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WELCOME Knowledge Exchange 2018€¦ · Head of Global Emerging Market Equities Ian Tabberer...

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  • WELCOME

    Knowledge Exchange 2018

  • 1

    Janus Henderson Investors (Australia) Funds Management Limited

    Level 36, Grosvenor Place, 225 George Street, Sydney NSW 2000

    T +61 (0)2 8298 4000 F +61 (0)2 8298 4001

    Important information

    This information is solely intended for the use of wholesale clients and is not for general public distribution. This document is issued by Janus Henderson Investors

    (Australia) Funds Management Limited (AFSL 444268, ABN 43 164 177 244) (‘Janus Henderson’).

    The information provided in this document is confidential and is for the sole use of the recipient. It may not be disclosed, copied or distributed in any form without

    the express permission of Janus Henderson and to the extent that it is passed on, care must be taken to ensure that this is in a form which accurately reflects the

    information presented here.

    Whilst Janus Henderson believe that the information is correct at the date of this document, no warranty or representation is given to this effect and no

    responsibility can be accepted by Janus Henderson to any end users for any action taken on the basis of this information. The information herein shall not in any

    way constitute advice or an invitation to invest. It is solely for information purposes and subject to change without notice.

    Past performance is not indicative of future performance.

    No representation or warranty is given as to the likelihood of achievement of any forward-looking statement in this document, or any events or results expressed

    or implied in any forward-looking statement. Such statements are not guarantees of future performance and are by their nature subject to significant uncertainties,

    risks and contingencies. Actual results or events may differ materially from any expressed or implied in any forward-looking statement and deviations are both

    normal and to be expected.

    All opinions and estimates in this information are subject to change without notice. Janus Henderson is not under any obligation to update this information to the

    extent that it is or becomes out of date or incorrect.

    Janus Henderson Investors Australia is the name under which Janus Henderson Investors Australia Limited (ABN 47 124 279 518), Janus Henderson Investors

    (Australia) Funds Management Limited (AFSL 444268, ABN 43 164 177 244) and Janus Henderson Investors (Australia) Institutional Funds Management Limited

    (AFSL 444266, ABN 16 165 119 531) operate. These companies are wholly owned subsidiaries of Janus Henderson Group plc (incorporated in Jersey, registered

    no.101484, registered office 47 Esplanade, St Helier, Jersey JE1 0BD).

    © Janus Henderson Investors. Janus Henderson, Janus, INTECH and Perkins are trademarks of Janus Henderson Investors. The name Janus Henderson

    Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC.

  • 2

    Janus Henderson Investors (Australia) Funds Management Limited

    Level 36, Grosvenor Place, 225 George Street, Sydney NSW 2000

    T +61 (0)2 8298 4000 F +61 (0)2 8298 4001

    Researcher disclaimer

    The Lonsec Ratings (assigned as follows: Janus Henderson Tactical Income Fund - October 2017; Janus Henderson Global Fixed Interest Total Return Fund -

    October 2017; Janus Henderson Global Equity Income Fund – February 2018) presented in this document are published by Lonsec Research Pty Ltd ABN 11 151

    658 561 AFSL 421 445. The Ratings are limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the

    investment merits of the financial products. Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a

    recommendation to purchase, sell or hold Janus Henderson Investors products, and you should seek independent financial advice before investing in these

    products. The Ratings are subject to change without notice and Lonsec assumes no obligation to update the relevant documents following publication. Lonsec

    receives a fee from the Fund Manager for researching the products using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings

    methodology, please refer to our website at: http://www.lonsecresearch.com.au/research-solutions/our-ratings.

    The Zenith Investment Partners (“Zenith”) Australian Financial Services License No. 226872 rating (assigned as follows Janus Henderson Tactical Income Fund

    June 2017; Janus Henderson Global Emerging Markets Equity Fund - October 2017; Janus Henderson Global Fixed Interest Total Return Fund - March 2017;

    Janus Henderson Global Equity Income Fund – November 2017) referred to in this document is limited to “General Advice” (as defined by the Corporations Act

    2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual. It is not a

    specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment

    decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of,

    and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Zenith

    usually charges the product issuer, fund manager or a related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings

    definitions and regulatory compliance are available on our Product Assessment’s and at http://www.zenithpartners.com.au/RegulatoryGuidelines.

  • 3

    Agenda

    Details Speaker

    Welcome Matt Gaden

    Head of Distribution

    Australian fixed interest

    Jay Sivapalan

    Portfolio Manager, Australian Fixed Interest

    Global fixed interest Andrew Mulliner

    Portfolio Manager, Global Fixed Interest

    Global equity income Andrew Jones

    Portfolio Manager, Global Equity Income

    Global emerging markets

    Glen Finegan

    Head of Global Emerging Market Equities

    Ian Tabberer

    Portfolio Manager, Global Emerging Market

    Equities

    Conclusion Matt Gaden

    Head of Distribution

  • 4

    Performance

    Janus Henderson Tactical Income Fund

    Period to:

    31 January 2018

    1 year

    (%)

    3 years

    (% p.a.)

    5 years

    (% p.a.)

    Since inception

    (% p.a.)

    Performance 3.17 2.99 3.68 5.60

    Benchmark 2.26 2.23 3.24 4.39

    Excess returns (net) 0.91 0.76 0.44 1.21

    Source: Janus Henderson Investors, as at 31 January 2018. Inception date: 31 June 2009.

    Benchmark: Bloomberg AusBond Bank Bill Index and Bloomberg AusBond Composite 0+ Yr Index (equally weighted)

    Note: Past performance is not indicative of future performance.

    • All major platforms

    Platform availability Researcher rating

  • 5

    Performance

    Janus Henderson Global Fixed Interest Total Return Fund

    Period to:

    31 January 2018

    1 year

    (%)

    2 years

    (% p.a.)

    3 years

    (% p.a.)

    Since inception

    (% p.a.)

    Performance 6.49 6.53 5.22 4.63

    Benchmark1 1.50 1.59 1.75 1.87

    Excess returns (net) 4.99 4.94 3.47 2.76

    Benchmark2 3.58 3.82 3.42 4.71

    Excess returns (net) 2.91 2.71 1.80 -0.08

    Source: Janus Henderson investors, as at 31 January 2018. Inception date: 1 July 2014.

    Benchmark: 1Reserve Bank of Australia Cash Rate. 2Barclays Multiverse Index hedged in Australian dollars.

    Note: Past performance is not indicative of future performance.

    • ANZ Grow Wrap

    • BT Wrap

    • IOOF

    • Linear

    • Netwealth

    • OneAnswer

    Platform availability Researcher rating

  • 6

    Performance

    Janus Henderson Global Equity Income Fund

    Source: Janus Henderson Investors, as at 31 January 2018. Inception date: 1 May 2015.

    Benchmark: MSCI World ex-Australia Index (net dividends reinvested) in AUD.

    Note: Past performance is not indicative of future performance.

    Period to:

    31 January 2018

    1 year

    (%)

    2 years

    (% p.a.)

    Since inception

    (% p.a.)

    Performance 18.03 9.06 6.94

    Benchmark 18.15 13.41 8.93

    Excess returns (net) -0.12 -4.35 -1.99

    • AMP North/My North

    • Hub 24

    Platform availability Researcher rating

  • 7

    Performance

    Janus Henderson Global Emerging Markets Equity Fund

    Source: Janus Henderson Investors, as at 31 January 2018. Inception date: 29 July 2016.

    Benchmark: MSCI Emerging Markets Index (net dividends reinvested) in AUD.

    Note: Past performance is not indicative of future performance.

    Period to:

    31 January 2018

    1 year

    (%)

    Since inception

    (% p.a.)

    Performance 21.79 13.34

    Benchmark 32.20 23.13

    Excess returns (net) -10.41 -9.79

    • BT Wrap

    • BT Panorama

    • Netwealth

    • Powerwrap

    Platform availability Researcher rating

  • Weathering all seasons:

    Australian fixed interest

    Jay Sivapalan

    Portfolio Manager, Australian Fixed Interest

  • 9

    Ten years on…

    Government yield (10yr) Government yield (10yr)

    0

    1

    2

    3

    4

    5

    6

    7

    2008 2010 2012 2014 2016 2018

    US

    Australia

    0

    100

    200

    300

    400

    500

    600

    700

    2008 2010 2012 2014 2016 2018

    Australia

    US

    %

    Basis

    poin

    ts (

    bps)

    Source: Janus Henderson Investors and Bloomberg, as at 15 February 2018.

  • 10

    Australian economy in a nutshell

    GDP growth Unemployment Wages growth

    Source: Australian Bureau of Statistics, as at 19 February 2018.

    Note: GDP growth: Janus Henderson Investors forecasts of y/y GDP growth with percentage point contributions from GDP components.

    Unemployment: Forecast numbers are estimated projections only based on RBA research.

    Wages growth: Wage Price Index y/y % growth.

    -1.50 -0.50 0.50 1.50 2.50 3.50

    Consumption

    Housing

    Business investment

    Public sector

    Net exports

    Stat discrepancy

    GDP: 3.0%

    Stocks

    3

    4

    5

    6

    7

    2006 2009 2012 2015 2018

    %

    RBA estimate of full employment rate

    RBA forecast

    1

    2

    3

    4

    5

    2006 2008 2011 2014 2017

  • 11

    What’s priced in

    United States

    Source: Janus Henderson Investors and Bloomberg, as at 16 February 2018.

    Note: Cash rate expectations represent cash futures contracts and OIS forward 1m cash rate.

    2016: Cash rate expectation as at 2 August 2016. 2018: Cash rate expectation as at 16 February 2018.

    Forecast numbers are estimated projections only based on internally generated research.

    Cash rate expectations

    Australia

    Europe

    -1

    2

    5

    2007 2011 2015 2019 2023

    %

    %

    %

    -1

    2

    5

    2007 2011 2015 2019 2023

    0

    1

    2

    3

    4

    5

    6

    7

    8

    2007 2011 2015 2019 2023

    2.5%

    0.5%

    2.5%

    Actual 2016 2018

    Legend:

  • 12

    Rising tide lifts all boats

    Source: Janus Henderson Investors and Bloomberg, as at 15 February 2018.

    Note: For illustrative purposes only.

    References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security research.

    Australian government yield curve

    1.0

    1.5

    2.0

    2.5

    3.0

    3.5

    4.0

    4.5

    5.0

    1 2 3 4 5 6 7 8 9 10

    %

    2018

    2017

    2016

    Macquarie Group

    Transurban

    Dexus Asciano

    Term (years)

  • 13

    Relative value

    Infrastructure Utilities

    Source: Janus Henderson Investors and CBA Credit, as at 31 January 2018.

    Asset swap spreads

    Ba

    sis

    po

    ints

    (b

    ps)

    0

    50

    100

    150

    200

    250

    300

    350

    2000 2006 2012 2018

    0

    50

    100

    150

    200

    250

    300

    350

    2000 2006 2012 2018

    Ba

    sis

    po

    ints

    (b

    ps)

  • 14

    Corporate debt

    Multinet Gas

    Key features

    • Gas distribution in Melbourne

    • High barriers to entry

    • Strong operating cash flows

    • Improving efficiency

    • Stable credit

    Summary information

    Maturity: December 2024

    Rating: BBB+

    Current yield: 3.83%

    Risk free rate: 2.65%

    Spread 1.18%

    Source: Janus Henderson Investors and Bloomberg, as at 14 February 2018.

    Note: Image sourced: https://oilprice.com/Latest-Energy-News/World-News/Latin-American-Energy-Outlook-Natural-Gas-Leads-The-Way.html.

    References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security research.

  • 15

    What’s keeping markets awake?

    Source: Images sourced from Google (royalty free icons).

  • 16

    Managing the downside

    Monthly returns Interest rate risk

    Janus Henderson Tactical Income Fund

    Du

    ratio

    n (

    ye

    ars

    )

    Source: Janus Henderson Investors and Bloomberg, as at 30 January 2018.

    Note: Australian bond market represented by Bloomberg AusBond Composite 0+ Yr Index.

    Fund = Janus Henderson Tactical Income Fund.

    Benchmark = Bloomberg AusBond Bank Bill Index and Bloomberg AusBond Composite 0+ Yr Index equally weighted.

    Net performance. Past performance is no guarantee of future results.

    -2%

    -1%

    1%

    2%

    3%

    4%

    2009 2011 2013 2015 2017

    0.0

    0.5

    1.0

    1.5

    2.0

    2.5

    3.0

    2010 2012 2014 2016 2018

    Benchmark

    Fund

    Australian bond market Fund

  • 17

    Weathering all seasons

    • Central banks removing easy monetary policy…already priced in.

    • Ultimately, higher yields a good thing for investors and restores

    defensive attributes.

    • Growth and inflation surprises could cause turbulence.

    Defensive strategies with ample flexibility to

    manage interest rate risk are

    best placed to weather all seasons.

  • Opportunities abroad:

    Global Fixed Interest

    Andrew Mulliner

    Portfolio Manager, Global Fixed Interest

  • 19

    Why Australians should travel abroad

    0.0

    1.0

    2.0

    3.0

    4.0

    5.0

    6.0

    7.0

    Au

    str

    alia

    10y U

    S

    Ja

    pa

    n

    Ge

    rma

    ny

    (AA

    A)

    Fra

    nce

    (AA

    )

    Spain

    (BB

    B+

    )

    Ita

    ly (

    BB

    B)

    Au

    sB

    on

    dC

    red

    it0

    +

    Eu

    rop

    ea

    nIG

    co

    rps

    US

    D IG

    co

    rps

    £ IG

    co

    rps

    EM

    IG

    co

    rps

    Eu

    rop

    ea

    nH

    Y c

    orp

    s

    US

    HY

    co

    rps

    EM

    HY

    co

    rps

    Local

    FX hedged to AUD

    Higher yields available outside Australia (after hedging)!

    Yie

    ld (

    %)

    Source: Janus Henderson Investors and Bloomberg, as at 24 January 2018.

    Note: Assume 1-year holding period and 3-month FFX hedge.

  • 20

    Opportunities but flexibility required

    Significant dispersion of returns within fixed income

    Cash Emerging market debt Asset Backed Securities

    US Treasuries Global investment grade corporates Secured Loans

    US Treasuries inflation-linked Global High Yield Australia Broad Market

    Difference between best and worst performer

    11.2% 43.6% 64.4% 15.0% 15.6% 18.4% 18.4% 7.5% 10.4% 15.5% 11.6%

    2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

    12.1% 14.0% 60.7% 15.3% 14.1% 18.9% 9.0% 7.8% 3.6% 16.2% 12.7%

    11.6% 11.1% 47.5% 14.0% 9.8% 17.1% 7.1% 7.7% 0.8% 10.4% 8.0%

    9.1% 3.8% 25.9% 10.8% 6.8% 10.8% 4.4% 6.0% 0.3% 8.0% 5.8%

    5.6% -1.1% 16.3% 8.8% 5.0% 10.8% 0.3% 4.5% 0.3% 6.1% 5.3%

    3.4% -4.8% 12.4% 7.4% 3.2% 10.4% 0.1% 3.3% -0.1% 4.8% 3.3%

    2.3% -8.6% 10.0% 6.3% 2.8% 7.3% -0.7% 2.5% -0.2% 1.6% 3.1%

    1.8% -22.2% 1.0% 5.9% 0.3% 3.9% -3.4% 2.1% -1.7% 1.6% 2.4%

    1.7% -27.0% -1.8% 1.4% -0.8% 2.2% -7.1% 0.9% -2.0% 1.1% 1.4%

    0.9% -29.6% -3.7% 0.3% -1.5% 0.5% -9.4% 0.3% -6.6% 0.7% 1.1%

    Source: Merrill Lynch, Credit Suisse, Barclays, as at 31 December 2017.

    Note: Merrill Lynch indices: ML US Treasury master (G0Q0); ML US Treasuries inflation-linked (G0QI); ML Global broad market corporates (G0BC) hedged to USD; ML Australia

    broad market (AUD0) hedged to USD; ML Global High Yield (HW00) hedged to USD); ML US 3-month constant maturity overnight Libor; Credit Suisse Western European

    Leveraged Loans Index; Barclays Pan European 50/50 AAA/AA ABS FRN Composite Index (EUR); Emerging market debt is 50/50 blend of JPM GBI EM local currency.

    index in USD and JPM EMBI Global Diversified Index.

  • 21

    Everything is awesome!

    Global PMIs* suggest the global economy continues to rebound

    PMI above 50

    PMI below 50

    PMI above 55

    PMI below 45

    Source: Bloomberg, as of 31 December 2017.

    Note: A reading above 50 (green areas) implies expansion and a reading below 50 implies contraction (yellow and orange areas).

    *The Purchasing Managers' Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders,

    inventory levels, production, supplier deliveries and the employment environment.

  • 22

    Where’s my Philips curve?

    US Germany

    0

    2

    4

    6

    8

    10

    12

    1988 1996 2004 2012

    Unemployment Rate (%)

    Avg. Hourly Earnings (yoy %)

    -4

    -2

    0

    2

    4

    6

    8

    10

    12

    14

    1992 1998 2004 2010 2016

    Unemployment Rate (%)

    Employee Compensation per Hour (yoy %)

    Source: Bloomberg, as of 31 December 2017.

  • 23

    0

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    14,000

    16,000

    18,000

    2007 2009 2011 2013 2015 2017 2019

    US Fed

    Bank of England

    European Central Bank

    Bank of Japan

    Peak central bank stimulus in the past

    A slow rollover in G4 Central Bank Assets (US$bn)

    • FED reducing

    balance sheet

    • ECB to end asset

    purchases in 2018

    • BOE halts QE

    program Mar-17

    • BOJ introduces

    yield curve control

    Bill

    ions (

    $)

    Source: Datastream, as at 31 December 2017.

    Note: Forecasts for periods beyond this date shown in diamond shaded area.

  • 24

    Clouds on the horizon?

    G7 + E7 Industrial Output and Real Narrow Money (% 6M)

    Source: Datastream, as at 31 December 2017.

    -15.0

    -10.0

    -5.0

    0.0

    5.0

    10.0

    2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

    Industrial Output

    Real Narrow Money

    Peak in narrow money: June 2017

    Industrial output peaks March 2018?

  • 25

    What drives positioning?

    Building blocks of asset allocation

    Expected return

    Volatility

    Asset correlation

  • 26

    Strength in depth: coverage across fixed income

    Source: Janus Henderson Investors, as at 28 September 2017.

    110 investment professionals in US, Europe and Australia

    Credit Research

    (21)

    Portfolio

    Managers (14)

    Central Dealing Team (12)

    Analysts (4)

    Portfolio

    Managers (1)

    Client Portfolio Managers (8)

    Portfolio

    Managers /

    Analysts (4)

    Investment Strategy Group

    Emerging Market

    Credit

    Corporate credit – Investment grade

    and high yield

    Rates &

    Government

    Bonds

    Analysts (4)

    Portfolio

    Managers (2)

    Portfolio Analysts

    (2)

    Secured Loans

    Analysts (4)

    Portfolio

    Managers (4)

    Securitised

  • 27

    0% 10% 20% 30% 40% 50% 60% 70%

    Govt - Fixed Interest

    Govt - Index Linked

    Govt - Emerging Markets

    Corporate - Investment Grade

    Corporate - Emerging Markets

    Corporate - High Yield

    Secured Loans and FRNs

    Asset or Mortgage Backed

    Cash and Derivatives

    Feb-18

    Government

    Corporate

    Secured

    Duration range: 0 – 6 years

    Source: Janus Henderson Investors, as at 15 February 2018.

    Note: * Typical range is 0-20%, however this may be increased to 50% in exceptional circumstances.

    Where do we see the opportunity?

    % of NAV

    *

  • 28

    Opportunistic government bond exposure

    0.0

    1.0

    2.0

    3.0

    4.0

    5.0

    6.0

    2012 2013 2014 2015 2016 2017

    Du

    ratio

    n c

    on

    trib

    ution

    (ye

    ars

    )

    Source: Janus Henderson Investors, as at 31 December 2017.

    Government bond

    holdings

    • Australia 30y

    • Canada 5y

    • 30y Euro interest

    rate swaps

    • Spain 30yr

    • Portugal 7yr, 30yr

    • US 5yr

    • Japan Inflation-

    linked

    Targeted approach to duration

    Global Fixed Interest Total Return Strategy (duration)

  • 29

    Secured credit offers uncorrelated opportunities

    0.5

    -0.2

    0.5 0.8

    1.2 1.4

    -2.4 -2.6

    -2.3

    -1.8

    -2.2

    -2.7

    -1.5

    0.6

    1.7

    -3.5

    -2.5

    -1.5

    -0.5

    0.5

    1.5

    2.5

    ABS Loans Corporate bonds Global Govt High yield

    Source: Janus Henderson Investors and Bloomberg, as at 31 December 2017.

    Note: Based on total return of the following – ABS and Loans show returns on fund sleeve holdings. Government Bonds- BoA Merrill Lynch G7 Government Index (hedged to

    USD); Corporate Bonds- BoA Merrill Lynch Global Corporate Bond Index (hedged to USD); High yield Corporate Bonds - BoA Merrill Lynch Global High Yield Index

    (hedged to USD).

    % Q2 2013 “Taper Tantrum” Q2 2015 Q4 2016 “Trump Reflation”

    Floating rate resilience during rates market volatility

  • 30

    0 50 100 150

    B

    BB

    BBB

    A

    AsiaEMEALatAm

    EM Credit pays you for better fundamentals

    Spread per turn of leverage by rating

    0 20 40 60 80

    B

    BB

    BBB

    A

    EM

    US

    Source: BofA Merrill Lynch Global Research, as at December 2017.

    Credit rating Credit rating

    Investors get a better compensation for holding EM balance sheet risk

  • 31

    A truly global portfolio

    5yr Canadian Gov’ts

    US steepener

    Argentine provinces Nigeria telecoms

    Spain & Portugal

    30yr Gov’ts

    European secured loans

    Long NOK vs EUR

    Euro Financials

    Long CZK vs CHF

    Egypt Gov’ts 30yr Australia Gov’ts

    Long SOEs &

    property developers

    Selective US

    high yield

    Long UK non

    conforming ABS

  • The more things change,

    the more they stay the same:

    Global Equity Income

    Andrew Jones

    Portfolio Manager, Global Equity Income

  • 33

    The importance of dividends

    John D. Rockefeller

    “Do you know the only thing that gives me pleasure? It’s to see my

    dividends coming in.”

    Jane Austen

    “A large income is the best recipe for happiness I ever heard of.”

    Benjamin Graham

    “The prime purpose of a business corporation is to pay dividends

    to its owners.”

    Image source: John D. Rockefeller: https://en.wikipedia.org/wiki/John_D._Rockefeller.

    Benjamin Graham: https://en.wikipedia.org/wiki/Benjamin_Graham.

    Jane Austen: https://writersinspire.org/writers/jane-austen.

  • 34

    Synchronised GDP growth

    Revision of G10 growth forecasts over time

    Consensus G10 real GDP growth forecasts (YoY %)

    Source: Bloomberg consensus forecasts, as at 31 December 2017.

    0.8

    1.0

    1.2

    1.4

    1.6

    1.8

    2.0

    2.2

    2.4

    2.6

    0.8

    1.0

    1.2

    1.4

    1.6

    1.8

    2.0

    2.2

    2.4

    2.6

    2011 2012 2013 2014 2015 2016 2017 2018

    2012

    2013

    2014

    2015

    2016

    2017

    2018

  • 35

    Valuations and earnings growth

    Earnings growth

    From downgrades to upgrades

    Source: Datastream, Bloomberg, IBES, as at January 2018.

    *Japan EPS numbers refer to the fiscal year (ending March Y+1).

    2017 EPS growth figures are forecasts.

    Region 12m forward

    valuations

    EPS Growth

    (%)

    PE

    (x)

    DY

    (%) 16 17F 18F

    Japan* 15 1.9 12 14 30

    Eurozone 14 3.5 4 10 9

    US 19 2.2 2 11 13

    UK 14 4.2 -2 22 7

    EM 12 2.4 8 23 13

    Global 16 2.6 3 15 10

    MSCI World EPS growth forecasts (% YoY)

    Source: Citi, as at February 2018.

    -7%

    -2%

    3%

    8%

    13%

    18%

    2014 2015 2016 2017 2018

    2015 2016

    2017

    2018

    2019

  • 36

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    100 Current payout (%)

    Median payout (%) since 1970

    Payout ratios by region

    Source: Citi Research – Global Equity Strategy, as at 31 December 2017.

    *Median shown since 1996.

    CEEMEA: Central Eastern Europe Middle East & Africa; DM: Developed Markets.

    Yields may vary and are not guaranteed. Forecasted figures are projected estimates based on Factset consensus data.

    Pa

    yo

    ut ra

    tio

    (%

    ) The global equity income environment

    Payout ratios are broadly in line with history

  • 37

    Janus Henderson Global Dividend Index

    Long-term study of global dividend trends

    • Analyses dividends paid by the world’s

    top 1,200 firms by market capitalisation.

    • Base year of 2009 and report based in

    US$.

    • Global dividends rose 7.7%* in 2017.

    Global dividends (US$)

    Source: Janus Henderson Investors, as at 19 February 2018.

    Note: * Headline growth. Underlying growth was +6.8%.

    Past performance is no guarantee of future results.

    Bill

    ions (

    $)

    730 779

    948

    1,025 1,059

    1,173 1,153 1,154

    1,252

    1,348

    -

    200

    400

    600

    800

    1,000

    1,200

    1,400

    1,600

    2009

    2010

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    2018e

  • 38

    The importance of dividends

    Higher yielding stocks, with growing dividends, have outperformed

    Source: Thomson Reuters and Datastream, as at 25 January 2018.

    Note: Rebased to 100, as at 30 June 1995. Past performance is no guarantee of future results.

    0

    100

    200

    300

    400

    500

    600

    700

    800

    1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

    MSCI World Total Return Index

    MSCI World High Dividend Yield Total Return Index

    Performance of dividend yielders to broad market

    +664%

    +454%

    Re

    ba

    se

    d r

    etu

    rn

  • 39

    0

    2

    4

    6

    8

    10

    12

    14

    16

    18

    <1%

    1%

    -2%

    2%

    -3%

    3%

    -4%

    4%

    -5%

    5%

    -6%

    6%

    -7%

    7%

    -8%

    8%

    -9%

    9%

    -10

    %

    10

    %-1

    5%

    15

    %-2

    0%

    Forecast yield

    Realised yield

    Higher yield can be illusory

    Avoid value traps

    Source: Société Générale Cross Asset Research, as at 31 December 2017.

    Note: Yield and forecasts relate to the period 1995 to 31 December 2017.

    *Janus Henderson Global Equity Income team generally focus on, but is not limited to, stocks yielding 2% – 6%.

    Estimated versus realised yield by dividend yield level

    Realised yield lower

    than market forecasts

    Team’s focus yield range*

  • 40

    Distribution of global equity income

    MSCI World by Dividend Yield

    392

    467

    323

    207

    108

    75 62

    0

    50

    100

    150

    200

    250

    300

    350

    400

    450

    500

    6%

    Source: Factset, as at 26 January 2018.

    Nu

    mb

    er

    of co

    mp

    an

    ies

    Dividend yield

  • 41

    Not everything has done well

    Global value versus growth

    75

    80

    85

    90

    95

    100

    105

    80

    85

    90

    95

    100

    105

    110

    2009 2010 2011 2012 2013 2014 2015 2016 2017

    Value

    outperforming

    Value

    underperforming

    Source: Bloomberg, as at December 2017, MSCI World Value and Growth Indices.

    Note: Rebased to 100, at 31 December 2009.

  • 42

    European financials have lagged

    European banks and German bond yields

    Source: Bloomberg, as of 31 December 2017.

    Note: Stoxx 600 ex-UK Bank Index rebased to 100, 31 December 2017.

    -0.4

    -0.2

    0.0

    0.2

    0.4

    0.6

    0.8

    1.0

    60

    70

    80

    90

    100

    110

    120

    Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17

    Stoxx Europe Bank Sector (Index, LHS)

    German 10yr government bond yield (%, RHS)

  • 43

    Energy: dividends attractive

    “Our intent remains to offset any ongoing scrip dilution.”

    “Achieving goals to cashflow neutrality at $40.”

    “Future dividends will be settled entirely in cash.”

    “Free cashflow increase at $50.”

    “Maintaining discipline to continue to reduce breakeven.”

    Source: Respective company websites.

    Note: References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security.

  • 44

    Energy: dividends attractive

    -15,000

    5,000

    25,000

    45,000

    65,000

    85,000

    105,000

    125,000

    Restructuring and return improvement

    Source: Redburn, as at October 2017.

    Note: *Free cash flow of 7 major oil companies.

    Source: ISHN.com.

    Org

    an

    ic fre

    e c

    ash

    ($

    m)*

  • 45

    The more things change, the more they stay the same

    • Macro backdrop supportive

    • Higher yield doesn’t mean better yield

    • Focus on cashflow and dividend growth

  • Passive aggressive:

    Global Emerging Markets

    Glen Finegan

    Head of Global Emerging Market Equities

    Ian Tabberer

    Portfolio Manager,

    Global Emerging Market Equities

  • 47

    Glen Finegan

    Head of Global Emerging Market Equities

    17 years’ experience

    Nicholas Cowley

    Portfolio Manager

    20 years’ experience

    Michael Cahoon

    Portfolio Manager

    7 years’ experience

    Stephen Deane

    Portfolio Manager

    10 years’ experience

    Ian Tabberer

    Portfolio Manager

    16 years’ experience

    Janus Henderson Global Emerging Markets

    Boutique culture – Edinburgh based

    Source: Janus Henderson Investors, as at 31 December 2017.

    • Average 14 years’ industry

    experience.

    • Leverage Global Equities

    team.

    • Long-term performance track

    records based on a consistent

    approach.

  • 48

    Emerging Markets demographics look attractive…

    Most population growth will come from less developed regions

    0

    1

    2

    3

    4

    5

    6

    7

    8

    9

    10

    1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

    Least developed regions

    Less developed regions

    More developed regions

    Source: United Nations, Department of Economic and Social Affairs, Population Division (2017).

    Note: World Population Prospects: The 2017 Revision, DVD Edition. Total Population, both sexes, using medium fertility. Definition for ‘More developed regions’ and ‘Less

    developed regions’ can be found at https://esa.un.org/unpd/wpp/Download/Standard/Population/.

    Population (billions)

  • 49

    …but not all EM countries offer the same opportunity

    MSCI Emerging Markets regional breakdown

    Source: Janus Henderson Investors and Datastream, as at 31 December 2017.

    United Nations, Department of Economic and Social Affairs, Population Division (2017). World Population Prospects: The 2017 Revision, DVD Edition. Total

    Population, both sexes, using medium fertility. Definition for ‘Less developed regions’ can be found at https://esa.un.org/unpd/wpp/Download/Standard/Population/

    Regions as defined by Janus Henderson Investors. LatAm (Latin America) includes Caribbean. EM = Emerging Markets.

    0.0%

    0.5%

    1.0%

    1.5%

    2.0%

    2.5%

    3.0%

    0%

    10%

    20%

    30%

    40%

    50%

    SE Asia(inc. South

    Korea)

    GreaterChina

    LatAm Africa Middle East India EasternEurope (inc.

    Russia)

    ■ MSCI EM Index weights (%) (LHS) ■ % of regional population to ‘Less developed regions’ population (LHS)

    ■ 10 year CAGR population % (2017-2027) (RHS)

  • 50

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    Indices follow but don’t lead

    MSCI Emerging Markets country breakdown in

    ■1992 ■2017

    and 2017 1992

    Source: MSCI, as at 31 December 1992 and 31 December 2017.

    Note: Others includes: Colombia, Czech Republic, Egypt, Hungary, Pakistan, Peru, Poland, Qatar and UAE.

  • 51

    Who controls the index?

    Exposure to State Owned Enterprises

    73%

    27%

    Private SOE

    Source: Janus Henderson Investors, MSCI, as at 31 December 2017.

    Note: Private, SOE (State Owned Enterprises) as defined by Janus Henderson Investors.

    MSCI EM Index

  • 52

    We back owners and entrepreneurs for the long-term

    Greatview Aseptic

    “Mobile and internet technology not only has

    fundamentally changed our life…but also presents

    historic opportunities to the PRC to surpass others…The

    PRC dairy industry has tightly and closely connected to

    the world’s stage…Traditional manufacturing sector must

    embrace the new generation with innovation.

    We, Greatview, have been pursuing innovation for new

    business opportunities.”

    First item level traceable milk

    cartons using QR codes

    Quote source: http://www.greatviewpack.com/info/list2288b7a1dc9042aeb2efd004b895df3f_2.html.

    Image source: https://www.foodbev.com/news/best-new-brand-or-business-at-world-dairy-innovation-awards/.

    Note: References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security.

    Jeff Bi, Co-Founder, Chief Executive Officer and Executive Director

  • 53

    …that have strong track records and alignment

    Source: 1 http://forbesindia.com/printcontent/20732. 2 https://www.forbes.com/profile/charlene-de-carvalho-heineken/gallery/3.

    3 http://www.adityabirla.com/media/press-reports/its-now-or-never . 4 http://www.quinenco.cl/esp/directores.php.

    Note: References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security.

    Deepak Parekh1

    Chairman of HDFC India’s leading housing

    finance company

    Seek and you shall find!

    Kumar Mangalam Birla3

    Chairman of Grasim

    Industries, UltraTech

    Cement, Idea Cellular and

    Aditya Birla Capital

    Charlene de Carvalho-

    Heineken2

    Executive Director of

    Heineken Holdings

    Jean-Paul Luksic4

    Chairman of Antofagasta

    and Vice Chairman of

    Quinenco Chilean business family with

    interests across the economy

  • 54

    Positioning: regions and countries

    Janus Henderson Global Emerging Markets Equity Fund

    0

    5

    10

    15

    20

    25

    30

    35 FundBenchmark

    Regional exposure Country exposure %

    Source: Janus Henderson Investors, as at 31 December 2017.

    Benchmark: MSCI Emerging Markets Index (net dividends reinvested) in AUD.

    Note: MSCI country classifications standard used to determine country classifications.

    The above is for illustrative purposes only and should not be misconstrued as advice.

    Americas, 24%

    Asia Pacific, 42%

    EMEA,

    26%

    Cash, 7%

  • 55

    Not all emerging markets are “Emerging”

    • The Janus Henderson Global Emerging Markets Equities

    strategy is bottom-up and benchmark unaware.

    − The Benchmark gives an illusion of safety.

    − 50% of the Benchmark is Greater China and South

    Korea.

    Large parts of the world are still developing markets.

    The long-term Global Emerging Markets opportunity

    remains UNCHANGED.

    Benchmark: MSCI Emerging Markets Index (net dividends reinvested) in AUD.

  • THANK YOU

  • 57

    Contact us

    • Visit www.janushenderson.com/australia

    Matt Gaden

    Head of Distribution, Australia

    Jordan Tang

    Head of Retail Distribution

    Gary Horton

    Institutional Sales Director

    Amy Barron

    Retail Sales Director (NSW)

    Harry Wall

    Head of Client Account Management

    Tom Kelly

    Retail Sales Director (QLD)

    Charles Horan

    Senior Client Account Manager

    David Livera

    Retail Sales Director (VIC/WA/TAS)

    Fawzul Ahmed

    Client Account Manager

    John Negri

    Retail Sales Director (VIC/SA)

    Mark Fensom

    Client Account Manager

    Daniel Simpson

    Business Development Associate

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