global emerging marketswebcast.viewontv.com/upload/docs/comgest/gem_2014... · dec-93 mar-96 jun-98...

27.11.2014 Pavillon Cambon, Paris

Global Emerging Markets

For Professional Investors only

25 YEARS OF HISTORY Emerging Markets evolution phases

1988 - 1994 Discovery

1994 - 2002 Crises & reforms

2002 - 2010 The Great decade

2010 - 2014 Consolidation

2014 – 2019? Economic decoupling?

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http://4.bp.blogspot.com/-zanRFqMNSOQ/UJb3nYWg8uI/AAAAAAAACZs/pQ2VvRGth9o/s1600/Argentina+em+crise.png

1988… Discovery = euphoria

Abnormally high returns

Internationalisation of portfolios

Opening up of commodity markets

Collapse of communism

3

1994… Back to reality

Crises

Extreme volatility

Multiple contractions

Bankruptcy of the EM financial sector

1994 was not the best year to start an Emerging Markets fund….

…you cannot emerge from Emerging Markets in times of emergency!

4

1994… The investment universe was somewhat different… as was Comgest’s EM fund*

MSCI Emerging Markets: Geographic breakdown

Source: FactSet/Comgest - * Comgest’s GEM flagship fund. Indices are used for comparison of past performance only. The material presented in this document is for information purposes only and is not

intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment.

0%

0%

0%

1%

1%

1%

1%

2%

2%

2%

4%

4%

4%

5%

7%

9%

11%

12%

17%

18%

Jordan

Sri Lanka

Israel

Venezuela

Peru

Pakistan

Colombia

Turkey

Greece

Portugal

Philippines

Korea

Argentina

Indonesia

Chile

India

Mexico

Thailand

Brazil

Malaysia 1994 In the portfolio* when Comgest took over management:

60 equity holdings

10 bonds

Full sector diversification

1995 The portfolio resembles a classic Comgest fund:

40 equity holdings, no bonds, clear sector biases

Top 5 holdings:

Malaysia Insurance (7%), Cheung Kong (3.8%), Amoy Properties

(3.8%), New Straits Times (3.5%), Gamuda (3.1%)

Breakdown as of 31/12/1994

Comgest’s EM fund*

5

0

20

40

60

80

100

120

140

160

180

Nov-94 Jul-95 Mar-96 Nov-96 Jul-97 Mar-98 Nov-98 Jul-99 Mar-00 Nov-00 Jul-01 Mar-02 Nov-02

Comgest's EM fund* MSCI EM - NR

1994 – 2002… The initial demonstration of our defensive characteristics

Cumulative performance vs. MSCI EM (net, in USD, 1994 – 2002)

0.0% CAGR

-6.3% CAGR

Price p

erf

orm

ance, re

based

to 1

00

Source: FactSet/Comgest. * Comgest’s GEM flagship fund. Comgest S.A. assumed full management of the fund on 31/12/1994.

Past performance is no guarantee of future results. The index used for comparative purposes changed from MSCI Emerging Markets price to MSCI Emerging Markets dividends reinvested from 01/01/2006.

Performance calculation based on NAV to NAV variation expressed in USD.

6

2002… I will never ever buy Emerging Markets!

Benefits of reforms

Low valuations & low expectations

Declining USD / aggressive FED /

rising US balance of payments

Rising commodities

Rising China

The perfect configuration that happens once in a life time

7

2010… Emerging Markets can’t fail, stupid…

High valuations & high expectations

Peak of commodities

China slowing down

USD at the bottom-contracting US balance of payments

MSCI Emerging Markets: Calendar year performance (USD, 2002 – 2010)*

-8%

52%

22% 30% 32%

39%

-53%

79%

19%

2002 2003 2004 2005 2006 2007 2008 2009 2010

16.8% CAGR

Source: FactSet/Comgest - *Past performance is no guarantee of future results. Indices are used for comparison of past performance only.

Consolidation was inevitable

8

2014… 20 years later

Although completely different, the portfolio* has the

same characteristics as 20 years earlier:

40 equity holdings

No bonds

Clear sector biases

Top 10 holdings:

0.2%

0.2%

0.3%

0.4%

0.6%

0.6%

0.6%

1.0%

1.2%

1.5%

1.6%

1.7%

2.4%

2.7%

3.9%

4.7%

5.4%

7.1%

7.4%

10.3%

12.0%

15.0%

19.2%

Hungary

Czech Republic

Egypt

Peru

United Arab Emirates

Qatar

Greece

Colombia

Philippines

Chile

Turkey

Poland

Thailand

Indonesia

Malaysia

Russia

Mexico

India

South Africa

Brazil

Taiwan

Korea

China

TSMC

China Life Insurance

China Mobile

MTN

Infosys

6.8%

6.1%

5.2%

4.0%

4.0%

Tenaris

Sanlam

Hutchison Whampoa

Heineken

Mediatek

4.0%

3.5%

3.2%

3.2%

3.1%

Breakdown as of 31/12/1994

MSCI Emerging Markets: Geographic breakdown Comgest’s EM fund*

Source: FactSet/Comgest - * Comgest’s GEM flagship fund. Indices are used for comparison of past performance only. The material presented in this document is for information purposes only and is not

intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment.

9

2014… 20 years later

Cumulative performance vs. MSCI EM (net, in USD,1994 – 2014)

+9.1% CAGR

+4.7% CAGR

Price p

erf

orm

ance, re

based to 1

00

Source: FactSet/Comgest. * Comgest’s GEM flagship fund. Data as of 31/10/2014


Performance calculation based on NAV to NAV variation expressed in USD. Comgest S.A. assumed full management of the fund on 31/12/1994.

10

0

100

200

300

400

500

600

Nov-94 Jan-97 Mar-99 May-01 Jul-03 Sep-05 Nov-07 Jan-10 Mar-12 May-14

Comgest's EM fund* MSCI EM - NR

50

100

150

200

250

300

350

Dec-04 Nov-06 Oct-08 Sep-10 Aug-12 Jul-14

Comgest's EM fund* - Price MSCI EM - Price

MSCI EM - EPS last 12 months Comgest's EM fund* - EPS last 12 months

1994 – 2014 Emerging Markets delivered stellar earnings growth

MSCI EM EPS (USD, 1994 – 2014)

Source: MSCI, CLSA (left), Factset/Comgest (right) - * Comgest’s GEM flagship fund. Data as of 30/09/2014


Performance calculation based on NAV to NAV variation expressed in USD. Comgest S.A. assumed full management of the fund on 31/12/1994.

Price vs. EPS 10 years

0

25

50

75

100

Oct-94 Jul-97 Apr-00 Jan-03 Oct-05 Jul-08 Apr-11 Jan-14

EP

S g

row

th

+6.2% CAGR +8.5%

CAGR

+7.6%

CAGR

+11.1%

CAGR

+10.1%

CAGR

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1994 – 2014 But is it only about EPS growth?

Quality of companies is key but in addition, these factors help…

Recognize that no company operates in a vacuum

Exercise valuation discipline

Diversify with reason

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1994 - 2014 Shinsegae (Korea)

Price p

erf

orm

ance, re

based to 1

00

Data as of 01/10/2014 in local currency. Base 100 = 31/12/1992. Source: Bloomberg

Past performance is no guarantee of future results. This material presented in this document is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale

of any security. The contents of this document should not be treated as advice in relation to any potential investment.

0

500

1000

1500

2000

2500

3000

3500

Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12

Price (local currency) EPS

We bought

We sold

13

0

100

200

300

400

500

600

May-06 Mar-07 Jan-08 Nov-08 Sep-09 Jul-10 May-11 Mar-12 Jan-13 Nov-13 Sep-14


1994 - 2014 Coca-Cola Icecek (Turkey)

Price p

erf

orm

ance, re

based to 1

00




We bought

We reduced

14

0

500

1 000

1 500

2 000

2 500

3 000

Dec-93 Mar-96 Jun-98 Sep-00 Dec-02 Mar-05 Jun-07 Sep-09 Dec-11 Mar-14


1994 - 2014 Taiwan Semiconductor Manufacturing Company Ltd (Taiwan)

Price p

erf

orm

ance, re

based to 1

00




We bought

15

100

200

300

400

500

Sep-09 Jul-10 May-11 Mar-12 Jan-13 Nov-13 Sep-14


1994 - 2014 Tencent Holding Ltd (Hong Kong)

Price p

erf

orm

ance, re

based to 1

00




We bought

We sold

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1994 - 2014 Quality Companies + Valuation Discipline = Superior Risk-adjusted Returns

Annualised performance in bull markets

(since inception)

Annualised performance in bear markets

(since inception) Volatility

0%

5%

10%

15%

20%

25%

30%28.01

27.02

Comgest's EM fund* MSCI Emerging Markets

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

-15.00

-17.62

Comgest's EM fund* MSCI Emerging Markets3

Years

Annualised

5

Years

Annualised

10

Years

Annualised

Since

Inception

Annualised

0.0%

5.0%

10.0%

15.0%

20.0%

13.7

15.3

18.7

20.6

15.1

17.5

21.622.3

Fund IndexNumber of quarters of bull markets: 50 Number of quarters of bear markets: 30

Source: FactSet/Comgest. * Comgest’s GEM flagship fund. Data as of 31/10/2014, net, in EUR.

Past performance is no guarantee of future results. Indices are used for comparison of past performance only. Performance calculation based on NAV to NAV variation expressed in euros. Fund volatility is calculated using weekly performance data. The index used

for comparative purposes changed from MSCI Emerging Markets price to MSCI Emerging Markets dividends reinvested from 01/01/2006. Comgest S.A. assumed full management of the fund on 31/12/1994 and 'performance since inception' is as of this date.

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2014… Cyclical challenges remain…

Sources: BCA Research, Sept. 14

Past performance is no guarantee of future results.

EM stocks and EM business cycle

18

2014… Cyclical challenges remain…

Source: BCA Research, Sept. 14

Past performance is no guarantee of future results.

EM stocks and US trade-weighted dollar

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China

1.4bn

Bangladesh

166m

Kenya

45m

Nigeria

177m

Egypt

87m

Pakistan

196m

2014… … but so does the structural potential

Sources: IMF, World Bank, McKinsey Global Institute and MSCI

EM vs. DM A growing asset class

44%

51%

67%

74%

86%

90%

56%

49%

33%

26%

14%

0% 50% 100%

WORLD MARKET CAP

ELECTRICITY CONSUMPTION

GDP AT PPP

FX RESERVES

MOBILE PHONES

POPULATION

EM DM

Population size

20

2014… We continue to invest to improve ourselves

1994 2014

Vincent

Strauss

Jean-François

Canton

Galina

Besedina

Juliette

Alves

Charles

Biderman

Abla

Bellakhdar

Yann

Gérain

Sébastien

Thévoux-Chabuel

ESG Analysts²

Manish

Shah¹

Ketan

Shah¹ Gagan

Thareja¹

Adam

Hakkou

Vincent

Houghton

Jasmine

Kang

Caroline

Maes

Chakara

Sisowath

Gary

Pinge

Wojciech

Stanislawski

David

Raper

Vincent

Strauss

Slabbert

Van Zyl

Emil

Wolter

Baijing

Yu

Data as at October 2014

¹Comgest India Advisors, independent company working exclusively for Comgest / ²Yann and Sébastien work as ESG analysts, supporting each regional team

21

0

50

100

150

200

250

300

350

400

450

Jan-05 May-06 Sep-07 Jan-09 May-10 Sep-11 Jan-13 May-14 Sep-15 Jan-17 May-18 Sep-19

Comgest's EM fund* - EPS last 12 months MSCI EM - EPS last 12 months

2014 – 2019 We believe that our EPS should be stronger

Source: Factset

Data between 31/12/2004 and 31/08/2015. * Comgest’s GEM flagship fund.

Past performance is no guarantee of future results. Indices are used for comparison of past performance only. The value of investments may go down as well as up. Indices are used for comparison of past performance only. Forward looking data included is

estimated and is not a reliable guide to future performance. Investors should be aware that these figures are provided for information purposes only and Comgest does not take any responsibility for discrepancies which may occur between estimated forward

figures and factual market data published over the coming months.

470

299

253

225

13% CAGR

7.5% CAGR

Estimated data

EP

S g

row

th, re

ba

se

d to

10

0

Actual data

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IMPORTANT INFORMATION This document has been prepared for professional investors only and may only be used by these investors. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The contents of this document should not be treated as advice in relation to any potential investment. The securities discussed herein may not be held in the portfolio at the time you receive this presentation. Performance figures are provided net of all fees unless otherwise stated and are calculated on a time-weighted, total return basis. Funds which specialise in a particular region or market sector may entail higher risks than those which hold a very broad spread of investments. Past investment results are not necessarily indicative of future investment results. The value of all investments and the income derived therefrom can decrease as well as increase. This may be partly due to exchange rate fluctuations in investments that have an exposure to currencies other than the base currency of the Fund. Reference to market indices or other measures of relative market performance over a specified period of time are provided for your information only. Reference to an index does not imply that the portfolio will achieve returns, volatility or other results similar to the index. The composition of the index will not reflect the manner in which a portfolio is constructed. The information and any opinions have been obtained from or are based on information from sources believed to be reliable, but accuracy can not be guaranteed. No liability is accepted by Comgest in relation to the accuracy or completeness of the information contained in this document. The information in this document is not comprehensive and is presented for informational purposes only. All opinions and estimates constitute our judgment as of the date of this presentation and are subject to change without notice. Comgest does not provide tax or legal advice to its clients and all investors are strongly urged to consult their own tax or legal advisors concerning any potential investment. Before making any investment decision, investors are advised to check the investment horizon and category of the Fund in relation to any objectives or constraints they may have. Investors must read the latest Fund prospectus and the Key Investor Information Document (“KIID”), available at our offices and on our website www.comgest.com Investors shall undertake to respect the legal, regulatory and deontological measures relative to the fight against money laundering, as well as the texts that govern their application, and if modified investors shall ensure compliance with the applicable texts. This material is in no case an offer for people living in a specific jurisdiction which does not authorize the distribution of the Funds mentioned herein. The investment professionals listed in this document are employed either by Comgest S.A., Comgest Asset Management International Limited, Comgest Far East Limited, Nippon Comgest Inc, Comgest Singapore Pte. Ltd. Comgest S.A. is regulated by the Autorité des Marchés Financiers (AMF). Comgest Far East Limited is regulated by the Hong Kong Securities and Futures Commission. Comgest Asset Management International Limited is regulated by the Central Bank of Ireland. Nippon Comgest Inc. is regulated by the Financial Service Agency of Japan (registered with Kanto Local Finance Bureau (No. Kinsho 1696)). Comgest Singapore Pte Ltd, created 18 August 2010, is a Licensed Fund Management Company & Exempt Financial Advisor (for Institutional and Accredited Investors) regulated by the Monetary Authority of Singapore.

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global emerging marketswebcast.viewontv.com/upload/docs/comgest/gem_2014... · dec-93 mar-96 jun-98...

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