investment meeting: summary of views - msmiam.com · bond performance update still hard to make...

Macro Overview

While US-China concerns seem to have faded (at least as far as equity investors are concerned), they are not forgotten. Most likely, the acceptance that this issue will take time to play out has driven investors to focus on other issues.

Central Bankers’ decisions continue to fail to surprise. This is either a testimony to their increasing transparency or a recognition that “data-driven” rate decisions are a fact of life. Chairman Powell’s gave us the 25 basis point increase yesterday (the eighth this cycle) with small variations in the Fed statement. While removing “accommodative”, he minimized the significance of the omission and reiterated the case for gradual rate hikes. Draghi’s comments the prior week indicate that their June game plan is still THE plan.

While Trump’s America First trade policy remains an issue, the real focus in the coming weeks will be the start of the 3rd Quarter Earnings season and the subsequent US mid-term elections on the 6th of November. Markets should be supported by positive earnings surprises. However, October nervousness may be heightened by the political drama heading into a potential shift of power in the US House of Representatives (probable) and the implications that carries for US policy direction.

Our base scenario (continued global growth above 3.5%, data-driven rate increases and an eventual softening of trade tensions) and we favor a shift some of our exposure out of the US towards EM markets and commodity related sectors.

Investment Meeting: Summary of Views27th September 2018

Current Market ConditionsEquities: Global equity sentiment is nervous but retains the upward

bias of the past few weeks.

US markets are again trading at new multi-year highs across most

metrics while valuations seem more attractive for European and

Emerging Market equities. Relative valuations between the US and

EM markets remain near cycle highs and supportive of our call to

increase our exposure to EM.

USD Fixed Income: as risk appetite rose, US Treasuries pushed toward the 3.05 – 3.10% top of the range for the 10 year note. The Fed gave us 25 bps and Fed Fund futures imply 78% probability of an additional 25 basis points on Dec. 19. Our view is unchanged - we would look to increase our exposure at higher spread and 10 year rates above 3.10%.

EUR Fixed Income: no change. Government 5 & 10 yr. rates are largely unchanged (+3-4 bps) over the past two weeks. Still not attractive for USD ref investors.

Emerging Market Fixed Income: the tapering of USD strength and restrained China trade reaction has brought USD EM spreads down 30-40 bps; EUR EM spreads are marginally lower but less attractive overall. We remain selective buyers as yields go above the 6.00% yield levels on USD EM debt.

Top Ideas and Fund HoldingsUpdates on our current holdings / target funds enclosed.

1

Equity Performance Update

Themes remain unchanged with US markets cementing their lead in USD

terms this year!

The past two weeks have seen a revival of risk-on with the MSCI Latin

America (+4,5%) and Nikkei 225 (+4,8%) leading the way higher. We are

using this rally to cut our position in Japan on valuation grounds but holding

to our exposure to Latin America (beneficiary of stable to higher growth,

weak currencies). Emerging market equities continue to be the big laggards

but we believe that this may soon be changing and are positioning

accordingly.

2

Equity Indices (USD Aug'18 26-Sep-18

MSCI WORLD 1.0% 4.1%

MSCI ACWI 0.6% 2.4%

S&P 500 3.0% 8.7%

NASDAQ COMP. 5.7% 15.7%

RUSSELL 2000 4.2% 10.2%

STXE 600 $ Pr -2.9% -3.2%

MSCI Japan USD 0.2% 0.4%

MSCI AC ASIA x JAPAN -1.2% -8.1%

EM Latin America USD -8.8% -10.4%

EM Europe -7.6% -11.0%

Bond Performance Update

Still hard to make money in bonds in 2018!

The returns continue to be uninspiring at best with the broad Barclays

Aggregate Bond index showing a -2,0% USD return.

The numbers speak for themselves but the tide may be getting ready to turn

as we approach the 3.10% yield level on US 10 year Treasuries. The laggards

have come back a touch over the past two weeks with EM debt and EUR

High Yield recovering 1.3 to 1.5% in USD terms. This now brings the Pan-EUR

HY index into positive territory year to date but still lagging the +2,4% gains

USD Corporate High Yield indices. We are approaching buy levels…

3

Bl.-Barc. Bond Aug'18 26-Sep-18

Global Aggregate 0.1% -2.0%

U.S. Corp 0.5% -2.4%

US Corp High Yield 0.7% 2.4%

Pan-Euro Agg Corp 0.1% -1.1%

Pan-Euro HY Unh Eur -0.1% 0.3%

EM USD Aggregate -1.3% -2.5%

EM Pan-Euro Agg. Unh. -1.0% -1.3%

EM Local CY Aggregate -2.9% -6.4%

Local Currency Returns

Alternative Asset Performance Update

Energy (+16,7%) continues to be the commodity (& Alternative Asset)

outperformer in 2018!

Year to date, the HFRI Absolute return index is the only broad benchmark

showing positive returns (+0,8%) as CTAs and Global hedge indices continue

to lag and the Bloomberg Commodity TR is at -2,6%.

Over the past two weeks, both Industrial Metals (+3,8%) and Energy (+4,0%)

continue to move higher. We retain overweight exposure to the energy

sector and have been adding to our copper mining position.

4

Alternative Assets Aug'18 25-Sep-18

HFR Macro/CTA 2.4% -1.8%

HFR Global Hedge 0.5% -1.1%

HFR Absolute Return 0.4% 0.8%

BBG Commodity TR -1.8% -2.6%

BBG Agriculture TR -6.0% -10.8%

BBG Energy TR 3.8% 16.1%

BBG Industrial Metals TR -4.3% -12.4%

Gold vs USD -2.1% -8.4%

Source: Bloomberg

Currency Performance Update

We’re seeing what we believe to be a temporary bounce in USD after the

mid-August shift in trend.

The improving tone in the US-Mexico and US-Canada trade negotiations has

been sufficient to shake out the one-sided bets in favour of the USD since

February.

Consistent with the risk-on bid for markets, EM currencies continued to be

well bid and gained about 1.3% of their losses leaving them down 4.5% year

to date. While the USD was slightly higher versus the JPY and Gold, it was

largely unchanged against the other pairs we chart.5

Aug'18 Last 3 Mos. YTD

DXY 0.6% 1.2% 2.6%

USDMXN 2.4% -4.5% -3.9%

USDBRL 7.9% 8.9% 22.1%

USDCAD 0.2% 0.6% 4.0%

USDEUR 0.9% 0.6% 2.5%

USDCHF -2.1% -1.6% -0.3%

USDGBP 1.3% 1.1% 4.2%

USDRUB 8.3% 5.4% 16.9%

USDJPY -0.7% 3.8% -1.5%

USDAUD 3.4% 4.7% 8.6%

USDCNH 0.9% 7.3% 5.1%

USDINR 3.6% 7.7% 11.2%

XAUUSD -2.1% -8.3% -7.9%

Source: Bloomberg

USD Returns vs FX

Returns As of: 27-Sep-18

The Week’s Macro Indicators : CB Watch

The Fed delivered an additional +50 bps in a well-telegraphed manner subject to economic growth coming through as expected.

• U-3 Unemployment rate: July data at 3.9% from 4.0% in June and average hourly earnings stable at 2.7% YoY. US Labor Force Participation rate also stable at 62.9% is still near multi-decade lows.

• US Capacity Utilization: July steady near 78.1% - still not above the 80-82% levels which would lead to increased inflation fears.

• PCE (Personal Consumption Expenditure) Deflator: up a touch at 1.98% vs July’s 1.90% - almost at the Fed's 2% target level.

• Bloomberg Financial Conditions Index: improving financing environment – rising again.

No major changes in Europe either. ECB remains committed to

holding a steady course on rates until mid-2019.

• EZ Financing Conditions holding steady – no change

• Euro Zone Unemployment rate continues to grind lower: June at 8.3% vs prior Qtr. 8.4%

• EZ Capacity Utilization: last print for June 30 (84.3%) approaching levels indicative of capacity constraints. Current estimates are for a 3Q18 print of 84.10%.

• EZ All-item Inflation: August back down to 2.0% target vs July 2.1% in line with steady forecast of 2.0 %..

6

The Week’s Macro Indicators : Key Indicators

The data flow out of the US is improving and now Europe is falling short.

• US data surprising even more on the downside since the end of month and the CESIUSD is now almost positive at -0,3 vs -19.2 .

• European data (CESIEUR) reversed direction and is now -25,2 vs -5.0 at mid-month.

• Japan (CESIJPY) back at -3,0 vs -1.6 two weeks ago.

• G-10 data is a bit higher at +13,40 vs +3.9 on the 12th Sept. on the back of improving data flow out of the US.

7

Fixed Income: US & EUR Overview

US Treasuries: 3mo, 2yrs and 10yrs (%) EUR Govies: 2s, 5s and 10s (%)

EM Debt: USD & EUR Aggregate Spreads (bps)USD: Global IG and Global High Yield Corp. Spreads (bps)

USD short rates (3mo and 2yrs) continue to grind higher while 10s are flat. Looking at 3mo vs 10 year rates, we are not near “recession warning levels”. Europe is a snooze even as macro data improves. Credit spreads improving on Global High Yield USD and EM debt.

8

S&P 500 3Q18 Earnings : Optimism Remains

Thomson Reuters/IBES earnings estimates for the 3Q18 incorporate the new Global Industry Classification Standard (GICS) which go into effect for the S&P 500 at the close of business Sept. 28th.

Forecasts for the 3Q18 season show continued solid earnings growth of 21,6% (+18,7% ex-Energy). Main drivers are Energy (+97%), Financials (+41,6%), Materials (+30,9%) and the new Info. Tech. (+20,2%). YoY growth numbers will begin to fade as we enter 2019.

Revenue growth is expected to notch a still high growth of 7.6% (6.4% ex-Energy) vs +3,0% GDP growth estimates for the US economy. The growth is expected to come are Energy (+19,0%), the new Communications Svcs. (+12,0%), Real Estate (+11,9%) and Materials (+10,1%).

We continue to look to build positions in the Materials, Energy and Health Care sectors on a selective basis.

9

S&P 500 : Earnings Growth by Sector (YoY)

S&P 500 : Revenue Growth by Sector (YoY)

STOXX 600 3Q18 Earnings : Optimism Remains

As is usually the case, Earnings Season in Europe sees fewer constituents reporting (176 our of 600).

The TR/IBES consensus estimates call for a sharp pick up both in revenues (+7,4% 3Q vs +3,2% 2Q) and earnings (+14,2% 3Q vs 9.7% 2Q). Not surprisingly, Energy (+48,3%) and Financials (+20,3%).

Similarities with the US end there as earnings expectations are more varied and three sectors are expected to see a drop in earnings (Telecom Svcs. (-12,0%), Health Care (-5,0%) and Utilities (-0,9%)). On the positive side, analysts do not expect earnings growth to fade as they do for US companies.

Our bias in Europe favors Energy and , Health Care while also looking at companies that pay sustainable high dividends.

10

STOXX 600: Earnings & Revenue Growth (YoY) Forecasts

STOXX 600 : Euro Zone Earnings Growth by Sector (YoY)

Global Equity: Overview

Equity Market Valuation vs 7yr Hi-Lo

11

As of: 26-Sep-18

Index Last Price

Dividend

Yield (%)

Trailing 12

Mo EPS*

Est.

Earnings**

EPS Growth

Est Est P/E

Current

Pr/Book Low Hi

P/B % From

Hi

Current

Pr/Sales Low Hi

P/S % From

Hi

SP500 2,915.56 1.85 138.31 161.27 16.6% 18.08 3.52 1.83 3.52 0.0% 2.27 1.03 2.28 0%

Dow Jones Industrials 26,492.21 2.15 1409.25 1562.55 10.9% 16.95 4.19 2.29 4.19 0.1% 2.13 1.05 2.26 6%

Nasdaq 8,007.47 0.99 172.03 334.06 94.2% 23.97 4.79 2.33 5.06 5.3% 2.95 1.43 2.95 0%

Stoxx 600 Europe 383.65 3.59 22.14 25.94 17.2% 14.79 1.88 1.26 2.10 10.4% 1.26 0.73 1.32 5%

Nikkei 24,033.79 1.85 1385.91 1422.54 2.6% 16.90 1.91 1.06 1.94 1.6% 1.15 0.46 1.17 1%

MSCI Asia X-Japan 653.17 2.72 52.89 51.75 -2.2% 12.62 1.52 1.17 2.12 28.2% 1.26 0.85 1.56 19%

MSCI Emerging 1,041.78 2.89 82.84 86.98 5.0% 11.98 1.58 1.24 2.12 25.6% 1.20 0.89 1.50 20%

MSCI Emerging Europe 309.13 5.20 44.82 42.91 -4.3% 7.20 0.97 0.69 1.46 33.4% 0.90 0.73 1.52 41%

MSCI Emerging Asia 535.38 2.59 42.15 43.44 3.0% 12.32 1.59 1.23 2.22 28.4% 1.16 0.79 1.45 20%

MSCI Emerging LatAm 2,509.73 3.24 155.04 189.76 22.4% 13.23 1.87 1.32 2.34 19.9% 1.34 0.96 1.86 28%

MSCI India 1,303.12 1.59 58.11 67.12 15.5% 19.42 3.05 2.23 3.55 14.1% 2.18 1.19 2.29 5%

MSCI China 79.27 2.42 6.28 6.51 3.8% 12.17 1.65 1.10 2.56 35.6% 1.36 0.86 2.04 33%

Source: Bloomberg

The shifting risk appetite is taking US and Japanese valuations to new highs pretty much across the board even as trade US-China trade tensions increase. S&P500

PE is now above 18.0x; Price/Book and Price/Sales ratios are at new cycle highs. The Nikkei 225 is now approaching cycle highs on both Price/Book (1.91x vs

1.94x high) and Price/Sales (1.15x vs 1.17 high). European markets continue to look more attractive with some upside to valuations across all metrics. Emerging

markets remain the best value on these metrics across the board.

* - diluted eps from continuing ops. includes one time, extraordinary gains/losses

** -Bloomberg consensus EPS GAAP estimates excluding one time, extraordinary gains/losses

We look at market levels on three key metrics (current Price to next 12 months estimated Earnings (Est P/E), current Price to Book Value (P/B) and current Price toSales. While these measures alone do

not necessarily account for markets' potential to continue to move higher, they do provide a good sense of the relative value of different global equity markets.

Price/Book 7 Yr Price/Sales 7yr

Top Ideas

13

Global Equity: Top Ideas

14

Name Sector CCY

Market Cap

(bln) Entry Date

Initial Entry

Level Last Close

% Return

From

Purch.

Top Anal.

Target price % Upside Exit Date Exit Price

Realized

Gain/Loss %RESOLUTE MINING LTD Materials AUD 0.97 26-Apr-17 1.16 1.29 10.78% 1.60 24.51% 16-Feb-18 1.14 -1.93%

UNITED STATES STEEL CORP Materials USD 5.14 26-Jun-17 21.86 29.03 32.80% 58.00 99.79% 14-Mar-18 39.78 81.98%

PEARSON PLC Consumer Discretionary GBp 7.16 30-Nov-16 794.00 916.80 15.47% 845.00 -7.83% 15-Jun-18 879.00 10.71%

ELI LILLY & CO Health Care USD 110.98 14-Nov-16 77.70 103.33 32.99% 95.25 -7.82% 07-Aug-18 102.38 31.76%

Positions Exited 2018

MSM Focus Ideas

Theme Strategy Name Sector CCY

Market Cap

(bln) Entry Date

Average

Entry Level Last Close

% Return

From

Purch.

Top Anal.

Target price % Upside

Defensive Value KONINKLIJKE AHOLD DELHAIZE NConsumer Staples EUR 24.39 26-Jan-17 19.96 19.53 -2.14% 22.40 14.68%

Defensive Value MONDELEZ INTERNATIONAL INC-AConsumer Staples USD 63.41 29-Nov-17 42.94 43.24 0.70% 46.25 6.96%

Defensive Yield NESTLE SA-REG Consumer Staples CHF 247.49 13-Oct-14 67.80 80.64 18.94% 86.00 6.65%

Defensive Value VODAFONE GROUP PLC Telecommunication Services GBp 44.60 6-Feb-14 204.45 167.40 -18.12% 232.20 38.71%

Basing commodity Growth&Yield ANTOFAGASTA PLC Materials GBp 8.50 31-Aug-18 817.00 854.00 4.53% 954.00 11.71%

Basing commodity Value FREEPORT-MCMORAN INC Materials USD 20.29 22-Jun-18 16.48 14.00 -15.05% 21.80 55.71%

Energy recovery Growth&Yield CONOCOPHILLIPS Energy USD 89.81 21-Mar-17 45.65 77.28 69.29% 80.45 4.10%

Energy recovery Growth&Yield KINDER MORGAN INC Energy USD 38.86 13-Dec-16 21.50 17.61 -18.09% 21.00 19.25%

Energy recovery Value ROYAL DUTCH SHELL PLC-A SHS Energy GBp 220.04 22-Sep-16 1,872.00 2,642.00 41.13% 2,955.00 11.85%

Energy recovery Value SCHLUMBERGER LTD Energy USD 84.27 1-Oct-14 101.50 60.88 -40.02% 85.50 40.44%

Finance value Value CAPITAL ONE FINANCIAL CORP Financials USD 46.02 13-Jun-17 80.67 96.19 19.24% 112.90 17.37%

Finance value Yield SWISS RE AG Financials CHF 30.77 24-Apr-17 86.95 90.66 4.27% 104.70 15.49%

Healthcare spend Growth FRESENIUS MEDICAL CARE AG & Health Care EUR 27.44 31-Jan-17 75.33 89.26 18.49% 94.40 5.76%

Healthcare spend Yield GLAXOSMITHKLINE PLC Health Care GBp 76.32 5-Oct-17 1,516.00 1,531.60 1.03% 1,712.00 11.78%

Healthcare spend Value ROCHE HOLDING AG-GENUSSCHEINHealth Care CHF 204.28 28-Jan-14 200.00 236.25 18.13% 227.25 -3.81%

Healthcare spend Value SHIRE PLC Health Care GBp 41.82 27-Mar-17 4,676.00 4,613.50 -1.34% 4,602.00 -0.25%

Tech Transformation Value FACEBOOK INC-A Information Technology USD 482.02 15-Feb-18 159.39 166.95 4.74% 215.20 28.90%

Tech Transformation Growth FANUC CORP Industrials JPY 4363.41 15-Feb-18 27,000.00 21,385.00 -20.80% 26,500.00 23.92%

Tech Transformation Value SIEMENS AG-REG Industrials EUR 94.38 22-Dec-17 117.55 111.04 -5.54% 131.20 18.16%

Consumer Recovery Value BOOKING HOLDINGS INC Consumer Discretionary USD 93.40 21-Nov-17 1,761.00 1,967.51 11.73% 2,332.00 18.53%

US Consumer spend Growth STARBUCKS CORP Consumer Discretionary USD 77.26 29-Nov-17 57.25 57.27 0.03% 62.50 9.13%

US Consumer spend Growth VISA INC-CLASS A SHARES Information Technology USD 303.65 29-Feb-16 73.50 149.27 103.09% 161.00 7.86%

Last update target prices:25-Sep-18

Pricing Date: 27-Sep-18


Account Name: MSM Top

Account No.:

Fund Description Ticker Last Price NAV Date CurrencyFund

ObjectiveAsset Class

YTD

Return1Yr Return

Sharpe

Ratio

Maximum

Drawdown

1Yr

Comments

The Doric Fund is a long/short Asian equity hedge fund

focusing on greater China ,India,South East Asia and Korea.

The Fund seeks to generate positive returns on The Doric

Fund is a long/short Asian equity hedge fund focusing on

greater China both longs and shorts investment. The

approach relies on benefiting from structural changes in the

development of Asian domestic economies, deep

duediligence, systematic risk management and portfolio

construction.

DORASPS KY 501.90 31/07/2018 USD Long Short Alternative -9.61 -2.86 -0.19 -11.43

Positives: performance - top or second decile fund over the past 1 & 3 years and

since inception; 3Yr Sharpe ratio 1.1 and 5yr 1.4 vs peers 0.37 and 0.63. Bottom-up

fundamentally driven with a clearly defined portfolio construction. Proven risk

management track record and transparent. Negatives: monthly liquidity subject to

60 day notice period for redemptions. Recommendation: Buy

Enam India Growth Fund is an open-end feeder fund

incorporated in the Cayman Islands. The Fund aims to

preserve and achieve long-term capital appreciation through

a concentrated, actively managed long-only portfolio. The

Fund invests in a master fund investing in equity instruments

of listed Indian companies and does not use hedging in its

investment strategy.

ENAMIND KY 336.06 31/08/2018 USD Long Biased Alternative -15.67 -3.97 -0.25 -17.50

High conviction bottom-up manager focusing on India. Aims to deliver consistent

alpha over the India Nifty 500 index. Manager has a solid longer term record

investing in the region. Positives: Sharpe ratio 1.74 over past year, 0.71 since

inception vs 0.24 index. Industry exposure as of Jan 31'18: Financials (25%), Media

(10%), Logistics (7%), Cons. Durables (7%) and Cement (7%). Recommendation: Buy

AXA IM Fixed Income Investment Strategies - U.S. Short

Duration High Yield Fund is an open-end fund incorporated in

Luxembourg. The Fund's objective is to AXA IM Fixed Income

Investment Strategies - U.S. Short Duration High Yield Fund

realize a high level of current income through investing in

high-yield fixed income corporate debt securities, primarily in

U.S.-domiciled companies.

AXUSHLF LX 152.92 11/09/2018 USD High Yield Bond Fixed Income 1.66 1.82 0.17 -1.06

Positives: performance - top decile fund over the last 1, 3 & 5yr periods; 1Yr Sharpe

ratio 1.53 vs peers 0.74. Negatives: retail class fee structure relatively high for FI

funds; relatively high duration (8.7) implies more risk should interest rates increase

in next 3 -6 months, more volatile than peers (5.6% vs 3.8%). Recommendation: Buy

Legg Mason Western Asset Macro Opportunities Bond Fund

is an open-end investment fund incorporated in Ireland. The

Fund's objective is to maximise Legg Mason Western Asset

Macro Opportunities Bond Fund is an open-end total return.

The Fund invests in debt securities, convertible bonds,

preferred shares and warrants listed on regulated markets

globally, including emergingmarkets.

WAMOAAU ID 119.23 11/09/2018 USDEmerging

Markets BondFixed Income -9.38 -8.64 -1.73 -10.26


ratio 1.36 vs peers 0.45. Negatives: retail class fee structure (TER 1.76%) relatively

high for FI funds; relatively high duration (11.1) implies more risk should interest

rates increase in next 3 -6 months but volaility similar to peers (4.8% vs 4.5%).

Recommendation: Buy

PIMCO GIS Income Fund is an open-end fund incorporated in

Ireland. The objective of the Fund is to seek high current

income, consistent with prudent investment PIMCO GIS

Income Fund is an open-end fund incorporated in Ireland.

The objective management. The Fund will utilize a global

multi-sector strategy that is founded on the principle of

diversification across a broad range of globalfixed-income

securities.

PIMCMEI ID 10.64 11/09/2018 USDForeign

Aggregate

Bond

Fixed Income -1.70 -1.03 -1.36 -1.88


ratio 1.17 vs peers 0.23; ; rmoderate duration (4.55) and volaility significantly below

peers (1.6% vs 12.9%). Negatives: retail class fee structure (1.45%) relatively high for

FI funds. . Recommendation: Buy

N/A

Investment Recommendation: SummaryMSM Investment Idea

Page 1 of 4



Account No.:



YTD

Return1Yr Return

Sharpe

Ratio

Maximum

Drawdown

1Yr

Comments

N/A


PIMCO GIS Global High Yield Bond Fund is an open-end fund

incorporated in Ireland. The Fund seeks maximum total

return consistent with prudent investment PIMCO GIS Global

High Yield Bond Fund is an open-end fund incorporated in

management. The Fund invests at least two-thirds of its

assets in a diversified portfolio of high yield fixed-income

securities that are denominated in majorworld currencies.

PGHYBMI ID 10.66 11/09/2018 USD High Yield Bond Fixed Income 0.68 1.16 -0.14 -2.42

Positives: attractive YTM 5.97%; moderate duration (4.2) and volaility in line with

peers (3.0% vs 2.9%). Negatives: performance - 2nd quartile fund over the last 1, 3 &

5yr periods; 1Yr Sharpe ratio 0.76 vs peers 1.03; retail class fee structure (1.45%)

relatively high for FI funds. Recent spread widening has impacted performance but

manager has a solid record. Recommendation: Watchlist

Ashmore SICAV - Emerging Markets Short Duration Fund is an

open-end fund incorporated in Luxembourg. The Fund will

mainly seek to access the returns available from short term

emerging market transferable securities which are debt in

nature and other instruments issued by sovereigns, quasi-

sovereigns and corporates denominated exclusively in USD

and hard currency.

AEMSRIU LX 105.72 11/09/2018 USDEmerging

Markets BondFixed Income -2.91 -0.23 -0.46 -4.31

Positive: excellent manager EM FI.Results in top deciles over 1 & 3yr periods, short

duration preferable in rising rate environment, 1Yr Sharpe ratio (3.70) superior., low

relative 1Yr volatility (3.06% vs 5.73%). Negatives: exposure to higher risk EM

markets (Venezuela, Ecuador). Recommendation: buy

IVA Global Sicav is an open-end fund incorporated in

Luxembourg. The Fund's objective is to seek long-term

capital growth with high risk. The Fund invests in a range of

securities and asset classes from markets throughout the

world.

IVAGLAU LX 174.20 11/09/2018 USDGlobal

AllocationMixed Allocation -1.28 1.43 0.04 -5.22

Global multi-asset manager with a proven track record. Positives: Sharpe ratio 1.14

vs 0.38 peers; has outperformed peers over 1, 3 & 5yr periods as well as in 5 of the 8

years since inception; full transparency. Current allocation (87% Equity, 3% FI, 9%

Gold, 2% Cash) approx. Regional allocation: NorAm (45%), Europe (27%), APAC

(25%), LatAm (2%), Other (1%).

The iShares Core MSCI Europe ETF is an exchange-traded

fund incorporated in the USA. The ETF seeks to track the

investment results of an index composed of European region

developed market large, mid and small capitalization

equities.

IEUR US 47.34 11/09/2018 USDEuropean

RegionEquity -3.23 -0.63 -0.12 -11.49

ETF tracking performance of MSCI Europe multi-cap index. More attractive

valuations and should benefit from a growing global economy. Positives: tracks

index closely and low-cost structure (0.10% Expense ratio).

Franklin Templeton Investment Funds - Templeton Asian

Smaller Companies Fund is a SICAV incorporated in

Luxembourg. The Fund's objective is long-term capital

appreciation. The Fund invests primarily in small-cap

companies incorporated or whose principal business activity

is in the Asian region (except Japan).

TEMASAU LX 46.17 11/09/2018 USDAsian Pacific

Region ex

Japan

Equity -7.94 -1.81 0.01 -12.85

Regional play on small to mid-cap plays in Asia. More attractive valuations and

should benefit from a growing global economy. Manager has a solid longer term

record investing in the region. Positives: Sharpe ratio 1.98 vs 1.79 index and 1.45

peers; strong risk management in difficult markets (2011 correction saw the fund

down 15.6% vs -26.6% index, -17.2% peers). Current allocation (97% Equity, 3%

Cash) approx. Regional allocation: India (25%), South Korea (19%), China (16%),

Taiwan (16%), RORegion (30%).

Page 2 of 4



Account No.:



YTD

Return1Yr Return

Sharpe

Ratio

Maximum

Drawdown

1Yr

Comments

N/A


iShares Latin America 40 ETF is an exchange-traded fund

incorporated in the USA. The Fund tracks the performance of

the S&P Latin America 40 Index. The Fund uses a

Representative Sampling strategy to try to track the Index.

The Index includes highly liquid securities from major

economic sectors in Latin America. It weights the holdings

based on market capitalization.

ILF US 29.33 11/09/2018 USDLatin American

RegionEquity -12.67 -15.51 -0.64 -26.03

ETF tracking performance of S&P Latin America 40 index. More attractive valuations

and should benefit from a growing global economy/stable to higher demand for

commodities/improving political environment. Positives: tracks index closely and

low-cost structure (0.10% Expense ratio), full transparency. Regional allocation:

Brazil (59%), Mexico (23%), Chile (12%), Peru (4%), Colombia (2%).

Recommendation: Buy

SPARX Japan Fund PLC is a UCITS certified open-end

investment company incorporated in Ireland. The objective is

long-term capital appreciation. The Fund will invest primarily

in equity securities of Japanese companies listed or traded on

Recognised Exchanges.

SPAFDID ID 26553.00 11/09/2018 JPY Japan Equity 3.78 19.04 1.46 -12.37

Institutional share class of Japanese long-only equity manager with a solid longer

term record investing (top-decile since new manager in 2011). Bottom up investor

focused on small & mid-cap companies. Positives: Sharpe ratio 2.17 vs 1.46 peers,

experienced team with fundamental focus, full transparency into holdings.

SPDR S&P Regional Banking ETF is an exchange-traded fund

incorporated in the USA. The Fund's objective is to replicate

as closely as possible the performance of the S&P Regional

Banks Select Industry Index, an equal-weighted index.

KRE US 62.23 11/09/2018 USD Financial Equity 6.48 19.88 1.52 -9.12Current allocation (100% Equity,0% Cash) approx. Pure play on US regional banks

which should benefit from increasing Net Interest Income as rates go higher in a

strong economy. Pure tracker with low-cost fee (0.35%)

The Global X Copper Miners ETF is an exchange-traded fund

incorporated in the USA. The seeks to provide investment

results that correspond generally to the price and yield

performance, before fees and expenses, of the Solactive

Global Copper Miners Index ("Underlying Index").

COPX US 20.38 11/09/2018 USD Materials Equity -25.48 -21.25 -0.75 -30.96

Current allocation (100% Equity,0% Cash) approx. Pure play on copper supply

dynamics and synchronized global growth driving copper prices/volumes higher over

the coming 12-18 months. Globally diversified with regional allocation as follows:

Canada (32%), Australia (14%), China (9%), UK (6%), Switz. (6%) India (6%) Chile (5%),

ROW (23%). Pure tracker with relatively low-cost fee (0.65%). Recommendation:

Buy on weakness

VanEck Vectors Gold Miners ETF is an exchange-traded fund

incorporated in the USA. The ETF tracks the performance of

the NYSE Arca Gold Miners Index. The ETF invests in

materials stocks of all cap sizes across the globe. Its largest

allocation is in North American companies, principally those

domiciled in Canada. The ETF weights the holdings using a

market capitalization methodology.

GDX US 17.99 11/09/2018 USD Materials Equity -22.59 -26.50 -1.54 -28.58

Current allocation (100% Equity,0% Cash) approx. Pure play on gold price recovery

over the coming 1-3 years. Globally diversified with regional allocation as follows:

Canada (50%), Australia (16%), US (15%), ROW (20%). Pure tracker with low-cost fee

(0.52%). Recommendation: buy on weakness.

Page 3 of 4



Account No.:



YTD

Return1Yr Return

Sharpe

Ratio

Maximum

Drawdown

1Yr

Comments

N/A


iShares MSCI Global Select Metals & Mining Producers ETF is

an exchange-traded fund incorporated in the USA. The ETF

seeks investment results that correspond generally to the

price and yield performance, before fees and expenses, of

the MSCI ACWI Select Metals & Mining Producers Ex Gold &

Silver Investable Market Index.

PICK US 29.74 11/09/2018 USD Materials Equity -12.85 -6.37 -0.21 -20.92








Wellington Management Funds Ireland PLC - Wellington

Global Health Care Equity Fund is an open-end fund

incorporated in Ireland. The objective is long-term capital

appreciation. The Fund invests in equity securities of health

care companies worldwide.

WGHCEPB ID 35.93 11/09/2018 USDHealth Care

SectorEquity 13.25 12.08 0.78 -10.09

Global equity play in an attractive sector. Positives: proven asset manager w

attractive long-term record, top quartile performance over a 1, 3 & 5yr periods, 1Yr

Sharpe ratio (1.55) exceeds peers (1.05), 1Yr Volatility (15.05% below peers (17.55%);

Negatives: absolute volatility relatively high for investment with a 3 to 6 month time

frame.

Robo Global Robotics & Automation Index ETF is an exchange-

traded fund incorporated in the USA. The ETF seeks to track

the performance of the ROBO Global Robotics and

Automation Index. The ETF weights the holdings using a

multi factor methodology that primarily holds US based

information technology and industrial companies.

ROBO US 40.94 11/09/2018 USD Thematic Equity -0.92 7.73 0.57 -13.99

Globally diversified play on AI, Robotics and application of Automation in

manufacturing. Current allocation (100% Equity,0% Cash) approx. Longer term (3-5

year) play on the development of applied technologies both at the consumer and

manufacturing level. Current allocation: US (42%), Japan (26%), Europe (17%) ROW

(15%). Pure tracker with moderate fee (0.95%).

iShares Global Energy ETF is an exchange-traded fund

incorporated in the USA. The Fund's objective is to seek

investment results that correspond to the performance of

the S&P Global Energy Index.

IXC US 36.44 11/09/2018 USD Energy Equity 3.88 16.01 0.85 -13.16

Globally diversified play on stable to higher energy prices over the coming 12 - 18

months. Current allocation (99.7% Equity,0.3% Cash) approx. Should benefit from

global economic growth leading to stable to higher energy prices. Pure tracker with

low-cost fee (0.47%). Recommendation: Hold

WisdomTree India Earnings Fund is an exchange-traded fund

incorporated in the USA. The Fund seeks investment results

that correspond to the price and yield performance of the

WisdomTree India Earnings Index.

EPI US 25.97 11/09/2018 USD India Equity -6.19 -1.78 0.03 -15.54








Source: Bloomberg, MSM Inv. Advisors SA

Page 4 of 4

Market Technicals – Key Slides

Potential Market Risks

• US/China trade tensions linger with Trump now accusing China of meddling with the mid term elections

• Kavanaugh hearing with the Senate the outcome of which could result in a potential political turmoil

• Italian yields stabilising but the Italian budget details keenly awaited

• Sell off in treasuries continues and a move above 3.12% in 10’s and 3.25% in 30’s could start putting pressure on equities

• Brexit YOYO continues

US 30yr testing Critical Support

Source: Credit Suisse

US 10yr same story as the 30’s


Europe: Bunds Selling off in Tandem with Treasuries


S&P 500: Still Behaving

Source: Raymond James

Financials : Excellent Value


Europe: STOXX Value Play

Source: Goldman Sachs

Dollar: Looking Topish


EURUSD: Buying Opportunity

Source: Citi

EURCHF: An Attractive Entry Point

Source: Goldman Sachs

GOLD: Showing Signs of Basing


investment meeting: summary of views - msmiam.com · bond performance update still hard to make...

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