938
SA Equities: Trailing PE Ratio20 years to 28 February 2014 (17.9x)
Source: I-Net Bridge
Mean: 14.82
Std Dev: 2.48
Page 5 | CONFIDENTIAL:16938
Taking a closer look at 2013’s equity returns
Dividend Yield: 2.7%Earnings growth: -6.4%Re-rating: 25.1%Total Return: 21.4%
ALSI return in 2013
Rolling 12-months %-change
Offshore asset class returns and valuations
Page 7 | CONFIDENTIAL:16938
Global Equities 12-months to 28 February 2014 (All in US Dollars)
Source: I-Net Bridge
Nikkei225 (US$): 16.5%
S&P 500 (US$): 22.8%
MSCI Emerging Market (US$): -5.7%
MSCI ACWI (US$): 18.8%
FTSE100 (US$): 18.2%
ALSI (US$): 3.1%
2011 2012 2013 Jan 2014 Feb 2014
MSCI ACWI (US$) -5.0% 16.5% 23.4% -3.98% 4.88%
MSCI Emerging Market (US$) -18.2% 18.5% -2.3% -6.47% 3.33%
S&P500 (US$) 0.0% 11.7% 29.6% -3.56% 4.31%
FTSE100 (US$) -7.2% 7.4% 16.7% -4.25% 6.56%
Nikkei225 (US$) -13.4% 8.4% 28.1% -5.56% -0.49%
ALSI (US$) -15.90% 21.8% -4.4% -9.03% 8.38%
Page 8 | CONFIDENTIAL:16938
Global Equities: PE RatioDeveloped & Emerging markets
Source: I-Net Bridge
MSCI ACWI PE Ratio (16.88x)
Mean: 16.94
Std Dev: 3.74
Implications for asset allocation
Page 10 | CONFIDENTIAL:16938
Investec Cautious ManagedIncome generation and real returns at lower volatility
Source: Investec Asset Management as at 31 December 2013
Domestic -equities19.1%
Offshore -equities20.6%
Domestic -cash
25.4%
Domestic -bonds27.1%
Offshore -bonds & cash
3.1%
Commodities -gold1.8%
Domestic -unit trust
2.9%
● High quality stocks to provide real capital growth in volatile markets with lower levels of risk
SA Equities
● Preferred asset class● High quality global franchises on
attractive valuations
Offshore Equities
● Uncorrelated returns – provides protection in uncertain marketsGold
● Bonds and ILBs provide a superior return to cash which yields a negative real return
SA Fixed Interest
● Cash – looking to take advantage of bond opportunitiesCash
Page 11 | CONFIDENTIAL:16938
Investec Opportunity FundPositioned to provide investors with inflation-beating returns
Source: Investec Asset Management as at 31 December 2013
Domestic -equities, 36.4%
Offshore -equities, 21.4%
Domestic -cash , 18.1%
Domestic -bonds, 16.1%
Offshore -cash, 3.3%
Commodities -Gold, 2.4%
Offshore -bonds, 2.3%
● High quality stocks to provide real capital growth in volatile markets with lower levels of risk
SA Equities
● Preferred asset class● High quality global franchises on
attractive valuations
Offshore Equities
● Uncorrelated returns – provides protection in uncertain marketsGold
● Bonds provide a superior return to cash which yields a negative real return
SA Fixed interest
● Waiting for more attractive entry points on select equity opportunities
Cash
Page 12 | CONFIDENTIAL:16938
Investec Opportunity fundA proven investment philosophy
● A strong capital preservation bias through a strong focus on Quality businesses with attractive valuations and risk characteristics
● Aims to provide an attractive long-term rate of return regardless of the outlook for equity markets in the short term
● We expect a higher proportion of excess returns to be generated in falling markets
Superior returns with lower than average absolute volatility
10 11 12 13 14 15 1610
12
14
16
18
20
22
24
Investec Oppor-tunity Equity
carve-outALSI
General Equity sector
Standard deviation (%p.a.)
An
nu
alis
ed r
etu
rn (
%p
.a.)
10 11 12 13 14 15 16 1710
12
14
16
18
20
22
24
26 Investec Oppor-tunity Equity
carve-out
ALSIGeneral Equity
sector
Standard deviation (%p.a.)
An
nu
alis
ed r
etu
rn (
%p
.a.)
5 years 10 years
Page 13 | CONFIDENTIAL:16938
Investec Asset ManagementInternational Funds – Core Range
Global Fixed Income Global Multi-Asset Global Equity
Exp
ecte
d R
etu
rn
Worldwide Equity Feeder (ZAR)Global Equity (USD)
Global Opportunity Income FoF (ZAR)
Money Market (USD, EUR, GBP)
Global Strategic Managed Feeder (ZAR)Global Strategic Managed (USD)
Global Opportunity Equity FoF (ZAR)Global Franchise (USD)
Volatility
ModerateLow High
Investec Global Franchise FundHigh quality solutions in uncertain markets
Abrie Pretorius
Page 15 | CONFIDENTIAL:16938
Agenda
● Key facts
● Key benefits
● Performance
● Why invest in global franchise companies?
● Current positioning
● Summary
Page 16 | CONFIDENTIAL:16938
Investec GSF Global Franchise FundKey facts
Align top
Align left
GSF Global Franchise Fund OGGFRAN
Portfolio managerDomicileFund structureObjective
Performance comparison indexFund launchFund sizeStategy sizeShare classesOngoing chargesPerformance target*
Source: Investec Asset Management, March 2014* Performance target may not necessarily be achieved, losses may be made. Subject to change w ithout notif ication.
MSCI AC World NR (MSCI World NR pre 1/10/11)10 April 2007US$ 1,859.5 million (28 February 2014)US$ 2.9 billion (28 February 2014)A, F, IX, C, S, J, I1.92% (A-Share class)3%-5% p.a. outperformance (gross) over a full market cycle
The Fund aims to achieve long-term capital growth primarily through investment in shares of companies around the world. The Fund will have a blend of investments and will be unrestricted in its choice of companies either by size or industry, or in terms of the geographical make-up of the portfolio. The Fund will focus investment on stocks deemed to be of high quality which are typically associated with global brands or franchises.
Clyde RossouwLuxembourgLuxembourg-based SICAV, UCITS compliant
Page 17 | CONFIDENTIAL:16938
Key benefits
● Differentiated 'global franchise' philosophy
● We are long term holders of quality compounders
● Concentrated, global, high conviction portfolio
● Record of long-term outperformance:
− Participating meaningfully in up markets
− With smaller draw-downs in down markets
− Lower than average absolute volatility
We seek to invest in companies with business models which can provide some certainty in uncertain markets
Page 18 | CONFIDENTIAL:16938
Investec Global Franchise sufficiently uncorrelated to SA equities
Sector composition ALSI Investec Global Franchise
Basic Materials 24.7% Avoid. High capital intensity, no pricing power
Financials 18.7% ~ Typically low exposure. High leverage
Consumer Goods 23.4% Consumer staple bias
Consumer Services 11.9% Consumer staple bias
Telecommunication 7.0% Avoid. High capital intensity, no pricing power
Oil & Gas 4.6% Avoid. High capital intensity, no pricing power
Industrials 6.2% ~ Selected niches
Health Care 3.2% Typically high exposure
Technology 0.4% Selected niches
100.0%
As at 30 September 2013
Page 19 | CONFIDENTIAL:16938
Investec GSF Global Franchise FundPerformance track record
Annual performance in USD Cumulative performance in USD
-60%
-40%
-20%
0%
20%
40%
60%
Apr 07 Jan 09 Sep 10 May 12 Feb 14
Investec GSF Global Franchise A Acc
MSCI AC World NR (MSCI World NR pre 1/10/11)
41.8
18.5
Past Performance figures are not audited and should not be taken as a guide to the futureSource: Lipper, dates to 28 February 2014, NAV based, (inclusive of all annual management fees but excluding any initial charges),gross income reinvested, in USD. *Inception date: 10 April 2007.The performance is based on the OEIC Investec Global Select Equity Fund from 10 April 2007 which then merged into the Luxembourg-domiciled Investec GSF Global Franchise Fund on 03 September 2009. Quartile rankings within Lipper Global Equity Global Sector
3 months YTD 1 year 3 years p.a. 5 years p.a.
Investec GSF Global Franchise A Acc 0.5% 0.6% 10.1% 12.0% 18.7% 5.7%
MSCI AC World NR (MSCI World NR pre 1/10/11) 2.4% 0.6% 18.2% 8.5% 19.1% 2.8%
Relative performance -1.9% -0.1% -8.1% 3.5% -0.3% 2.9%
Quartile ranking 4 3 4 1 2 1
3 months YTD 1 year 3 years p.a. 5 years p.a.Since
inception p.a.*
Investec GSF Global Franchise A Acc 0.5% 0.6% 10.1% 12.0% 18.7% 5.7%
MSCI AC World NR (MSCI World NR pre 1/10/11) 2.4% 0.6% 18.2% 8.5% 19.1% 2.8%
Relative performance -1.9% -0.1% -8.1% 3.5% -0.3% 2.9%
Quartile ranking 4 3 4 1 2 1
5.9%
-32.6%
36.1%
5.9% 7.4%
14.7% 15.3%
0.6%3.9%
-40.7%
30.0%
11.8%
-5.9%
16.1%
22.8%
0.6%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
2007 (Apr) 2008 2009 2010 2011 2012 2013 2014 (YTD)
Investec GSF Global Franchise A AccMSCI AC World NR (MSCI World NR pre 1/10/11)
Page 20 | CONFIDENTIAL:16938
-60%
-40%
-20%
0%
20%
40%
60%
80%
Volatility Positive months %
Negative months %
Max Drawdown
Worst month
Best month
Tracking Error
Investec GSF Global Franchise Fund
MSCI AC World (net)
Investec GSF Global Franchise Fund 14.3% 65% 35% -40.8% -12.14% 12.03% 8.57%
MSCI AC World (net) 18.7% 52% 48% -53.7% -18.96% 11.22% -
Attractive relative risk characteristics
Past performance should not be taken as a guide to the future, losses may be made. Data is not auditedSource: Investec Asset Management. Data to 28 February 2014. Performance is gross of fees in USDReturns are calculated on a bid to bid basis of the S class with gross income reinvested in USD. Relevant fund TERs have been added back. Inception date: 30 April 2007.
Risk statistics since inception to 28 February 2014
Why invest in global franchise companies?
Page 22 | CONFIDENTIAL:16938
Highly differentiated 'global franchise' philosophy
High Quality Sustainable Growth
Compelling Valuation
Measure value in absolute terms based on the free cashflow yield for each investment
Above Average Yield
Enduring franchises that consistently support high returns
Sustainable and free cashflow growth Consistently shown to compound shareholder wealth at superior rates of return over the long term
Page 23 | CONFIDENTIAL:16938
High qualityReflected by high returns on invested capital with low leverage
Attractive Valuation
High Quality Sustainable Growth Above Average Yield
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Q1
Q2
Q3
Q4
Global Franchise
Global Franchise ROIC vs. the market ROIC
Source: Investec Asset Management analysis of FactSet data For the full research methodology, please refer to our recent white paper entitled ‘Tracking down great ideas – why return on invested capital is a crucial metric’
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
40%
50%
60%
70%
80%
90%
100%
Market (MSCI ACWI)
Consumer Discre-tionary
Consumer Staples
EnergyFinancials
Health Care
Industrials
Information Tech-nology
Telecommunication Services
Utilities
Percentage of companies maintaining 1st quartile returns
● Strong business models and management
● Low capital intensity
● Strong balance sheets
● By actively managing companies with high barriers to entry, the Global Franchise Fund has been able to maintain an ROIC typically 10% higher than the overall market
Page 24 | CONFIDENTIAL:16938
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2,000,000
4,000,000
6,000,000
8,000,000
Nestlé Anglo American plc
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-60%
-40%
-20%
0%
20%
40%
60%
Nestlé Anglo American
Why we shun capital intensity
Free Cashflow Margin Capital Expenditure (US$)
Source: Investec Asset Management, Bloomberg
● Nestlé generated $131bn of free cashflow returning over $80bn to shareholders
● Anglo American generated a mere $11bn of free cashflow, returning $22bn to shareholders during the best
commodity bull market in 50 years
Page 25 | CONFIDENTIAL:16938
High qualityReflected by high returns on invested capital with low leverage
● Strong business models and management
● Low capital intensity
● Strong balance sheets
● Portfolio has AA average credit rating
● CDS spreads below many AAA and AA sovereigns
● Average age of companies held within the portfolio is 110 years
Sources: Investec Asset Management and FactSet, 28 February 2014. Investec GSF Global Franchise Fund re-weighted excluding cash and equivalents
Attractive Valuation
High Quality Sustainable Growth Above Average Yield
Low leverage (Net debt to EBITDA)
Superior returns (Return on Invested Capital)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Apr-07 Aug-09 Nov-11 Feb-14
Global Franchise Fund
MSCI ACWI
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Apr-07 Aug-09 Nov-11 Feb-14
Global Franchise FundMSCI ACWI
Page 26 | CONFIDENTIAL:16938
Sustainable growthStrong business models provide sustainable long-term growth prospects
● The Global Franchise Fund has demonstrated long-term sustainable free cashflow growth benefitting from:
− Competitive advantages that are difficult to erode or replicate (brands, patents…etc.)
− Stable growing industries
− Disciplined capital allocation
Sources: Investec Asset Management and FactSet, 28 February 2014. Investec GSF Global Franchise Fund re-weighted excluding cash and equivalents
Attractive Valuation
High Quality Sustainable Growth Above Average Yield Global Franchise: Growth Rates
0%
2%
4%
6%
8%
10%
12%
14%
Apr-07 Aug-09 Nov-11 Feb-14
Investec Global Franchise 7-yr Free Cash Flow Compound Growth Rate (CAGR)
Page 27 | CONFIDENTIAL:16938
Above average yieldsExcess cash returned to shareholders
Sources: Investec Asset Management and FactSet, 28 February 2014. Investec GSF Global Franchise Fund re-weighted excluding cash and equivalents
● Strong cash generation – free cashflow is our preferred operating and valuation metric
● History of returning a high proportion of free cashflows to shareholders through dividends and share repurchases.
Attractive Valuation
High Quality Sustainable Growth Above Average Yield Return of capital to shareholders
0%1%2%3%4%5%6%7%8%9%
Apr-07 Aug-09 Nov-11 Feb-14
Total Return of CapitalDividend YieldShare Repurchase Yield
Page 28 | CONFIDENTIAL:16938
Compelling valuationsAbsolute valuations are attractive
● Despite being composed of high quality companies with strong growth prospects, the Global Franchise Fund remains at a valuation discount to the MSCI ACWI on a free cashflow basis
This is not a buy or sell recommendation for any particular stockSources: Investec Asset Management, Company reports, FactSet, 28 February 2014
Global Franchise free cashflow yield vs. MSCI ACWI
Attractive Valuation
High Quality Sustainable Growth Above Average Yield
0%
2%
4%
6%
8%
10%
12%
Apr 07 Aug 09 Nov 11 Feb 14
Global Franchise
MSCI All Country World (excluding Financials)
Page 29 | CONFIDENTIAL:16938
Portfolio construction
We aim to remain fully invested at all times. Cash can build up temporarily as a result of our inability to find undervalued stocks
Position size ● At least 1% at purchase
● Maximum individual position size: 10%
● Typical number of stocks: 25-40
● Maximum industry position size: 20%
● Unconstrained at sector level
Sector ● Sector and industry weightings are a product of our bottom-up stock selection process
● The characteristics that we seek are typically found in companies producing branded consumer goods, and pharmaceuticals, media and advertising
Country ● Country weightings are a product of our bottom-up stock selection process. The typical concentrations in our portfolios are Europe (non-UK), North America and the UK
These internal parameters are subject to change, not necessarily with notice to shareholdersIndustry defined in accordance with the Global Industry Classification Standard (GICS)
Current positioning
Page 31 | CONFIDENTIAL:16938
Name Weight P/E FCF Yield Dividend
Yield EM % Sales
Nestle (Nescafé, Maggi, Nesquik, Nespresso) 6.7% 21.7x 4.5% 3.1% 49%
Reckitt Benckiser Group (Nurofen, Finish, Vanish, Dettol, Strepsils) 5.5% 21.2x 5.1% 2.6% 39%
Japan Tobacco (Camel, Winston, Mild Seven, B&H) 5.2% 14.2x 5.5% 2.8% 27%
Microsoft (Windows 8, Office365, Skype, Bing, Xbox One, Surface) 5.0% 14.5x 7.3% 2.6% 13%
Imperial Tobacco (Davidoff, Gauloises, West) 4.7% 14.0x 7.0% 4.8% 27%
Roche (MabThera, Herceptin, Avastin, Pegasys) 4.7% 20.8x 5.1% 2.8% 18%
International Business Machines (IBM) 4.7% 12.0x 7.3% 2.0% 40%
Anheuser-Busch InBev (Budweiser, Beck's, Stella Artois) 4.5% 12.6x 6.1% 2.6% 56%
Novartis (Gleevec, Diovan, Lucentis, Gilenya) 4.5% 20.7x 5.1% 3.2% 10%
Samsung (Samsung, Galaxy) 4.3% 6.1x 13.0% 1.1% 48%
49.8% 15.8x 6.6% 2.8% 33%
Global Franchise Top 10An attractive mix of Value and Growth
Not a buy, sell or hold recommendation. The portfolio may change significantly over a short period of time. Financial metrics are based on blended forward and trailing financial data according to individual constituent company fiscal year endsSource: FactSet, as at 28 February 2014
A concentrated portfolio
Page 32 | CONFIDENTIAL:16938
Top holdingsReckitt Benckiser
● 19 Powerbrands are global number 1 & 2 in fast growing categories driving 70% of net revenue● Since 2000 revenue and profit more than doubled and market cap quadrupled● 12 years of high quality above market growth
GrowthFree Cash Flow
Quality
178256
386527
644 650745
929841
1117
1790
1374
15761722
19212039
2162
0
500
1000
1500
2000
2500
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
F
2015
F
Fre
e C
ash
Flo
w (
$m)
18.5% 14 year CAGR
Source: Bloomberg
This is not a recommendation to buy, sell or hold a particular security. The specific companies listed or discussed herein are included as representative transactions of the portfolio. No representation is being made that any investment will or is likely to achieve
Page 33 | CONFIDENTIAL:16938
735.2
250.4
124.3
0
100
200
300
400
500
600
700
800
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Tota
l Sha
reho
lder
Ret
urn
(Reb
ased
to
100
)
Reckitt Benckiser
HPC Competitors (Average)
MSCI ACWI
Top holdingsReckitt Benckiser
● Returned 60% of FCF to shareholders● Superior shareholder return of CAGR of 18.5% vs. the market of 2.3% over the last 13 years
ValuationShare price and EPS in GBP
YieldShareholder returns
0.2
0.7
1.2
1.7
2.2
2.7
5
10
15
20
25
30
35
40
45
50
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Price (LHS)
EPS 12m fwd. (RHS)
Source: Bloomberg, as at 31 December 2012 Source: FactSet, as at 31 May 2013
Past performance should not be taken as a guide to the futureThis is not a recommendation to buy, sell or hold a particular security. The specific companies listed or discussed herein are included as representative transactions of the portfolio. No representation is being made that any investment will or is likely to achieve
Page 34 | CONFIDENTIAL:16938
● World's third largest tobacco company with brands sold in 120 countries
● Dominant market share in two of the worlds largest markets, namely Japan and Russia.
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0%
2%
4%
6%
8%
10%
12%
14%
Top holdingsJapan Tobacco – Looking beyond the country
QualityStrong and improving profitabilityReturn on Invested Capital
Growth 10 Year CAGR in operating profit of 11%
Source: Company reports, 2014
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-
100
200
300
400
500
600
700
0%
5%
10%
15%
20%
25%
30%
35%Operating Profit
Operating Profit Margin
Page 35 | CONFIDENTIAL:16938
● Structural changes in local market and privatisation driving improved capital allocation and growth
YieldAttractive shareholder return profileImproving Capital Allocation
ValuationGrowth potential not recognised by market
Top holdingsJapan Tobacco – Looking beyond the country
Source: Bloomberg, 2014
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
0
20
40
60
80
100
120
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Dividend per share Payout Ratio
Jan-
06
Jun-
06
Dec-0
6
May
-07
Nov-0
7
Apr-0
8
Oct-0
8
Mar
-09
Sep-0
9
Feb-1
0
Aug-1
0
Jan-
11
Jul-1
1
Dec-1
1
Jun-
12
Nov-1
2
May
-13
Nov-1
3 5.0
7.0
9.0
11.0
13.0
15.0
17.0
19.0
21.0
PE Ratio '- 1 Stdev Average'+ 1 Stdev
Page 36 | CONFIDENTIAL:16938
Top holdingsMicrosoft Corp... re-inventing itself
● Uniquely poised to take advantage of opportunities in enterprise, cloud, search and mobile
Source: Company data, Investec Asset Management, August 2013. This is not a recommendation to buy, sell or hold a particular security. The specific companies listed or discussed herein are included as representative transactions of the portfolio. No representation is being made that any investment will or is likely to achieve
Growth Well positioned in large scalable markets
QualityStrong and improving profitability
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
20%
30%
40%
50%
60%
70%
Incremental ROIC
Page 37 | CONFIDENTIAL:16938
Top holdingsMicrosoft Corp... re-inventing itself
YieldAttractive shareholder return profileTotal return of capital
ValuationGrowth potential not recognised by market
● Track record of attractive shareholder returns● Market discounts perpetual decline and value destruction
Source: FactSet, October 2013. This is not a recommendation to buy, sell or hold a particular security. The specific companies listed or discussed herein are included as representative transactions of the portfolio. No representation is being made that any investment will or is likely to achieve
Apr-07 Dec-08 Jul-10 Feb-12 Sep-130.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Global Franchise FundMSCI All Country World Information TechnologyMicrosoft
Mar-04 Oct-05 May-07 Dec-08 Jul-10 Feb-12 Sep-13-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
6.1%
-2.8%
Actual Sales Growth
Implied Terminal Growth Rate
Page 38 | CONFIDENTIAL:16938
Sector and geographic allocation
Sector allocation Geographic allocation
The portfolio may change significantly over a short period of timeSource: Investec Asset Management, FactSet, as at 28 February 2014
Consumer Staples51.7%
Information Technology
18.5%
Health Care18.3%
Consumer Discretionary
6.2%
Financials2.7%
Other0.3% Cash
2.3%
North America42.6%
Europe ex UK25.4%
United Kingdom
19.8%
Japan5.2%
Emerging Markets
4.3%
Other0.3%
Cash2.3%
Page 39 | CONFIDENTIAL:16938
Current portfolio characteristicsFocus on quality and value
● Low gearing, low capital intensity (growth requires less capital)
● Overweight consumer staples (defensive and ideal for declining equity markets)
● No banks, but selected financials
Global Franchise
MSCI ACWI*
Free Cashflow Yield 5.9% 5.0%
Dividend Yield 2.5% 2.4%
Return on Invested Capital 18.9% 9.5%
P/E 16.3x 15.2x
Average Market Capitalisation**
$144bn $85bn
Tracking error 8.6%
Current Beta 0.69
The portfolio may change significantly over a short period of time. Source: FactSet, Investec Asset Management. The above reflects the portfolio characteristics of the Investec GSF Global Franchise Fund reweighted excluding cash and cash equivalents, as at 28 February 2014. Financial metrics are based on blended forward and trailing financial data according to individual constituent company fiscal year ends*Comparative index has changed to MSCI AC World Index from 1 October 2011**Market Capitalisation is market weighted
Summary
Page 41 | CONFIDENTIAL:16938
0.45
0.50
0.55
0.60
0.65
0.70
0.75
Apr-07 Aug-09 Nov-11 Feb-14
Global Franchise Portfolio Beta (7-yr Sample)
0%1%2%3%4%5%6%7%8%9%
Apr-07 Aug-09 Nov-11 Feb-14
Total Return of CapitalDividend YieldShare Repurchase Yield
Low market sensitivity (Beta to MSCI ACWI)
Investec GSF Global Franchise FundWhat is important to us…
Superior returns (Return on Capital) Low leverage (Net debt to EBITDA)
Return of capital to shareholders
Sources: Investec Asset Management and FactSet, 28 February 2014. Investec GSF Global Franchise Fund re-weighted excluding cash and equivalents
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Apr-07 Aug-09 Nov-11 Feb-14
Global Franchise FundMSCI ACWI
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Apr-07 Aug-09 Nov-11 Feb-14
Global Franchise Fund
MSCI ACWI
Page 42 | CONFIDENTIAL:16938
Attractive risk-adjusted returns
Since inception annualised return & risk versus peer group*
Past performance should not be taken as a guide to the future, losses may be made. Data is not auditedSource: Lipper, data to 28 February 2014, NAV based, (inclusive of all annual management fees but excluding any initial charges), in USD. *Inception is 30 April 2007. The fund performance is based on the OEIC Investec Global Select Equity Fund from 10 April 2007 which then merged into the Luxembourg-domiciled Investec GSF Global Franchise Fund on 03 September 2009
MSCI AC World NR (MSCI World NR pre
1/10/11)
Investec GSF Global Franchise A Acc
Lipper Global Equity Global
-15.0
-10.0
-5.0
0.0
5.0
10.0
10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.0 30.0 32.0 34.0
Ann
ualis
ed p
erfo
rman
ce %
cha
nge
Annualised standard deviation
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Conclusion
● Advantages for a South African Client
− Differentiated and clearly defined philosophy and process
− Non correlated
− attractively valued
− Developed market centric exposure
● Consistent and relative predictability in our investment results
● Attractive real return and below peer group volatility
● Bottom-up, fundamental research-based approach
● Manage the absolute risks that are most likely to jeopardise the achievement of long-term total returns
Thank youwww.investecassetmanagement.com
Page 45 | CONFIDENTIAL:16938
Disclaimer
This document or any of its content may not be in whole or in part, be copied, modified, distributed, retransmitted, redistributed, or released to any third party. The user represents and warrants that it will not use or permit the use of the document or any of its content for any purpose other than authorised internal use and warrants that it will not, without the prior written consent of Investec Asset Management, directly or indirectly redistribute, or knowingly facilitate redistribution of, all or any portion of the document.
All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such information or opinion without appropriate professional advice after a thorough examination of a particular situation. We endeavour to provide accurate and timely information but we make no representation or warranty, express or implied, with respect to the correctness, accuracy or completeness of the information and opinions. We do not undertake to update, modify or amend the information on a frequent basis or to advise any person if such information subsequently becomes inaccurate. Any representation or opinion is provided for information purposes only.
Investec Asset Management will not be held liable or responsible for any direct or consequential loss or damage suffered by any party as a result of that party acting on or failing to act on the basis of the information provided by or omitted from this document. This document may not be amended, reproduced, distributed or published without the prior written consent of Investec Asset Management.
In the event that specific collective investment schemes in securities (unit trusts) are mentioned please refer to the relevant fact sheet in order to obtain all the necessary information in regard to that unit trust.
Collective Investment Schemes in Securities (CIS) are generally medium to long term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of charges, fees and adviser fees is available on request from the manager. Additional adviser fees may be paid and if so, are subject to the relevant FAIS disclosure requirements. Forward pricing is used. The scheme trustee is FirstRand Bank Ltd (011) 371 2111.
Certain Investec Asset Management funds are offered as long-term insurance policies issued by Investec Assurance Limited, a registered insurer in terms of the Long-term Insurance Act.
Investec Asset Management is an authorised financial services provider.
Page 46 | CONFIDENTIAL:16938
Investec Asset ManagementSouth African Funds – core range
Fixed Income Multi-Asset Equity
Exp
ecte
d R
etu
rn
Value
Equity
Absolute Income
Diversified Income
Money Market
Opportunity
Cautious Managed
Managed
Expected Volatility
ModerateLow High
Opportunity Income