macro analysis
Asset Allocation
Deflation remains the major risk
The economic environment is less negative for the equity markets
product Focus Natixis Convertibles Euro
May 2009
perspectives
Macroeconomic Analysis Deflation remains the major risk “‘In the short term, deflationary pressures will be to the fore. They will not disappear rapidly and will have repercussions for social trends…”
2
by Philippe Waechter, Chief Economist
Asset Allocation The economic environment is less negative for the equity markets “The second quarter will be marked by an environment in which the economic statistics will be less uniformly negative than during the past few months, suggesting that we can hope to see a continuation in the bear market rally witnessed in the equity markets since March 9. This rebound should be all the more sustainable given that investors are currently very defensive in terms of asset allocation…” ”
4
by Franck Nicolas, Head of Global Asset Allocation & ALM
Market Data Monthly Market Data The trend in stock market indices in 2009: CAC 40 and the Standard and Poor’s 500
5
Overview of our international product range Summary of Natixis Asset Management’s international offer and of its expertise
6
Product Focus Natixis Convertibles Euro "Natixis Convertibles Euro is an original and attractive investment that benefits from both the dynamic potential of equities and the more limited volatility of bonds…”
10
by Denis Passot, portfolio manager
News Natixis Asset Management at the Geneva Forum for Sustainable Investment A pioneer in Socially Responsible Investment (SRI) with more than 20 years experience, Natixis Asset Management participated in the international Forum on Sustainable Investment. Philippe Zaouati, Head of Business Development, spoke at the roundtable "Responsible investing or financial performance? A false choice!"
12
Data as of 03/31/2009 Perspectives is a Natixis Asset Management's publication Contact: communication-nam@am.natixis.fr Publishing Director: F. Lenoir Editorial Committee: F. Delorme, S.de Quelen, H. Henriques, A.Lançon, K.Massicot, P. Le Mée, R. Monclar, F. Nicolas, A. Reynier, M-L. Rouy, Ph. Waechter Coordination - Writing : N. Clémot Head of design: F.Dupertuys Contributors: R. Cyrille, L. Faure
Natixis Asset Management Limited Liability Company Share Capital 50 434 604,76 € RCS Number 329 450 738 Paris Regulated by AMF under n°GP 90-009 Registered Office: 21 quai d’Austerlitz 75 634 Paris, Cedex 13 Tel. +33 1 78 40 80 00 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: 1-3, rue des Italiens 75009 Paris Tel. +33 1 78 40 32 00 www.multimanager.natixis.com
Cover picture: Bandstand Cutural Center, de La Warr Pavilion,Bexhill-on-sea.England. Niall McLaughlin Architects. Photography: Nicholas Kane/Corbis.
Editorial
Despite very accommodative economic policies, spiraling public debt and numerous liquidity injections, some analysts believe that a sustained period of high inflation is now required. Philippe Waechter, Chief Economist of Natixis Asset Management, does not agree with this scenario, believing that the overriding short-term risk lies in deflation. In his Macroeconomic Analysis on pages 2 and 3, he explains how deflationary pressures are the greatest concern and should be the primary focus of attention, as they will not be disappearing soon and could trigger social unrest. Philippe Zaouati Head of Business Development
In his Asset Allocation article on page 4, Franck Nicolas, Head of Global Asset Allocation & ALM, confirms that fears of inflation linked to aggressive monetary policies remain premature, largely because price indices are currently low or even in negative territory. In his opinion, such circumstances justify investment in fixed-rate bonds. And as economic statistics are less uniformly negative than in recent months, he considers whether the bear market rally – witnessed on the equity markets since 9 Marchmay continue over the second half of the year. In this more positive environment, Natixis Asset Management will continue to overweight US equities, which currently offer the best risk-reward profile. Finally, this issue includes a summary of Natixis Asset Management’s international offer [page 6 to 8] with a particular focus on Natixis Convertibles Euro with Denis Passot, Portfolio manager [Product Focus page 10].
Enjoy reading it. Philippe Zaouati Head of Business Development
www.am.natixis.com
May 2009
1
Macro Analysis
Philippe Waechter
Chief Economist
Deflation remains the major risk The Context In a globalized economy, it is not conceivable for a country to unilaterally sustain a high inflation rate. Any such attempt would be immediately penalized by the financial markets. Furthermore, to think that higher inflation is in everyone's interest seems hazardous. As a result, if a particular country really wants higher inflation, it will have to become isolated.
The Key Point Highly accommodative economic policies and the economic and financial situation are suggesting to some that the only salvation lies in a sustained period of high inflation. Our view is that this scenario is not the right one.
The Challenge Given the absence of manufacturing capacity constraints in the global economy, there is a risk of downward pressure on manufacturing costs and thus on wages. Wage reductions are already discernable in a number of export-driven emerging countries. This deflationary pressure poses a threat and brings with it a risk of social instability.
2
May 2009
It is very tempting to believe that the turbulence which is rocking the markets and the global economy could be solved by a period of sustained period of high inflation. From this perspective, inflation would enable a definitive line to be drawn under the past and facilitate the return to growth. On this assumption, spiraling government debt and monetary growth would inevitably result in a sustained period of high inflation. The factors currently limiting the leeway of all the economic players would then be dispersed by inflation, giving them some renewed room for maneuver and paving the way for a return to strong growth.
Inflation is unlikely to be an appropriate solution This approach might look tempting but calls for a number of qualifying remarks: nF irstly, inflation is not generally compatible with medium-term growth: too much inflation would not favor a sustained increase in economic activity. nO n the debt issue, note that while higher inflation effectively reduces the real value of debt, the stability of the public debt to GDP ratio is conditioned by an economy's nominal growth rate and by long-term interest rates. Thus, if inflation expectations are high, the inflation rate will be high to reflect this and higher than the nominal growth rate of the economy. Since government borrowing requirements will continue to be substantial, this dynamic will not result in a stable debt to GDP ratio. The risk is that we will see this ratio increase even more rapidly and, in order to stabilize it, higher rates would be necessary, which seems somewhat problematic in the current global economic environment.
www.am.natixis.com
nF inally, in an environment characterized by significant and constant interaction, it is difficult to imagine how inflation could take root, unless we believe that it is in everyone's interest to maintain inflation at a higher level for a sustained period (which would significantly change the model in operation since the 1980s). In the short term, any country tempted by such a solution would be rapidly penalized by the financial markets with higher interest rates for a sustained period. Thus, any return to a higher-inflation environment would likely require a more compartmentalized world, and the present configuration is not moving towards this – a direction that would not be desirable. While these three arguments counter the view that a sustained period of higher inflation could favor a return to growth, they do not address the issue of excessive monetary growth. History has often shown that such growth stokes inflation. The proactiveness that characterizes the behavior of the central bankers in these troubled periods should continue once calm is restored. They will need to mop up a large part of the liquidity injected into the system in order to avoid any inflationary surge.
In the short term, the greatest risk is deflation In the short term, the real worry is deflation. Manufacturing capacity constraints are practically non-existent in either the United States or China (as testified by the significant level of layoffs), and extremely limited in Europe and Japan. This is being reflected in downward pressure on production costs and thus on wages. The next development will probably be fiercer competition, which will ultimately beat prices down. In an economy where activity is globalized, if we believe there is such a thing as a
Macro Analysis
global manufacturing function (to include all forms of labor in all regions), surplus capacity in the economy could increase. In the past, this globalization of activity
In the short term, deflationary pressures will be to the fore. They will not disappear rapidly and will have repercussions for social trends‌ has already been reflected in downward pressure on wages, and this is liable to increase in the current phase. Recent research from the OECD shows that in a
global jobs market of 3 billion individuals, only 1.2 billion have an employment contract. For those workers without a contract, faltering growth in the global economy is already translating into pressure on wages. This will add to price competition, impacting the remuneration of those who do have a contract. However, this imported deflation will not be the same as in the late 1990s or the 2000s, when deflation offset any nominal internal pressures. Currently, the downward pressure of import prices is converging with industrialized economies in which deflationary trends are already present, adding to their destabilizing nature. From this perspective, the euro zone looks particularly fragile since, in the absence of pro-active economic policies, any pick-up in activity will only really come through in 2011. Imported deflation and
the sustained downturn in the jobs market caused by sluggish growth will have a long-term impact on the cost of labor.
Conclusion It generally takes a very long time for capacity utilization indicators to return to ‘normal’ levels, even after growth has picked up. We are going to need a period of sustained high growth for manufacturing capacity constraints to trigger inflationary pressures. This gives the central bankers time to mop up liquidity and underpins the view that, in the short term, deflationary pressures will be to the fore. They will not disappear rapidly and will have repercussions for social trends. Written on 04/28/2009
United States: capacity utilization rate
Source: Datastream; calculations: Natixis Asset Management
www.am.natixis.com
May 2009
3
Asset Allocation Franck NICOLAS
Head of Global Asset Allocation & ALM
The economic environment is less negative for the equity markets The second quarter will be marked by an environment in which the economic statistics will be less uniformly negative than during the past few months, suggesting that we can hope to see a continuation in the bear market rally witnessed in the equity markets since March 9. This rebound should be all the more sustainable given that investors are currently very defensive in terms of asset allocation. Over the next month, however, some consolidation of the recent rally seems likely. On this horizon, the fixed income markets offer a credible alternative (with a preference for government bonds), while some opportunities are emerging in the credit market.
Risk categories
Risk subcategories
Tactical allocation* Mar. 09(1) Apr. 09(2)
Fixed income equities fixed income United States
Euro issuers Equities
+ +
+ =
+
+
Euro UK Emerging countries Japan
+ +
+ +
-
=
=
=
Corporate
-
=
United States Euro
+ +
+ =
UK
+
=
Japan
=
=
CURRENCIES
Dollar
=
=
(against the euro)
Yen
=
-
Pound
=
=
-
-
+
+
COMMODITIES Oil Gold Scale from -- to ++ (1) Investment committee on 02/26/2009. (2) Investment committee on 03/26/2009.
* weighting gap v.s. strategic allocation of an investor.
** PMI or Purchasing Managers Index: The PMI survey polls companies on key components of their activity: production, new orders, employment, prices, inventories, etc. Each indicator is easy to understand: if the indicator is at 50, it is unchanged on the previous month. If it is above 50, its level has risen and, if it is below 50, then it has fallen. A synthetic indicator is calculated as a weighted average of a number of key components (production, new orders, inventories, employment and delivery times, etc.). A reading of above 50 indicates that the sector's activity has risen over the month. Example: • I f the synthetic index moves from 52.6 to 53.4, activity continued to increase month on month and has accelerated. • If the index moves from 54.6 to 52, activity has increased but at a slower rate. • I f the index moves from 48 to 46.5, activity has continued to decline but at a faster rate.
4
May 2009
Our recommendations by asset class Fixed income Against a backdrop of aggressive monetary policy, with key interest rates converging towards zero, investing in fixed income bonds is justifiable. Inflationary fears linked to such policy responses are still premature since inflation figures are low (or even negative) at present, given the significant decline in oil prices. Expectations of ECB rate cuts are a supporting factor for curve steepening in the euro zone. Spreads should continue to tighten since the ECB has the necessary resources to support any member state potentially threatened with payment default. The recent G20 agreements also suggest that assistance may be available for any country that requires it.
Equities The market rally started after announcements from the Fed (measures to boost credit distribution) and the US Treasury Secretary (deployment of the bailout plan for the banking system, notably including the purchase of toxic assets). A number of US economic indicators have stabilized, putting an end, at least temporarily, to the phase of significant deterioration in the macroeconomic metrics. Furthermore, the latest news on Chinese growth is, if anything, rather positive, as highlighted in the rise in the PMI**, the growth in credit and encouraging signs from the real estate market. In this more positive environment, Natixis Asset Management continues to overweight US equities which offer the best riskreward profile. The measures taken by the government, the Treasury and the Fed (Obama, Geithner and Bernanke plans) clearly show the determination of the US authorities to head off any risk of deflation, which is positive for the market. However, the recent rebound (typical of a bear market rally) is likely to give way to a period of consolidation fuelled by Q1 09 earnings releases.
www.am.natixis.com
Since the beginning of the year, the weakness of global economic activity has effectively augured ill for the second quarter figures. After a 36% fall in Q4 08 (-18.5 % excluding financials), S&P 500 earnings could again decline by around 30% (with energy and materials the sectors most affected). Equities in the euro zone remain cheap for a number of reasons: overvalued currency, companies less able to engage in rapid restructuring, risks linked to Eastern Europe...
Currencies In terms of currencies, the yen should continue to weaken against the dollar and the euro, given the deterioration in Japan’s economic fundamentals. After several months of weakness, sterling should, however, stabilize against the dollar thanks to the easing of the banking crisis, the very proactive stance adopted by Gordon Brown's government, which has ‘nationalized’ a substantial part of the banking system, and aggressive interest rate cuts.
Commodities The stimulus plans will end up having a positive impact on activity, constituting a supporting factor for a rebound in commodity prices, which have seen a significant consolidation in recent months. China has set the tone with its massive purchases of steel and copper in March. As for oil, with inventories high for the season, the bailout plans for the financial sector and the rising expectations for oil demand need to be watched closely. Gold remains a defensive asset in extreme situations but its appeal for asset management purposes is dwindling. In the short term, the high risk premium (reflected in the price of an ounce of gold) and the level of speculative positions encourages caution. Written on 03/18/2009
Market Data
Money Market Rate
France
1 year
2009
CAC 40
2 807.34
Value
-40.36%
-12.76%
CAC Mid 100
4 092.94
-40.05%
-7.45%
IT CAC 20
2 591.47
-34.45%
-10.98%
SBF 120
2 029.21
-40.50%
-12.20%
SBF 250
1 978.47
-40.58%
-12.12%
Europe
Value
1 year
2009
MSCI Europe
61.66
-42.26%
-11.19%
Euro Stoxx 50
2 071.130
-42.91%
-15.52%
DAX
4 084.76
-37.49%
-15.08%
Footsie
3 926.14
-31.15%
-11.46%
United States
Value
Dow Jones
1 year
2009
7 608.92
-37.95%
-13.30%
S&P 500
797.87
-39.68%
-11.67%
Nasdaq
1 528.59
-32.93%
-3.07%
Brent Crude Future
Asia
49.23
-50.92%
7.98%
Value
1 year
2009
Nikke誰
8 109.53
-35.26%
-8.47%
Hong Kong
13 576.02
-40.58%
-5.64%
Singapore
1 699.99
-43.47%
-3.50%
Shangha誰
161.060
-37.09%
45.20%
World MSCI World
Value 805.220
1 year
2009
-43.98%
-12.50%
1 year
2009
Eonia
1.636%
-2.523%
-0.716%
Euribor 3 months
1.510%
-3.217%
-1.382%
Euribor 6 months
1.670%
-3.055%
-1.301%
Euribor 1 year
1.812%
-2.913%
-1.237%
Fed Funds
0.160%
-2.060%
0.070%
Fixed Income Rate
1 year
2009
5 years French Treasury Bond
2.692%
-1.103%
-0.059%
5 years USTN
1.653%
-0.805%
0.101%
10 years French Treasury Bond
3.620%
-0.487%
0.174%
10 years USTN
2.670%
-0.752%
0.456%
30 years French Treasury Bond
4.125%
-0.518%
0.401%
30 years USTN
3.540%
-0.758%
0.872%
Value
1 year
2009 -4.49%
Currencies Euro/Dollar
1.328
-16.21%
Euro/Yen (100)
131.137
-16.85%
4.07%
Euro/Sterling
0.926
16.19%
-4.19%
Dollar/Yen
98.770
-0.77%
8.96%
As of 03/31/2009
The monthly Index The trend in stock market indices in 2009 Since the beginning of the year, the profiles of the CAC 40 and the Standard and Poor's 500 have been highly correlated. They have reacted in the same way to the same events and the same newsflow. These market indices moved along similar lines in two periods displaying diverging trends. n Until early March, overall market performance reflected investor concern in the face of a very rapidly deteriorating environment. A pause was, however, witnessed on the inauguration of Barack Obama in the second half of January. This honeymoon did not survive the announcement of the first bailout plan for the banks which failed to convince investors.
CAC 40 Standard and Poor's 500
n After a 25% correction, a technical bounce was to be expected since the market needed to recover some sort of equilibrium. This recovery took shape in March, driven by positive reports from prominent Wall Street bankers. The banking sector benefited at global level. At the same time, the sentiment that the economic news from China and the United States was no longer deteriorating constituted a significant supporting factor. Thus, despite the length of the crisis, in an environment which shows no sign of immediate improvement, we have nonetheless begun to envisage an eventual end to the crisis within a 'finite' period. Source: Datastream - Calculation: Natixis Asset Management
www.am.natixis.com
May 2009
5
Overview of our international product range Sub funds of the NIF (Lux) I SICAV managed by Natixis Asset Management
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
Méric
nnée-
e Dela Isabell
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 Euro Aggregate • Minimum recommended investment period: 3 years
I, C R, C
EUR EUR
LU0161120547 LU0161121271
Natixis Global Inflation Fund Potard
Get the most out of diversification in inflation-indexed bonds in a global universe • Investment universe: Mainly Euro denominated government or private issuers rated Investment - Diversifying fixed income assets • Benchmark: Barclays World Government Inflation linked all maturities Index hedged in euro F, C EUR LU0390502424 • Minimum recommended investment period: 2 years I, C EUR LU0255251166 • Risk Indicator: Tracking-error ex ante of 2%(maximum)
Sophie
Natixis Impact Euro Corporate Bond Fund aud
Benefiting from the SRI expertise of Natixis Asset Management through a socially responsible portfolio of investment grade corporate bonds
e Peyr
oph Christ
• 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, C R, C
See the full prospectus which is the only legally binding document.
6
January 2009
www.am.natixis.com
EUR EUR
LU0155376477 LU0155380156
Sub funds of the NIF (Lux) I SICAV managed by Natixis Asset Management
de
ndra u Belo
ret is Thé
o
Franç
ie
Matth
Natixis Emerging Europe Fund Get the most out of the growth in the emerging European zone as part of a conviction management strategy
• Investment universe: Emerging Europe Equities • Benchmark: MSCI Emerging Europe Index • Minimum recommended investment period: 5 years • Risk Indicator: Tracking-error ex ante between 6 and 8
I, C I, C R, C R, C R, D
EUR USD EUR USD USD
LU0147917792 LU0095830922 LU0147918923 LU0084288595 LU0084288678
Natixis Europe Smaller Companies Fund Benefiting from the potential of European Small & Midcaps within the scope of a conviction-based strategy
pers
Cuy Thierry
• Investment universe: European Small and Mid Equities • Benchmark: None (MSCI Europe Small Cap: indicative only) • Minimum recommended investment period: 5 years • Risk Indicator: Tracking-error ex ante between 4 and 7 (indicative)
I, C R, C R, D
EUR EUR EUR
LU0095827381 LU0064070138 LU0064070211
Natixis Euro Value Fund Tapping the potential of Eurozone value equities within the scope of a conviction-based strategy
re
Lefèv Olivier
• Investment universe: Eurozone Equities • Benchmark: None (MSCI EMU DNR: indicative only) • Minimum recommended investment period: 5 years
I, C
EUR
LU0389329003
Natixis Impact Europe Equities Fund ine Christ
Active and responsible investing to maximise SRI value added
ton Lebre
• Investment universe: European equities • Benchmark: MSCI Europe • 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.
www.am.natixis.com
January 2009
7
Overview of our international product range Funds of Natixis Asset Management available through Private Placement
25 complementary funds covering all asset classes are available through Private Placement. This quarterly reviewed list of funds aims to provide Natixis Global Associates' teams* with the most innovative products of Natixis Asset Management and to offer a wider range of expertise.
Fixed income
Money Market
Asset class Fund name 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
FR0000293714
Natixis Souverains Euro 1-3
I: FR0010208421
Natixis Souverains Euro 3-5
FR0010036400
Natixis Souverains Euro 5-7
FR0010201699
Natixis Souverains Euro 7-10 Natixis Souverains Euro
Equities
R: FR0007084926
FR0000449092 RC: FR0000003196
Natixis Inflation Euro
I: FR0007475413
R: FR0010170944
Natixis Crédit Euro
I: FR0010171108
R: FR0010690966
I: FR0010658963
R: FR0010660142
Natixis Convertibles Euro
BalanAltern. Absolute return ced
Share and ISIN code
Natixis Convertibles Europe
C: FR0010171678
Natixis Actions Europe Dividende
IC: FR0010582478
Natixis Impact Life Quality
C: FR0010410274
E: FR0010458539
Natixis Actions US Value
I: FR0010256412
R: FR0010236893
I: FR0010256404
R: FR0010236877
Natixis Actions US Growth Natixis Actions Europe Convictions
RC: FR0010573782
C: FR0010346429
Sonic Monde
I: FR0010555797
RC: FR0000993446
Natixis Absolute Quant Bond 18M
I: FR0010232348
R: FR0010249219
IC: FR0010654921
RC: FR0010657924
IC: LU0161071237
IC: LU0161073951
Natixis Absolute Swap Arbitrage Natixis Constellation European Event Alpha Hedge + Réactis Emerging
RC: FR0010058453 I: FR0010634345
RC: FR0010626218
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.
* Natixis Global Associates is a global distribution platform which brings their investment expertise of the affilliated investment managers to clients outside France.
8
May 2009
www.am.natixis.com
Printed with the permission of MVRDV. Photography: Jochen Helle/Artur/Artedia.
STANDARD OR CUSTOMIZED?
Drawing on expertise to create value At Natixis Asset Management, we understand that it takes solid expertise and a strong offer to provide targeted approaches. We carefully tailor our investment solutions to each client. With e277 billion in assets under management as of December 31, 2008 and some 600 employees based in Paris, Natixis Asset Management offers institutional investors, large companies, distributors and banking networks a wide range of products and investments issues across all asset classes. European expert of Natixis Global Asset Management www.am.natixis.com
WoZoCo Housing Project, Amsterdam, The Netherlands
Product Focus
Natixis Convertibles Euro
An original and attractive investment that benefits from both the dynamic potential of equities and the more limited volatility of bonds
What are the sources of performances?
k e y points n An opportunistic management of the convexity n A rigorous stock selection enhanced by the added expertise of our Equities and Credit teams n More than ten years experience in the convertible bond market
overview Investment universe Euro-denominated convertible bonds from OECD issuers Benchmark Exane Convertible Index Euro (ECI) NDR Minimum recommended investment period 4 years Risk indicator Modified duration between 0 and 8 Average delta of between 30 and 60 (indicative range)
10
May 2009
Convertible bonds allow to convert bonds to shares of an issuer according to a pre-determined ratio and period. The convertible bond’s value therefore depends directly on the underlying stock’s price variations. This sensitivity to the equity market is called “delta”.The characteristic of the delta is that it is higher in a bull market than in a bear market. That is called convexity. Convertible bonds therefore profit more from the rise of the underlying stock than they suffer from its fall. If the underlying stock has risen sharply, the convertible bond will have a very high delta and therefore perform Convertible bond convexity in a similar way to the underlying stock "Bond" profile "Mixed" profile "Stock" profile (“equity” profile). Conversely, if the underlying stock has fallen sharply the convertible bond will perform just like a normal bond (“bond” profile). Mixed profile convertible bonds Bond value of the convertible bond (with a delta of between 15% and Impur : Natixis Asset Management Stock Price 75%) are the most convex. Convertible Bond Price
Denis Passot Portfolio manager
Natixis Convertibles Euro is mostly invested in euro-denominated convertible bonds from OECD country issuers. The aim is to outperform the Exane Convertible Index Euro (ECI), representative of the Eurozone convertible bond market, over a minimum 4-year investment period.
What is in the fund's strategy? Depending on the strategists’ macroeconomic scenario and expectations for equity and fixed income markets, the investment team will identify a target range of average delta for the fund portfolios corresponding to the desired equity exposure. The team will focus on the most convex convertible bonds having a “mixed” profile. The aim is to get the most out of the dynamic nature of convertible bonds when markets are rising and their defensive nature when markets fall. Shares are selected through three complementary procedures: fundamental analysis of the issuers, with the added expertise of our Equities and Credit teams; technical analysis using proprietary models developed by the qualitative research team; valuation of the convertible by analysing its technical characteristics.
www.am.natixis.com
INVESTMENT TEAM The convertible bond is made up of a bond and a call option on the issuer’s underlying share. The convertible bond will therefore move in line with the call. This offers the bond investor an opportunity to play the rise in the equity markets. Conversely, the equity investor is provided with a share with a put option. This represents an investment in the underlying share with limited risk in uncertain market periods.
The fixed income department of Natixis Asset Management comprises 39 specialised managers* with total assets under management of € 197.2 bn for this asset class, including € 550 m on the convertible bond expertise**. Within this division, a specialised convertible bond team is responsible for arbitraging and directional investment of this asset class. This team interacts constantly with the trading, equities research and credit teams when selecting stocks. Source: Natixis Asset Management *as of 12/31/2008 **09/30/2008.
FUND FEATURES I Share Manager company
RISK MANAGEMENT
Legal form
Because it includes high-yield securities, Natixis Convertibles Euro is subject to interest rate and credit risk. The characteristics of convertible bonds also make them subject to equity market risk, although this is limited in the event of a market downturn because of their convexity. If the equity markets go up, the investment team makes high-delta convertibles a priority, and lowdelta ones if the markets fall. Fund managers select securities with a delta ranging between 15% and 75% to obtain an average portfolio delta of between 30% and 60%. Because of the implicit call option for the underlying share in each security, the price of the convertible is sensitive to volatility movements.
Inception date
R Share
Natixis Asset Management French mutal fund (FCP)
Fund compliant
Yes 20 June 1996
Accounting currency
EUR
ISIN / Allocation of income
FR0010658963 Accumulation
FR0010660142 Accumulation
1%*
1.60%*
not paid to the fund
None
3 %**
paid to the fund
None
None
not paid to the fund
None
None
paid to the fund
None
None
None
None
Maximum operating and management fees including taxes Maximum subscription fee Maximum redemption fee
Performance fee including taxes Minimum share fraction
One ten-thousandth One ten-thousandth
Minimum initial subscription
e 100,000
None
Initial Net Aset Value
e 100,000
e 1,524.49
Net Asset Value Calculation Cut-off time
Daily D 12:30pm (CET)
* Basis: net assets. ** Excluding any exoneration.
www.am.natixis.com
May 2009
11
News
Natixis Asset Management at the
Natixis Asset Management participated in the international Forum on Sustainable Investment in Geneva. A pioneer in Socially Responsible Investment (SRI) with more than 20 years experience, Natixis Asset Management is one of the leading SRI managers in France and in Europe in terms of AUM.
Natixis Asset Management at the 2009 French IFA’s forums Every year the “Chambre des Indépendants du Patrimoine’s” forum is one of the unmissable events dedicated to the independent financial advisers sector (and so is the annual Patrimonia Forum on October).
Maurice Gravier, a senior manager in the Equity Management department, gave a detailed presentation on Natixis Asset Management’s expertise in SRI in a workshop focused on SRI equities. Then, Philippe Zaouati, Head of Business Development, spoke at the roundtable "Responsible investing or financial performance? A false choice!" According to Philippe Zaouati, we have to go beyond the issue of SRI outperformance: "An investor chooses a core SRI portfolio on ethical grounds above all, and not as a source of outperformance. In our opinion, socially-responsible investment and financial performance are not mutually exclusive. We support the view that non-financial factors can impact on risk (and therefore the risk-reward profile of a portfolio), but we think that outperformance for this type of management profile chiefly relates to the talent of the manager. We cannot deny, however, that the key task of an asset manager is to target performance and this applies equally to SRI management."
As the IFA target is one of Natixis Asset Management’s strategic priorities, Natixis Asset Management participated at this forum with Dorval Finance** at the Palais des Congrès in Paris on May 5 and 6. The forum provided an opportunity for Stefan de Quelen and the Third Party Distribution sales team to reacquaint their clients with the advantages of Natixis Global Asset Management’s multi-boutique model and the wealth of expertise offered by Natixis Asset Management and the affiliates.
In order to complement the presentations by the experts from Natixis Asset Management with more in-depth information, product documentation about the Natixis Impact* range was distributed at the close of the event.
> More information Consult the product fact sheets for the Natixis Impact fund range (Natixis Impact Cash, Natixis Impact Euro Corporate Bond Fund, Natixis Impact Life Quality, Natixis Impact NordSud Développement, Natixis Impact Aggregate Euro, Natixis Impact Europe Equities) at www.am.natixis.com under the category Our Products.
* The Natixis Impact range which comprises all open-end funds of Natixis Asset Management, managed according to the main Socially Responsible Investment (SRI) approaches: “Integrated SRI” (new generation of “best-in-class”), Thematic SRI, Ethical and Solidaritybased.
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**Within a partnership on IFA market Natixis Asset Management acquired 25% of the capital of Dorval Finance on 09/12/2008. Dorval Finance is an independent investment management firm, authorised by the French Financial Markets Authority in 1993. Initially dedicated to private banking, Dorval Finance has, since 2004, been developing its conviction wealth management business, characterised by active and non-benchmarked asset management.
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Legal information This material has been prepared by Natixis Asset Management and is intended for the sole information of Natixis Global Asset Management, its subsidiaries and Natixis Global Associates. It shall not be disseminated to professional or non professional clients. 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. 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. In certain cases, this material is provided by one of the Natixis Global Associates entities listed below to its clients who qualify as Professional Clients or Qualified Investors. Natixis Global Associates is the global distribution organization of Natixis Global Asset Management, the holding company of a diverse line-up of specialised investment management and distribution entities worldwide. 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 material may otherwise lawfully be distributed in accordance with the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or the (Promotion of Collective Investment Schemes) (Exemption) Order 2001 (the "Intended Recipients"). To the extent that this material is issued by Natixis Global Associates UK Limited, the fund, services or opinions referred to in this material are only available to the Intended Recipients and this material must not be relied nor acted upon by any other persons. Registered Address: Natixis Global Associates UK Limited, Canon Bridge House, 25 Dowgate Hill, London, EC4R 2YA.
• In the E.U. (outside of Germany, Italy, and the UK): This material is provided by Natixis Global Associates S.A. or its branch office in France, Natixis Global Associates International. Natixis Global Associates S.A. is a Luxembourg management company that is authorized by the Commission de Surveillance du Secteur Financier and is incorporated under Luxembourg laws and registered under n. B 115843. Registered Address of Natixis Global Associates S.A.: 2-8 Avenue Charles de Gaulle, L-1653 Luxembourg, Grand Duchy of Luxembourg. Registered Address of Natixis Global Associates International (n.509 471 173 RCS Paris): 21 quai d'Austerlitz, 75013 Paris.
• In the DIFC: This material is provided in and from the Dubai International Financial Center (DIFC) by Natixis Global Associates Middle East. It is only available to persons who have sufficient financial experience and understanding to participate in financial markets within the DIFC, and qualify as Professional Clients as defined by the Dubai Financial Services Authority (DFSA). This communication should not be delivered to or relied on by any other type of person. Natixis Global Associates Middle East is the trade name for Natixis Global Associates Middle East, a branch of Natixis Global Associates UK Limited, which is duly licensed and regulated by the DFSA. Registered address: PO Box 118257, 5th Floor, Building 8, Gate Village, DIFC, Dubai, United Arab Emirates.
• In Italy: This material is provided by Natixis Global Associates Italia SGR, S.p.A., an investment management company (“Societa di Gestione del Risparmio”) registered and regulated by the Bank of Italy (registration no. 119, code no. 15143.1). Registered address: Via Larga, 4 - 20122, Milan, Italy.
• In Switzerland: This material is provided to Qualified Investors by Natixis Global Associates Switzerland Sàrl.
Contacts
Prospectus and sales documents required for subscription are available on demand: n Natixis Global Associates (Operations): offshoreops@ga.natixis.com n or CACEIS Luxembourg (Prime Transfer Agent): fb-reg-european-ta@eu.fasnetgroup.com n or Natixis Asset Management (Clients servicing): nam-service-clients@am.natixis.com
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(352) 47 67 70 78
May 2009
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THINK POSITIVE. • No. 1 French asset manager • No. 1 European asset manager
Grands Prix Le Monde Eurofonds - Fundclass 2009
Le Monde, one of France’s most prestigious newspapers, gives Natixis Asset Management its top rankings for consistent performance across its funds range over the past 4 years among asset managers offering more than 101 funds(1)
• Best Bond Group
Lipper Fund Awards 2009 (France)
Lipper gives Natixis Asset Management top ranking in the generalist category for the performance of its range of funds over 3 years(2)
• 1st prize Large Bond Group
La Tribune - Morningstar “Victoires des SICAV” Awards 2009
France’s leading business and financial newspaper, La Tribune, gives Natixis Asset Management top ranking for the performance of its range of funds in the large bond group category over 5 years(3)
Natixis Asset Management has again been recognized for its consistent results over time. With e 277 billion in assets under management as of December 31, 2008 and around 600 employees based in Paris, Natixis Asset Management offers institutional investors, large companies, distributors and banking networks a wide range of products and investments issues across all asset classes.
European expert of Natixis Global Asset Management www.am.natixis.com
Past performance or reference to any rankings or awards cannot be interpreted as indicating the future performance of a fund. (1) Companies with funds rated by Fundclass for at least four years as of 12/31/2008, and with more than 101 funds registered for sale in Europe. (Source: Le Monde Argent of 03/08/2009). (2) Companies with funds registered for sale in France and rated by Lipper for at least three years as of 12/31/2008. (Source: Lipper Thomson Reuters). (3) Companies with funds rated by Morningstar for at least five years as of 06/30/2008, and with more than 15 bond funds registered for sale in France. (Source: Morningstar).
WoZoCo Housing Project, Amsterdam, The Netherlands Natixis Asset Management - Agrément AMF n° GP 90-009 - RCS Paris 329 450 738