April 2010
Perspectives Macro Analysis The dynamics of emerging countries Asset Allocation Will the current trading range be broken? Expertise Focus Emerging equities: core or satellite?
www.am.natixis.com Corporate and Investment Banking / Saving Solutions / Specialized Financial Services
Publishing Director: F. Lenoir Editorial Committee: T. Benoist, S. de Quelen, Ph. Le Mée, R. Monclar, F. Nicolas, Ch. Point, Ch. Lacoste, JP. Snel, B. Thiery, Ph. Waechter Coordination - Writing: N. Clémot Head of design: F. Dupertuys Contributors: M. Louvrier-Clerc
4
Macroeconomic Analysis
6
Asset Allocation
7
Market Data
8
Overview of our international product range
11 Expertise Focus
This material has been prepared by Natixis Asset Management, a subsidiary of Natixis Global Asset Management. Natixis Asset Management is a French asset manager authorized by the Autorité des Marchés Financiers (Code 1200009, Agreement No. GP90009) and licensed to provide investment management services in the EU.
13 News
Legal information The funds mentioned in this material are not registered or authorized in all jurisdictions and may not be available to all investors in a jurisdiction. Natixis International Funds (Lux) I is organized as an investment company with variable capital under the laws of the GrandDuchy of Luxembourg and is authorized by the financial regulator (the CSSF) as a UCITS. Natixis Global Associates S.A. is the management company of the Fund. The provision of this material does not constitute an offer of services, nor an offer or recommendation to purchase or sell shares in any financial instrument. Investors should consider the investment objectives, risks and expenses of any investment carefully before investing. In the case of a fund, these can be found in the fund’s prospectus or offering memorandum, which should be read carefully before investing. If you would like further information about any of the funds, including charges, expenses and risk considerations, contact the sender of this document or your financial advisor for a free prospectus, simplified prospectus, copy of the Articles of Incorporation, the semi and annual reports, and/ or other materials and translations that are relevant to your jurisdiction. Any reference to a ranking, a rating or an award provides no guarantee for future performance results and is not constant over time. Performance data shown represents past performance and is not a guarantee of future results. More recent performance may be lower or higher. Principal value and returns fluctuate over time (including as a result of currency fluctuations) so that shares, when redeemed, will be worth more or less than their original cost. Performance shown is net of all fund expenses, but does not include the effect of sales charges or correspondent bank charges, and assumes reinvestment of distributions. If such charges were included, returns would have been lower. The analyses, opinions, and certain of the investment themes and processes referenced herein represent the views of the author(s) referenced as of the date indicated. These, as well as the portfolio holdings and characteristics shown, are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material. In certain cases, this material is provided by one of the Natixis Global Associates entities listed below, each of which is a subsidiary of Natixis Global Asset Management, the holding company of a diverse line-up of specialised investment management and distribution entities worldwide, each of which conduct any regulated activities only in and from the jurisdictions in which they are licensed or authorized. Their services and the products they manage are not available to all investors in all jurisdictions. Although Natixis Global Associates believes that the information provided in this material to be reliable, it does not guarantee the accuracy, adequacy, or completeness of such information. • In the UK: This material is provided by Natixis Global Associates UK Limited which is authorised and regulated by the UK Financial Services Authority (register no. 190258). This material is intended to be communicated to and/or directed at persons (1) in the United Kingdom, and should not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell securities in any other jurisdiction than the United Kingdom; and (2) who are authorised under the Financial Services and Markets Act 2000; or are high net worth businesses with called up share capital or net assets of at least £5 million or in the case of a trust assets of at least £10 million; or any other person to whom the
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Editorial Emerging countries will be one of the drivers of the worldwide recovery, and this new role will result in a change in the nature of the global balance. We are witnessing a simultaneous increase in the volume of goods and financial contracts traded between these countries, which reflects a greater degree of independence in their development process. And, in the opinion of Franck Nicolas, Head of Global Asset Allocation & ALM, the vigour demonstrated by emerging economies is helping to support the price of industrial raw materials to boot. For Philippe Waechter, Chief Economist, however good the privileged position enjoyed by emerging economies may appear in the short term, it should be considered in a wider context in order to understand the reasons for their accelerated growth in recent years and the challenges that they will have to face, now and in the future, to ensure sustainable growth. The Expertise Focus of this April issue explains why the asset class “emerging countries” has gone from part of satellite exposure to part of core exposure in the portfolios (a growing exposure that reflects the growing weighting of emerging markets in world growth) and reviews the product range offered by Natixis Asset Management for this type of asset. Natixis Global Asset Management’s multi-boutique model, of which Natixis Asset Management is a part, is indeed responding to this new challenge by combining the expertise of its local teams specialized in emerging Asia, Latin America an even emerging Europe with a wide product range aimed at institutional clients. The March clients workshop dedicated to emerging markets brought together the portfolio managers of these “local” asset management companies based around the world with Natixis Asset Management experts [see Expertise News p. 13]. As usual you can also find the summary of Natixis Asset Management’s international offer [pages 8 to 10 of this edition]. Enjoy reading it,
Philippe zaouati
Head of Business Development
AWARDS Victoires des SICAV awards: Natixis AM among the winners At the 2010 Victoires des SICAV awards presented by La Tribune newspaper, Caisses d’Epargne won second prize in the “Specialised range – bonds” category thanks to the delegated management of their fixed-income funds to Natixis Asset Management. Natixis Asset Management was itself named in third place in the “Broad range – bonds” category. The Morningstar methodology takes account of risk-adjusted performances not only over one year, but also over three and five years, and Natixis Asset Management has been rewarded for its repeated success in managing fixed-income funds over the entire five-year period, without taking excessive risks. Source: La Tribune – Les Victoires des SICAV supplement of March 26, 2010 Past performance or reference to any rankings or awards cannot be interpreted as indicating the future performance of a fund or its manager
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April 2010
3
Macro Analysis The dynamics of emerging countries Emerging countries are playing a driving role in the global recovery that has been at work since summer 2009. The levels of activity noticed in China, Brazil or even Korea are comparable to or higher than those observed over the first part of 2008. At the same time, there has been a noticeable concentration of the trade in goods and financing agreements between emerging countries. This reflects a greater autonomy in their growth dynamics. This feature of emerging countries is in stark contrast to the situation in industrialized countries, where the level of activity is still well below the level noted at the start of 2008. Even though this fortunate situation for the emerging markets is regarded as a good thing in the short term, it is necessary, however, to place it in the wider context in order to understand the reasons behind their accelerated growth over a number of years, and the challenges they face now and in the future in order to benefit from long-lasting growth. Finally, it is important to note that the readjustment of the global economy is offering emerging countries a new role in the governance of the global economy. The first step toward this aspect had been made with the creation of the G20, incorporating the main emerging countries alongside the developed countries.
n The development economics‌ "The development economics" have long been evolving in a constrained world. They were based on the assumption that the market was not capable of generating efficient resource allocation. With the exception of the oilproducing countries, this translated into low appreciation or non-appreciation in the price of commodities. If these prices were low, it was because the market allocation was inefficient. This phenomenon accentuated the perception of an economy constrained by external forces.
Philippe Waechter Chief Economist of Natixis Asset Management
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April 2010
In order to take control of their development, the States wanted to intervene directly in the allocation of resources. This interventionism, combined with the desire for independence, led to the implementation of strategies for import substitution: over and above normal production, it was necessary to produce locally to avoid dependence on foreign countries. This strategy resulted in a considerable loss of resources owing to the support given to sectors with non-existent productivity. The growth rate never took off despite the delay in accumulated growth.
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n ‌and their reappraisal At the end of the 80s, the reappraisal of these policies born of "the development economics" originated in particular from the dismantling of Eastern Europe, greater financial dependence with regard to foreign countries, and from the interest stimulated by the East Asian model. This latter was not based on import substitution but on a strategy designed to capture external markets. The change in direction was radical. From then on, the market became perceived more as an "indicator" for guiding the allocation of resources. In this model, the State has still enjoyed a major role, but rather as a facilitator helping to define the rules and enabling behaviors to be better coordinated.
n The opening up of the emerging countries The emerging countries have become progressively integrated into global dynamics, and are now benefiting from a world in growth. Their activity has been conditioned less by internal constraints than by the
trends of external markets on the increase. The most significant example of activity being reoriented toward exportation is that of China from the early 2000s and its joining of the WTO. This change in trend is playing an essential part in the dynamics of the trade that it created in the Asian area. Many countries have benefited from this impulse to redirect their economies and to link them more to external markets. As regards the new role of institutions, the most striking example is that of Brazil. In the early 90s, its rate of inflation was very high resulting in great instability both internally and externally. The adoption of a monetary policy conditioned by an inflation target made it possible to stabilize prices, direct expectations and give a strong signal to the rest of the world. This translated into a stabilized exchange rate, which not only enabled Brazilian businesses and households to develop in a less volatile environment, but also reassured foreign investors. The 1990s and early 2000s therefore witnessed a burst in the large number of developing countries opening up to the world and to trade. This has materialized into accelerated growth worldwide and has permitted far greater homogeneity in the orientation of activities in the major geographical areas. Thus in the period from 2004-2007, worldwide growth was in the order of 5%.
n Refocusing on the task The next stage in the development is to refocus activity onto internal demand. In the emerging countries, the growth has
generated an increase in employment and in the distribution of higher earnings favoring the appearance of a middle class wishing to spend more and to take advantage of this more favorable environment. Household consumption is then taking on a new dimension since it may contribute directly to the growth.
redefined. This will translate into quite marked adjustments to exchange rates: it will be reflected in the evolving balance of power and in the change dynamics. The current discussions on the parity of the Yuan to the Dollar are perhaps the beginnings of this process.
This diversification and the development of a middle class are essential for making the growth process more long-lasting and more autonomous. This must be achieved by the establishment of institutions which make this reorientation possible.
n Conclusion
The Chinese example is very significant in this respect. The very high rate of household savings reflects an uncertainty indicative of inadequate social structures (retirement, social security, etc.). Reducing this uncertainty in the long term requires the establishment of institutions that meet these expectations. This construction will be staggered over time.
n A new global balance The radical changes mentioned above are being brought about by a change in the nature of the global balance. Until now, emerging countries have been able to free up surpluses, enabling the external deficit in certain industrialized countries, such as the United States, to be financed. Their savings excess is therefore placed in countries suffering from a savings deficit.
The transformation noticed within the emerging countries has been spectacular. They have become open to change, have entered into the dynamics of globalization, and have assumed an important role there. This opening up provides major redeployment capabilities for the industrialized countries, but at the same time is forcing them to find a new kind of balance. The first steps toward this new balance are found in the relocation movements designed for least-cost production for the industrialized countries, then for the local markets. The second stage is already emerging: the increased growth in emerging countries and their readjustment toward consumption will force the western nations to revise their model in order to remain competitive.
Written on 31/03/2010
When the emphasis is placed more upon consumption within the emerging countries, this balance will be called into question again and may need to be
Difference in growth rates between low-income / medium-income countries and developed countries 6 5 4 3 2 1 0 -1
Calculated trend
-2 -3
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
Source: Datastream - Calculations: Natixis Asset Management
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April 2010
5
Asset Allocation Will the current trading range be broken? The equity markets rallied significantly in March. The solvency of Greek debt and a resolution of the impasse over Greek public finances seem to be on the right track. That said, divisions still exist within the euro zone, and Germany, which accounts for nearly 35% of its GDP, appears less and less willing to play the solidarity card at any price. In this context, the IMF assistance should be a big help. Even though the macroeconomic data are still encouraging, it appears very difficult at present to break out of the very broad trading range of 2,650 to 3,050 points within which the EuroStoxx 50 has trod water since late August. Sovereign risk is currently capping market gains, while the improved economic outlook is acting as a floor.
Franck nicolas
Head of Global Asset Allocation & ALM Risk Risk categories subcategories
Tactical allocation* 02/10(1) 03/10(2)
=
Fixed income
=
equities
+
+
Fixed income United States
=
=
= =
= =
=
=
=
=
Euro issuers Corporate Invest.Grade
+
+
equities
United States Euro zone
+ +
+ +
UK
+
=
Japan
=
=
Euro zone UK Emerging markets Japan
Currencies (against the euro)
Dollar
=
+
Yen
=
=
Sterling
=
-
=
=
=
=
Commodities Oil Gold Scale from -- to ++
*weighting gap vs. strategic allocation of an investor
(1) Investment committee on 03/02/2010. (2) Investment committee on 25/02/2010.
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April 2010
n Fixed income
n Currencies
In the United States, the end to the unconventional quantitative easing measures is taking shape, and Natixis Asset Management is standing by its scenario of bond market volatility over the course of the year. Nevertheless, it remains hard to envisage a significant rise in interest rates as long as the sovereign debt crisis continues and central bankers refrain from adopting a tougher tone. By contrast, the main government bond markets are benefiting from the difficulties on peripheral debt, with Germany and France the main beneficiaries. Their paper enjoys safe haven status and would offer reassurance if the situation looked set to deteriorate.
The euro is continuing to depreciate, and the recent announcements by the US Federal Reserve are likely to fuel this trend to some extent a little further into the year. In the short term, the lack of political credibility will make it hard for the euro to rally. The euro zone has been shaken to its core, with its unity and common economic policy criteria thrown into doubt. Faced to this situation in Europe, the Swiss franc is counted among the winner.
n Equities The Strategic Investment Committee still sees unspectacular gains over the year, suggesting that the market harbors a degree of upside provided that the trends in macroeconomic and corporate earnings data continue. What is most striking at present is the divergence between US and European equities. The S&P500 has outperformed the EuroStoxx 50 by nearly 6.25 percentage points year-to-date, thanks to the dollar effect. However, this divergence should come to an end if the Greek problem is resolved.
In addition, Natixis Asset Management is keeping its negative view on sterling and the yen for the rest of 2010.
n Commodities Industrial commodities have held very firm and continue to be bolstered by the growth differential story between the emerging and developed zones. Even though the strength of emerging market growth looks likely to lead to monetary tightening that will constrain growth in those countries, end-demand for commodities remains sufficiently strong to support prices.
*Trading range: the spread between the high and low prices traded during a period of time.
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Written on 31/03/2010
Markets Data France
Value
CAC 40 CAC Mid 100 IT CAC 20 SBF 120 SBF 250
3 974.01 6 595.42 3 549.52 2 919.27 2 850.31
Europe
Value
MSCI Europe Euro Stoxx 50 DAX Footsie
91.43 2 931.16 3 712.18 5 679.64
United States
Value
Dow Jones S&P 500 Nasdaq Brent Crude Future
10 856.63 1 104.49 2 397.96 82.70
Asia
Value
Nikkeï Hong Kong Singapore Shanghaï
11 089.94 21 239.35 2 887.46 258.59
World
Value
MSCI World
1 200.53
1 year 41.56 % 61.14 % 36.97 % 43.86 % 44.07 %
1 year 48.28 % 41.52 % 44.39 % 44.66 %
1 year 42.68 % 50.25 % 56.87 % 67.99 %
1 year 36.75 % 56.45 % 69.85 % 60.56 %
1 year 49.09 %
As of 31/03/2010
2010 0.96 % 8.22 % 5.34 % 2.09 % 2.19 %
Money Market Rate Eonia Euribor 3 months Euribor 6 months Euribor 1 year Fed Funds
2010 3.57 % -1.14 % 3.00 % 4.93 %
0.401 % 0.634 % 0.944 % 1.212 % 0.090 %
1 year -1.235 -0.876 -0.726 -0.6 -0.07
2010 -0.009 -0.066 -0.05 -0.036 0.04
Fixed Income
2010
Rate
4.11 % -0.95 % 5.68 % 6.12 %
5 years French Treasury Bond 5 years USTN 10 years French Treasury Bond 10 years USTN 30 years French Treasury Bond 30 years USTN
2010 5.15 % -2.89 % -0.35 % 2.45 %
2.268 % 2.561 % 3.420 % 3.833 % 4.022 % 4.715 %
1 year -0.378 0.908 -0.133 1.163 -0.092 1.175
2010 -0.211 -0.125 -0.173 0 -0.238 0.085
Currencies Value Euro/Dollar Euro/Yen (100) Euro/Sterling Dollar/Yen
2010 2.74 %
1.353 126.434 0.892 93.440
1 year 1.91 % -3.59 % -3.70 % -5.40 %
2010 -5.69 % -5.34 % 0.41 % 0.37 %
The monthly Index Brent price trend
Price of Brent per barrel dollars euro (purple) and euros (blue) Les taux d'intérêt eninzone 140 120 100 80 60 40 20 2004
2005
2006
2007
2008
2009
2010
Source: Datastream - Calculations: Natixis Asset Management
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Since October 2009, the price of Brent has moved to between $75 and $80 a barrel. This price, much higher than the prices seen in the 1990s and the early 2000s, reflects a change in the demand for oil. The demand generated by emerging countries, in particular China, has resulted in a long-term change in the stakes and the equilibrium on the market since the early 2000s. In the first half of 2008, the increased tension caused by these adjustments resulted in the price skyrocketing to over $140 a barrel. The recession in autumn 2008 depressed the market before it could recover with the help of demand pushed by emerging countries. Nonetheless, the current price of Brent remains high despite significant stocks in industrial countries and OPEC’s ability to increase production, which may result in an increased "financiarisation" of raw materials. Nonetheless, for the time being, the established parity between the euro and the dollar has limited the extent of changes to the barrel price, thus mitigating its impact on business and inflation.
April 2010
7
Overwiew of our international Product range Sub funds of the Natixis International F unds (Lux) I SICAV managed by Natixis AM These 7 sub funds of the Natixis International Funds (Lux) I SICAV reflect the key expertise of Natixis Asset Management
Natixis Euro Aggregate Plus Fund éric
née-M
elan belle D
Isa
Benefit from a broad range of fixed income investment opportunities
• Investment universe: Mainly Euro denominated government or private issuers rated Investment / Diversifying fixed income assets • Benchmark: Barclays Capital Euro Aggregate • Minimum recommended investment period: 3 years
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0161120547 LU0391146155 LU0161121271 LU0390502184
Natixis Global Inflation Fund Get the most out of diversification in inflationindexed bonds in a global universe
tard
Po Sophie
• Investment universe: International inflation-linked bonds • Benchmark: Barclays World Government Inflation linked all maturities Index hedged in euro • Minimum recommended investment period: 2 years • Risk Indicator: Target tracking-error ex ante of 2% (maximum)
H-I, A H-I, D I, A I, D R, A R, D
USD USD EUR EUR EUR EUR
LU0390502267 LU0390502341 LU0255251166 LU0255251596 LU0255251679 LU0255251752
Natixis Impact Euro Corporate Bond Fund rbier
e Ba hristin
C
Benefiting from the SRI expertise of Natixis Asset Management through a socially responsible portfolio of investment grade corporate bonds
• Investment universe: Mainly Euro-denominated investment grade debt securities issued by OECD as well as cash, money market instruments or other securities • Benchmark: Barclays Euro Aggregate Corporate Index • Minimum recommended investment period: 3 years
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0155376477 LU0391146072 LU0155380156 LU0390502770
See the full prospectus which is the only legally binding document. See the Legal Information on page 2 for important information about the funds.
8
April 2010
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rade elond
Natixis Emerging Europe Fund
héret
ois T
Franç
Get the most out of the growth in the emerging European zone as part of a conviction management strategy
ieu B
Matth
• Investment universe: Emerging Europe Equities • Benchmark: None (MSCI Emerging Europe Index: indicative only) • Minimum recommended investment period: 5 years • Risk Indicator: Target tracking-error ex ante between 6 and 10
I, A I, A I, D R, A R, A R, D
EUR USD USD EUR USD USD
LU0147917792 LU0095830922 LU0095831060 LU0147918923 LU0084288595 LU0084288678
Natixis Europe Smaller Companies Fund Benefiting from the potential of European Small & Midcaps within the scope of a convictionbased strategy
pers
Cuy hierry
T
• Investment universe: European Small and Mid Equities •B enchmark: None (MSCI Europe Small Caps NDR: indicative only) •M inimum recommended investment period: 5 years •R isk Indicator: Target tracking-error ex ante between 4 and 7 (indicative)
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0095827381 LU0095828272 LU0064070138 LU0064070211
Natixis Euro Value Fund Tapping the potential of Eurozone value equities within the scope of a conviction-based strategy
vre
efè livier L
O
• Investment universe: Eurozone Equities • Benchmark: None (MSCI EMU NDR: indicative only) • Minimum recommended investment period: 5 years
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0389329003 LU0389329185 LU0389329342 LU0389329425
Natixis Impact Europe Equities Fund Active and responsible investing to maximise SRI value added
breton
e Le hristin
C
• Investment universe: European equities • Benchmark: None (MSCI Europe: indicative only) • Minimum recommended investment period: 3 years
I, C I, D R, C R, D
EUR EUR EUR EUR
LU0095828512 LU0095828785 LU0066549592 LU0066549832
See the full prospectus which is the only legally binding document. See the Legal Information on page 2 for important information about the funds.
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April 2010
9
Overwiew of our international Product range Natixis Asset Management's funds offer a range of expertise and innovation 28 complementary funds covering all asset classes. This quarterly reviewed list of funds aims to highlight Natixis Asset Management's most innovative products and its wide range of expertise.
BalanAltern. Absolute return ced
Equities
Fixed income
Money Market
Asset class Fund name
Share and ISIN code
Natixis Cash Première
C: FR0010157834
Natixis Cash A1P1
C: FR0010322438
Natixis Impact Cash
C: FR0010008003
Natixis Cash Eonia
I: FR0010298943
Natixis Tréso Euribor 3 Mois
R: FR0007084926
FR0000293714
Natixis Tréso Plus 3 Mois
FR0007075122
Natixis Souverains Euro 1-3
I: FR0010208421
Natixis Souverains Euro 3-5
FR0010036400
Natixis Souverains Euro 5-7
FR0010201699
Natixis Souverains Euro 7-10
FR0000449092
Natixis Souverains Euro
RC: FR0000003196
Natixis Inflation Euro
I: FR0007475413
R: FR0010170944
Natixis Obli Opportunités 12 Mois
I : FR0010796391
R : FR0007493226
Natixis Crédit Euro
I: FR0010171108
R: FR0010690966
Natixis Convertibles Euro
I: FR0010658963
R: FR0010660142
Natixis Convertibles Europe
C: FR0010171678
Natixis Actions Europe Dividende
IC: FR0010582478
RC: FR0010573782
Natixis Impact Life Quality
C: FR0010410274
E: FR0010458539
Natixis Actions Europe Convictions
C: FR0010346429
Natixis Actions US Value
I: FR0010256412
Natixis Actions US Growth
I: FR0010256404
R: FR0010236877
Sonic Monde
I: FR0010555797
RC: FR0000993446
Natixis Actions Global Emergents
I: FR0010711051
R: FR0010706960
Natixis Absolute Quant Bond 18 M
I: FR0010232348
R: FR0010249219
IC: FR0010654921
RC: FR0010657924
IC, $: LU0161071237
IC, €: LU0161073951
Natixis Absolute Swap Arbitrage Natixis Constellation European Event Natixis Absolute Multistratégies
R: FR0010236893
IC: FR0010688812
These funds are authorized for sale in France and possibly in other country(ies) where their sale is not contrary to local legislation. Please refer to legal information of this material.
10
April 2010
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Expertise Focus Emerging equities: core or satellite? The percentage of emerging equities held in European investors’ portfolios has been rising steadily for five years, going from 8.5% at the end of 2004 to nearly 20% at the end of 2009(1). As an asset class they have gone from part of satellite exposure to part of core exposure, reflecting the growing weighting of emerging markets in world growth. Thanks to a global multi-boutique model combining the expertise of local teams with a broader product range aimed at institutional clients, Natixis Global Asset Management has developed recognized expertise in this segment. Under this model, three asset managers have developed specialized expertise in emerging areas: Absolute Asia Asset Management in Emerging Asia, Hansberger Global Investors in Latin America and Natixis Asset Management in Emerging Europe and global allocation across emerging equities. They manage more than €650 million in emerging equities(2).
ABSOLUTE ASIA AM GOLDEN DRAGON RENAISSANCE FUND H-I / A shares (EUR) : LU0258450138 Sub fund of the Natixis International Funds (Lux) I SICAV From the People’s Republic of China through Hong Kong to Taiwan, Greater China is the economic and commercial power seeing the fastest growth in the world. Trade flows and foreign investments have been the driving factors behind this expansion. Thanks to this economic dynamism, the standard of living for the average Chinese has risen. The immense domestic market is now maturing, increasing investment opportunities. The Absolute Asia Bill Sung, AM Golden Dragon Renaissance Fund is an ideal way to seize these. Based in Singapore, the management Portfolio manager team of this fund identifies major trends affecting companies in the region and then select small and mid(Absolute Asia AM) sized companies likely to benefit from them. The portfolio is constructed through a condensed selection of around 35 stocks.
ABSOLUTE ASIA AM EMERGING ASIA FUND H-I / A shares (EUR) : LU0258446615 Sub fund of the Natixis International Funds (Lux) I SICAV The Absolute Asia AM Emerging Asia Fund’s investment universe focuses specifically on emerging Asia; from China to Indonesia via South Korea, India, Malaysia, the Philippines, Taiwan and Thailand. This geographic zone boasts some special characteristics: a robust economy, high growth rates and an expanding middle class. The dynamism of the domestic market is today driving a range of sectors related to household consumption, real estate, infrastructure, etc. In order to benefit from all opportunities the Gary Lim(3), area has to offer, the Absolute Asia AM Emerging Asia Fund’s investment process is unconstrained by Portfolio manager capitalization or style. (Absolute Asia AM) The portfolio is concentrated around 50-70 stocks (indicative figure) and its indicative benchmark is the MSCI Emerging Market Asia Free.
(1) Source: Lipper Feri. (2) Source: Natixis Global Asset Management as of February 28, 2010. Figures relate to open-ended fund only: China - €103 million; emerging Asia - €185 million; Latin America - €50 million; emerging Europe - €150 million; global emerging equities - €168 million. (3) CFA: Chartered financial analyst.
www.am.natixis.com
April 2010
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HANSBERGER EMERGING LATIN AMERICA FUND I / A shares (EUR) : LU0147917107 Sub fund of the Natixis International Funds (Lux) I SICAV The Hansberger Emerging Latin America Fund essentially invests in companies active in Latin American emerging markets. In addition to sustained domestic growth and large-scale infrastructure projects, this part of the world has two important assets: land which is rich in natural resources and minerals, and major agricultural production. Reflecting this focus, the benchmark for the fund is the MSCI EM Latin America. Francisco Alzuru(4), Portfolio manager (Hansberger Global Investors)
The investment process is based on a bottom-up approach that also allows for the global macroeconomic environment. Stock selection emphasizes securities the market regards as under-valued. Portfolio construction is unconstrained in terms of capitalization. The Hansberger Emerging Latin America Fund reflects the strong convictions of the management team, the portfolio holds around 35-40 stocks.
NATIXIS EMERGING EUROPE FUND H-I / A shares (EUR) : LU0258447001 Sub fund of the Natixis International Funds (Lux) I SICAV At the crossroads of Europe and Asia, emerging Europe enjoys the benefit of a strategic position. It is both one of the motors of global growth and among its prime beneficiaries. In addition, it is profiting from institutional and economic convergence with the European Union. François Théret and Matthieu Belondrade(4), Portfolio managers (Natixis Asset Management)
Investing in the Natixis Emerging Europe Fund is a way to profit from this privileged position. Having made a geographic allocation across the countries in the region, the management team picks 70-100 stocks on the basis of in-depth analysis of fundamentals, valuation and risk levels.
An active approach unconstrained by a benchmark allows the managers to select stocks outside the countries in the MSCI Emerging Europe index, such as Ukraine and Romania, enhancing portfolio diversification. Because of its economic scale, Russia always comprises 30-50% (indicative figure) of the fund’s geographic allocation, which results in a large exposure to the energy sector. The team manages the fund through a conviction-based strategy, established through systematic meetings with top managers and regular interaction with local research teams.
NATIXIS ACTIONS GLOBAL EMERGENTS I / A shares (EUR) : FR0010711051 A French mutual fund (FCP) Natixis Actions Global Emergents invests in the twenty or so countries included in the MSCI Emerging Markets index. The investment universe is diversified by virtue of the very contrasting natures and levels of development of the constituent countries. The management team uses a fundamental top-down approach based on active country allocation with careful risk budgeting, aiming to outperform the benchmark over a (4) Pierre Radot and Christoph Metz , recommended investment horizon of five years. The investment process falls into three Portfolio managers (Natixis Asset Management) stages: The first stage involves an analysis of each emerging market in terms of its macroeconomic and political environment, valuation and market conditions by the Natixis Asset Management’s Emerging Equities Allocation Committee. Secondly, the relative weight of each country within the portfolio is determined, taking into account the risk budget. The third stage comprises the tactical management of the portfolio maneuvering and the control of risks. The managers of Natixis Actions Global Emergents use liquid investment vehicles, which allow a high degree of responsiveness while limiting transaction costs: country, regional and/or global emerging market ETFs(5), emerging market futures (in countries with greater liquidity)… (4) CFA: Chartered financial analyst. (5) ETF: Exchange traded fund.
For more information on these funds: www.am.natixis.com [Our Products section]
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April 2010
www.am.natixis.com
News Institutional clients and sustainable investment
Expertise
The emerging markets: Core or satellite? Natixis Asset Management organized its 8th clients Workshop on the previous March 24 around this key theme. The Natixis Asset Management experts evoked the great stakes of these “new industrialized countries” in front of more than 150 participants: Their growing importance in the world economy, the most dynamic regions, and the risks and opportunities for the investors… After an introduction by Pascal Voisin, CEO of Natixis Asset Management, Philippe Waechter, Chief Economist, outlined the main macroeconomic developments observed over the past decades. Then, Franck Nicolas, Head of Global Allocation & ALM, dedicated his intervention to the following issue: “Emerging markets: A strategic importance and a tactical implementation”.
Natixis Asset Management invited its institutional clients to the 2010 Forum GI (Institutional Asset Management Forum) on March 17 and 18. The 2010 event was not just about drawing conclusions from the financial crisis but also about tackling the crucial subject of pension funding. Natixis Asset Management, which manages the most important part of its assets for the account of institutional clients, was naturally present at the forum. Wilfrid Pham, Head of Equity Management at Natixis Asset Management, took part in a round table on "evaluation models and asset management solutions to reduce risks on the long term and take a sustainable investment approach", organised jointly with Novethic(1). Further information on the product range of Natixis Asset Management on www.am.natixis.com (Our Products section) (1) N ovethic is the French centre for research on Corporate Social Responsibility (CSR) and Socially Responsible Investment (SRI). Novethic is also an expert media resource on sustainable development [www.novethic.com]
IN BRIEF April 2010
Impact Climate Change
n Emerging markets:
Going beyond the generally accepted ideas
The legitimacy of the
This Workshop allowed a certain number of generally accepted ideas on emerging markets to be shaken up. Thus, as was emphasized by Pascal Voisin: “The crisis has called into lasting question the idea according to which the western markets would offer limited potential in counterparty for a risk, also limited, while the emerging markets would be ‘high risk, high return’…” For him, the debate on the correlation between emerging economies and developed economies “seems today to be distinct insofar as each of us can witness the dynamic specific to the emerging markets”.
n Point of view on the emerging markets Presented by Philippe Zaouati, Head of Business Development, the Workshop round table brought together Francisco Alzuru, Managing Director Emerging Market Research (Hansberger Global Investors), Gary Lim, Senior Portfolio Manager (Absolute Asia Asset Management) and François Théret, Portfolio manager/ Analyst in the Equities department dedicated to Emerging Europe (Natixis Asset Management). This round table with “international” dimensions reflected the diversity and richness of Natixis Global Asset Management’s multiboutique model. For the 150 participants who were present, it was a privileged access to different perspectives from specialists with varied horizons who are specialized in each of the large emerging market zones. Francisco Alzuru on Latin America, Gary Lim on the Asian zone and François Théret on Emerging Europe.
IPCC
and Richard Klein, aM by Stéphane Hallegatte Change Scientific Committee of Natixis Members of the Climate It has 194 body set up in 1988. (IPCC) is an international l Organisation and the Panel on Climate Change by of the World Meteorologica The Intergovernmental (1) 31 members elected operates under the auspices by a Bureau gathering member countries and Programme. It is managed United Nations Environment the member countries.
the n What is the role of
IPCC?
The Climate Change Scientific Committee t of Natixis Asset Managemen
to policyto provide regular reports The IPCC’s mandate is of scientific about the current state makers in all countries change risks related to climate progress on climate change, The mandate for dealing with them. and possible strategies the reports the prime purpose of also makes it clear that not to make any political is to inform public policymaking, comments IPCC therefore never recommendations. The or what should be introduced on whether climate policies as a source The IPCC must only act form they should take. policy making, it public of process the of information for read expresfor instance, when you cannot replace it. So, ”, which crop up fresions like an “IPCC recommendation IPCC reports never this is nonsense. policy quently in the media, s, nor do they take any contain any recommendation positions.
n IPCC reports: the priority is to inform
1991. They 4 major reports since in our The IPCC has published and evaluate the advances summarise, synthesise will have change, the impacts it knowledge about climate gas emissions. for cutting greenhouse and the policy options
the challenges of So as to better understand solutions, Natixis proposed climate change and created its own Climate Asset Management has bringing together Change Scientific Committee,by Carlos Joly, coHeaded recognized experts. that drafted the United chair of the Expert Group this Responsible Investment, Nations’ Principles for a year. committee meets twice Climate Change Management’s Asset Natixis has three main objectives: Scientific Committee Asset Management's 1. To enlighten the Natixis managers on climate teams and portfolio change and its consequences appropriateness of the 2.To advise on the portfolio is invested securities in which the 3.To provide information
different disciplines and
world regions. It has 31
Climate Change at the heart of the debate The IPCC (Intergovernmental Panel on group on Climate Change) and its reports are at the heart of the debate today on the topic of climate change.
members
of the IPCC to represent of the special task force. elected by the Plenary groups and the 2 co-Chairs made up of scientists issues about of each of the 3 working (1) The IPCC Bureau is Working Group II investigates 3 vice-Chairs, the bureaux and the possibilities for system and climate change. including a Chairman, basis for the climatic impacts of such change Group I looks at the scientific to climate change, the positive and negativeor otherwise mitigate climate change. systems Of the 3 working groups, economic and natural limit greenhouse gas emissions inventories. the vulnerability of social, III examines potential solutions that would compiling national greenhouse the IPCC programme for adaptation. Working Group is responsible for implementing 2014. assessment report in greenhouse gas inventories and after delivery of the fifth The task force on national for green technologies the next election is due Sea, with responsibility was elected in 2008 and Development and the The current IPCC Bureau ’Ecology, Energy, Sustainable www.ipcc.ch). the French Ministry of Panel on Climate Change, (Sources: website of the website of the Intergovernmental climate negotiations, and
Read the point of view of Stéphane Hallegatte and Richard Klein, specialists of the climate change and members of Natixis Asset Management’s Climate Change Scientific Committee, in the dedicated Flash “The legitimacy of the IPCC” available on www.am.natixis.com/climatechange/eng/ CoRPoRATE ANd INvESTMENT
BANkING / SavINg SOlUTIONS
/ SPECIAlIzEd FINANCIAl
SERvICES
techange/en
www.am.natixis.com/clima
Portugal downgrade On March 24, Fitch downgraded the rating of the Portuguese debt from AA to AA- with a negative outlook due to the weak recovery perspectives for economic recovery compared to other countries of the euro zone.
April 2010
Markets flash Portugal Downgrade As seen by the Fixed an event with restricted n What impact would
On 24th March fitch downgraded the Portuguese debt from aa to expressed a negative outlook aa- and for same in light of the following: • The unlikeliness of economic upturn in comparison with the other countries in the Euro zone, which shall weigh on public finances in the medium term; • a significant reduction in Portuguese public finances during the crisis, with a budgetary deficit totaling 9.3% of the GDP in 2009 as opposed to 2.6% in 2008.
% of GDP
withdrawal on the European stock markets and a 2% reduction of the lisbon stock market on the same day. The spreads on the bond stock have, on the whole, remained, markets stable in comparison with Germany (+2.1 bp for the two-year spread, -0.3 bp for the fiveyear spread and +2 bp for the ten-year spread).
80.0 60.0 40.0 20.0 0.0
www.am.natixis.com
Ireland
Greece
Spain
France
Belgique Irlande Grèce Source: France European Allemagne Espagne 2009 Commission
480 pb 440 400 360 320 280 240 200 160 120 80 40 0 01/07 05/07
Consult the Markets Flash “Portugal downgrade” written by the Fixed Income department of Natixis Asset Management on the 31.03.2010 available on www.am.natixis.com COrPOraTE anD InvEsTMEnT
aa- have on the market?
Euro Zone: Public Debt Forecasts
160.0 140.0 120.0 100.0
Belgium Germany
The announcement of the Portugal downgrade has had only a very limited effect on the markets i.e. slight
The downgrade was actually widely anticipated by the market. fitch is only repositioning itself as regards the s&P, which has already graded Portugal as a+. Moody’s aa2 grade should be noted, which is, as always, a rating mark above fitch.
You will find all the interventions in the Natixis AM’s Workshop Newsletter No. 8 soon available on: www.am.natixis.com.
Income department
impact, already anticipate d by the markets
a Fitch downgrade to
Holland
Austria
Portugal
Finland Euro Zone
Italie 2011 Pays-Bas Autriche Portugal
Finlande
Five Year Spread
Portugal downgrade
09/07
01/08
05/08
Portugal vs Germany
09/08
Spain vs Germany
Source: Bloomberg
BankInG / saving solutions
Italy
2010
Euro Zone: Inter-Country
/ sPECIalIzED fInanCIal
01/09
05/09
09/09
01/10
Greece vs Germany
sErvICEs
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April 2010
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www.am.natixis.com Natixis Multimanager Subsidiary of Natixis Asset Management A French simplified joint-stock company Share Capital of 7 536 452 euros RCS Number 438 284 192 Paris Regulated by AMF under n°GP 01-054 Registered Office: 21 quai d’Austerlitz 75 634 Paris, Cedex 13 - Tel. +33 1 78 40 32 00 www.multimanager.natixis.com
communication-nam@am.natixis.fr - April 2010.
Perspectives is a Natixis Asset Management's publication - Natixis Asset Management - Communications Department - Business Development -
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