GLOBAL EMERGING MARKETS EQUITIES
MODEL PORTFOLIOS NOVEMBER 2014
0
FACT SHEET: MILLTRUST GEMMA UCITS
INVESTING WITH CONFIDENCE INTO EMERGING MARKETS Milltrust International is an award winning asset manager regulated in the United Kingdom which focuses on investment management expertise in Frontier and Emerging Markets, as well as specialist real asset solutions driven by the changing demographics of the developing world. Milltrust delivers the industry’s first dedicated Emerging Markets Managed Accounts (EMMA) platform, in conjunction with State Street, offering investors access to the local equity markets through a selection of some of the world's largest regional asset managers, including BTG Pactual (Brazil), Itaú Unibanco (Latin America), Value Partners (Greater China), UTI International (India) and Lion Global Investors (ASEAN). The funds take the form of regulated Irish UCITS funds. Milltrust also advises the Emerging Markets Land Opportunities (EMLO) SPC, with a specific focus on developing agricultural farmland projects in Latin America and Australasia.
FACT SHEET: MILLTRUST GEMMA UCITS MODEL PORTFOLIOS
FACT SHEET: MILLTRUST GEMMA UCITS PROFILE Model Portfolio:
FUND ALLOCATIONS Latin American Fund
Milltrust GEMMA UCITS
Fund Holdings: Approach: Exposure: Liquidity: Asset Class: Regulation: Infrastructure:
Milltrust EMMA UCITS Funds Long-biased, actively managed, unconstrained Latin America, China, India, ASEAN Weekly Listed Equities UCITS Commingled Managed Accounts
Greater China Fund 24.72% 21.42% 18.72% 9.10%
ASEAN Fund
26.04%
Brazil Fund
India Fund
PERFORMANCE TABLES – NET RETURNS
2014 2013 2012
USD
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
1.81%
5.00%
1.33%
3.44%
3.44%
1.53%
3.09%
-5.66%
1.49%
-0.47%
Fund
-5.77%
Index
-6.60%
3.19%
2.92%
0.06%
3.26%
2.25%
1.93%
2.07%
-7.59%
1.07%
-1.12%
Fund
3.72%
-0.59%
-1.19%
1.31%
-3.25%
-7.33%
-0.83%
-4.05%
7.16%
5.67%
-1.36%
-0.33%
Index
1.31%
-1.35%
-1.87%
0.44%
-2.94%
YTD 8.96% 0.20% -1.97%
-6.79%
0.77%
-1.90%
6.23%
4.76%
-1.56%
-1.53%
-4.98%
Fund
1.21%
0.73%
1.55%
4.08%
1.47%
0.80%
4.93%
15.65%
Index
2.20%
1.61%
-0.54%
5.84%
-0.73%
1.18%
4.78%
15.05%
Notes: Index = MSCI EM (USD). Performance shown above should be used as a guide only and is not an indication of the future performance of Milltrust GEMMA UCITS Model Portfolio.
PERFORMANCE ANALYTICS 140.00
-1.12%
6.00%
130.00
-4.70%
-7.65%
4.00%
Year to Date:
8.96%
0.20%
2.00%
Since Fund Inception:
23.53%
9.54%
Annualised Return:
8.82%
3.71%
Positive Months:
63.33%
60.00%
Largest Monthly Return:
7.16%
6.23%
Largest Monthly Loss:
-7.33% 12.00%
-7.59% 11.85%
0.40
-0.02
Ann. Standard Deviation: Ann. Sharpe Ratio (RFR=4%):
70.00
-8.00% -10.00%
60.00 Milltrust GEMS
Milltrust GEMS
MARKET CAP
Comm., 6.23%
35% 30%
Materials, 1.97%
25% 20%
Cons. Cycl., 13.29%
10% 5%
Energy, 5.34%
Cash
50B+
10B 50B
5B 10B
Diversified, 1.64%
1B 5B
0% 500M 1B
Financial, 34.33%
15%
Cons. NonCycl., 14.13%
100M 500M
Industrial, 7.36%
Cumulative NAV
Oct-14
Nov-14
Jul-14
Sep-14
Aug-14
Apr-14
Jun-14
Mar-14
May-14
Jan-14
Feb-14
Oct-13
Dec-13
Nov-13
Jul-13
Sep-13
Aug-13
Apr-13
Jun-13
Mar-13
May-13
Jan-13
80.00
-6.00%
SECTOR ALLOCATION Utilities, 3.24%
100.00 90.00
-4.00%
* INDEX: MSCI EMERGING MARKETS in USD
Technology, 3.70%
Feb-13
Oct-12
Dec-12
-2.00%
110.00 Nov-12
0.00%
120.00
Jul-12
Last 3 Months:
Sep-12
-0.47%
Aug-12
INDEX*
Jun-12
FUND
Monthly Return
8.00%
SUMMARY Latest Month:
FACT SHEET: MILLTRUST GEMMA UCITS FUND HOLDINGS STRATEGY: The Fund aims to achieve strong long-term, risk-adjusted returns by actively investing in companies in Latin America with both highquality fundamentals and those that will benefit the most from the region’s structural growth story.
MILLTRUST LATIN AMERICA FUND
Itaú Asset Management
TEAM: The Milltrust Latin America Fund is managed by Scott Piper, one of the most knowledgeable managers in the region with nearly two decades experience investing in Latin American markets. Scott Piper is supported by one of the largest dedicated investment teams locally based in Brazil, Peru, Chile and Mexico.
STRATEGY: The Fund follows a concentrated and actively managed longbiased Brazil equity strategy designed to capture capital gains from the growing domestic sectors that will benefit from the favourable investment climate and the more stable political environment in Brazil. TEAM: The Fund is managed by one of the most experienced, awardwinning equity teams in Brazil led by Jose Zitelmann and Gustavo Hungria. The core team has worked together since 1998 and has won the S&P/ Valor Economico award for 3 years in a row.
STRATEGY: The Fund employs a long biased equity strategy with a focus on value across the Greater China markets from which it aims to capture capital gains from undervalued and exceptional businesses in the region. TEAM: The Fund is managed by a highly reputable and award-winning team led by Cheah Cheng Hye and Louis So and supported by a team of 38 investment professionals leveraging off the firm’s 20 year history of network connections, stock analysis, and company research in the AsiaPacific region.
STRATEGY: The Fund follows an actively managed long-biased multi-cap strategy with a value approach in India, incorporating fundamental research and quantitative multi-factor models to construct a portfolio of high-conviction stocks that will benefit from the India story. TEAM: The Fund is managed by an experienced team of India specialists led by N. Murali and V. Srivatsa who have been running the highly-rated strategy for over 5 years. The managers are supported by a dedicated team of 23 investment professionals, one of the largest India dedicated teams amongst its peers.
STRATEGY: The Fund aims to provide long-term capital growth by investing in listed securities in South East Asia. The team employs an actively managed, high conviction value approach combined with a topdown thematic focus on sectors and stocks that will benefit from the longterm secular economic growth of the region. TEAM: Led by Gerard Lee and Alan Tan, and supported by over 50 professionals, Lion Global Investors has one of the largest and most experienced investment teams in Asia. A true Asian specialist, the team manages one of the few dedicated South East Asia funds and has won numerous performance awards over the years.
MILLTRUST BRAZIL FUND
BTG Pactual
MILLTRUST GREATER CHINA FUND
Value Partners Group Limited
MILLTRUST INDIA FUND
UTI International
MILLTRUST ASEAN FUND
Lion Global Investors
FACT SHEET: MILLTRUST GEMMA UCITS
Milltrust International produces a selection of Model Portfolios for investments in Emerging Markets equities. Our focus is on building liquid, transparent and alpha-seeking portfolios.
OBJECTIVE
PROCESS
Build a portfolio of best ideas stocks from across the developing world and deliver strong risk adjusted returns across the market cycle irrespective of overall market performance.
STRATEGY Follow a multi manager approach by selecting locally-based leading investment teams who have both the local penetration and informational edge in their respective markets to run country or regional unconstrained, alphaseeking strategies. Allocate between the different regional investments teams to the regions in the developing world that provide the most favourable environment. Emphasis on fundamental and on-the-ground company research where the teams seek out strong growing companies that are well-run and levered to the dominant domestic themes in each region.
RATIONALE STOCK PICKING HAS BECOME THE PRIMARY DRIVER OF ALPHA. Drilling down and distinguishing between different sectors and companies within an EM allocation is of greater importance now. LOCAL PRESENCE WITH DEEP REGIONAL PENETRATION IS A MUST. Deeply entrenched local investment teams have an important informational edge which enables them to take high conviction positions in exceptional companies. They are in a better position to uncover growing companies that are not in the index; the companies that are currently US$2 to 3bn today and US$7 to 8bn tomorrow.
REGIONAL ALLOCATION PROCESS Use quantitative models to create a disciplined and 20.95% transparent framework for comparisons between the countries. Rely on our team 19.55% of experienced professionals to bring in the necessary 9.12% 27.54%to interpret the model qualitative analysis outputs and identify other levels of risk and opportunities. Overweight the regions and countries that provide the most favourable environment for growing economic activity, rising income levels and expanding investment opportunities. FUND SELECTION PROCESS • Select underlying regional or country Funds from our pre-approved elite Fund list of locally-based investment teams from across the developing world. Ongoing monitoring and due diligence of the underlying Funds. OPTIMAL PORTFOLIO CONSTRUCTION Update and review allocation models on a monthly basis which then recalibrates the optimal portfolio. Rebalance the portfolio on a quarterly basis. Release allocation report on a quarterly basis.
MODEL PORTFOLIOS
Approach: Fund Holdings: Current Geographical Exposure: Liquidity:
Milltrust Global Emerging Markets Managed Accounts (“GEMMA”) UCITS
Milltrust Global Emerging Markets
Long-biased, actively managed, unconstrained
Long-biased, actively managed, unconstrained
Invests only in the Milltrust Emerging Markets Managed Accounts (“EMMA”) UCITS Funds
May invest in offshore, onshore, open-ended, closed-ended and passive (ETFs) investments
Latin America, China, India, ASEAN
Latin America, China, India, ASEAN, Korea, MENA, South Africa, Russia, Eastern Europe
Weekly
Weekly
Asset Class:
Listed equities
Listed Equities
Regulatory Structure:
UCITS
Regulated and offshore funds allowed
Commingled managed accounts
All structures considered
Infrastructure:
MODEL PORTFOLIO
FACT SHEET: MILLTRUST GEMMA UCITS
PROCESS
REGIONAL ALLOCATION Our proprietary models include the medium to long term Strategic Regional Allocation Model (SRAM) and the shorter term Tactical Regional Allocation Model (TRAM).
Strategic Regional Allocation Model (SRAM) Approach: Time Horizon: Frequency:
Factors:
Methodology:
Tactical Regional Allocation Model (TRAM)
Multi-factor quantitative model
Multi-factor quantitative model and qualitative analysis
Medium to long-term
Short to medium-term
Quarterly updates. Annual data and YOY%
Monthly updates
Thirty-six factors grouped into five different categories. The focus is on identifying the key drivers of medium to long term economic activity and the important economic, financial and political risks.
Twelve factors including: Valuation, Momentum, Sentiment, Growth, Demand, Consumer Confidence, External Balance, Foreign Exposure, FX, Monetary Policy, Political Review and Structural Reform.
Each country gets a score for each factor which then receives a weighting according to relevance. The weighted scores are then summed up to provide an overall relative weighting percentage within each model which are then combined to form the optimal portfolio and recommended allocation range (which is +/- 5% of final weighting).
Components of the Strategic Regional Allocation Model (SRAM): Category
Description
Factors – what we look for
GROWTH Factors that forecast the size and growth of the economy and investment universe.
SECULAR TRENDS
FINANCIAL RISKS
POLITICAL RISKS
•
Factors that evaluate sovereign and fiscal risk as well as a country’s external balance and foreign exposure.
Factors that look at the robustness and strength of financial systems.
Factors that measure the effectiveness of the government, regulatory environment and legal framework in a country.
Growing economies with increasing productivity Deepening and broadening capital markets
•
Strong demographics Improving information and communication technologies Increasing urbanization and growing labour markets Rising levels of income and savings rate
• • •
Sustainability of the debt service obligations Low risk of default Healthy current account balance
• •
Bank solvency and resiliency Asset quality in loan portfolio and bank efficiency
• • • •
Government effectiveness Regulatory quality and environment Rule of law Control of corruption
• • Factors that drive medium to long-term economic activity
ECONOMIC RISKS
•
•
FACT SHEET:MODEL MILLTRUST GEMMA UCITS MILLTRUST PORTFOLIOS FUND SELECTION The Milltrust team has a long track record in identifying and selecting third party managers in the developing world for investment. We seek to identify managers that have an excellent:
PEDIGREE AND REPUTATION
EDGE
INVESTMENT EXPERIENCE
ETHICAL PRINCIPLES
INVESTMENT PROCESS
TRACK RECORD
RISK
RISK MANAGEMENT DISCIPLINE
ABILITY TO MANAGE A BUSINESS OR TEAM
OPTIMAL PORTFOLIO CONSTRUCTION The portfolio construction process combines the results of our regional allocation and fund selection processes. We typically assign one investment team/fund per country/region which is subject to our ongoing monitoring and due diligence. The portfolio is rebalanced on a quarterly basis.
EMERGING EUROPE Optimal Weight: xx% Fund: Emerging Europe Fund
RUSSIA Optimal Weight: xx% Fund: Russia Fund CHINA Optimal Weight: xx% Fund: Milltrust Greater China Fund KOREA Optimal Weight: xx% Fund: Korea Fund
BRAZIL Optimal Weight: xx% Fund: Milltrust Brazil Fund
LATIN AMERICA Optimal Weight: xx% Fund: Milltrust LatAm Fund
INDIA Optimal Weight: xx% Fund: India Fund
MENA Optimal Weight: xx% Fund: MENA Fund SOUTH AFRICA Optimal Weight: xx% Fund: South Africa Fund
ASEAN Optimal Weight: xx% Fund: Milltrust ASEAN Fund
INCLUDED IN MODEL PORTFOLIO 1: Milltrust Global Emerging Markets Managed Accounts (“GEMMA”) UCITS INCLUDED IN MODEL PORTFOLIO 2: Milltrust Global Emerging Markets
FACT SHEET: MILLTRUST GEMMA UCITS MODEL PORTFOLIO
EMERGING MARKETS EQUITY TEAM Eric Anderson, an economics major from the University of California, Berkeley, brings nearly fifteen years of international investment industry experience in the United States, Europe, and Asia. Mr. Anderson has a successful track record in building and developing a multi-manager investment platform and setting strategic fund allocations for institutional investors. He has spent nearly a decade focused exclusively on the Emerging Markets, where he has extensive experience on the ground researching local investment managers, providing full due diligence capabilities and structuring and seeding a number of fund strategies in these regions.
Alexander Kalis is responsible for Milltrust’s manager selection, due diligence and discretionary client advisory practice. He has over 13 years’ experience working at top-tier asset management firms managing some of the largest pools of capital dedicated to Emerging Markets funds in the industry. He has an award-winning portfolio management track record and extensive experience carrying out investment research, due diligence and client advisory on traditional and alternative investment managers across all asset classes.
Vishaal Shah was, until recently a co-portfolio manager within the hedge fund team at a UK listed financial services group, where he co-managed $300m in client assets. Mr. Shah brings over 5 years of expertise in investing in emerging and frontier markets. Mr Shah was the lead analyst for a fund of hedge fund segregated mandate, managing an uncorrelated, concentrated and highly liquid managed account. The portfolio had annualized returns of in excess of 9% between Jan 2008 and April 2011 with no negative years.
MILLTRUST CHIEF EXECUTIVE OFFICER Simon Hopkins, Chief Executive Officer, has been a senior figure in the international investment management industry for more than two decades. After pursuing a successful investment banking career spanning more than a decade at S.G. Warburg, UBS, HSBC James Capel and Nomura where he participated in numerous Emerging Markets transactions, in 1996 Mr. Hopkins created one of the industry’s first dedicated research and investment consulting businesses, Global Fund Analysis, to provide truly objective analysis for investors. At its peak GFA had over 27,000 registered users around the globe. Concurrently, Mr. Hopkins played a pioneering role in seeding many of the incipient European hedge funds through the Fortune Group, an award-winning alternatives investment banking and advisory business, which he also created in 1996, and which merged with Global Fund Analysis in 2000. Fortune Group went on to become one of the UK’s pre-eminent hedge fund advisory firms with clients in 24 countries and a focus on pension funds, charities and endowments, as well as a number of the world’s leading families. The firm was successfully sold to UK-listed, financial services group, Close Brothers Group PLC, in 2006, culminating in its full integration in January 2010. Mr. Hopkins is a regular commentator on fund industry topics in the financial media and has addressed numerous conferences, the OECD and the London School of Economics on fund investing. He graduated with honours from the University of Bristol's Faculty of Law in 1986 and speaks fluent French. He now resides with his family in Singapore.
FACT SHEET: MILLTRUST GEMMA UCITS HOW TO INVEST:
Direct Investments. Investors invest directly into each Fund as per the desired weighting which removes the necessity for an over-arching fund of funds structure or any additional fees.
Single Structure. If required by the investor, Milltrust can also structure a single vehicle on the Platform that invests across the Milltrust Funds.
ALLOCATION DECISIONS:
Investors are able to outsource their allocation decisions to the regulated investment advisory team at Milltrust who maintain and provide full transparency to the Milltrust Model Portfolios
Do-it-yourself. Investors are also able to build their own Global Emerging Markets portfolio by investing across the Milltrust Funds and weighting the different investments as they see fit.
CONTACT US: LONDON: Hudson House | 8 Tavistock Street London WC2E 7PP E: info@milltrust.com | T: +44 (0)20 3427 3440 SINGAPORE: 80 Raffles Place | #26-01 UOB Plaza 1 Singapore 048624 E: info@milltrust.com | T: +65 6225 3052
DISCLAIMER: Milltrust International LLP is a subsidiary of Milltrust International Group (Singapore) Pte Ltd. and is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Milltrust International (Singapore) Pte. Ltd. is a wholly-owned subsidiary of Milltrust International LLP. Milltrust International (Singapore) Pte Ltd has submitted a notification for Exempt Fund Manager status to the Monetary Authority of Singapore, and in accordance with the changes to the regulatory regime for fund management companies in force from August 2012 will supplement this notification during the prescribed transition period to comply with the new rules. This document does not constitute any offer or invitation to purchase or subscribe for any shares or other securities. This document is confidential. It is being supplied to you solely for your information and may not be reproduced, forwarded to any other person or published in whole or in part for any purpose without the prior written consent of Milltrust International LLP. No reliance may be placed for any purpose whatsoever on the information contained in this document or on its completeness. No representation or warranty, express or implied, is given by Milltrust International LLP as to the accuracy, fairness, sufficiency or completeness of the information, opinions or beliefs contained in this document. Save in the case of fraud, no liability is accepted for any loss, cost or damage suffered or incurred as a result of the reliance on such information, opinions or beliefs. Any financial projections given are illustrative only and none of the projections or assumptions should be taken as forecasts or promises on the part of Milltrust International LLP. Accessing this document or using its information is not intended for persons who are restricted or prohibited from accessing or using this document or its information by relevant laws in any jurisdiction, and it is the responsibility of any person accessing the information contained in this document to observe all applicable laws and regulations of such jurisdiction. Any investment in the fund should be based on the full details contained in the relevant prospectus which is available from the Milltrust International LLP website ( www.milltrust.com ).