frontier markets - schroders · potentially be classified as an emerging market. a frontier market...
TRANSCRIPT
For professional investors only. This material is not suitable for retail clients
Frontier Markets
Zurich, June 5th 2013
For Professional Investors and Advisors only. Not Suitable for Retail Clients
Agenda
The Investment Case
Economic background
Equity Markets
Country Analysis/Key Stocks
Schroders Overview & Philosophy
Investment Process
Team
Appendices:
Performance
Competitor Analysis
Strategy
Biographies
2 Frontier Markets | May 2013
Economic background
Definitions vary and are somewhat judgmental
World Bank
What is a Frontier Market?
4 Frontier Markets | May 2013
Source: Schroders, MSCI, S&P, World Bank, as of June 2012
*World Bank, GNI per capita 2011, Atlas Method
** International Finance Corporation
IFC**
MSCI
Bracket*
Low income <$1,025
Low middle income $1,026 - $4,035
Upper middle income $4,036 - $12,475
High Income >$12,476
1.Not “High” income as defined by World Bank
2.Apparent lack of financial depth with low market cap to GDP ratio
3.Broad based discriminatory controls regarding foreign investment exist
4.Displays a lack of transparency, depth, regulation & operational efficiency
For inclusion in index a security is required to meet the following:
Free float > $43 mn, 2.5% ATVR, Foreign Inc. Factor > 0.15
Demonstrate a relative openness to and accessibility for foreign investors
Partial ease of capital inflows / outflows
Modest efficiency of the operational framework
Anything classified as Low income to Upper Middle income can
potentially be classified as an Emerging Market. A Frontier
market is therefore implicitly a low/low middle income country.
Any country satisfying at least one of these criteria can
potentially be classified as an Emerging Market
A Frontier Market is an Emerging Market which is relatively
small and illiquid, and has generally less information available.
Frontier Markets match all of these criteria.
Currently dominated by Middle East and Financials
Europe Middle East Regions
MSCI Frontier Markets Index – by country & sector
5 Frontier Markets | May 2013
Source: FactSet, MSCI. Data to March 31st, 2013
Countries and sectors are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Africa Asia
Sectors
Latin
Country Weight (%)
Bulgaria 0.1
Croatia 2.0
Estonia 0.5
Kazakhstan 4.0
Lithuania 0.1
Romania 1.2
Serbia 0.3
Slovenia 1.6
Ukraine 0.2
Total 10.1
Weight (%)
Financials 50.9
Telecommunication Services 14.6
Industrials 10.3
Consumer Staples 9.4
Energy 8.1
Materials 3.7
Health Care 1.7
Utilities 1.2
Consumer Discretionary 0.1
IT 0.0
Total 100.0
Country Weight (%)
Bahrain 0.5
Jordan 0.8
Kuwait 23.9
Lebanon 2.2
Oman 3.2
Qatar 15.1
Tunisia 0.7
UAE 10.8
Total 57.2
Bangladesh 1.9
Pakistan 4.0
Sri Lanka 1.7
Vietnam 2.2
Total 9.9
Country Weight (%)
Kenya 3.8
Mauritius 0.9
Nigeria 15.0
Total 19.7
Argentina 3.1
Total 3.1
Weight (%)
Europe 10.1
Africa 19.7
Middle East 57.2
Asia 9.9
Latin 3.1
Total 100.0
Massive deposits of natural resources are not currently reflected in equity markets
MSCI Frontier Markets Index – by sector
6 Frontier Markets | May 2013
Source: FactSet, MSCI. Data to March 31st, 2013
Countries and sectors are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Frontier Markets Emerging Markets Developed Markets
Sectors Weight (%) Weight (%) Weight (%)
Consumer Discretionary 0.1 7.8 11.3
Consumer Staples 9.4 9.1 11.0
Energy 8.1 12.0 10.0
Financials 50.9 27.6 20.4
Health Care 1.7 1.3 11.1
Industrials 10.3 6.4 11.0
IT 0.0 14.1 11.7
Materials 3.7 10.7 6.3
Telecoms 14.6 7.4 3.8
Utilities 1.2 3.6 3.4
Total 100.0 100.0 100.0
Frontier countries at early stage of development …… therefore should grow faster
Emerging markets stages of development
7 Frontier Markets | May 2013
Source: Schroders
Emerging market countries selected for this comparison are not representative of all emerging market countries. The countries shown are selected for illustrative purposes and
should not be viewed as an investment recommendation. The views and opinions contained in this presentation may change and there is no guarantee that any forecasts or
opinions will be realized.
Matu
rity
Time
Frontier Markets India China
Brazil
Malaysia
Mexico
Czech/Hungary/Poland
S. Korea
Israel
Taiwan Hong Kong/Singapore G7
Frontier markets
deregulation
Emerging markets
Premium growth (5%-7%)
Established growth
(3%-5%)
Mature economies
(2%-3%)
Russia
Turkey
Frontier markets population 848mn (12.1% of world), GDP 3,251bn (4.4% of world)
Europe
Frontier markets basic information
8 Frontier Markets | May 2013
Source: IMF, World Bank, estimates as of October 2012 *GDP at PPP **UN World Population Prospects database, 2010 estimates
Countries mentioned are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. Information and opinions obtained from third parties,
including forecasts, have been obtained from sources we consider to be reliable. We do not accept responsibility for errors of fact obtained from third parties, and there is no
guarantee that any forecasts or opinions will be realized.
Middle East
Nominal GDP 2013 (billions US$) GDP* per capita 2013 (US$) Population 2013 (millions) % Population <30yrs**
Bulgaria 51 14,725 7.2 32.6
Croatia 58 18,515 4.4 34.1
Estonia 22 22,262 1.3 36.7
Kazakhstan 220 14,896 16.7 51.1
Lithuania 43 21,091 3.2 36.8
Romania 172 13,357 21.3 36.0
Serbia 39 10,887 7.6 38.9
Slovenia 45 28,914 2.0 32.4
Ukraine 195 8,010 45.1 36.1
Europe Total 845 7,655 108.9 37.2
Bahrain 28 28,793 1.2 54.0
Jordan 34 6,197 6.5 64.0
Kuwait 175 44,041 3.9 48.9
Lebanon 44 16,286 4.1 52.1
Oman 83 29,112 3.3 62.0
Qatar 191 105,094 1.9 50.1
Tunisia 46 10,048 10.9 51.8
UAE 375 69,796 5.5 44.0
Middle East Total 975 27,554 37.3 53.4
Frontier markets population 848mn (12.1% of world), GDP 3,251bn (4.4% of world)
Asia
Frontier markets basic information
9 Frontier Markets | May 2013
Source: IMF, World Bank, estimates as of October 2012 *GDP at PPP **UN World Population Prospects database, 2010 estimates
Countries mentioned are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. Information and opinions obtained from third parties,
including forecasts, have been obtained from sources we consider to be reliable. We do not accept responsibility for errors of fact obtained from third parties, and there is no
guarantee that any forecasts or opinions will be realized.
Africa
Latin America
Regional
Nominal GDP 2012 (billions US$) GDP* per capita 2012 (US$) Population 2012 (millions) % Population <30yrs** Bangladesh 127 2,166 151.6 60.5
Pakistan 237 2,949 182.6 65.8
Sri Lanka 65 6,554 20.8 49.2
Vietnam 152 3,759 91.5 52.3 Asia Total 580 1,203 446.5 57.0
Kenya 50 1,879 43.3 72.3
Mauritius 12 16,320 1.3 45.8
Nigeria 293 2,879 169.3 70.5 Africa Total 355 1,570 213.9 62.9
Argentina 495 18,800 41.5 49.3
Latin America Total 495 18,800 41.5 49.3
Frontiers 3,251 5,939 848 59.2
GEMS 24,035 9,210 3,970 51.3
USA 16,198 51,056 317 41.3
Japan 5,997 37,193 127 29.1
World 74,149 12,372 7,019 52.6
Services and industry not agriculture dominate
GDP Sector Profile (2013 estimates) Regional GDP by Sector (2013 estimates)
GDP sector analysis
10 Frontier Markets | May 2013
Source: Haver, EIU. Data as of February 2013
Sectors/Countries mentioned are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Information and opinions obtained from third parties, including forecasts, have been obtained from sources we consider to be reliable.
We do not accept responsibility for errors of fact obtained from third parties, and there is no guarantee that any forecasts or opinions will be realized.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Arg
entina
Bahra
inB
angla
desh
Bulg
aria
Cro
atia
Esto
nia
Jord
an
Kazakhsta
nK
enya
Kuw
ait
Leb
anon
Lithua
nia
Mau
ritius
Nig
eria
Om
an
Pakis
tan
Qata
rR
om
ania
Saudi A
rabia
Serb
iaS
lovenia
Sri L
anka
Tu
nis
iaU
kra
ine
UA
EV
ietn
am
7%
36% 57%
7%
43% 50%
1%
24%
75%
Frontier
Markets
GEMS
G7
Agriculture Industry Services
Frontier Markets currently small but huge growth potential
Frontier Market economies as a % of world economy
11 Frontier Markets | May 2013
Source: IMF, Data Mapper estimates for 2013 as of October 2012
*MSCI Frontier Markets consist of: Argentina, Bahrain, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, Kazakhstan, Kenya, Kuwait, Lebanon, Lithuania, Mauritius, Nigeria, Oman,
Pakistan, Qatar, Romania, Serbia, Slovenia, Sri Lanka, Tunisia, UAE, Ukraine, Vietnam
848 (12.1%)
24,035 (32.4%)
36,561 (42.1%)
3,970 (56.6%)
45,027 (60.7%)
42,712 (49.2%)
1,036 (14.8%)
1,164 (16.6%)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Nominal GDP ($bn)
GDP at PPP ($bn)
Population (mn)
Frontier Markets* Emerging Markets Developed Markets Other
2,526
(2.9%)
1,836
(2.5 %)
3,251
(4.4%)
5,038
(5.8%)
Frontier markets have 2nd largest GDP after China, but the stock markets
are massively underdeveloped relative to their economies
Nominal GDP 2013
(US $bn)¹
Frontier Market Cap** vs. Emerging Markets
as at March 31, 2013 (US $bn)²
Market capitalization and GDP relative to other emerging
markets
12 Frontier Markets | May 2013
1Source: IMF world economic outlook database. Estimates for 2013 as of October 2012 2Source: FactSet, MSCI. Data to March 31st, 2013
*FM (Frontier Markets): Argentina, Bahrain, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, Kazakhstan, Kenya, Kuwait, Lebanon, Lithuania, Mauritius, Nigeria, Oman, Pakistan,
Qatar, Romania, Serbia, Slovenia, Sri Lanka, Tunisia, Ukraine, UAE, Vietnam
**MSCI Free float adjusted
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
3'251
2'504
2'117
2'109
1'234
1'210
839
469
402
340
276
GEM
China
FM*
Brazil
India
Russia
Korea
Mexico
Turkey
Taiwan
South Africa
Malaysia
Egypt
689
567
483
412
270
251
224
212
134
114
82
10
GEM
China
Korea
Brazil
Taiwan
S Africa
India
Russia
Mexico
Malaysia
Frontiers
Turkey
EgyptFrontiers 14% of GEMS Frontiers 3% of GEMS
3,815
9,039
24,035
Frontier stock markets very small relative to their economies
Market Cap to GDP Ratios
13 Frontier Markets | May 2013
Source: MSCI, IMF. As at March 2013
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
3
17
39
62
106
0
20
40
60
80
100
120
140
Frontier Markets GEMs Germany Japan USA
%
%
%
%
%
%
Strong growth and mixed inflation
Frontier Markets GDP Growth*
% yoy
Frontier Markets Consumer Price Index**
% yoy
GDP growth and inflation
14 Frontier Markets | May 2013
Source: IMF Data Mapper. Estimates for 2013 as of October 2012
*Based on the change of the sum of Nominal GDP (US$ at PPP)
**Weighted average rate, using current MSCI Frontier Markets weights and % change CPI
The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds
of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized. Please see important notes at the end of this document.
0
2
4
6
8
10
12
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
0
2
4
6
8
10
12
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
% %
Forecast Forecast
Frontier economies expect to grow faster than Emerging or Developed economies
Differences between FM, EM and DM GDP growth (forecasts)
GDP growth
15 Frontier Markets | May 2013
Source: CITI Investment Research and Analysis. Estimates as at January 2013. The opinions stated in this presentation include some forecasted views. We believe that we are
basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee that any forecasts or opinions will
be realized. Please see important notes at the end of this document.
0%
1%
2%
3%
4%
5%
6%
7%
2012 2012-2021 2022-2031 2032-2041 2042-2051
Frontier Emerging Developed
GDP growth p.a.
When economies grow quickly, stock markets usually perform very strongly
Markets in times of High Growth Korea
16 Frontier Markets | May 2013
Source: FactSet, Bloomberg.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
-60%
-40%
-20%
0%
20%
40%
60%
75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
0%
2%
4%
6%
8%
10%
12%
Korea Market 5yr CAGR (lhs) Korea GDP 5yr CAGR (rhs)
February 1981 – February 1992
GDP Growth = 9.6% p.a.
Stockmarket performance = 18.2% p.a.
When economies grow quickly, stock markets usually perform very strongly
Markets in times of High Growth Hong Kong
17 Frontier Markets | May 2013
Source: FactSet, Bloomberg.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds
of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized. Performance shown is past performance. Past performance is no
guarantee of future results.
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
0%
2%
4%
6%
8%
10%
12%
14%
Hong Kong Market 5yr CAGR (lhs) Hong Kong GDP 5yr CAGR (rhs)
Feb ‘74 – Nov ‘81
GDP Growth = 9.4% p.a.
Stockmarket performance = 16.7% p.a.
-60%
-40%
-20%
0%
20%
40%
60%
80%
75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
0%
2%
4%
6%
8%
10%
12%
Taiwan Market 5yr CAGR (lhs) Taiwan GDP 5yr CAGR (rhs)
When economies grow quickly, stock markets usually perform very strongly
Markets in times of High Growth Taiwan
18 Frontier Markets | May 2013
Source: FactSet, Bloomberg.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds
of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized. Performance shown is past performance. Past performance is no
guarantee of future results.
Feb ‘73 – Aug ‘81
GDP Growth = 7.9% p.a.
Stockmarket performance = 9.0% p.a.
It is strong domestic nominal growth combined with a stable or strong currency that
leads to strong stockmarket returns
GDP vs. Equity Market
19 Frontier Markets | May 2013
Source: Bloomberg, IMF, CEIC, Emerging Advisors. Data as at April 2013. * Excluding China and Mexico.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
No correlation here… Annual rate of growth/return, 2000-2012 (in %)
…but a tight correlation here Annual rate of growth/return, 2000-2012 (in %)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Bra
zil
Ch
ile
Ch
ina
Cze
ch
Re
pu
blic
Hon
g K
on
g
Hungary
India
Indo
ne
sia
Isra
el
Ko
rea
Ma
laysia
Me
xic
o
Ph
ilip
pin
es
Po
land
Ru
ssia
Sin
ga
po
re
Sou
th A
fric
a
Taiw
an
Tha
iland
Turk
ey
Real GDP Equity market (USD)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Bra
zil
Ch
ile
Ch
ina
Cze
ch R
epu
blic
Ho
ng
Ko
ng
Hu
ng
ary
India
Indo
ne
sia
Isra
el
Ko
rea
Ma
laysia
Me
xic
o
Ph
ilip
pin
es
Po
land
Ru
ssia
Sin
ga
po
re
So
uth
Afr
ica
Taiw
an
Tha
iland
Turk
ey
Nominal GDP (in USD) Equity market (USD)
Correlation: -0.07 (0.22*) Correlation: 0.53 (0.85*)
Fiscal position in most Frontier economies is better than that in Developed
Fiscal balance, 2013e
20 Frontier Markets | May 2013
Source: Haver, EIU. Data as at February 2013
The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds
of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized. Please see important notes at the end of this document. Countries are
mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
-15
-10
-5
0
5
10
15
Kuw
ait
Qata
r
Sau
di A
rab
ia
Om
an
UA
E
Esto
nia
Kaza
kh
sta
n
Bulg
aria
Nig
eria
Slo
ven
ia
Arg
en
tin
a
Rom
ania
Ukra
ine
Serb
ia
Lithu
ania
Vie
tna
m
Cro
atia
Ma
uritiu
s
Bah
rain
Ban
gla
de
sh
Pakis
tan
Ken
ya
Leb
ano
n
Sri L
an
ka
Tu
nis
ia
Jo
rdan
FM
EM
DM
% of GDP 17.2%
Fiscal balance and current account picture better than developed and improving
Fiscal Balance as % of GDP¹ Current Account as % of GDP²
Fiscal & current accounts
21 Frontier Markets | May 2013
Source: ¹Haver, EIU. Data as at February 2013
²IMF Data Mapper. Estimates for 2013 as at October 2012
The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds
of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.
Please see important notes at the end of this document. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
-6% -4% -2% 0% 2% 4% 6%
FM Europe
FM Africa
FM Middle East
FM Asia
FM Latin
FM Total
GEM
DM
2001 2013e
-3% 0% 3% 6% 9% 12% 15%
FM Europe
FM Africa
FM Middle East
FM Asia
FM Latin
FM Total
GEM
DM
2001 2013e
17.6%
Aggregate Debt to GDP Levels
Frontiers markets fiscal and debt levels
22 Frontier Markets | May 2013
Source: ¹ IMF. ² IMF DataMapper. Country selection based on MSCI FM & EM indices. Developed markets as per IMF classification. Data based on 2013 estimates as at
October 2012. The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions
within the bounds of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.
Significant improvements in FM fiscal position has led them to be as good as GEM countries
60%
70%
80%
90%
100%
110%
120%
20%
25%
30%
35%
40%
45%
50%
55%
60%
2001 2004 2007 2010 2013 2016
Frontier MarketsEmerging MarketsDeveloped Markets (rhs)
Government fiscal balances¹
-5%
-4%
-3%
-2%
-1%
0%
1990-1999 2000-2011
Emerging Markets Frontier Markets
(%) of GDP (%) of GDP (%) of GDP
Low and improving level of government debt. Very good relative to developed markets
Gross Public Domestic debt (%GDP)* S&P/Moody’s**
Debt and cost of funding
23 Frontier Markets | May 2013
*Source: IMF Data Mapper. Estimates for 2013 as of October 2012. **Bloomberg as at March 2013.
The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds
of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.
Please see important notes at the end of this document. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
%
0
50
100
150
200
250
Arg
en
tin
a
Bah
rain
Bulg
aria
Cro
atia
Esto
nia
Jo
rdan
Kaza
kh
sta
n
Ken
ya
Kuw
ait
Leb
ano
n
Lithu
ania
Ma
uritiu
s
Nig
eria
Om
an
Pakis
tan
Qata
r
Rom
ania
Serb
ia
Slo
ven
ia
Tunis
ia
Ukra
ine
UA
E
Vie
tna
m
Ja
pa
n
UK
US
2003 2013e
Bahrain BBB/Baa1
Kuwait AA/Aa2
Lebanon B/B1
Oman A/A1
Qatar AA/Aa2
UAE NR/Aa2
Tunisia BBB/Baa2
Kenya B/NR
Mauritius NR/Baa1
Nigeria BB-/Ba3
Bulgaria BBB/Baa2
Croatia BB+/Baa3
Estonia AA-/A1
Kazakhstan BBB+/Baa2
Romania BB+/Baa3
Slovenia A-/Baa2
Ukraine B/B3
Sri Lanka B+/B1 Vietnam BB-/B2
Developed
Despite being less developed, Frontier countries have strong reserves
FX Reserves as a % of GDP (2013 estimates)
FX Reserves
24 Frontier Markets | May 2013
Source: Haver, EIU. Data as at February 2013
*EFG-Hermes. Data as at September 2012, includes sovereign wealth funds
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
62%
44%
29%29%26%25%23%23%21%19%19%17%14%14%13%11% 8% 8%3% 2% 1%
29%30%
41%
74%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
UA
E*
Kuw
ait*
Qata
r*
Lebanon*
Bahra
in*
Serb
ia
Bulg
aria
Om
an*
Cro
atia
Rom
ania
Tunis
ia*
Mauritiu
s
Lith
uania
Ukra
ine
Jord
an*
Kazakhsta
n
Nig
eria
Kenya
Vie
tnam
Sri L
anka
Bangla
desh
Arg
entin
a
Pakis
tan
Slo
venia
Esto
nia
Fro
ntie
r M
ark
ets
GE
MS
200% 235%
Frontier economies private debt is similar to that in Emerging economies
Private sector credit to GDP, 2012
25 Frontier Markets | May 2013
Source: CITI Investment Research and Analysis, IMF Banking Survey, Haver. Data as at January 2013
0%
40%
80%
120%
160%
200%
Frontier EM Developed
Corporate debt Household debt
Prudent bank lending policies – generally ratio under 100%
Loan to deposit ratios by country
26 Frontier Markets | May 2013
Source: EM Advisors. Data to October 31, 2012
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
0
20
40
60
80
100
120
140
Arg
en
tina
Ban
gla
de
sh
Kaza
kh
sta
n
Ken
ya
Kuw
ait
Leb
ano
n
Nig
eria
Pakis
tan
Qata
r
Sri L
an
ka
Unite
d A
rab
Em
irate
s
Vie
tna
m
%
Rising FDI will support economic growth and development
Foreign Direct Investment into Frontier Markets
27 Frontier Markets | May 2013
Source: Haver, EIU. Data as of February 2013
Countries include: Argentina, Bahrain, Bangladesh, Bulgaria, Croatia, Estonia, Jordan, Kazakhstan, Kenya, Kuwait, Lithuania, Mauritius, Nigeria, Oman, Pakistan, Qatar,
Romania, Serbia, Slovenia, Sri Lanka, Tunisia, Ukraine, UAE, Vietnam
Information and opinions obtained from third parties, including forecasts, have been obtained from sources we consider to be reliable. We do not accept responsibility for errors of
fact obtained from third parties, and there is no guarantee that any forecasts or opinions will be realized.
US$ bn
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0
20
40
60
80
100
120
140
160
180
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
FDI $bn FDI as % GDP (rhs)
Forecast
Many Frontier Markets rank better than BRIC on the Corruption Perceptions Index.
Corruption Perceptions Index Ranked by score, High (least corrupt) – Low (most corrupt)
28 Frontier Markets | May 2013
Source: Transparency International Corruption Perception Index, 2012 results (www.transparency.org)
The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be. A country or territory’s score indicates the perceived
level of public sector corruption on a scale of 0 - 100, where 0 means that a country is perceived as highly corrupt and 100 means it is perceived as very clean. A country's rank
indicates its position relative to the other countries and territories included in the index. This year's index includes 176 countries and territories.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Countries Score Rank/176
Germany 79 13
Japan 74 17
UK 74 17
US 73 19
Qatar 68 27
UAE 68 27
Estonia 64 32
Slovenia 61 37
Mauritius 57 43
Lithuania 54 48
Bahrain 51 53
Jordan 48 58
Oman 47 61
Croatia 46 62
Kuwait 44 66
Saudi Arabia 44 66
Romania 44 66
Countries Score Rank/176
Brazil 43 69
Italy 42 72
Tunisia 41 75
Sri Lanka 40 79
China 39 80
Serbia 39 80
Morocco 37 88
India 36 94
Argentina 35 102
Vietnam 31 123
Lebanon 30 128
Kazakhstan 28 133
Russia 28 133
Pakistan 27 139
Nigeria 27 139
Bangladesh 26 144
Ukraine 26 144
Many Frontier Markets rank better than BRIC countries on the ease of doing business rank.
Doing Business in Frontier countries Ranked on the ease of doing business, High (easiest) – Low (hardest)
29 Frontier Markets | May 2013
Source: www.doingbusiness.org, June 2012 results
The ease of doing business index ranks economies from 1 to 183. For each economy the index is calculated as the ranking on the simple average of its percentile rankings on
each of the 9 topics included in the index in Doing Business 2011: starting a business, dealing with construction permits, registering property, getting credit, protecting investors,
paying taxes, trading across borders, enforcing contracts and closing a business. The ranking on each topic is the simple average of the percentile rankings on its component
indicators. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Countries Rank/183
US 4
UK 7
Saudi Arabia 12
Germany 19
Japan 20
Mauritius 23
Estonia 24
Lithuania 27
UAE 33
Qatar 36
Slovenia 37
Bahrain 38
Tunisia 46
Kazakhstan 47
Oman 49
Kuwait 67
Romania 72
Countries Rank/183
Croatia 80
Italy 87
Sri Lanka 89
China 91
Serbia 92
Morocco 94
Jordan 96
Vietnam 98
Lebanon 104
Pakistan 105
Argentina 113
Russia 120
Bangladesh 122
Brazil 126
India 132
Nigeria 133
Ukraine 152
Frontier Markets generally display high literacy rates and many have higher HDI
levels than the BRIC countries
Human Development Index and Literacy Rate Ranked by HDI score, High (best) – Low (worst)
30 Frontier Markets | May 2013
Source: United Nations Development Programme, Data for 2011.
* Human Development Index. A composite index measuring average achievement in three basic dimensions of human development—a long and healthy life, knowledge and a
decent standard of living.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Countries HDI* Literacy rate
US 0.910 99.0
Germany 0.905 99.0
Japan 0.901 99.0
Slovenia 0.884 99.7
UK 0.863 99.0
UAE 0.846 90.0
Estonia 0.835 99.8
Qatar 0.831 94.7
Lithuania 0.810 99.7
Bahrain 0.806 91.4
Argentina 0.797 97.7
Croatia 0.796 98.8
Romania 0.781 97.7
Saudi Arabia 0.770 86.1
Serbia 0.766 97.8
Kuwait 0.760 93.9
Russia 0.755 99.6
Countries HDI* Literacy rate
Kazakhstan 0.745 99.7
Lebanon 0.739 89.6
Ukraine 0.729 99.7
Mauritius 0.728 87.9
Brazil 0.718 90.0
Oman 0.705 86.6
Tunisia 0.698 77.6
Jordan 0.698 92.2
Sri Lanka 0.691 90.6
China 0.687 94.0
Vietnam 0.593 92.8
Morocco 0.582 56.1
India 0.547 62.8
Kenya 0.509 87.0
Pakistan 0.504 55.5
Bangladesh 0.500 55.9
Nigeria 0.459 60.8
Diverse competitive advantages
Competitive advantages
31 Frontier Markets | May 2013
Source: Schroders
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
The opinions stated in this presentation include some forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the bounds
of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.
Kazakhstan
Argentina
Ukraine
DEMOGRAPHICS
Lebanon
Tunisia
LOW
LABOR
COSTS
Bahrain
Kuwait
Oman
Qatar
UAE
Pakistan
Bangladesh
Vietnam
Kenya
Jordan
Oman
Saudi Arabia
Nigeria
Bulgaria
Croatia
Estonia
Lithuania
Mauritius
Romania
Serbia
Slovenia
Sri Lanka
NATURAL
RESOURCES
Frontier countries tend to have relatively young populations…
Demographics
32 Frontier Markets | May 2013
Source: UN Population Division, June 2012. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
0
10
20
30
40
50
Nig
eria
Ken
ya
Jo
rdan
Pakis
tan
Ban
gla
de
sh
Ind
ia
Kaza
kh
sta
n
Kuw
ait
Vie
tna
m
Tunis
ia
Leb
ano
n
Om
an
Bra
zil
Arg
en
tina
Sri L
an
ka
Bah
rain
UA
E
Qata
r
Ma
uritiu
s
Chin
a
US
Ru
ssia
Serb
ia
Ukra
ine
Rom
ania
Lith
ua
nia
Esto
nia
Cro
atia
Bulg
aria
Slo
ven
ia
Ja
pa
n
Germ
any
FM
Avera
ge
GE
M A
ve
rage
DM
Ave
rage
Median age in years
Frontier Markets Emerging Markets Developed Markets
Averages
…and have strongly growing populations
Demographics
33 Frontier Markets | May 2013
Source: UN Population Division, June 2012
Information and opinions obtained from third parties, including forecasts, have been obtained from sources we consider to be reliable. We do not accept responsibility for errors of
fact obtained from third parties, and there is no guarantee that any forecasts or opinions will be realized.
Forecast annualized
population growth rate
DM EM FM
2025 0.45% 0.74% 1.38%
2030 0.42% 0.67% 1.32%
2050 0.32% 0.42% 1.13%
90
100
110
120
130
140
150
160
170
201
0
201
5
202
0
202
5
203
0
203
5
204
0
204
5
205
0
DM GEM FM
Populations rebased; 2010 = 100
Frontier Markets benefit from very competitive labour costs
Labour costs per hour (in US$) Asia and Latin America
34 Frontier Markets | May 2013
Source: Haver, EIU. 2013 estimates as at February 2013
*UBS/ILO estimates as at June 2011
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
0.3 0.9 1.7 1.0 3.7
6.1
11.0
33.4
36.8
0
5
10
15
20
25
30
35
40
45
Ban
gla
de
sh*
Sri L
an
ka
Vie
tna
m*
Ind
ia
Chin
a
Arg
en
tina
Bra
zil
Ja
pa
n
Unite
d S
tate
s
$
Major Emerging Markets Frontier Markets Developed Markets
Frontier Markets benefit from very competitive labour costs
Labour costs per hour (in US$) Eastern Europe
35 Frontier Markets | May 2013
Source: Haver, EIU. 2013 estimates as at February 2013
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
$
Major Emerging Markets Frontier Markets Developed Markets
3.0 5.0 5.3 5.1 5.0 5.5
7.8 10.6 10.9 11.8 12.2
36.8
46.7
0
5
10
15
20
25
30
35
40
45
50
Ukra
ine
Kaza
kh
sta
n
Bulg
aria
Ru
ssia
Rom
ania
Cro
atia
Lith
ua
nia
Esto
nia
Slo
ven
ia
Pola
nd
Cze
ch R
ep
ub
lic
Unite
d S
tate
s
Germ
any
Significant natural resources
Oil & Gas reserves
36 Frontier Markets | May 2013
Source: BP Statistical Review World Energy June 2012. Data for 2011
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
% of World Proven resources
6.1
0.3 1.5
5.9
2.3 1.8
16.1
0.9 0.5
12.0
2.9 2.5 0.9
3.9
0
4
8
12
16
20
24
Kuw
ait
Om
an
Qata
r
UA
E
Nig
eria
Kaza
kh
sta
n
Sau
di A
rab
iaOil Gas
Total Oil reserves – 34% of world
Total Gas reserves – 24% of world
Equity markets
3 Key prerequisites for investment
Pre-conditions for investment
38 Frontier Markets | May 2013
Source: Schroders
POLITICS
ECONOMICS
STOCKMARKET
Is the regime stable and pro-business?
Can foreign investors get secure custody, reliable accounting
standards, sufficient liquidity?
Are there policies in place to liberalize the economy?
Frontier stock markets very under-developed relative to their economies
MSCI Market Cap* to GDP ratios since 1988
Market structure
39 Frontier Markets | May 2013
Source: CITI Investment Research and Analysis, DataStream, Haver. Data to December 2012
*Free float adjusted
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Frontier Emerging Developed
60.8%
17.5%
2.8%
MSCI FM provides reasonable country and stock diversification
MSCI Frontier equity market index
40 Frontier Markets | May 2013
Source: Factset and MSCI. Data to March 31st , 2013.
Countries mentioned are shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Market Cap US ($mn) Weight % No of Stocks Weighted average MSCI Foreign Ownership Limit
Kuwait 27,338 23.9 12 49.6%
Qatar 17,305 15.1 13 18.3%
Nigeria 17,195 15.0 12 33.8%
United Arab Emirates 12,367 10.8 9 21.7%
Pakistan 4,629 4.0 12 21.9%
Kazakhstan 4,573 4.0 4 32.3%
Kenya 4,309 3.8 6 41.2%
Oman 3,683 3.2 8 34.5%
Argentina 3,519 3.1 5 36.8%
Lebanon 2,557 2.2 5 43.9%
Vietnam 2,496 2.2 9 12.6%
Croatia 2,315 2.0 4 18.5%
Bangladesh 2,224 1.9 9 33.4%
Sri Lanka 1,939 1.7 5 41.7%
Slovenia 1,862 1.6 3 55.5%
Romania 1,400 1.2 3 13.9%
Mauritius 1,036 0.9 2 40.6%
Jordan 921 0.8 4 6.6%
Tunisia 745 0.7 3 32.1%
Estonia 609 0.5 2 49.7%
Bahrain 574 0.5 2 17.6%
Serbia 331 0.3 2 17.6%
Ukraine 208 0.2 2 14.5%
Lithuania 171 0.1 2 17.3%
Bulgaria 104 0.1 2 31.2%
Total 114,410 100.0 140 -
MSCI GEMS 3,815,200 - 823 -
MSCI World 27,441,446 - 1608 -
Currently dominated by Middle East and Financials
Europe Middle East Regions
MSCI Frontier Markets Index – by country & sector
41 Frontier Markets | May 2013
Source: FactSet, MSCI. Data to March 31st, 2013
Countries and sectors are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Africa Asia
Sectors
Latin
Country Weight (%)
Bulgaria 0.1
Croatia 2.0
Estonia 0.5
Kazakhstan 4.0
Lithuania 0.1
Romania 1.2
Serbia 0.3
Slovenia 1.6
Ukraine 0.2
Total 10.1
Weight (%)
Financials 50.9
Telecommunication Services 14.6
Industrials 10.3
Consumer Staples 9.4
Energy 8.1
Materials 3.7
Health Care 1.7
Utilities 1.2
Consumer Discretionary 0.1
IT 0.0
Total 100.0
Country Weight (%)
Bahrain 0.5
Jordan 0.8
Kuwait 23.9
Lebanon 2.2
Oman 3.2
Qatar 15.1
Tunisia 0.7
UAE 10.8
Total 57.2
Bangladesh 1.9
Pakistan 4.0
Sri Lanka 1.7
Vietnam 2.2
Total 9.9
Country Weight (%)
Kenya 3.8
Mauritius 0.9
Nigeria 15.0
Total 19.7
Argentina 3.1
Total 3.1
Weight (%)
Europe 10.1
Africa 19.7
Middle East 57.2
Asia 9.9
Latin 3.1
Total 100.0
Frontier Markets less liquid than Emerging but still investable
Frontier market liquidity
Equity market information
42 Frontier Markets | May 2013
Source: FactSet, Bloomberg, MSCI, Schroders as of March 31, 2013
*Less, if country index holds less than 5 stocks
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Countries Six Month Average Daily Traded
Value US$ Mn
5* largest stocks as %
of the index
United Arab Emirates 32.8 86.9
Qatar 27.9 71.0
Kuwait 24.1 77.9
Pakistan 19.6 75.2
Argentina 17.9 100.0
Nigeria 14.4 71.9
Kazakhstan 9.1 100.0
Vietnam 8.9 81.0
Bangladesh 3.7 72.5
Oman 3.6 83.6
Kenya 3.6 98.0
Sri Lanka 2.1 100.0
Romania 1.3 100.0
Countries Six Month Average Daily Traded
Value US$ Mn
5* largest stocks as %
of the index
Slovenia 1.0 100.0
Jordan 1.0 100.0
Mauritius 0.7 100.0
Lebanon 0.5 100.0
Croatia 0.5 100.0
Estonia 0.4 100.0
Tunisia 0.4 100.0
Serbia 0.2 100.0
Bulgaria 0.1 100.0
Lithuania 0.1 100.0
Bahrain 0.1 100.0
Ukraine 0.0 100.0
Days taken to buy most liquid 70% of MSCI index
Fund Size
Assumed % of average daily volume
bought each day $50mn $100mn
10% 3 days 6 days
25% 2 days 3 days
50% 1 day 2 days
Frontier Markets still 41% off their 2008 highs and are lagging emerging markets
Frontier Markets vs. GEMS and Developed
43 Frontier Markets | May 2013
Source: FactSet and MSCI, 31st March 2013 (Net total return indices, USD)
Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.
Market indices are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Index (May 2002 = 100) Index (May 2002 = 100)
Performance (USD)
Region 1 Year to
Mar 13
Since
May ’02 to
Mar 13
Since
Feb ’09 to
Mar 13
Frontier Index 11.6% 164.7% 73.3%
EM Index 2.0% 286.2% 128.1%
World Index 11.8% 83.3% 109.1%
0
50
100
150
200
250
300
350
400
450
500
Ma
i 02
Dez 0
3
Jul 05
Jan
07
Au
g 0
8
Fe
b 1
0
Se
p 1
1
Mrz
13
MSCI Frontier MSCI Emerging
MSCI World
0
50
100
150
200
250
300
Ma
i 02
Dez 0
3
Jul 05
Jan
07
Au
g 0
8
Fe
b 1
0
Se
p 1
1
Mrz
13
Frontier relative to GEM
Frontier relative to World
Frontier Markets have not participated in market recovery since 2009
Frontier Markets vs. GEMS and Developed
44 Frontier Markets | May 2013
Source: FactSet and MSCI, March 31st, 2013 (Net total return indices, USD)
Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.
Market indices are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Index (Jan 2009 = 100) Index (Jan 2009 = 100)
50
100
150
200
250
Jan 09 Sep 09 Apr 10 Nov 10 Jun 11 Jan 12 Aug 12 Mrz 13
MSCI Frontier MSCI Emerging MSCI World
60
70
80
90
100
110
120
Jan 09 Sep 09 Apr 10 Nov 10 Jun 11 Jan 12 Aug 12 Mrz 13
Frontier relative to GEM Frontier relative to World
Most markets well below peak
Frontier Stock Market History
45 Frontier Markets | May 2013
Source: FactSet, Bloomberg to March 31st, 2013
Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
% Fall from
Country Peak to trough Peak to 31/03/2013
Abu Dhabi -64% -58%
Argentina -75% -70%
Bahrain -63% -63%
Bulgaria -86% -82%
Croatia -77% -71%
Dubai -84% -80%
Estonia -79% -51%
Jordan -72% -70%
Kazakhstan -77% -64%
Kenya -64% -44%
Kuwait -65% -64%
Lebanon -55% -53%
Mauritius -64% -25%
Nigeria -77% -68%
Oman -60% -50%
Pakistan -79% -51%
Qatar -65% -33%
Romania -87% -65%
Slovenia -78% -73%
Sri Lanka -48% -37%
Tunisia -32% -32%
Ukraine -72% -72%
Vietnam -78% -64%
Frontier Markets tend towards low correlation with MSCI GEMs, MSCI World, S&P
GSCI and each other
Correlations* 2005-2013
46 Frontier Markets | May 2013
*Note: A Correlation Coefficient of +1 shows that two series rise and fall together, -1 shows that when one rises the other falls (and vice versa), 0 shows there is no relationship,
Countries <3% of MSCI Frontier Markets index excluded. 1Since January 2005
Source: FactSet, Bloomberg, Schroders, data to March 31st, 2013. Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to
buy/sell.
Correlation
coefficients Qatar Kuwait Oman UAE¹ Croatia Nigeria Slovenia Kazakhstan
MSCI
Frontiers
MSCI
GEMs
MSCI
World
S&P GSCI
Index
Qatar 1.00
Kuwait 0.50 1.00
Oman 0.49 0.63 1.00
UAE¹ 0.66 0.56 0.58 1.00
Croatia 0.48 0.39 0.35 0.50 1.00
Nigeria 0.23 0.46 0.40 0.46 0.46 1.00
Slovenia 0.09 0.12 0.22 0.05 0.04 0.10 1.00
Kazakhstan 0.30 0.33 0.42 0.30 0.51 0.36 -0.08 1.00
MSCI
Frontiers 0.72 0.78 0.69 0.82 0.62 0.55 0.06 0.42 1.00
MSCI GEMs 0.52 0.41 0.46 0.55 0.67 0.28 0.00 0.58 0.61 1.00
MSCI World 0.49 0.47 0.45 0.55 0.70 0.31 -0.07 0.58 0.63 0.89 1.00
S&P GSCI
Index 0.52 0.48 0.46 0.49 0.56 0.34 0.14 0.39 0.59 0.60 0.58 1.00
Frontier stocks are good diversifiers
Correlation of MSCI Frontier Markets with MSCI World
Correlation
47 Frontier Markets | May 2013
Source: Bloomberg, rolling 52-week correlations of weekly USD Net returns. Data to March 31st, 2013
-40%
-20%
0%
20%
40%
60%
80%
100%
2003 2003 2004 2005 2005 2006 2006 2007 2008 2008 2009 2009 2010 2010 2011 2012 2012 2013
MSCI Frontier Markets with MSCI World
51.9%
Correlation between Frontier stock markets and the oil price varies widely over time
Correlation of MSCI FM with Brent
Correlation with Brent Crude (rolling 40 weeks)
48 Frontier Markets | May 2013
Source: Schroders, Bloomberg. Data to March 31st, 2013.
-40%
-20%
0%
20%
40%
60%
80%
100%
Mrz 06 Mrz 07 Mrz 08 Mrz 09 Mrz 10 Mrz 11 Mrz 12 Mrz 13
30.8%
Frontier Markets have historically been excellent diversifiers
10 year (Annualized)* 5 year (Annualized)*
Frontier markets efficient frontiers vs. World
49 Frontier Markets | May 2013
Source: FactSet, MSCI. *All figures use weekly US$ MSCI Price returns to March 29th, 2013. Performance shown is past performance.
Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.
Annualized Risk (%S.D. p.a) Annualized Risk (%S.D. p.a)
Annualized return (%p.a.) Annualized return (%p.a.)
Cumulative Return
MSCI FM +76.1%
MSCI World +88.0%
Cumulative Return
MSCI FM -49.5%
MSCI World -0.1%
5.8%
5.9%
6.0%
6.1%
6.2%
6.3%
6.4%
6.5%
6.6%
6.7%
6.8%
14% 15% 16% 17% 18% 19%
MSCI World 100%
MSCI FM 100%
FM 80%
FM 60%
FM 40% FM 20%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
16% 17% 18% 19% 20% 21% 22% 23%
MSCI World 100%
MSCI FM 100%
FM 80%
FM 60%
FM 40%
FM 20%
Valuations well below their peak and cheap versus emerging and developed markets
Valuations
50 Frontier Markets | May 2013
Source: Schroders, FactSet, Bloomberg, MSCI as at March 31st, 2013.
*Since Dec 2001. ¹Last twelve months
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Countries Weight % Peak* PE Historic PE¹ Prospective PE % Below Peak
P/E
Kuwait 23.6 43.8 17.7 12.9 -60%
Qatar 15.0 40.0 12.3 9.6 -69%
Nigeria 14.9 28.7 15.0 10.2 -48%
UAE 10.7 51.3 12.9 11.2 -75%
Pakistan 4.0 16.2 7.8 7.0 -52%
Kazakhstan 4.0 10.5 6.7 5.5 -36%
Kenya 3.7 21.8 13.3 11.5 -39%
Oman 3.2 18.3 10.1 9.6 -45%
Argentina 3.0 446.6 3.8 3.9 -99%
Lebanon 2.2 27.3 8.9 12.4 -67%
Vietnam 2.2 41.0 18.9 12.6 -54%
MSCI Frontiers -- 17.8 11.8 9.6 -34%
MSCI EM -- 20.6 11.8 10.6 -39%
MSCI World -- 30.2 16.1 13.3 -47%
Frontier Markets cheap versus Global Emerging Markets
MSCI Frontier Markets vs. MSCI Global Emerging Markets relative trailing P/E
Frontier Markets vs. Global Emerging Markets
51 Frontier Markets | May 2013
Source: FactSet. Data to March 31st, 2013
Performance shown is past performance. Past performance is not a guide to future performance.
The value of investment can go down as well as up and is not guaranteed.
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
Dez 07 Sep 08 Jun 09 Mrz 10 Dez 10 Sep 11 Jun 12 Mrz 13
MSCI FM vs. MSCI EM relative trailing P/E
0.4
0.6
0.8
1.0
1.2
1.4
Dez 07 Sep 08 Jun 09 Mrz 10 Dez 10 Sep 11 Jun 12 Mrz 13
MSCI FM vs. MSCI EM relative P/B
Frontier Markets cheap versus Global Emerging Markets
MSCI Frontier Markets vs. MSCI Global Emerging
Markets relative P/B
52 Frontier Markets | May 2013
Source: FactSet. Data to March 31st, 2013
Performance shown is past performance. Past performance is not a guide to future performance.
The value of investment can go down as well as up and is not guaranteed.
0
1
2
3
4
5
6
7
8
9
Dez 02 Jun 04 Dez 05 Mai 07 Nov 08 Apr 10 Okt 11 Mrz 13
MSCI Emerging MSCI Frontier
Frontier markets have a higher dividend yield than emerging markets
MSCI Frontier Markets vs. MSCI Global Emerging Markets Dividend Yield
MSCI Frontier Markets vs. MSCI Global Emerging
Markets
53 Frontier Markets | May 2013
Source: FactSet. Data to March 31st, 2013
Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.
%
Few international investors have exposure to Frontier stock markets
Institutional funds allocated to EM and Frontier (as at 6th February 2013)
Fund allocation
54 Frontier Markets | May 2013
Source: CITI Investment Research and Analysis, EPFR. Data as of February 6, 2013
$4'380bn
US$ 692bn
US$ 15bn 0
500
1'000
1'500
2'000
2'500
3'000
3'500
4'000
4'500
5'000
Developed Emerging Frontier
US$ bn
Frontier Markets are under owned
GEM funds holdings in Frontier Markets
55 Frontier Markets | May 2013
Source: EPFR. Data to February 28th, 2013
This presentation provides opinions which may include forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the
bounds of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Dez 95 Jun 98 Nov 00 Mai 03 Okt 05 Apr 08 Sep 10 Feb 13
% of GEM funds AUM invested in Frontier Markets
Frontier market stocks are relatively under-researched
Average number of analysts covering stocks in MSCI indices*
Analyst coverage
56 Frontier Markets | May 2013
Source: CITI Investment Research and Analysis, IBES, FactSet. Data to end December 2011
*The number of sell-side analysts covering an average stock in each of the three groups
0
2
4
6
8
10
12
14
16
18
1988 1992 1995 1998 2002 2005 2008 2011
Frontier Emerging Global
16.4
14.0
4.7
Frontier Markets give exposure to growth potential and provide diversification benefits
Summary
Attractive demographics, low labour costs and large resource base
Strong economic growth potential
Liberalisation of economies and markets provides excellent investment opportunities
Currently under owned
Low correlation provides good diversification
Attractive valuations
Why Now?
Foreign investor interest increasing
Liberalisation process gathering momentum
Beneficial impact of strong Chinese/Indian growth and FDI
Cheap versus emerging and developed markets
57 Frontier Markets | May 2013
This presentation provides opinions which may include forecasted views. We believe that we are basing our expectations and beliefs on reasonable assumptions within the
bounds of what we currently know. However, there is no guarantee that any forecasts or opinions will be realized.
Regional Key Drivers
Middle East*
Large Energy Reserves
52% of global oil reserves
36% of total oil production
40% of natural gas reserves
14% of natural gas production
Massive Government Spending
$465bn of infrastructure spending over the last 5 years, another $480bn expected by 2016
Diversification away from Oil
Growth in non-oil has outpaced oil growth despite the surge in oil prices
Contribution to GDP of oil sector in 2005 at 47%, compared to 29% in 2010
Young demographics
60% of population below the age of 30
59 Frontier Markets | May 2013
Source: Schroders, HSBC, BP, UN Population database. Data as at September 2012
*Bahrain, Jordan, Kuwait, Lebanon, Oman, Qatar, UAE
High double digit GDP growth
Largest LNG producer in the world with export capacity of
77mn tons per year, 28% of the global LNG output
Home to world’s third largest proven natural gas reserves in
excess of 25trn cubic meter, 12% of the world’s total
One of the fastest growing economy in the world. Real GDP
grew by 14% in 2011 on the back of increased LNG capacity
A young population with the highest per capita income in the
world reaching USD 80,000 in 2011 (World Bank)
Over USD 185bn to be spent on 176 new construction and
hydrocarbon related projects in 2011-2016.
Qatar's successful 2022 FIFA World Cup bid will accelerate
large-scale infrastructure projects
2012/2013 budget committed to huge government spending,
supported by a huge fiscal surplus, 12.5% of GDP in 2011
Gas reserves¹
Qatar (15.6% of MSCI Frontiers Index)
60 Frontier Markets | May 2013
Source: Schroders. Data as at January 2013
¹BP Statistical Review, June 2012
This slide is intended as an example of our views and opinions on specific country but should not be viewed as an investment recommendation. This country does not necessarily
have an allocation in any current portfolio, and opinions and allocations are subject to change.
0%
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16%
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Trillion cubic meters as % of global (rhs)
Cubic metres in trillion % of global
Key positives:
Largest industrial company in Qatar, with holdings in petrochemicals (40%
of EBITDA), fertilizers (40% of EBITDA) and steel (20% of EBITDA)
Owns 75% of the world’s largest single site producer of Urea (capacity of
5.5mn by 2013) and Ammonia (3.6mn by 2013)
Enjoys one of the cheapest cost structures in the world, sourcing natural
gas at USD 1.5-2/mmbtu from the Qatari Government
Capacity expansion will support EPS growth over the next few years
(2011-2015 CAGR of at least 5%)
Existing plants operate at full utilisation rate across all businesses
Has 95% market share in the Qatari steel market and is set to benefit from
the heavy infrastructure spending planned in the country in preparation for
World Cup 2022
Enjoys the full support of the Qatari government (51% owned by Qatar
Petroleum and 19% by Qatari pension funds)
Industries Qatar (Grade: 1, weight in MSCI Qatar : 17%)
Qatar – key stocks
61 Frontier Markets | May 2013
Source: Schroders, FactSet, as at December 2012. *Net (TR).
Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.
This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not
necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on
page 97.
US$ (re-based to 100)
Forward
P/E
Forward
EPSG %
Div Yield
%
Upside to
Fair Value %
10.1 5.0 6.0 +10.0
85
90
95
100
105
110
115
120
125
130
135
140
145
150
Sep 09 Mrz 10 Okt 10 Apr 11 Nov 11 Mai 12 Dez 12
Industries Qatar Relative to MSCI Qatar*
Bought
Sep 2010
Diverse economy with significant reserves
A diverse economy: hydrocarbon and resource rich Abu Dhabi
with an open, service based, dynamic Dubai. Abu Dhabi
accounts for 57% of UAE GDP, Dubai is 32% & the other
emirates 11%
Dubai is well positioned as the tourist and financial hub of the
Middle East
The UAE has never run a C/A deficit in the country’s history.
IMF projections through 2014 see the UAE with the 20th
strongest C/A balance globally
Estimated FX reserves and SWF assets are equal to around
235% of GDP as at January 2013 (one of the largest reserves
stock in the world relative to the size of the economy)
Young and growing population, at a CAGR of 6% in the last 5
years
GDP of Travel & Tourism
UAE (9.6% of MSCI Frontiers Index)
62 Frontier Markets | May 2013
Source: Schroders, World Travel & Tourism Council, IMF Data Mapper. Data as at January 2013
This slide is intended as an example of our views and opinions on specific country but should not be viewed as an investment recommendation. This country does not necessarily
have an allocation in any current portfolio, and opinions and allocations are subject to change.
US$ bn % of GDP
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GDP (US$) % of total GDP (rhs)
Key positives:
Established brand name and solid execution track record with over 32,000
units delivered since 2001 (93% in the UAE)
Increasing recurring revenue stream from retail and hospitality assets,
expected to reach AED 3.8bn by 2013 (49% of total revenues)
Rental portfolio represents 75% of total estimated EV
Diversification away from Dubai with revenue contribution to decrease to
69% by 2015, coming mostly from recurring income
516mn sq.m of land bank secured at competitive valuations valued at over
AED 79bn
Trading at 0.9x P/NAV vs. MENA average of 1.1x P/NAV
Emaar Properties (Grade: 1, weight in MSCI UAE : 30%)
UAE – key stocks
63 Frontier Markets | May 2013
SourceSource: Schroders, FactSet, as at December 2012. *Net (TR).
Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.
This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not
necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on
page 97.
US$ (re-based to 100)
Forward
P/E
Forward
EPSG %
Div Yield
%
Upside to
Fair Value %
15.6 5.0 0.0 +10.0
60
65
70
75
80
85
90
95
100
105
110
115
120
125
130
135
140
Sep 09 Feb 10 Aug 10 Jan 11 Jul 11 Jan 12 Jun 12 Dez 12
Emaar Properties Relative to MSCI UAE*
Bought
Sep 2009
The largest oil reserves in the world are now being used to diversify the sources of GDP growth
Country has grown by an
average 5% annually, with non-oil
sector leading the way
(accounting for 70% of headline
growth since 2003)
Has been running massive fiscal
surpluses over the past 5 years
Oil revenues have fuelled
extensive government spending
in infrastructure, education and
social projects
Government committed to
infrastructure spend – USD
400bn planned over the next
few years
Budget Break Even Oil Price
of $65/bbl
Oil reserves¹ Infrastructure spending²
Saudi Arabia (Not an MSCI Frontiers Index market)
64 Frontier Markets | May 2013
Source: ¹BP Statistical Review, June 2012. ²ML, UBS, SAMA. Data as at September 2012
This slide is intended as an example of our views and opinions on specific country but should not be viewed as an investment recommendation. This country does not necessarily
have an allocation in any current portfolio, and opinions and allocations are subject to change.
Barrels in billions US$ bn
15%
16%
17%
18%
19%
20%
21%
22%
23%
24%
25%
26%
27%
255
258
261
264
267
270
199
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1
Billions of Barrels
as % of global (rhs)
0
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% of global
f
Key positives:
One of the world’s five largest petrochemicals manufacturers
Access to significantly cheaper feedstock, with long term contracts to
receive natural gas at USD 0.75/mmbtu from the Saudi Government
Low cost structure acts as a natural hedge: it can operate well above
industry levels in a downturn, and still remain profitable
Able to gain market share globally while competitors struggle
High free cash flow generation
SABIC (Grade: 1, weight in MSCI Saudi: 16%)
Saudi Arabia – key stocks
65 Frontier Markets | May 2013
Source: Schroders, FactSet, as at December 2012. *Net (TR).
Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.
This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not
necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on
page 97.
US$ (re-based to 100)
Forward
P/E
Forward
EPSG %
Div Yield
%
Upside to
Fair Value %
9.7 5.3 5.3 +28.0
95
100
105
110
115
120
125
130
135
140
145
150
155
160
165
Sep 09 Feb 10 Aug 10 Feb 11 Jul 11 Jan 12 Jul 12 Dez 12
SABIC Relative to S&P Saudia Arabia
Bought
Sep 2009
Asia
Large, young population
Bangladesh population 162mn (60% below the age of 30)
Vietnam population 88mn (50% below the age of 30)
Population growth across the region over 1%
Competitive manufacturing base
Low Labor costs/hour in Bangladesh $0.3, Sri Lanka $0.9, Vietnam $1.7, vs. China $3.3
Strong economic growth expected to continue
Regional GDP growth estimated at over 8%
66 Frontier Markets | May 2013
Source: Schroders, IMF WEO database, UN World Population database, UBS, EIU as at September 2012
Large, young population, with strong growth
Large, young & growing population. Total population 88m
with 50% of the population below 30 yrs of age
Cheap & relatively well educated labour force
FDI commitments have consistently been high,
notwithstanding periodic macro crisis. FDI commitments were
USD 16bn in 2009 & USD 10bn as of June ’11
Large resource base
Advantageous geographic location
Annual GDP Growth
Vietnam (2.1% of MSCI Frontiers Index)
67 Frontier Markets | May 2013
Source: Schroders, IMF WEO database, EIU, UBS. Data as at September 2012
This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not
necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.
% (yoy)
0
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4
6
8
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12
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Forecast
Large, young population. Strong Economic growth
Large, young and growing population. Total population 162m
with 60% of the population below 30 yrs of age.
Cheap labour force. Wages considerably lower than China,
making it a viable alternative to China based Multi National
Corporations
Strong GDP growth expected at 7% over the next 3 years
Enormous investment demand for infrastructure projects
Advantageous geographic location
Population split (2010)
Bangladesh (2.1% of MSCI Frontiers Index)
68 Frontier Markets | May 2013
Source: Schroders, IMF, EIU, UBS, UN World population database. As at September 2012
This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not
necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.
Age group buckets
0% 2% 4% 6% 8% 10% 12%
0-4
15-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+
5-9 10-14
Key positives:
Titas Gas has a dominant market share in the gas transmission
and distribution segment in Bangladesh. The company has
demonstrated its ability to reduce transmission and distribution
losses to almost nil, from the high 7% of total gas volumes a
few years ago
The company will benefit from price reforms and the
government focus on increasing supply of gas to the country to
avoid power shortages.
Strong balance sheet with over 50% of the market cap in cash
and long term deposits.
Titas Gas (Grade: 1, weight in MSCI Bangladesh: 9%)
Bangladesh – key stocks
69 Frontier Markets | May 2013
Source: Schroders, FactSet, as at December 2012. *Net (TR).
Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.
This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not
necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on
page 97.
US$ (re-based to 100)
Forward
P/E
Forward
EPSG %
Div Yield
%
Upside to
Fair Value %
6.9 28.0 4.3 +28.0
Overweight from
Dec 2010
0
50
100
150
200
250
Mrz 10 Aug 10 Jan 11 Jun 11 Okt 11 Mrz 12 Aug 12 Dez 12
Titas Gas Relative to MSCI Bangladesh*
Africa
Strong regional economic growth of over 5%
Large and young population
African population 1bn, 15% of global population. Contribution to total global GDP of only 2%
Could account for 30% of global youth by 2030
Rich in Natural Resources
approximately 30% of mineral reserves globally
Indirect beneficiary of Chinese growth
Trade between China and Africa has increased significantly from $10bn in 2000, to $100bn
in 2010
China responsible for 30% of electricity generation across the continent
Massive investment
Recent $23bn deal made outlining development of three oil refineries in Nigeria
70 Frontier Markets | May 2013
Source: Schroders, UN, IMF WEO database, Renaissance Capital. Data as at September 2012
Resource rich market which should benefit from a strong “demographic dividend”
Favourable demographics - With a population of about 160mn
people, Nigeria is the most populous country in Africa and in
the top 10 most populous worldwide. This population is very
young, with a majority below 20 years of age
Resource rich - At 37bn barrels, Nigeria has the 10th largest
proven oil reserves in the world, a significant source of foreign
exchange income
Growing fast - IMF forecasts Real GDP to grow at over 6% for
each of the next 3 years
Huge need for investment - Cement consumption per capita
100kg, compared to 300kg in South Africa and over 1200kg in
China
Oil reserves¹
Nigeria (14.0% of MSCI Frontiers Index)
71 Frontier Markets | May 2013
Source: Schroders, HSBC, U.N. age population database. As at September 2012. ¹BP Statistical Review 2011
This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not
necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.
0
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10
15
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25
30
35
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199
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99
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99
21
99
31
99
41
99
51
99
61
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81
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92
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22
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32
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42
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52
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62
00
72
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01
1
Key positives:
One of the biggest and most profitable banks in Nigeria, with a
market leading brand and a very strong capital base.
Well positioned to benefit from increased confidence in
Nigeria's banking sector following 2008 financial crisis, as
government supported bail-out of the sector continues.
Huge opportunities in Nigeria for trade financing, infrastructure
lending and household lending - Loans to GDP is under 25%
Credible management with a strong reputation for risk
management and transparency.
Zenith Bank (Grade: 1, weight in MSCI Nigeria : 13%)
Nigeria – key stocks
72 Frontier Markets | May 2013
Source: Schroders, FactSet, as at December 2012. *Net (TR).
Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.
This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not
necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on
page 97.
US$ (re-based to 100)
Forward
P/E
Forward
EPSG %
Div Yield
%
Upside to
Fair Value %
8.8 11.0 6.1 +13.0
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
Sep 09 Feb 10 Aug 10 Feb 11 Jul 11 Jan 12 Jul 12 Dez 12
Zenith Bank Relative to MSCI Nigeria*
Overweight from
Dec 2010
Large, young population. Economy growing strongly
Favourable demographics - At over 40mn people, Kenya is
the third most populous country in East Africa. Over 50% of
this population is under 20 years old, promising a significant
future demographic dividend as this group enters the labour
force.
Growing strongly - IMF forecasts real GDP growth of over 5%
for each of the next 3 years, supported by increased
government spending on infrastructure.
Proxy for East African growth - Kenya is the largest economy
in the East African Community, a regional grouping of over
130mn people with GDP of over $70bn. With the only major
port in East Africa, Kenya is ideally positioned to become the
commercial hub of the region and benefit from its
development, including that of oil-rich Uganda and South
Sudan.
Huge need for investment - Cement consumption per capita
60kg, compared to 300kg in South Africa and over 1200kg in
China
Population split (2010)
Kenya (3.1% of MSCI Frontiers Index)
73 Frontier Markets | May 2013
Source: Schroders, HSBC, U.N. age population database. As at September 2012
This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not
necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.
Age group buckets
5-9 10-14
0% 4% 8% 12% 16% 20%
0-4
15-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99100+
Europe
Region rich in natural resources
Oil reserves (as % of total global) in Kazakhstan 1.8% (2011)
Natural Gas reserves (as % of total global) in Kazakhstan 1% and Ukraine 0.4% (2011)
Iron Ore reserves (as % of total global) in Kazakhstan 5% and Ukraine 3%
Copper reserves (as % of total global) in Kazakhstan 2%
Manufacturing centre for central Europe
Low Labour costs/hour in Bulgaria $4.9, Romania $5.0 vs. Germany $33.9, France $30.5
Advantageous geographical proximity to central Europe
74 Frontier Markets | May 2013
Source: Schroders, BP Statistical review of World energy, International Iron and Steel Institute, UBS, EIU Forecasts, as at June 2012
Enormous natural resources
Huge endowment of natural resources, which have allowed
the country to build up an oil reserve of 50% of GDP. Only
16m population
Sits geographically in an excellent position to export to both
China and Europe. Borders with China and Russia
Corruption is high but the political situation is stable. President
Nazarbeyv is a popular President and is more Western facing
than Putin in Russia. There is limited scope for civil unrest in
the near future, in spite of Zhanaozen protests
Phase I of the Kashagan oil field is set to be brought online in
2014. Biggest oil find since North Sea oil and has taken a
decade to develop. It will be another huge source of
Government revenue after development costs have been paid
(estimated to be $120bn). Estimated oil in the field is 38bn
barrels with a field life of over 25 years
Kazakhstan natural resources
Kazakhstan (4.0% of MSCI Frontiers Index)
75 Frontier Markets | May 2013
Source: Schroders as at September 2012. ¹BP Statistical Review of World Energy 2012
This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not
necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.
Resource % of global share World Ranking
Ferrochrome 5 2
Uranium 13 3
Cadmium 7 4
Zinc 7 4
Lead 4 5
Iron Ore 5 7
Rhenium 3 7
Bismuth 2 7
Molybdenum 1 9
Copper 2 10
Bauxite 1 11
Oil¹ 2 11
Key positives:
Huge excess capital reserves even under a penal Basel III
scenario. 2011 Tier 1 ratio 16+% and could be above 20% in
the next two years. Re-levaraging of the balance sheet will be
ROE supportive.
Halyk has a large funding advantage over the competition due
to its liquidity position and high pre-provision profitability – it is
almost considered a sovereign proxy on debt. Large liquidity
reserves to grow the balance sheet going forward.
Very strong GDP growth expected to be 7% in 2011, and 5% in
2012 in Kazakhstan. The banking opportunity is large due to
low consumer credit penetration levels. High profitability growth
to be supported over the next 3 years by a decline in risk costs
and a resumption of double digit loan growth.
Halyk Bank (Grade: 1, weight in MSCI Kazakhstan : 15%)
Kazakhstan – key stocks
76 Frontier Markets | May 2013
Source: Schroders, FactSet, as at December 2012. *Net (TR).
Securities above are shown for illustrative purposes and are not to be considered a recommendation to buy or sell.
This slide is intended as an example of our view or opinion on a specific stock in a Frontier country but should not be viewed as a recommendation to buy or sell. This stock is not
necessarily a holding in any current portfolio, and stock ratings and holdings are subject to change. For information on our stock ranking system, please see below beginning on
page 97.
US$ (re-based to 100)
Forward
P/E
Forward
EPSG %
Div Yield
%
Upside to
Fair Value %
4.9 14.0 6.1 +51.0
70
80
90
100
110
120
130
140
150
160
170
180
190
200
210
Sep 09 Feb 10 Aug 10 Feb 11 Jul 11 Jan 12 Jul 12 Dez 12
Halyk Bank Relative to MSCI Kazakhstan*
Overweight from
Jan 2011
A dynamic economy held back by poor policies
Large and educated middle class
Agricultural powerhouse; 20% of global Soya, 5% of global
beef
Underleveraged population; 5% Credit to GDP
Membership of Mercosur: leveraged to Brazilian growth
Substantial shale oil and gas discoveries have been made
in the past year
Household debt (%of GDP)
Argentina (3.3% of MSCI Frontiers Index)
77 Frontier Markets | May 2013
Source: UBS, Bloomberg, USDA, Morgan Stanley, Credit Suisse as at September 2012.
This slide is intended as an example of our views and opinions on specific Frontier country but should not be viewed as an investment recommendation. This country does not
necessarily have an allocation in any current portfolio, and opinions and allocations are subject to change.
0%
5%
10%
15%
20%
25%
30%
Arg
en
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a
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Co
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Me
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o
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Chile
Agenda
The Investment Case
Economic background
Equity Markets
Country Analysis/Key Stocks
Schroders Overview & Philosophy
Investment Process
Team
Appendices:
Performance
Competitor Analysis
Strategy
Biographies
78 Frontier Markets | May 2013
Philosophy
We believe that developing stock markets are inefficient and provide strong potential for adding
value through active fund management. This value can be extracted through both country and stock
selection. We believe that it is inappropriate to apply a systematic style bias as Frontier Market
countries may differ in their stage of development. We believe that as fund managers we should
manage both return and risk. Our aim is to achieve returns with the minimum level of risk through a
pro-active approach to risk control. We believe that applying a systematic, disciplined
approach, with a strong team culture increases our ability to add value.
79 Frontier Markets | May 2013
Source: Schroders
Focus
Why Schroders? A worldwide team – dedicated to asset management
Asset management is our sole business
Frontier Markets | May 2013
Experience and independence
Over 200 years of financial services experience
Founding Schroder family still controls more than 47% of
voting equity
Resources
Well established teams in all key
investment regions
Over 360 portfolio managers and
analysts worldwide
Over 3000 personnel in 27 countries
Financial strength
$359.2billion in AUM globally of which $26.2 billion is in
Emerging Markets
Approximately $1.5 billion surplus capital available for
building the business¹ Source: Schroders
Statistics are as of March 31, 2013
¹As at December 31, 2012
Bermuda Cayman Islands Mexico City New York Philadelphia
Amsterdam Copenhagen Frankfurt Geneva Gibraltar Guernsey Jersey London Luxembourg
Madrid Milan Paris Rome Stockholm Zurich
Beijing Hong Kong Jakarta Seoul Shanghai Singapore Sydney Taipei Tokyo
Buenos Aires Santiago São Paulo
Dubai
Mumbai
Schroders offices (Investment offices in orange)
80
Emerging market resources Location and experience
Source: Schroders March 2013. ¹Includes 7 fund managers, 1 strategist/fund manager, 27 analysts and 2 client portfolio managers.
* Local office analysts not involved in EM portfolio construction, but are a further source of expertise for the EM team to reference. Excluded from the 37 total in team.
Mexico
London:
Allan Conway (32)
Robert Davy (30)
James Gotto (21)
Waj Hashmi (19)
Nicholas Morse (25)
Nicholas Field (21)
Tom Wilson (11)
Pablo Riveroll (6)
Jonathan Fletcher (3)
Robert Ledger (1)
Moreno Fasolo (2)
Hong Kong:
Maurien Yau (20)
Jay Luong (12)
Young Roe Kim (12)
Sherry Lin (19)
Jing Li (8)
Rebecca Xu (3)
Shanghai:
Wu Hui (18)
Alex Tang (8)
Taipei:
Chen-Hsiu Chen (15)
Karen Lin (15)
Seoul:
Juno Yoon (12)
Singapore:
Wai Yin Loke (27)
Siok Mei Lim (17)
Sameer Kakakhel (18)
Indonesia:
Kiekie Boenawan*
Sao Paulo:
Alexandre Moreira (13)
Pedro Baltazar (5)
Supported by:
5 Global Sector Portfolio Managers
50+ Developed Market Analysts
Locally based Investment Teams
Portfolio Managers
Research Analysts
Product Manager
( ) Years Experience
Local business units
Dubai:
Rami Sidani (9)
Maha Soueissy (8)
Maya Bou Kheir (9)
Buenos Aires
Alan Ayres (30)
Edward Evans (10)
Abbas Barkhordar (5)
Bryony Deuchars (12)
Rollo Roscow (8)
Mohsin Memon (5)
Andrew Boag (6)
37¹ INVESTMENT PROFESSIONALS WITH A TOTAL OF 495 YEARS OF EXPERIENCE
(168 YEARS FOR FUND MANAGERS, 287 YEARS FOR ANALYSTS) AND AN AVERAGE OF 13 YEARS EXPERIENCE
Frontier Markets | May 2013 81
India:
4 analyst from the JV*
Schroders investment approach Sources of outperformance
82 Frontier Markets | May 2013
Source: Schroders as of March 2013.
Investment Process PRIMARILY BALANCED APPROACH targets 50% value added from stock and 50%
from country decisions
Strong proprietary stock research: database/models (GRiD)
QUANTITATIVE process drives country decisions
Incorporates rigorous RISK CONTROLS, including alpha adjusted tracking error and
stop loss rules
Team 37 Investment professionals
Average 13 years experience
Regional expertise locally based
Matrix approach
Global Resources Central economics team
Global Sector Analysis
Use of Global Platforms (dealing, settlement, risk, research and performance)
Schroders investment approach Objectives
83 Frontier Markets | May 2013
Source: Schroders
* Turnover figures are based on the lesser of purchases and sales over mean market value
There is no guarantee that any managed portfolio will meet its objectives.
Return Outperform MSCI Frontier Markets Index by 2.5% p.a.
(gross) over 3 year rolling periods
Risk Tracking error: 5% (range 2%-8%)
Equal risk from country and stock
Characteristics Style – balanced
Turnover 60%-80% p.a.*
Portfolio of 50 - 70 stocks
Agenda
The Investment Case
Economic background
Equity Markets
Country Analysis/Key Stocks
Schroders Overview & Philosophy
Investment Process
Team
Appendices:
Performance
Competitor Analysis
Strategy
Biographies
84 Frontier Markets | May 2013
A disciplined, systematic process with a well resourced, experienced team
Inputs
Emerging markets equity investment process
85 Frontier Markets | May 2013
Portfolio Construction Risk Management & Implementation
Stock Analysis
– Fundamental
Country Analysis
– Quantitative model
with judgemental
overlay
Stock Selection
(50%)
Country Allocation
(50%)
Portfolio
Execution &
Monitoring
Model
Portfolio
Client Portfolio
Implementation
Process overview
86 Frontier Markets | May 2013
Source: Schroders
Monthly Strategy Meeting
Country Stock Models
Country Quantitative Analysis
Country Allocation
GEMS Country Model tested on GEM, not frontier
Qualitative Judgement
Client Portfolio
Risk Analysis
Country analysis
Top down quantitative model
Factors
Source: Schroders
As of December 2012
The model takes the above mentioned factors into account in the percentages stated. Please see more details about the model on sl ide 87. Please see important information
about models at the end of this presentation.
Model aims to ensure systematic coverage of all key factors in all markets
Valuation 43%
Price/book 11%
P/E forecast 10%
Real earnings yield gap 10%
5yr P/E 12%
Growth 15%
Earnings growth 5%
Earnings revisions (3m) 7%
ROE 3%
Currency / Risk 17%
Real exchange rate 8%
Current account/GDP 9%
Momentum 20%
Price momentum (36m) 10%
Consensus
Weighting deviation 10%
Interest rates 5%
Real interest rate 5%
Frontier Markets | May 2013 87
Performance of GEM Model vs. MSCI EM
Source: Schroders. Data shown from December 31, 1991 to December 31, 2012. Results based on theoretical model output. Back test period 1992-2009 (excluding the out of
sample test period of 2004/2005). ¹Relative performance calculated arithmetically. ²Transaction costs include: commission + trader timing + market impact costs for a round trip.
The performance shown above is the performance of a hypothetical portfolio, net of transaction costs. The performance does not represent the performance of an actual account,
but instead is intended to indicate the impact that the GEM Model (a top down model for country selection) had on managed portfolios. Returns were calculated using end of day
trading prices for the day of the quarterly team meeting at which country allocations were determined. Please see the end of the presentation for a description of the model and its
limitations. Past performance is not a guide to future performance. The value of an investment can go up or down and is not guaranteed.
3.5%
0.1%
4.5%
1.6%0.4%
5.1%
2.4%3.7%
0.5%
2.6%
1.5%
3.3%
8.4%
4.5%4.2%
-0.7% -0.3%
7.7%3.5%
10.4%
2.9%
20.4%
-5%
0%
5%
10%
15%
20%
25%
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12Since
Inc.
(pa)
0
50
100
150
200
250
300
Dec 91 Dec 94 Dec 97 Dec 00 Dec 03 Dec 06 Dec 09 Dec 12
0
100
200
300
400
500
600
700
Relative net Relative gross MSCI EMF (rhs)
Performance of top down model
31 December 1991 = 100
Annual relative performance (net)1
Consistent value added
Outperformed in 19 out of 21 years
Model returns (net of 1.65% transaction costs² x model turnover)
Annualized excess return = 3.7%
Annualized tracking error = 3.6%
Information ratio = 1.0
Annual Turnover = 38.5%
Model has provided consistent outperformance with low volatility
Hypothetical results: For further information on the risks involved please refer to the Important Information slide
Frontier Markets | May 2013 88
Performance of GEM model during up and down years December 1991 to December 2012
Source: Schroders. Relative performance calculated arithmetically.
The performance shown above is the performance of a hypothetical portfolio, net of transaction costs. The performance does not represent the performance of an actual account,
but instead is intended to indicate the impact that the GEM Model (a top down model for country selection) had on managed portfolios. Returns were calculated using end of day
trading prices for the day of the quarterly team meeting at which country allocations were determined. Please see the end of the presentation for a description of the model and its
limitations. Past performance is not a guide to future performance. The value of an investment can go up or down and is not guaranteed.
Down years
Up Years
Model has performed well during up and down years
1 (-0.3%)
1 (-0.7%)
2
Underperformance
8 (+0.1% to +8.4%)
11 (+0.5% to +20.4%)
19
Outperformance
3.4%
4.7%
Average relative
performance
Frontier Markets | May 2013 89
Performance of GEM model vs. MSCI Frontier Markets Since inception of the Frontier Markets Fund (14th December 2010)
Source: Schroders.
The performance shown above is the performance of a hypothetical portfolio, net of transaction costs. The performance does not represent the performance of an actual account,
but instead is intended to indicate the impact that the GEM Model (a top down model for country selection) had on managed portfolios. Returns were calculated using end of day
trading prices for the day of the quarterly team meeting at which country allocations were determined. Please see the end of the presentation for a description of the model and its
limitations. Past performance is not a guide to future performance. The value of an investment can go up or down and is not guaranteed.
Early days but looks promising
Frontier Markets | May 2013 90
99
100
101
102
103
104
De
z 1
0
Ja
n 1
1
Feb
11
Mrz
11
Ap
r 1
1
Ma
i 1
1
Ju
n 1
1
Ju
l 1
1
Au
g 1
1
Se
p 1
1
Okt 1
1
No
v 1
1
De
z 1
1
Ja
n 1
2
Feb
12
Mrz
12
Ap
r 1
2
Ma
i 1
2
Ju
n 1
2
Ju
l 1
2
Au
g 1
2
Sep 1
2
Okt 1
2
No
v 1
2
De
z 1
2
Ja
n 1
3
Feb
13
GEMS Model Performance for Frontier Markets
14 December 2010 = 100
Underperformance in 2H 2011
due to overweight Eastern
European countries as
Eurozone concerns intensified
Strong performance in other
periods from a wide range of
countries
Model is run monthly and countries ranked based on scores
Model scores and rankings
Country analysis GEMS country model scoresheet - Example
91 Frontier Markets | May 2013
Source: Schroders April 2013
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
April-2013 TOT P/B P/E 5yr P/E P/E F/C EYG VAL EPS Gr
GDP 6m
Chg
Return on
Equity
Revisions
Ratio GRW
DividendCo
ver REER
Curr A/C
%GDP RISK Real IR INT RATE Price Mom
Active w gt
Dev MOM
100% 11.0% 0.0% 12.0% 10.3% 9.6% 43.0% 8.9% 0.0% 6.5% 0.0% 15.4% 0.0% 8.5% 8.6% 17.1% 4.9% 4.9% 19.6% 0.0% 19.6%
Serbia 77.0 88.2 94.7 98.9 99.6 95.2 76.8 79.1 77.7 85.7 14.9 50.2 40.7 40.7 68.9 68.9
Argentina 63.5 82.9 97.9 89.9 85.0 89.3 95.0 80.2 88.8 0.0 51.1 25.6 87.1 87.1 14.2 14.2
Ukraine 61.1 90.5 87.2 100.0 99.9 94.0 28.2 97.1 57.1 53.9 27.0 40.4 99.6 99.6 0.8 0.8
Estonia 53.4 60.8 16.6 36.2 47.6 39.6 93.5 12.8 59.6 67.6 38.2 52.8 17.9 17.9 88.1 88.1
Nigeria 52.8 16.2 21.1 29.8 20.2 21.8 76.3 82.7 79.0 57.9 54.2 56.1 78.5 78.5 91.1 91.1
Pakistan 52.8 27.2 47.9 49.5 37.7 40.7 42.8 94.7 64.6 9.4 43.4 26.4 82.4 82.4 85.5 85.5
Romania 52.7 57.2 41.0 45.8 49.5 48.2 91.7 16.2 60.0 71.8 39.9 55.8 39.8 39.8 57.2 57.2
Qatar 52.1 31.7 26.4 35.3 47.4 34.6 55.6 42.0 49.9 59.6 97.9 78.8 16.4 16.4 77.9 77.9
Kenya 50.5 13.0 18.1 28.0 11.3 17.6 73.2 99.4 84.2 51.2 24.2 37.6 95.8 95.8 96.0 96.0
Sri Lanka 50.1 19.9 16.4 23.9 12.4 18.2 64.9 60.7 63.1 89.4 31.7 60.5 87.7 87.7 91.3 91.3
Bulgaria 49.9 100.0 99.8 50.0 50.0 76.8 50.0 15.5 35.5 52.6 44.0 48.3 17.1 17.1 11.8 11.8
Kazakhstan 48.8 60.6 77.5 60.9 79.7 69.7 5.3 51.4 24.7 45.9 57.9 52.0 6.6 6.6 30.0 30.0
Bangladesh 48.3 37.9 47.5 50.0 50.0 46.2 50.0 44.1 47.5 96.8 56.9 76.8 87.2 87.2 19.0 19.0
UAE 48.0 56.7 25.8 30.3 31.2 36.0 59.1 13.2 39.8 59.7 65.0 62.4 42.9 42.9 69.6 69.6
Mauritius 45.1 31.8 31.5 50.0 50.0 40.2 50.0 57.6 53.2 16.4 21.0 18.7 34.1 34.1 75.3 75.3
Oman 44.5 38.7 44.8 39.5 50.5 43.2 31.0 45.8 37.2 58.9 80.6 69.8 19.7 19.7 37.2 37.2
Vietnam 43.5 18.0 28.3 24.7 19.7 22.9 85.3 47.4 69.4 53.9 47.1 50.5 63.7 63.7 57.4 57.4
Kuwait 40.9 31.7 29.2 25.3 24.3 27.8 65.8 18.0 45.8 32.3 100.0 66.2 47.8 47.8 42.1 42.1
Bahrain 40.1 59.6 82.2 37.0 45.4 57.3 1.1 30.0 13.2 59.7 55.2 57.4 24.7 24.7 12.2 12.2
Lebanon 39.6 61.8 50.9 35.6 35.5 46.6 55.2 26.4 43.1 59.7 20.4 40.0 48.0 48.0 19.2 19.2
Tunisia 39.5 19.9 25.7 50.0 50.0 35.5 50.0 32.0 42.5 36.0 25.5 30.7 20.5 20.5 58.6 58.6
Lithuania 39.2 19.3 21.9 25.9 29.6 23.9 11.4 75.1 38.1 52.9 41.9 47.4 31.8 31.8 68.4 68.4
Slovenia 36.4 55.1 41.1 35.2 40.0 43.0 25.6 12.6 20.1 52.6 61.6 57.1 33.4 33.4 17.3 17.3
Croatia 36.1 39.3 46.6 29.3 38.1 38.7 2.6 27.3 13.0 35.8 52.9 44.4 20.5 20.5 45.1 45.1
Jordan 35.0 44.5 28.8 34.3 37.0 36.0 50.9 22.9 39.2 59.6 6.6 33.0 38.9 38.9 30.2 30.2
Rather than optimization, a simple ‘worst to best’ asset allocation approach is used
Rankings – Weightings
Country allocation GEMS equity model - Example
92
Source: Schroders, April 2013. *Or 10% for countries over 15% of index.
Countries and country allocations are shown for illustrative purposes only, are subject to change and should not be viewed as a recommendation to buy/sell.
Identify top and bottom 6
countries
Take bottom 6 countries to
zero or maximum 5%
underweight*
Redistribute proceeds equally
across top 6 markets 7.6%
Country MSCI Index Rank Abs Rel
Serbia 0.3% 1 1.6% 1.3%
Argentina 3.1% 2 4.3% 1.3%
Ukraine 0.2% 3 1.4% 1.3%
Estonia 0.5% 4 1.8% 1.3%
Nigeria 15.2% 5 16.5% 1.3%
Pakistan 4.1% 6 5.4% 1.3%
Romania 1.2% 7 1.2% 0.0%
Qatar 14.8% 8 14.8% 0.0%
Kenya 3.8% 9 3.8% 0.0%
Sri Lanka 1.7% 10 1.7% 0.0%
Bulgaria 0.1% 11 0.1% 0.0%
Kazakhstan 3.7% 12 3.7% 0.0%
Bangladesh 1.8% 13 1.8% 0.0%
UAE 11.0% 14 11.0% 0.0%
Mauritius 0.9% 15 0.9% 0.0%
Oman 3.2% 16 3.2% 0.0%
Vietnam 2.2% 17 2.2% 0.0%
Kuwait 23.9% 18 23.9% 0.0%
Bahrain 0.5% 19 0.5% 0.0%
Lebanon 2.4% 20 0.0% -2.4%
Tunisia 0.6% 21 0.0% -0.6%
Lithuania 0.2% 22 -0.1% -0.2%
Slovenia 1.6% 23 0.0% -1.6%
Croatia 2.0% 24 0.0% -2.0%
Jordan 0.8% 25 0.0% -0.8%
100.0% 100.0%
Frontier Markets | May 2013
Judgement
93 Frontier Markets | May 2013
Source: Schroders
Unreliable/Incomplete Data
Market factors – Liquidity/Access
Geo-political factors
Summary score sheet - example
Country allocation
94 Frontier Markets | May 2013
Source: Schroders, April 2013.
Countries representing over 15% of index can be up to 10% underweight, otherwise a maximum of 5% underweight.
In the case of off-index market Saudi Arabia, maximum allocation is restricted to 10%.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Model Active
Weight
Index
Weight
Active
Weight
Final
Weight
Serbia 1 O 1 O 1.2% U 0.3% -0.3% 0.0%
Argentina 2 O 2 O 1.2% U 3.0% -3.1% -0.1%
Ukraine 3 O 3 O 1.2% N 0.2% 2.5% 2.7%
Estonia 4 O 11 N 1.2% U 0.5% -0.5% 0.0%
Nigeria 5 O 6 O 1.2% U 15.2% -1.5% 13.7%
Pakistan 6 O 7 N 1.2% U 4.1% 0.0% 4.1%
Romania 7 N 4 O 0.0% U 1.2% -1.2% 0.0%
Qatar 8 N 8 N 0.0% O 14.9% 4.0% 18.9%
Kenya 9 N 13 N 0.0% U 3.8% -2.5% 1.3%
Sri Lanka 10 N 14 N 0.0% N 1.7% 0.0% 1.7%
Bulgaria 11 N 9 N 0.0% U 0.1% -0.1% 0.0%
Kazakhstan 12 N 12 N 0.0% O 3.9% 3.5% 7.4%
Bangladesh 13 N 5 O 0.0% N 1.8% 0.0% 1.8%
UAE 14 N 10 N 0.0% O 11.0% 5.0% 16.0%
Mauritius 15 N 15 N 0.0% U 0.9% -0.5% 0.4%
Oman 16 N 16 N 0.0% O 3.2% 0.5% 3.7%
Vietnam 17 N 17 N 0.0% U 2.2% -2.2% 0.0%
Kuwait 18 N 18 N 0.0% U 24.0% -8.5% 15.5%
Bahrain 19 N 19 N 0.0% U 0.5% -0.5% 0.0%
Lebanon 20 U 24 U -2.2% N 2.2% -1.5% 0.7%
Tunisia 21 U 21 U -0.6% N 0.6% -0.6% 0.0%
Lithuania 22 U 20 U -0.1% N 0.1% -0.2% 0.0%
Slovenia 23 U 22 U -1.6% N 1.6% -1.6% 0.0%
Croatia 24 U 23 U -2.0% N 2.0% -2.0% 0.0%
Jordan 25 U 25 U -0.8% N 0.8% -0.8% 0.0%
Saudi Arabia 100% 8.0%
Georgia 2.5%
(Others AFRICA) 1.5%
Cash 0.2%
Decision
Previous
Month
April 2013
GEMs Model
JudgementModel Rank
Detailed fundamental analysis aim to cover a minimum of 70% of the stocks in each country
Stock analysis
95 Frontier Markets | May 2013
Source: Schroders, FactSet. Data as of March 31, 2013
* Excluding markets less than 1% of the MSCI Frontier Markets Index: Bahrain, Bulgaria, Estonia, Jordan, Lithuania, Mauritius, Serbia, Tunisia, Ukraine.
In Middle East, core coverage approx. 64% of UAE, 73% of Qatar, 61% of Oman, 97% of Lebanon and 69% of Kuwait.
Min. 70% market
capitalization
coverage*
57 out of 140 stocks
in the MSCI Frontier
Markets Index are
core stocks
Focus Universe Output Tools Communication
Common
research
template
Schroder
company
valuation model
3-stage DCF
analysis
Long term
Shareholder
value and
return
Sustainable
competitive
advantage
Stocks graded
1-4
Fair values
Global Research
Investment
Database
(GRiD)
Daily research
communication
Monthly sector
meetings
In depth, fundamental stock research
Intranet based
Consistent modelling and valuation disciplines
Consistent economic, currency and pricing
assumptions
Enables quantitative measurement
of analysts’ impact
Stock analysis Global Research Investment Database – “the GRiD”
96 Frontier Markets | May 2013
Source: Schroders
Use of GRiD is for illustrative purposes only. All security information is for illustrative purposes and is subject to change at any time.
Not to be considered a recommendation to buy/sell.
In depth, fundamental stock research
Stock analysis Global Research Investment Database – “the GRiD”
97 Frontier Markets | May 2013
Source: Schroders
Use of GRiD is for illustrative purposes only. All security information is for illustrative purposes and is subject to change at any time.
Not to be considered a recommendation to buy/sell.
Stock rankings
1 High conviction outperform
2 Low conviction outperform
3 Low conviction under-perform
4 High conviction under-perform
1’s and 4’s evenly split
5% performance cut off to
encourage conviction
*Note: Applies to Latin America and EMEA. Asia is minimum 30% 1’s and 20% 4’s
Source: Schroders
Stocks ranked 1-4 and distributed across the country index*
Buy Sell
1 2 4 3
30-50% 0-40% 30-50% 5%
Performance
Cut-off
5%
Performance
Cut-off
Hold
Conviction achieved through normal distribution requirement
and +/- 5% cut off for 2 and 3 ranked stocks
Frontier Markets | May 2013 98
Detailed analysis of analysts performance reviewed weekly
Ranking performance per country
Distribution of rankings in core
stocks
Number of ranking changes year
to date
Percentage of market ranked
(core plus non-core)
+/- 5% cut off for 2’s and 3’s
Weekly analysis per analyst:
Stock analysis Weekly Analyst Scoresheets
99 Frontier Markets | May 2013
Source: Schroders. All security information is for illustrative purposes and is subject to change at any time. Not to be considered a recommendation to buy/sell.
Bahrain Aluminium Bahrain 30%
Egypt Orascom Industries 32%
Egypt Commercial Int. Bank 26%
Jordan ARAB BANK 59%
Kuwait Mobile Telecommunications CO 26%
Kuwait NATIONAL BANK OF KUWAIT 26%
Lebanon SOLIDERE 51%
Morocco MAROC TELECOM 35%
Morocco Attijari Wafa Bank 35%
Morocco DOUJA PROM GROUPE ADDOHA 30%
Oman BANK MUSCAT 34%
UAE EMAAR PROPERTIES 30%
Analyst Scores – MENA – 30th April 2013
Market Score MSCI Wgt Total No. of Stocks Ranked No. of No. of 1's 2's 3's 4's T/O Limit T/O
Scores Core Non-core Stocks in Market
Maya Bou Kheir 11.66 3.25 19 6 41
Oman -1.84 0.10 -0.16 3 1 8 71% 56% 30% 14% 0% 3 0
Qatar 4.24 0.45 1.99 7 2 13 77% 25% 22% 30% 23% 7 2
UAE 3.14 0.35 0.96 4 3 9 76% 57% 0% 43% 0% 4 1
Bahrain 1.11 0.01 0.02 1 0 2 32% 0% 0% 100% 0% 1 0
Lebanon 7.00 0.07 0.49 3 0 5 83% 17% 23% 61% 0% 3 0
Jordan -2.00 0.02 -0.06 1 0 4 59% 0% 0% 100% 0% 1 0
Maha Soueissy 2.60 3.70 18 14 69
Egypt -5.24 0.06 -0.35 5 1 7 87% 29% 43% 20% 7% 5 0
Saudi Arabia 4.62 0.76 3.49 7 8 47 46% 17% 35% 38% 11% 7 3
Morocco -0.51 0.02 -0.01 2 0 3 74% 50% 0% 50% 0% 2 0
Kuwait 3.73 0.17 0.58 4 5 12 69% 0% 43% 35% 22% 4 0
The strategy’s objective is to beat the MSCI FM index but we will actually look off-
benchmark for other alpha opportunities
Stock analysis
Non-core stocks are bottom 30% by market capitalisation of MSCI Frontier Markets Index + non
index frontier markets stocks
Analysts incentivized to find non-core stocks
Developed Market Frontier companies
– DM stocks which generate over 50% of their revenues from FMs screened on a quarterly basis by Stella
Huang and Jacob Reynolds
– Results reviewed by the team and detailed analysis carried out on potential investment ideas
– Strong opportunities presented at monthly strategy meeting for inclusion in the portfolio on a bottom up
basis
Up to 10 - 20 non-core stocks in portfolio representing about 10% of the portfolio
100 Frontier Markets | May 2013
Style
No imposed general style due to diversity of Frontier Markets
Non-core stocks
Global Emerging Markets Equities | May 2013 101
Stocks selected to be further analysed
Country Stock
Country Analysts Emerging/Developed
Analysts
Regional/Global Stock
Emerging/Developed
Analysts
Present the bottom-up case in monthly strategy meetings
Stock screens quarterly review
Report to the Fund Manager covering that country
Non core exposure – Developed/Emerging stocks
Return target can be converted into detailed risk budget
Risk controls
102 Frontier Markets | May 2013
Source: Schroders
Return objective
Information ratio
Tracking error target
Stock tracking error target
Stock tracking error target per country
MSCI Frontier Markets Index +2.5% (gross) p.a. over
3 year rolling periods
0.5
(2.5%)/0.5 = 5% (2-8% range)
0.5*(5²) = 12.5 12.5 = 3.5%
10% (4-15% range)
Aim of risk controls is to obtain return targets with minimum risk and achieve a
skewed distribution of returns in favour of the upside
Tracking error target 2 – 8%, average 5%
Country controls ± 5% vs. index
Alpha adjusted tracking errors
Risk controls
103 Frontier Markets | May 2013
Source: Schroders.
*This is not a guaranteed stop-loss
15% relative stop-loss rule*
15% relative stop-buy screen
Performance attribution
Sector reviews
Risk Controls
Stock Controls
Monitoring
It is costly not to admit your mistakes
Portfolio manager psychology
104 Frontier Markets | May 2013
Source: Schroders, Deutsche Bank. February 2009. This slide is a joke/anecdote. It is not real and obviously not based on any real data.
Stock Country Date Sold Maximum
pain avoided
Relative performance from date
of sale to end of year (vs country index %)
Absolute performance
from date of sale to end
of year (%)
BRF-Brazil Foods Brazil 07-Feb-12 7% 30% 8%
CEMIG ADS Brazil 05-Nov-12 12% -12% -6%
PDG Realty Brazil 12-Mar-12 59% -51% -57%
Telefonica Brasil Brazil 14-Sep-12 3% 7% 8%
TIM Participacoes Brazil 20-Nov-12 13% -5% 7%
Anhui Conch Cement China 01-Aug-12 7% 15% 38%
Baidu Inc. ADS China 13-Nov-12 15% -6% 6%
Belle International China 16-Jan-12 4% 31% 57%
Belle International China 17-Oct-12 0% 15% 30%
China Mengniu Dairy China 29-Feb-12 8% -3% 1%
Dongfeng Motor Group China 04-Jan-13 0% 0% 0%
Lenovo Group Ltd. China 27-Jul-12 6% 6% 31%
Lenovo Group Ltd. China 04-Oct-12 10% -4% 12%
Parkson Retail Group Ltd. China 05-Jul-12 33% -24% -9%
Tingyi Holding Corp. China 29-Feb-12 14% -14% -9%
Centamin Egypt Ltd Egypt 01-Aug-12 58% -44% -39%
EFG-Hermes Holdings Egypt 26-Jul-12 13% -10% 1%
Infosys Ltd. India 23-Apr-12 14% -13% -3%
Reliance Industries Ltd. India 23-Mar-12 4% 1% 8%
IndoFood Sukses Makmur Indonesia 10-Feb-12 11% 6% 8%
London Sumatra Indonesia Indonesia 04-Sep-12 27% -5% 1%
CIMB Group Holdings Bhd Malaysia 20-Jan-12 4% 0% 10%
Genting Bhd Malaysia 07-Aug-12 4% 4% 9%
Wal-Mart de Mexico Mexico 21-Jun-12 4% 6% 31%
Buenaventura Peru 07-Aug-12 14% -13% 0%
KGHM Poland 09-Jan-12 0% 42% 96%
Globaltrans Russia 16-Nov-12 11% -5% 7%
Norilsk Nickel Russia 20-Mar-12 6% 16% 6%
NOVATEK Russia 26-Jul-12 15% 0% 12%
Stock Country Date Sold
Maximum
pain
avoided
Relative performance
from date
of sale to end of year
(vs country index %)
Absolute
performance
from date of sale
to end of year (%)
X5 Retail Group Russia 26-Jan-12 17% -13% -16%
Impala Platinum South Africa 09-May-12 15% 0% 12%
E-mart Co. Ltd. South Korea 02-Mar-12 16% -13% -8%
Hyundai Heavy Inds. South Korea 23-Jul-12 16% 0% 23%
Hyundai Mobis South Korea 03-Jan-13 0% 0% 0%
GS Eng. & Const. South Korea 17-Oct-12 29% -18% -11%
Samsung Engineering South Korea 19-Oct-12 18% -8% 0%
SK Hynix South Korea 29-May-12 11% 5% 26%
KB Financial Group South Korea 08-May-12 9% -1% 8%
KT&G Corp. South Korea 27-Jan-12 7% -1% 9%
Samsung Fire & Marine South Korea 09-Feb-12 2% -2% 5%
Shinhan Financial South Korea 20-Jul-12 10% 2% 21%
Chinatrust Financial Taiwan 01-Aug-12 6% -6% 7%
Chinatrust Financial Taiwan 03-Jan-13 0% 0% 0%
TAV Turkey 02-Nov-12 10% -9% 2%
Turk Telekom Turkey 10-Jul-12 24% -24% 0%
Average 12.5%
Pain avoided in 2012 by using the stop loss rule*
Year No of Transactions Average pain avoided
2012 45 -12.48
2011 39 -19.06
2010 45 -12.61
2009 41 -17.30
2008 46 -28.01
2007 40 -21.55
2006 27 -13.09
2005 18 -14.65
Pain avoided at 12.5% slightly lower than usual
Frontier Markets | May 2013
December 31, 2011 to December 31, 2012. US Dollar
Source: Schroders. *Please note that during periods of market volatility we may temporarily suspend the stop-loss rule. Suspended from Q3 2011 to year end
Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed
Securities and countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell
105
No need to implement the rule in 2012
% of MSCI EM Index Stop Loss (3 month rolling rule)
Percentage of Index Stop Loss
Source: Schroders. Data to March 2013.
+1 std deviation
-1 std deviation
0%
10%
20%
30%
40%
50%
60%
2005 2007 2008 2009 2010 2011 2012
Frontier Markets | May 2013 106
Risk
Why is risk adjustment correlated with performance rather than conviction?
Risk adjusted performance aim to deliver low volatility, consistent, incremental
outperformance to reach target returns
Why increase risk where performance is under-target?
If positive but below target alpha increase risk
If negative alpha reduce risk
A disciplined approach to risk control
Frontier Markets | May 2013 107
Implementation
Set at team monthly strategy meeting
Country weights: Targets
Portfolio characteristics: Sign off
Set by Portfolio Managers with Analysts’ Input
Stock weights
Fund manager assistants team
Liquidity testing
Assigned Portfolio Manager
Client guidelines and risk expectations
Cash flows
Source: Schroders, March 2013.
Please see the description of the model and its limitations at the end of this presentation.
Client Portfolio
Policy
Model Portfolio
Implementation
Model
Portfolios
Client
Portfolio
Implementation
4 person fund manager assistant team ensures fund manager’s
focus on fund management, not administration
Frontier Markets | May 2013 108
Trading
Investment team has primary responsibility
All trades are screened pre-trade in the
Charles River System
All trades carried out by the Central Dealing team
Trading costs are monitored using Alpha Capture
Performance and characteristics signed off
monthly by product manager and formally
reviewed quarterly
Source: Schroders, March 2013.
Portfolio
execution &
monitoring
Portfolio construction team
Central dealing team
Client portfolio
Pre-trade screening
Operations
Experienced, global team of dealers
Frontier Markets | May 2013 109
Agenda
The Investment Case
Economic background
Equity Markets
Country Analysis/Key Stocks
Schroders Overview & Philosophy
Investment Process
Team
Appendices:
Performance
Competitor Analysis
Strategy
Biographies
110 Frontier Markets | May 2013
Emerging market resources Location and experience
Source: Schroders March 2013. ¹Includes 7 fund managers, 1 strategist/fund manager, 27 analysts and 2 client portfolio managers.
* Local office analysts not involved in EM portfolio construction, but are a further source of expertise for the EM team to reference. Excluded from the 37 total in team.
Mexico
London:
Allan Conway (32)
Robert Davy (30)
James Gotto (21)
Waj Hashmi (19)
Nicholas Morse (25)
Nicholas Field (21)
Tom Wilson (11)
Pablo Riveroll (6)
Jonathan Fletcher (3)
Robert Ledger (1)
Moreno Fasolo (2)
Hong Kong:
Maurien Yau (20)
Jay Luong (12)
Young Roe Kim (12)
Sherry Lin (19)
Jing Li (8)
Rebecca Xu (3)
Shanghai:
Wu Hui (18)
Alex Tang (8)
Taipei:
Chen-Hsiu Chen (15)
Karen Lin (15)
Seoul:
Juno Yoon (12)
Singapore:
Wai Yin Loke (27)
Siok Mei Lim (17)
Sameer Kakakhel (18)
Indonesia:
Kiekie Boenawan*
Sao Paulo:
Alexandre Moreira (13)
Pedro Baltazar (5)
Supported by:
5 Global Sector Portfolio Managers
50+ Developed Market Analysts
Locally based Investment Teams
Portfolio Managers
Research Analysts
Product Manager
( ) Years Experience
Local business units
Dubai:
Rami Sidani (9)
Maha Soueissy (8)
Maya Bou Kheir (9)
Buenos Aires
Alan Ayres (30)
Edward Evans (10)
Abbas Barkhordar (5)
Bryony Deuchars (12)
Rollo Roscow (8)
Mohsin Memon (5)
Andrew Boag (6)
37¹ INVESTMENT PROFESSIONALS WITH A TOTAL OF 495 YEARS OF EXPERIENCE
(168 YEARS FOR FUND MANAGERS, 287 YEARS FOR ANALYSTS) AND AN AVERAGE OF 13 YEARS EXPERIENCE
Frontier Markets | May 2013 111
India:
4 analyst from the JV*
Emerging Market investment team
¹Deputy Heads.
Source: Schroders as of March 2013. * Plus access to the research of 4 analysts from our Joint Venture in India.
Regions are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
A matrix approach ensures involvement of whole team in all portfolios, minimising
divergent performance and retains individual accountability
Stock Analysis
Asia Latin America
Nicholas Morse Alexandre Moreira
Andrew Boag
Pedro Baltazar
Pablo Riveroll
EMEA
Tom Wilson Bryony Deuchars
Rollo Roscow
Mohsin Memon
Po
rtfo
lio
Co
ns
tru
cti
on
Korea Philippines
India
Mexico
Poland South Africa
Malaysia Thailand
Taiwan
Brazil
Czech Turkey
Allan Conway - Head of Emerging Markets
Alan Ayres/Edward Evans - Emerging Markets Client Portfolio Manager
Nicholas Field¹ - Emerging Markets Strategist/Portfolio Manager
Abbas Barkhordar - Emerging Markets Strategy Analyst
Middle East
Rami Sidani Maha Soueissy
Maya Bou Kheir
Indonesia
China
Chile Peru
Colombia
Russia Hungary
Morocco
Egypt
London Jonathan Fletcher
Robert Ledger
Moreno Fasolo
Asia 14 Analysts*
Robert Davy¹
Global manager
Waj Hashmi
Global manager
James Gotto
Global manager
Frontier Markets | May 2013 112
Input from whole team - Global perspective - Individual accountability - Minimize divergent performance
Frontier Markets investment team
113 Frontier Markets | May 2013
Source: Schroders as of March 2013. ¹Deputy Head of GEMS. * Lithuania and Serbia not covered as too illiquid. ** Coverage transferred July 2011 from local Asian Analysts.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Analysts
Allan Conway Head of Emerging Markets
Rami Sidani Frontier Markets Fund Manager
Nicholas Field Emerging Markets Strategist/Portfolio Manager¹
Alan Ayres / Edward Evans Emerging Markets Client Portfolio Manager
Maha
Soueissy
Rollo
Roscow
Jonathan
Fletcher
Abbas
Barkhordar
Kuwait
Tunisia
Kenya
Nigeria
Mauritius
Bulgaria
Croatia
Estonia
Kazakhstan
Romania
Slovenia
Ukraine
Bangladesh
Maya
Bou Kheir
UAE
Qatar
Oman
Bahrain
Lebanon
Jordan
Europe* Asia** Africa MENA
Andrew
Boag
Argentina
Latin America
Robert
Ledger
Sri Lanka
Moreno
Fasolo
Mohsin
Memon
Pakistan Vietnam
Front office support team
Source: Schroders as of March 2013.
Fund Managers
Strong support for fund managers enables them to focus on investments
Client Portfolio Manager
Alan Ayres
Rajan Shah Asma Bazza
Paramita
Mondal
Alasdair
Docherty
Michal
Paprocki Danielle Lovegrove Jacob Reynolds Tara Williams Fatna Chelihi
Edward
Evans
Frontier Markets | May 2013 114
Emerging markets team assessment
Source: Schroders
Team compensation aligned with clients interests
Frontier Markets | May 2013 115
Global Fund Manager
(%)
Regional Head
(%)
Analyst
(%)
Stock Rankings 0.0 0.0 40.0
Global GEM performance 27.5 15.0 10.0
Regional performance 0.0 45.0 0.0
Frontiers performance 0.0 0.0 2.0
Countries within GEM 47.0 0.0 12.5
EMEA/Lat Am countries within GEM 0.0 10.0 0.0
Countries within Frontiers 0.0 0.0 3.0
Participation 8.0 8.0 5.0
Marketing 5.0 7.5 0.0
Market Coverage 0.0 0.0 10.0
Manage Team 3.0 10.0 0.0
Research/projects 0.0 0.0 10.0
Other 9.5 4.5 7.5
Total 100.0 100.0 100.0
Quant 74.5 70.0 67.5
Non-quant 25.5 30.0 32.5
Team meetings
116 Frontier Markets | May 2013
Daily Daily conference calls
Weekly Strategy – “Housekeeping”
Monthly Strategy – Country Allocation
Sector
Quarterly Performance/Risk Review with CIO
A disciplined, systematic approach with strong risk control implemented with conviction
Summary
117 Frontier Markets | May 2013
Source: Schroders as at March 2013.
Investment Process PRIMARILY BALANCED APPROACH targets 50% value added from stock and 50%
from country decisions
Strong proprietary stock research: database/models (GRiD)
QUANTITATIVE model drives country decisions
Incorporates rigorous RISK CONTROLS, including alpha adjusted tracking error
and stop loss rules
Team 37 Investment professionals
Average 13 years experience
Regional expertise locally based
Matrix approach
Global Resources Central economics team
Global Sector Analysis
Use of Global Platforms (dealing, settlement, risk, research and performance)
Agenda
The Investment Case
Economic background
Equity Markets
Country Analysis/Key Stocks
Schroders Overview & Philosophy
Investment Process
Team
Appendices:
Performance
Competitor Analysis
Strategy
Biographies
118 Frontier Markets | May 2013
1 year
3 years p.a.
5 years p.a.
Since
inception p.a.
Schroder Middle East Equity Composite +30.4 +11.0 +0.2 +0.7
MSCI Arabian Markets Net (TR) and Turkey + Saudi Arabia (fixed at 20%)* +18.7 +4.3 -2.2 -1.5
Relative performance +11.7 +6.7 +2.4 +2.2
Tracking Error 4.1 3.3 4.7 4.7
Information Ratio 2.9 2.0 0.5 0.5
Performance (in US$ %) to April 30th, 2013
Annualized periods to April 30th, 2013 (in US$ %)
Investment mandate: Middle East Equity
Target: 2% p.a. (gross) over 3 year rolling periods
Inception date: October 31, 2007
Schroder Middle East Equity Composite
Frontier Markets | May 2013 119
YTD 2012 2011 2010 2009 2008
Schroder Middle East Equity Composite +14.7 +34.5 -19.2 +27.2 +30.1 -52.2
MSCI Arabian Markets Net (TR) and Turkey + Saudi Arabia (fixed at 20%)* +9.0 +24.7 -21.2 +20.3 +31.3 -47.6
Relative performance +5.7 +9.8 +2.0 +6.9 -1.2 -4.6
Tracking Error n/a 3.8 3.1 4.2 5.3 6.0
Information Ratio n/a 2.6 0.6 1.7 -0.2 -0.8
Source: Schroders. Performance shown gross of fees
Past performance is not a guide to future performance. The value of an investment can go down as well as up and is not guaranteed. Please see the end of the presentation for
performance notes.
*From inception to 9.30.2009 the index is MSCI Arabian Markets inc. Israel and Turkey Net TR with Saudi Arabia capped at 10%.
From 9.30.2009 to 9.30.2010 chain linked to MSCI Arabian Markets inc. Turkey Net TR with Saudi Arabia capped at 20%.
From 9.30.2010 to 8.31.2012 chain linked to MSCI Arabian Markets Net TR and Turkey + S&P Saudi Arabia Large / Mid Cap (fixed at 20%).
From 8.31.2012 to present chain linked to MSCI Arabian Markets inc. Turkey Net TR with Saudi Arabia capped at 20%.
Quartile ranking to April 30th, 2013
Competitor analysis – Schroder ISF Middle East
120 Frontier Markets | May 2013
Source : Schroders, Morningstar Direct
Morningstar Direct: Performance for Schroder ISF Middle East A Acc.
Database Name : GEM Offshore Universe All Strategies USD/ Africa & Middle East Equity
Schroder ISF range is not available to US investors
Performance shown is past performance. Past performance is not a guide to future performance. The value of an investment can go down as well as up and is not guaranteed.
1 Year 3 Years 5 Years
Schroder ISF Middle East A Acc 1 1 1
** Remove from final presentation **
Performance (in US$ %) to April 30th, 2013
Investment mandate: Frontier Markets
Benchmark: MSCI Frontiers Markets Net (TR)
Inception date: December 31, 2010
Schroder Frontier Markets Equity Composite
Source: Schroders. Performance shown gross of fees
Past performance is not a guide to future performance. The value of an investment can go down as well as up and is not guaranteed. Please see the end of the presentation for
performance notes.
Frontier Markets | May 2013 121
YTD 1 year 2 years p.a. Since inception
p.a.
Schroder Frontier Markets Equity Composite +18.9 +30.2 +10.1 +8.0
MSCI Frontier Markets Index Net (TR) +12.1 +16.8 +0.1 -0.4
Relative performance +6.8 +13.4 +10.0 +8.4
Tracking Error n/a 5.6 4.9 5.1
Information Ratio n/a 2.4 2.0 1.6
Frontier Markets Attribution 2012
Source: Schroders, Factset, Gross. Total performance is calculated based on the Schroder regional composite. Attribution data is shown for a representative account.
Countries are mentioned for illustrative purposes only and should not be viewed as a recommendation to buy/sell.
Past performance is no guarantee of future results. Performance is gross of fees. Please see performance notes at the end of presentation for important disclosures. The value of an investment can go
down as well as up and is not guaranteed. The above attribution data was sourced from FactSet which uses bottom up methodology whereby constituents of both the index and the fund are priced at the
same point in time thus removing timing differences. FactSet returns do not take into account Transaction costs or Management fees. FactSet assumes trades go through at closing prices rather than the
actual price that may have been traded at during the day. The accounting data used by FactSet is un-audited, whereas the data used for actual fund performance is audited, therefore any subsequent
cleaning of data will not be reflected in FactSet.
Fund Benchmark
Total Return Total Return Allocation Selection Total Effect Explanation
Argentina -59.2 -37.1 1.02 -0.38 0.65 U/w. Market underperformed by 46%
Bahrain -- -3.8 0.08 0.00 0.08
Bangladesh -1.9 -10.5 0.19 0.37 0.56 O/w Titas Gas. U/w National Bank
Bulgaria -- -32.3 0.06 0.00 0.06
Croatia -2.0 -2.5 0.27 0.01 0.28
Estonia -- 46.4 -0.13 0.00 -0.13
Georgia 10.6 -- 0.08 0.00 0.08
Jordan -- -0.6 0.10 0.00 0.10
Kazakhstan 48.6 33.0 0.26 0.76 1.02 O/w Halyk Savings Bank
Kenya -- 61.9 -1.14 0.00 -1.14 Zero-weight. Market outperformed by 53%.
Kuwait 24.8 -0.0 0.79 4.93 5.71 U/w. Market underperformed by 9%. O/w Mabanee and Natonal Mobile Telecom
Lebanon 5.6 0.5 -0.14 0.19 0.05
Lithuania -- 26.4 -0.04 0.00 -0.04
Mauritius 0.4 0.9 0.06 0.01 0.06
Nigeria 72.0 62.9 0.82 0.69 1.51 O/w. Market outperformed by 54%. O/w Zenith Bank and UBA
Oman -0.1 -6.5 -0.07 0.24 0.17
Pakistan 27.8 32.5 -0.03 -0.25 -0.28
Qatar 2.8 -2.0 -0.47 0.99 0.53 O/w. Market underperformed by 11%. O/w Qatar Industries and Gulf International
Romania -- 25.9 -0.19 0.00 -0.19
Saudi Arabia 9.6 -- 0.21 0.00 0.21
Serbia -- 7.4 0.01 0.00 0.01
Slovenia -- -0.5 0.24 0.00 0.24
Sri Lanka 9.2 5.2 -0.00 0.04 0.03
Tunisia -- -4.8 0.12 0.00 0.12
Ukraine 46.6 -49.2 -0.43 1.14 0.71 O/w. Market underperformed by 58%. O/w Mhp
UAE 39.8 27.4 0.78 1.57 2.35 O/w. Market outperformed by 19%. O/w First Gulf Bank and Emaar Properties. Zero-weight Arabtec and Abu Dhabi Com. Bank
Vietnam -- 18.9 -0.13 0.00 -0.13
[Cash] -- -- -0.21 -- -0.21
Subtotal -- -- 2.11 10.31 12.42
[Residual] -- -- -- -- -0.36
Total 20.91 8.85 -- -- 12.06
Frontier Markets | May 2013 122
Frontier Markets Strategy
123 Frontier Markets | May 2013
Source: Schroders, May 2013
Countries representing over 15% of index can be up to 10% underweight, otherwise a maximum of 5% underweight.
In the case of off-index market Saudi Arabia, maximum allocation is restricted to 10%.
Information is for illustrative purposes only and is subject to change. Not to be considered a recommendation to buy/sell
Frontiers Index Target Active Tgt Target Active Tgt Comments
09/05/2013 09/04/2013 09/04/2013 09/05/2013 09/05/2013
Kazakhstan 3.8 7.2 + 3.5 7.3 + 3.5 STRONG BOTTOM UP OPPORTUNITIES
Saudi Arabia 0.0 8.0 + 8.0 8.0 + 8.0 STRONG BOTTOM UP OPPORTUNITIES, FAVORABLE MACRO OUTLOOK
Qatar 15.0 18.8 + 4.0 18.5 + 3.5 STRONG GROWTH AND STRONG BOTTOM UP IDEAS
UAE 11.5 16.0 + 5.0 15.7 + 4.2 CHEAP VALUATIONS
Oman 3.2 3.7 + 0.5 3.7 + 0.5 FAVORABLE MACRO ECONOMIC BACKDROP, LIMITED BUTTOM UP OPPORTUNITIES
Ukraine 0.2 2.7 + 2.5 2.7 + 2.5 REASONABLE VALUATIONS, IMPROVING MACRO ENVIRONMENT
Georgia 0.0 2.5 + 2.5 3.0 + 3.0 STRONG BUTTOM UP OPPORTUNITIES
OTHERS(AFRICA) 0.0 1.5 + 1.5 1.5 + 1.5 OFF INDEX BOTTOM UP OPPORTUNITY IN EASTERN AFRICA
Sri Lanka 1.8 1.7 0.0 1.8 0.0 IMPROVING VALUATIONS, IMPROVING MACRO ENVIRONMENT
Pakistan 4.2 4.1 0.0 4.2 0.0 VERY CHEAP VALUATIONS, UNSTABLE POLITICAL ENVIRONMENT
Bangladesh 1.8 1.8 0.0 1.8 0.0 STRONG MACRO GROWTH, RICH VALUATIONS
Nigeria 14.9 13.7 (1.5) 12.9 (2.0) FAIR VALUATIONS
Lebanon 2.2 0.9 (1.5) 0.7 (1.5) ATTRACTIVE VALUATIONS, POLITICAL UNCERTAINTY
Mauritius 0.9 0.4 (0.5) 0.4 (0.5) REASONABLE VALUATIONS, LIMITED STOCK OPPORTUNITIES
Romania 1.1 0.0 (1.2) 0.0 (1.1) DETERIORATING MACRO ENVIRONMENT
Kenya 3.9 1.3 (2.5) 1.4 (2.5) RICH VALUATIONS, IMPROVING POLITICAL BACKDROP
Tunisia 0.6 0.0 (0.6) 0.0 (0.6) LIQUIDITY CONCERNS, POLITICAL INSTABILITY
Kuwait 23.9 15.4 (8.5) 16.4 (7.5) LIMITED VALUE OPPORTUNITIES AND RELATIVELY EXPENSIVE VALUATIONS
Vietnam 2.0 0.0 (2.2) 0.0 (2.0) IMPROVING MACRO ENVIRONMENT, RICH VALUATIONS
Croatia 2.0 0.0 (2.0) 0.0 (2.0) LIMITED STOCK OPPORTUNITIES, DETERIORATING MACRO ENVIRONMENT
Jordan 0.8 0.0 (0.8) 0.0 (0.8) LIMITED VALUE OPPORTUNITIES AND WEAK MOMENTUM
Bahrain 0.5 0.0 (0.5) 0.0 (0.5) ILLIQUID AND LIMITED OPPORTUNITIES
Argentina 3.1 0.0 (3.1) 0.0 (3.1) ATTRACTIVE VALUATIONS, DETERIORATING MACRO ENVIRONMENT
Slovenia 1.7 0.0 (1.6) 0.0 (1.7) LIMITED STOCK OPPORTUNITIES
Estonia 0.5 0.0 (0.5) 0.0 (0.5) MAJOR LIQUIDITY CONCERNS
Lithuania 0.1 0.0 (0.2) 0.0 (0.1) MAJOR LIQUIDITY CONCERNS
Bulgaria 0.1 0.0 (0.1) 0.0 (0.1) MAJOR LIQUIDITY CONCERNS
Serbia 0.3 0.0 (0.3) 0.0 (0.3) MAJOR LIQUIDITY CONCERNS
Total: 100.0 99.8 -0.2 99.9 -0.1
Liquidity: 0.0 0.2 0.2 0.1 0.1
Grand Total: 100.0 100.0 0.0 100.0 0.0
GEM Model enhancements
124 Frontier Markets | May 2013
Source: Schroders as of December 2010.
Performance model is shown without making an allowance for advisory fees. The deduction of advisory fees would affect performance of an account managed in this strategy.
Performance shown is past performance. Past performance is not a guide to future performance. The value of investment can go down as well as up and is not guaranteed.
The model performance shown in this presentation is hypothetical and no representation is made that the particular combination of investments would have been selected at the
commencement date, held for the period shown, or the performance achieved. Please refer to the Important information slide for further details.
10/04 06/06 01/11 Change from 06/06
Valuation 45% 38% 43% 5%
Price/book 15% 9% 11% 2%
P/E trailing 10% 10% — -10%
5yr trailing P/E — — 12% 12%
P/E forecast 10% 10% 10% 0%
Real earnings yield gap 10% 9% 10% 1%
Growth 10% 25% 15% -10%
EPS Growth 5% 6% 5% -1%
GDP Growth (12month forecast) 5% 6% — -6%
ROE — 4% 3% -1%
EPS revisions (3 months) — 9% 7% -2%
Currency Risk 25% 18% 17% -1%
Beta 5% — —
Real exchange rate 10% 5% 8% 3%
Current A/C / GDP 10% 8% 9% 1%
Dividend cover — 5% — -5%
Momentum 15% 13% 20% 7%
Earnings revisions (1 month) 7.5% — —
Price momentum (36 months) 7.5% 9% 10% 1%
Consensus weighting deviation — 4% 10% 6%
Interest Rates 5% 6% 5% -1%
Real interest rates 5% 6% 5% -1%
100% 100% 100% 0%
Returns p.a. (from end 1991) — 3.0% 4.0% +1.0%
T/E — 3.5% 3.7% 0.2%
Information Ratio — 0.86 1.10 +0.24
Turnover (av. Annual) — 45% 39% -6%
Head of emerging markets investment team
Allan Conway
Head of Emerging Market Equities
Degree in Economics
Allan Conway joined Schroders in October 2004 from West LB
Asset Management
After a number of Accountancy related positions Allan joined Provident
Mutual Life Assurance in 1983, where he was Investment manager for
Far East and North American markets before being appointed Head of
Overseas Equities in 1987
In 1992 he joined Hermes Investment Management (formerly Postel) as
Head of Overseas Equities, personally managing the Emerging Markets
and Pacific Basin portfolios
In 1997 he joined LGT Asset Management as Head of Global Emerging
Markets subsequently leaving when LGT was sold to Invesco in 1998
In 1998 he joined West LB as Head of Global Emerging Markets and
CEO of WestAM (UK) Ltd
Member of the Institute of Chartered Accountants and a Fellow of the
Securities Institute
Frontier Markets | May 2013 125
Biographies Emerging markets investment team
Robert G. Davy
Emerging Markets Portfolio Manager Robert Davy joined Schroders in 1986 after spending
three years with Peat Marwick where he qualified as a
chartered accountant. He spent several years at
Schroders as an analyst on the American equity team.
He was a founding member of Schroders’ Latin
American team, becoming a Latin American portfolio
manager in 1990. Today, he is a global portfolio
manager on the Emerging Markets Team and Deputy
Head of Emerging Market Equities
James Gotto
Emerging Markets Portfolio Manager James has spent his entire career at Schroders, joining
after graduating from Oxford University with a BA Hons
in Classics in 1991. He began his career as a UK
Research Analyst, moving in 1994 to the Latin American
Team. He was seconded to Argentina in 1995, with
responsibility for Research and the management of local
funds, before returning to London in 1998 as a Latin
American portfolio manager. He was also responsible
for Latin American business development from 2000 to
2003. He is now a global portfolio manager on the
Emerging Markets Team
Waj Hashmi
Emerging Markets Portfolio Manager Waj joined Schroders in July 2005 from WestLB Asset
Management, where he was a Director and Global
Emerging Markets portfolio manager since 2002. Before
this he was Head of EMEA Emerging markets and a
senior investment analyst for EMEA stocks, having
joined WestAM in 1998 from LGT Asset Management.
Prior to joining LGT as an EMEA analyst in 1997, he
qualified as an accountant with Arthur Andersen. Waj is
a graduate in Physics from Oxford University, a qualified
chartered accountant (ACA) and CFA Charterholder. At
Schroders he is now a global portfolio manager
Nicholas Field
Emerging Markets
Portfolio Manager / Strategist Nicholas joined Schroders in July 2006 from WestLB
Asset Management where he was a Global Emerging
Markets Fund Manager from 1999. Prior to this Nicholas
worked at Dresdner RCM Global Investors as an
Emerging Markets Fund Manager from 1996. His
investment career started in 1991 upon joining HM
Treasury. Nicholas is a graduate in Mathematics from
Cambridge University and also holds a Masters in
Finance obtained from the London Business School.
Today, he is a portfolio manager and strategist on the
Emerging Markets Team as well as Deputy Head of
Emerging Market Equities
Frontier Markets | May 2013 126
Tom Wilson
Head of EMEA Tom Wilson has a BA Hons in History from Newcastle
University. His investment career commenced in 2001
when he joined the Schroders Graduate Scheme. He
initially worked as assistant to the Institutional and Retail
CIO’s, but moved into the Research Development
Programme in 2002, working on the Global Oils team.
In 2004 he transferred to the Emerging Markets team to
be an EMEA analyst responsible for Turkey, Czech
Republic, Morocco and Jordan. In January 2007 Tom
was promoted to Head of EMEA
Alan Ayres
Emerging Markets
Client Portfolio Manager Alan Ayres started his investment career in 1983 as a
fund manager with The Co-Operative Insurance Society,
and also spent seven years with Merrill Lynch as an
institutional Salesman. He joined Schroder Securities in
1995 and moved to Hong Kong in 1996 as head of the
office and Hong Kong product. In 1998 he was
appointed Head of the Asian Equity Division. He
transferred to Schroder Investment Management in April
2000 as Product Manager for the Japanese and Pan
Pacific teams. Alan joined the Emerging Markets Team
as Product Manager in December 2006. Alan holds an
MSc in Applied Statistics from Oxford University and a
BSc in Maths & Statistics from Warwick University
Biographies Emerging markets investment team
Rami Sidani
Head of MENA Rami joined in July 2008 from SHUAA Capital where he
was a MENA Fund Manager from 2004 managing
conventional as well as specialist funds in twelve Arab
equity markets. His investment career started in 2003
upon joining Socofinance in Geneva as a currency
analyst. Rami has an MSc in Banking and Finance from
HEC Lausanne and also holds an MBA from the
Lebanese American University in Beirut
Nicholas Morse
Head of Latin America Nicholas joined Schroders in July 2005 as Head of Latin
America Equities. Nicholas started his investment
career in 1987 at Foreign & Colonial. He moved to
Singer & Friedlander in 1989 where he was responsible
for Latin markets. In 1993 he joined Grupo Financiero
Banamex Accival, where he was a manager of Latam
research. He went on to manage Latam funds for
Martin Currie Inv. Mgmt. in 1994 and Merrill Lynch Inv.
Mgmt. in 1996. In 2002 he re-joined Singer &
Friedlander as a director, managing Asia-pacific ex
Japan funds
Frontier Markets | May 2013 127
Edward Evans
Emerging Markets Product Manager
Edward Evans joined Schroders in October 2009 from ABN AMRO Asset Management where he
was a Client Portfolio Manager representing and raising assets on behalf of the Emerging Markets
Equities team. His investment career commenced in 2002 as a client account manager with Fidelity
Investments. He then joined JPMorgan Asset Management on the graduate business development
program in 2003. Edward holds a BA (Hons) Economics, Business Management and French from
the University of Durham and is a CFA Charterholder.
Maha Soueissy
Analyst, Middle East
Maha joined in July 2008 from SHUAA Capital where she was an Associate in the Equity Asset
Management team and analyst of Middle East equities covering a range of sectors across the
MENA region. Prior to SHUAA, she worked as a capital markets Analyst with Hyphen Asset
Management in Beirut. She is currently stationed in Dubai as a Middle East Equity analyst
Maya Bou Kheir
Analyst, Middle East
Maya joined Schroders in October 2008 from SHUAA Capital where she worked as an analyst on
the Equity Asset Management team, covering equities across the MENA region since August 2006
. Her investment career started in April 2004 upon joining MEDGULF Insurance in Beirut as a
financial analyst. Maya holds a BA in Business Administration, majoring in finance from the
American University of Beirut.
Rollo Roscow
Analyst, Emerging Europe
Rollo joined Schroders in August 2008. Before joining, he was an Assistant Manager in the
Investment Management Audit Division at KPMG, specialising in the audit of funds, investment
managers and hedge funds. Rollo’s investment career started in September 2004 in the Edinburgh
Financial Services department of KPMG. After moving to London in 2006 he qualified as a
Chartered Accountant in December 2007. Rollo holds an MA (Hons) in Economics and
Accountancy from the University of Edinburgh. At Schroders he is an EMEA analyst
Mohsin Memon
Analyst, Emerging Europe
Mohsin joined Schroders in November 2010. Before joining, he was an Assistant Manager in the
Investment Management Audit Division at KPMG, specialising in the audit of investment managers
and funds. Mohsin’s investment career started in September 2007 in the London Financial
Services department of KPMG. He qualified as a Chartered Accountant in October 2010. Mohsin
holds a BSc (Hons) in Computer Science from Kings College London and a post graduate in
Accounting and Finance from London School of Economics. At Schroders he is an EMEA analyst
Biographies Emerging markets investment team
Frontier Markets | May 2013 128
Jonathan Fletcher
Analyst, Asia
Jonathan commenced his investment career in 2009. Prior to joining Schroders he worked as a
technology analyst for Altrium Capital. Previously he worked for Deloitte as a Senior Consultant.
He is currently an analyst focusing on Asia. Jonathan graduated from Oxford University with a B.A
in Economics and Management.
Robert Ledger
Analyst, Asia
Robert joined Schroders in 2011. Prior to this he worked at Deloitte where he was primarily
involved in Financial Advisory projects. He is currently an analyst focusing on India and Korea.
Robert graduated from Nottingham University with a BA (Hons) Industrial Economics, is a qualified
charted accountant (ACA) and is currently studying towards the CFA designation.
Moreno Fasolo
Analyst, Asia
Moreno joined Schroders in 2011. Prior to this he worked as a banks’ equity analyst at Nomura.
Previously he worked for PWC as a manager in the valuation department. He is currently an Asian
Equity Analyst responsible for Malaysia, Taiwan and Thailand. Moreno graduated from King’s
college with PhD in Physics/Mathematics and is a qualified charted accountant (CA).
Andrew Boag
Analyst, Latin America
Andrew joined Schroders in April 2010. Andrew’s investment career started in August 2006 when
he joined Deloitte as a student accountant working in Insurance & Investment Management. He
holds a BA in American Studies from the University of Nottingham and is a Member of the Institute
of Chartered Accountants in England & Wales. At Schroders, he is now a Latin American analyst
Abbas Barkhordar
Analyst, EM Strategy & Frontiers
Abbas holds an MPhys in Physics from Oxford University. Abbas joined the team in January 2008,
after completing Schroders’ graduate training program commencing October 2007. Prior to this he
completed a six-month internship as an investment analyst at Clearbrook Capital Partners LLP, a
boutique private equity house, between January to July 2007. Abbas has passed all 3 levels of the
CFA examinations and obtained Investment Management Certificate (IMC) in November 2007.
Abbas is an emerging markets strategy and Frontier Markets analyst based in London.
Biographies Emerging markets investment team
Frontier Markets | May 2013 129
Definition of the Firm
The Firm is defined as all accounts managed by Schroder Investment Management in the UK and
US, by wholly owned subsidiaries of Schroders PLC. Prior to 1st January 2007 SIM London &
SIM North America existed as two separate Firms which were compliant & verified as separate
entities until 31st December 2006. The consolidation of these two Firms was made as part of a
move towards creating one global Firm. Composite and Firm assets reported prior to 1st January
2007 represent those of the legacy firm which managed the product. Prior to 1st January 2011 the
SPrIM (Schroder Property Investment Management) Firm existed separate to the Schroder
Investment Management UK and US Firm, from 1st January 2011 these Firms have been
combined into a single firm. A complete list and description of the Firm's composites and
performance results is available upon request.
Composite Definition
The Schroder Middle East Equity Composite Composite (the "Composite") is comprised of all
Schroder Investment Management (UK & US), fully discretionary accounts which seek to achieve
returns above the MSCI Arabian Markets and Turkey with Saudi Arabia Domestic Capped at 20%,
prior to 31/08/2012 20% Saudi Arabia Large/Mid Cap (NDR) + 80% MSCI Arab Mkts ex SA +
Turkey (NDR), custom index prior to this index (or a similar benchmark) through capital growth by
investing in the Greater Middle East. The objective is to achieve long-term capital growth primarily
through investing in equity or equity related securities (including warrants and convertible
securities) and fixed interest securities of Middle Eastern Companies, including companies in
emerging Mediterranean markets. Accounts may also seek exposure to the markets of North
Africa. None of the accounts in the Composite uses leverage.
Composite Construction
New accounts are included from the beginning of the first full month of management on a
discretionary basis. Terminated accounts are excluded from the end of the last full month of
discretionary management.
The composite currency is US Dollar
Composite Inception Date: 31/10/2007
Composite Creation Date: 28/11/2007
Calculation Methodology
The portfolio returns are time-weighted rates of return that are adjusted for cash flows. Portfolio
returns are combined using beginning of period asset weights to produce the composite return.
Periodic returns are geometrically linked to produce annual returns.
Dividends on equities are recognised net of irrecoverable withholding tax. Since January 1999
dividends have been recognised as of the ex-dividend date having previously been recognised on
a cash basis. Performance results are presented before the deduction of management fees and
custodian fees but after trading expenses.
Fee Schedule The fee scale applied to the composite is 1.5% p.a.
Dispersion
The dispersion of annual returns is measured by the asset weighted standard deviation of
portfolio returns represented within the composite for the full year provided a minimum of 5
portfolios are available.
Additional Information
The exchange rates used are provided by WM. Each currency is valued at 4 pm on the last
business day of the month.
Additional information regarding policies for valuing portfolios, calculating and reporting returns
and a description of all composites are available on request.
GIPS Compliance Statement
Schroder Investment Management (UK & US) claims compliance with the Global Investment
Performance Standards GIPS® and has prepared and presented this report in compliance with
the GIPS standards. Schroder Investment Management (UK & US) has been independently
verified for the periods 1st January 1996 to 31st December 2011. The verification report(s) are
available upon request.
Verification assesses whether (1) the firm has complied with all the composite construction
requirements of the GIPS standards on a firm-wide basis, and (2) the firm's policies and
procedures are designed to calculate and present performance in compliance with the GIPS
standards. Verification does not ensure the accuracy of any specific composite presentation.
Schroder Middle East Equity Composite Composite Disclosures as of : December 31, 2011
130 Frontier Markets | May 2013
Definition of the Firm
The Firm is defined as all accounts managed by Schroder Investment Management in the UK
and US, by wholly owned subsidiaries of Schroders PLC. Prior to January 1, 2007 SIM London
& SIM North America existed as two separate Firms which were compliant & verified as separate
entities until December 31, 2006. The consolidation of these two Firms was made as part of a
move towards creating one global Firm. Composite and Firm assets reported prior to January 1,
2007 represent those of the legacy firm which managed the product. Prior to January 1, 2011
the SPrIM (Schroder Property Investment Management) Firm existed separate to the Schroder
Investment Management UK and US Firm, from January 1, 2011 these Firms have been
combined into a single firm. A complete list and description of the Firm's composites and
performance results is available upon request.
Composite Definition
Accounts included in the Schroder Frontier Markets seek to achieve returns above the MSCI
Frontier Markets (NDR) index (or a similar benchmark) by providing capital growth primarily
through investment in equity and equity related securities of frontier markets companies.
Frontier markets are countries included in the MSCI Frontier Markets Index or any other
recognized Frontier Markets financial index. None of the accounts in the Composite
use leverage.
Composite Construction
New accounts are included from the beginning of the first full month of management on a
discretionary basis. Terminated accounts are excluded from the end of the last full month of
discretionary management. This Composite has no minimum asset level for inclusion.
The composite currency is US Dollar
Composite Inception Date: 12-31-2010
Composite Creation Date: 01-07-2011
Calculation Methodology
The portfolio returns are time-weighted rates of return that are adjusted for cash flows. Portfolio
returns are combined using beginning of period asset weights to produce the composite return.
Periodic returns are geometrically linked to produce annual returns.
Dividends on equities are recognized net of irrecoverable withholding tax. Since January 1999
dividends have been recognized as of the ex-dividend date having previously been recognized on
a cash basis. Performance results are presented before the deduction of management fees and
custodian fees but after trading expenses.
Fee Schedule
The fee scale applied to the composite is 1.5% p.a.
GIPS Compliance and Verification
Schroder Investment Management (UK & US) claims compliance with the Global Investment
Performance Standards GIPS® and has prepared and presented this report in compliance with
the GIPS standards. Schroder Investment Management (UK & US) has been independently
verified for the periods January 1, 1996 to December 31, 2011. The verification report(s) are
available upon request.
Verification assesses whether (1) the firm has complied with all the composite construction
requirements of the GIPS standards on a firm-wide basis, and (2) the firm's policies and
procedures are designed to calculate and present performance in compliance with the GIPS
standards. Verification does not ensure the accuracy of any specific composite presentation.
Additional Information
The exchange rates used are provided by WM. Each currency is valued at 4 pm on the last
business day of the month.
Additional information regarding policies for valuing portfolios, calculating and reporting returns
and a description of all composites are available on request.
Schroder Frontier Markets Composite Disclosures as of : December 31, 2011
131 Frontier Markets | May 2013
For Professional Investors Only. Not Suitable for Retail Clients
The views and opinions contained herein are those of the Emerging Markets team, and may not necessarily represent views expressed or reflected in other Schroders
communications, strategies or funds.
Risk warning: Investments in equities are subject to market risk and, potentially, to currency exchange rate risk. Investments in emerging markets are subject to market risk and,
potentially, liquidity and currency exchange rate risk. This fund may use financial derivative instruments as a part of the investment process. This may increase the fund’s price
volatility by amplifying market events.
Important Information: This presentation does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder International Selection Fund (the
“Company”). Nothing in this presentation should be construed as advice and is therefore not a recommendation to buy or sell shares.
Subscriptions for shares of the Company can only be made on the basis of its latest prospectus together with the latest audited annual report (and subsequent unaudited semi-
annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A.
An investment in the Company entails risks, which are fully described in the prospectus.
Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get the amount
originally invested.
The forecasts stated in the presentation are the result of statistical modelling, based on a number of assumptions. Forecasts are subject to a high level of uncertainty regarding
future economic, geopolitical and market factors that may affect actual future performance. The forecasts are provided to you for information purposes as at today's date. Our
assumptions may change materially with changes in underlying assumptions that may occur, among other things, as economic and market conditions change. We assume no
obligation to provide you with updates or changes to this data as assumptions, economic and market conditions, models or other matters change.
Hypothetical results must be considered as no more than an approximate representation of the strategies performance, not as indicative of how it would have performed in the
past. It is the result of statistical modelling, based on a number of assumptions and there are a number of material limitations on the retroactive reconstruction of any performance
results from performance records. For example, it does not take into account any dealing costs or liquidity issues which would have affected a real investment's performance. This
data is provided to you for information purposes only as at today's date and should not be relied on to predict possible future performance.
For the purposes of the Data Protection Act 1998, the data controller in respect of any personal data you supply is Schroder Investment Management Ltd (SIM). Personal
information you supply may be processed for the purposes of investment administration by the Schroders Group which may include the transfer of data outside of the European
Economic Area. SIM may also use such information for marketing activities unless you notify it otherwise in writing
Third party data is owned or licensed by the data provider and may not be reproduced or extracted and used for any other purpose without the data provider's consent. Third party
data is provided without any warranties of any kind. The data provider and issuer of the presentation shall have no liability in connection with the third party data. The Prospectus
and/or www.schroders.com contains additional disclaimers which apply to the third party data.
This presentation is issued by Schroder Investment Management Limited, 31, Gresham Street, EC2V 7QA, who is authorised and regulated by the Financial Services Authority.
For your security, all telephone calls are recorded.
Important information
132 Frontier Markets | May 2013
For Professional Investors Only. Not Suitable for Retail Clients
This presentation intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation
for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment
recommendations. Information herein is believed to be reliable but Schroder Investment Management Ltd (SIM) does not warrant its completeness or accuracy. This does not
exclude or restrict any duty or liability that SIM has to its customers under the Financial Services and Markets Act 2000 (as amended from time to time) or any other regulatory
system
Investors should be aware that frontier markets involve a higher degree of risk than emerging and developed markets. Less developed markets are generally less well regulated
than the developed markets, investments may be less liquid and there may be less reliable arrangements for trading and settlement of the underlying holdings. The strategy will
hold investments denominated in currencies other than the base currency and exchange rates will cause the value of these investments, and the income from them, to rise or fall.
The strategy can also use derivatives for investment purposes, which may increase the price volatility by amplifying market events and where OTC derivatives are used there is
the risk of counterparty default.
The model performance shown in the presentation must be considered as no more than an approximate representation of the portfolios’ performance, not as indicative of how it
would have performed in the past. It is the result of statistical modelling, based on a number of assumptions and there are a number of material limitations on the retroactive
reconstruction of any performance results from performance records. For example, it does not take into account any dealing costs or liquidity issues which would have affected a
real investment's performance. This data is provided to you for information purposes only as at today's date and should not be relied on to predict possible future performance.
Details of the assumptions used are available on request.
The hypothetical results shown must be considered as no more than an approximate representation of the portfolios’ performance, not as indicative of how it would have
performed in the past. It is the result of statistical modelling, based on a number of assumptions and there are a number of material limitations on the retroactive reconstruction of
any performance results from performance records. For example, it does not take into account any dealing costs or liquidity issues which would have affected a real investment's
performance. This data is provided to you for information purposes only as at today's date and should not be relied on to predict possible future performance.
The returns presented represent past performance and are not necessarily representative of future returns which may vary. The value of investments can fall as well as rise as a
result of market or currency movements.
Potential investors should be aware that investment in Frontier Markets involves an above average degree of risk and should be seen as long-term in nature.
Important information
133 Frontier Markets | May 2013
Opinions
Schroders has expressed its own views and opinions in this presentation and these may change
Data Protection
For the purposes of the United Kingdom’s Data Protection Act 1998, the data controller in respect of any personal data you supply is Schroder Investment Management Limited.
Personal information you supply may be processed for the purposes of investment administration by the Schroders Group which may include the transfer of data outside of the
European Economic Area. Schroder Investment Management Limited may also use such information for marketing activities unless you notify it otherwise in writing
Taped Telephone Lines
For your security communications with our London office may be taped or monitored
Identification
Schroder Investment Management Limited,
31 Gresham Street,
London EC2V 7QA
Telephone: 020 7658 6000, Fax: 020 7658 6965
Company register number. 1893220
Authorised and regulated by the Financial Services Authority
Important information
134 Frontier Markets | May 2013