US EQUITIES LONG ONLY VALUE FUND
François BoulteJürgen von Mach
Independent long term investingBuilding value from mispriced quality assets
2019 Q3
Approved for Distribution in Switzerland and France
Gutzwiller Fonds Management AG is the funds arm of E. Gutzwiller & Cie, Banquiers
Swiss domiciled; set up in 2001 in Basel, regulated by the Swiss Financial Market Supervisory Authority (FINMA)
GFM focuses on a limited number of funds where it believes it can add value
Often involving a combination of internal and external expertise
The team manages five open-ended funds. Also provides asset management services for in-house funds of E. Gutzwiller & Cie, Banquiers
Each fund has its own distinct mandate, all share a long-term and high conviction approach
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A high conviction approach
Investment objectives
• long-term capital growth from investing in US Equities
• investing in well-established companies with diversified operations at an attractive valuation
• highly disciplined, bottom-up, value-oriented approach based on extensive company analysis
• acting independently of any sector orientation or other restrictive methodologies
• no cash allocation
Approach
• maintaining a conservative long-term view, avoiding market excesses
• our risk definition: the nature of the investment and its valuation
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Gutzwiller ONE is acculumating value from mispriced quality assets
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Gutzwiller ONE has a long term track record of outperformancePassing through economic cycles
Gutzwiller ONE Track Recordvs Russell 1000 Value
• A long term outperformance built with no cash allocation• Achieving capital preservation & appreciation through widely varying economic cycles• Based on independent long term investing through businesses with strong sharehodler orientation• We participate in the markets’ upside potential in good times while adding value proposal in down markets
Gutzwiller ONE
Russell 1000 Value
Past performance is not a guarantee of future results.
As end of September 2019
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Data courtesy of Robert Shiller, Yale School of Management (Jul 2019)
• Most people point toward “low interest rates” as a reason why this valuation is justified• But there is no historical relationship between the Shiller PE and interest rates
Markets are Richly valued
Cyclically Adjusted PE Ratio (CAPE Ratio)
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G63
But Free Cash Flow yield is online with the history
SP500 Free Cash Flow Yield
In fact, Market has high expectations from growth potential
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Current conditions are highly unusual
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Russell 1000 Value TR vs. Russell 1000 Growth TR
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Growth and value returns tend to move in cycles over time
10 Years in favor of growth oriented stocks
Valuation spread between value and growth indices are at their widest
Past performance is not a guarantee of future results.
GFM Analysis
As end of October- Data Available only end of July 2018
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Approaching a Recession steps
• Housing market peak
• ISM new orders peak
• 30-year U.S. Treasury yield peak (Autumn 2018)
• Jobless claims trough, Leading economic indicators peak, yield curve inversion
• 2-year U.S. Treasury yield and Fed Funds rate peak
• Fed pause at top
• Fed starts to lower rates
• Jobs (non-farm payrolls) peak
• Recession start
• Inflation peak
Source: Kessler
A "We don't feel that the probability of recession is at all elevated“ Federal Reserve Chairman Jerome Powell - Feb 12, 2019.
(We are likely here)
(June 2019)
(WATCHOUT)
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Source: Bloomberg, GFM AnalysisPast performance is not a guarantee of future results
Gutzwiller ONE vs indices
Returns
Nasdaq
R 1000 Growth
Gutzwiller ONE
R 1000 Value
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Over 3 years, Gutzwiller ONE is outperforming most of its peers
Methodology
We have extracted 23 funds* listed in Bloomberg, which follow the same strategy, as an US equity value long only in USD, as we do. This is for our own guidance, but we disclose this information to our clients and prospects.
The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
The information ratio (IR) is a measure of portfolio returns above the returns of a benchmark, usually an index, to the volatility of those returns.
Source: Bloomberg, GFM Analyis, June 2019
The Sharpe ratio is the average return earned in excess of the risk‐free rate per unit of volatility or total risk.The information ratio (IR) is a measure of portfolio returns above the returns of a benchmark, usually an index, to the volatility of
03/10/2019
Currency AuM TER
3 YR Return Quartile Decile Rank
Sharpe Ratio
Information Ratio
MSCI World NR 9.92Peer Group Median 7.20
Competitor N USD 672 1.02 13.04 1 1 1 / 23 1.00 ‐Competitor I USD 2,534 0.66 9.20 1 1 2 / 23 0.66 ‐Competitor R USD 305 ‐ 9.13 1 2 3 / 23 0.68 ‐Competitor J USD 1,243 1.69 9.09 1 2 4 / 23 0.66 ‐0.17Competitor D USD 2,465 0.75 8.49 1 3 5 / 23 0.62 ‐1.05Gutzwiller ONE ‐ I USD @ 75Bps USD 73 1.74 8.25 1 3 6 / 23 0.56 ‐2.43Competitor W USD 23 1.00 7.98 2 3 7 / 23 0.56 ‐0.24Competitor M USD 754 0.72 7.76 2 4 8 / 23 0.62 ‐0.21Gutzwiller ONE ‐ R USD @ 150Bps USD 73 1.74 7.50 2 4 9 / 23 0.56 ‐2.43Competitor F USD 1,854 1.80 7.47 2 5 10 / 23 0.59 0.01Competito rE USD 1,854 1.80 7.46 2 5 11 / 23 0.59 0.01Competitor A USD 5,180 0.79 7.20 2 5 12 / 23 0.52 0.21Competitor H USD 1,513 1.91 7.12 3 6 13 / 23 0.57 0.66Competitor P USD 511 0.96 7.12 3 6 14 / 23 0.66 ‐Competitor X USD 20 0.98 6.91 3 7 15 / 23 0.53 ‐0.02Competitor G USD 1,316 1.91 6.67 3 7 16 / 23 0.50 0.13Competitor S USD 240 1.75 6.33 3 8 17 / 23 0.50 ‐0.21Competitor O USD 569 0.05 6.00 3 8 18 / 23 0.46 ‐0.42Competitor K USD 1,072 1.68 5.99 4 8 19 / 23 0.43 ‐Competitor Q USD 367 0.97 4.65 4 9 20 / 23 0.38 ‐1.32Competitor B USD 3,568 1.90 3.55 4 9 21 / 23 0.28 ‐1.42Competitor V USD 84 3.02 2.20 4 10 22 / 23 0.19 ‐Competitor L USD 856 ‐ 1.96 4 10 23 / 23 0.22 ‐
3 Year
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1.Generating superior profitability at lower price
2.Smart diversification across quality assets and resilient operating businesses
3.Exposure to growth and innovation through needed products and services
4.Holding power with no conflict of interest
5.Stable team with solid portfolio strategy
Reasons to believe now in Gutwiller ONEGutzwiller ONE is independent, long term and offer better yields
François Boulte, Portfolio Manager
Gutzwiller Fonds Management AGKaufhausgasse 54051 Basel Switzerland
+41 61 205 70 00
The shown results on the charts do not account for possible commissions and cost of issues and redemptions. For the period from November 3, 1997 to June 30, 2001 it refers to the former internal bank portfolio "EG US Equities", transformed 1:1 into Gutzwiller ONE as per July 1, 2001.
Past performance is no guarantee for future returns. Gutzwiller ONE’s performance depends on future development of investments and on how successfully the fund advisor implements the investment policy. Investments denominated in foreign currencies imply additional risk.
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