November 2010
Perspectives Emerging markets Shapers of a new balance of power? //////// Macro Analysis What is the outlook for the future? //////// Asset Allocation Where might investment opportunities arise? //////// Expertise Focus
www.am.natixis.com CORPORATE AND INVESTMENT BANKING / INVESTMENT SOLUTIONS / SPECIALIZED FINANCIAL SERVICES
SUMMARY Macroeconomic Analysis //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 4 Asset Allocation //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 6 Market Data ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 7 our international product range ////////////////////////////////////////////////////////////////////////////////////////////////////// 8 Expertise Focus //////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 11 News ///////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// 13
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 Grand-Duchy 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
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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): f b-reg-european-ta@eu.fasnetgroup.com - Tel.: (352) 47 67 70 78 n or Natixis Asset Management (Clients servicing): nam-service-clients@am.natixis.com
This document is strictly intended for professional clients. 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. GP 90-009) and licensed to provide investment management services in the EU. Publishing Director: F. Lenoir /// Editorial Committee: Th. Benoist, Ch. Lacoste, K. Massicot, Ph. Le Mée, R. Monclar, F. Nicolas, Ch. Point, S. de Quelen, ML. Rouy, JP. Snel, B. Thiery, Ph. Waechter ///
Coordination - Writing: C. Boutou, N. Clémot /// Head of design: F. Dupertuys /// Contributors: B. Boulay-Mégard, D. Levadoux, M. Louvrier-Clerc.
PAGE 3
Editorial
The balance and dynamism of the world economy are undergoing a period of profound upheaval. The recovery seems clearly to have been driven by the emerging economies, which have seen a quick, robust and lasting turnaround in activity, while the industrialized countries have been relegated to a secondary role in this worldwide trend. According to Philippe Waechter, Chief Economist at Natixis Asset Management, the contributions by specific emerging markets to this economic resurgence nevertheless remain unequal; not all of them are growing at the same pace. This set of circumstances raises several questions: How can this period of growth be sustained without creating great disparities between emerging economies? How can we ensure that the vigorous growth of emerging markets does not have weighty consequences for the future of the industrialized countries? All of this underscores the need to manage the economic cycle while limiting disparities and excesses. Franck Nicolas, Head of Global Asset Allocation & ALM at Natixis Asset Management, thus recalls the various economic policy actions undertaken to put the brakes on the vigorous resurgence of the emerging economies and avoid the creation of overly strong inflationary tensions. In his view, although these actions have been “freshly� received by the markets they assuredly have had an impact since, at a pace close to overheating, emerging market growth is now nearing its full potential and stabilizing at a relatively high level. In this market context dominated by the emerging economies, Natixis Asset Management works to identify the investment opportunities to be seized in these booming regions. We offer a selection of funds that aim to take advantage of dynamic growth in emerging economies [see the Expertise Focus section on pages 8 and 9], with a special emphasis on Eastern Europe with Natixis Emerging Europe Fund, a fund managed by Natixis Asset Management. As usual, you can also find the summary of Natixis Asset Management’s international offer [pages 8 to 10 of this issue]. Enjoy reading it,
Philippe zaouati
Deputy CEO, Head of Business Development
Natixis Asset Management
Perspectives /// November 2010
PAGE 4
macro analysis
Emerging markets: drivers of a new equilibrium?
Philippe Waechter Chief Economist of Natixis Asset Management
The context Emerging markets have played a major role in the resurgence of the world economy. Asia, particularly, led by China, has been driving global growth. Meanwhile, the contribution of industrialised countries has been far more limited.
The key points How to prolong the cyclical trend is the key question being asked in emerging markets. They need to extend the growth phase without causing excessive imbalances in order to keep a rapidly expanding middle class happy.
The stakes The relationship between emerging and industrialised economies will inevitably evolve. The equilibrium of the past is changing. Vigorous expansion of emerging economies is bound to have consequences for the future of the industrialised world.
Perspectives /// November 2010
“The equilibrium and dynamics of the global economy were radically changed.” That could perhaps be the verdict of history when we look back at the crisis that rocked the leading industrial nations at the end of the twenty-first century’s first decade. This shift in perspective is one way to capture the combined impact of a massive financial and banking crisis in the industrialised world and the increasing maturity of emerging economies.
Industrialised versus emerging economies Industrialised countries are struggling to emerge from a period marked by revolutionary change. In mid-2010 their output is still well below pre-recession levels. This is no longer the case for Brazil, South Korea, Taiwan or China, where production is now considerably higher than it was before the crisis [See chart]. This rather unusual order in which countries are coming out of recession reflects the impact of the financial and banking crisis on industrialised countries. Emerging markets were not hit to the same extent. Activity may have been knocked back but their recovery phase has not been constrained by the legacy of financial excesses seen in industrialised countries.
Differentiated dynamics The recovery of the global economy over the last few months is largely the result of a fast, strong and sustainable rebound in emerging market growth. Performances within the emerging economies have been mixed: not all regions are advancing at the same pace
and not all have had an equal impact on the global economy. Asia is the biggest driver of the global economy. This is where production has grown most and trade has expanded fastest. Asia is the only region where industrial output and volume trade is well above pre-recession levels. Latin America, particularly Brazil, has also grown rapidly but still proportionately less than Asia. This has considerable implications for economic policy. While growth has restarted in emerging markets and activity is expanding, the usual tensions that affect growing economies are now coming to the fore. Governments and central bank will have to be especially alert to avoid or rein in such imbalances as they emerge. Hence the recent rate movements by central banks, particularly in Asia and Brazil, to address their vigorously expanding economies. In industrialised countries, meanwhile, this is not yet an issue. Activity is still sluggish, the labour market is struggling to adjust and unemployment remains high. The aim of the authorities is to limit the constraints that could hold back their economies. This is a key point as it highlights the differentiated constraints faced by the different countries in the global economy.
Natixis Asset Management
PAGE 5
macro analysis
Emerging markets: Some unanswered a new maturity? questions Another big difference: the shift in behaviour by emerging market countries, which are now trying to manage the economic cycle so that it lasts longer and ultimately penetrates as far as possible into each national economy. Their behaviour in the past has been more versatile and has often led fairly quickly to higher inflation which damaged growth. Nothing of the sort today. We can see in this change the signs of greater political maturity coinciding with the emergence of a broader-based middle class in many of these countries. Favouring and satisfying this middle class will help prolong the economic cycle and refocus the sources of growth on a more independent domestic trend. Such rebalancing will take time. Institutions need to be created that can support the development of a consumer middle class. These countries will have to reduce uncertainty and put in place organisations that can provide a calmer and less doubtful environment. This trend is already under way in several “advanced” Asian states such as Korea. However, to make a long-term success of such a transition, they need a stable macro-economic trend. This comes back to managing the economic cycle in a way that reduces imbalances, a complex task that will inevitably mean changes in the way these economies function.
Conclusion
This view of the dynamic in emerging markets raises three main questions: • I s it preferable to have a strong political regime to encourage growth? Probably not. In the medium term, regimes that are overly prescriptive rarely achieve sustainable growth.
A new hierarchy is emerging. It is most obvious in the new status of China, now the world’s second biggest economy ahead of Japan. This change had already been taken into account when the G7 became the G20. The newly enlarged body made it possible to implement coordinated and more effective stimulus policies during the 2008 recession.
•H ow should they relate to industrialised countries? Emerging markets are both competitors for developed countries and sources of growth thanks to their fast-growing markets.
While we may be seeing a transition and a shift in the balance of the global economy, remember that history is not yet written, there will be many twists and turns along the way and the transition to this new equilibrium will inevitably take time.
• So, where is the equilibrium to be found in economics (trade), politics (on the climate for instance) and in finance (exchange rates)?
Written on 20/10/2010
GDP growth - Base 100 in 1H 2010 Brasil Korea
110 100 90 80 2006
2007
2008
2009
2010
Taiwan Australia USA France Germany Euro zone Japan UK
Source: Datastream - Calculations: Natixis Asset Management
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Natixis Asset Management
Perspectives /// November 2010
PAGE 6
asset allocation
What are the prospects for the emerging markets? General environment
-
-
As the economic crisis weighed heavily on the buoyancy of developing regions, the decoupling anticipated by many in 2008 between developed and emerging economies did not really come to pass. However, during the 2009 recovery, emerging economies bounced back well, quickly returning to their pre-crisis levels, while economies in the West remain below their 2007 levels. As a result, the Chinese authorities were compelled to take measures to rebalance domestic consumption and exports in order to avoid inflationary tensions. These economic policy decisions generated relatively slower growth, a move that nevertheless was hardly applauded by the financial markets.
Euro zone UK Emerging markets Japan
= = =
= = =
Emerging market growth seems to have stabilized at a relatively high level. As economic expansion in these regions threatens to overheat, the growth rate has now very nearly reached its full potential.
Euro issuers
Corporate Invest. Grade
+
+
equities
United States
=
=
Euro zone
+
+
UK
-
-
Japan
=
=
Dollar
=
=
Yen
=
=
Sterling
+
+
=
=
=
=
Franck nicolas Head of Global Asset Allocation & ALM Risk categories
Risk subcategories
Tactical allocation* 09/10(1) 10/10(2)
Fixed income
=
=
equities
+
+
Fixed income United States
Currencies (against the euro)
Commodities Oil Gold (1) Investment committee as of 09/09/2010. (2) Investment committee as of 30/09/2010.
Scale from -- to ++
*weighting gap vs. strategic allocation of an investor
Perspectives /// November 2010
Approach by region Among the larger emerging regions, only India seems to be slightly overvalued, with inflation running above 10%, particularly due to a lack of infrastructure creating bottlenecks in production capacity. This level of inflation remains worrisome, even in a context of significant investments, since the latter will take some time to put in place. China’s urbanization rate has reached a peak, following consistent and robust growth over the last several years. The country will need to refocus on domestic demand, since exports are beginning to slow. The Chinese authorities have prevented overheating by raising the reserve ratio as well as interest rates, combined with higher taxes on real estate transactions. Growth should now return to a pace more in line with this economy’s potential, but should also prove to be more long-lasting: a sustainable, unprecedented
and positive trend for the Chinese economy. So far, this growth has especially benefited the more affluent sections of society. In recent months, the Chinese government has therefore increased the minimum wage in most of the country’s regions. These wage increases necessarily have repercussions for corporate profit margins. This may explain why the profit growth forecasts of Chinese companies are lower than those of other emerging markets. Russia boasts vast reserves of strategic raw materials, not limited to petroleum but encompassing other resources vital for the industrialization of emerging regions. From a stock market standpoint, Russia’s valuation is highly attractive. But it is especially the countries fostering intra-emerging market trade growth that should best benefit from expansion in these regions. For example, South Korea, Taiwan and Malaysia have shown considerable prowess in reaping the rewards of emerging market dynamism as a whole. Conversely, Mexico and some Central European countries are more sensitive to neighboring developed economies.
Specific themes From the value standpoint, local or foreign companies with operations in the emerging countries are in the best position to benefit from rapidly rising domestic demand. As investment targets, they are preferable to exporting companies, whose prospects are hampered by the weak growth expected in the developed countries. The consumer goods sector is expected to take advantage of this change and the housing sector might see further growth in regions where prices are not already excessively high. Written on 20/10/2010
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Natixis Asset Management
PAGE 7
markets data
As of 29/10/2010 France
Value
CAC 40 CAC Mid 100 IT CAC 20 SBF 120 SBF 250
3 833.50 6 893.76 3 632.86 2 858.82 2 796.15
Europe
Value
MSCI Europe EuroStoxx 50 DAX Footsie
92.17 2 744.99 3 870.31 5 675.16
United States
Value
Dow Jones S&P 500 Nasdaq Brent Crude Future
11 118.49 1 183.26 2 507.41 83.15
Asia
Value
Nikke誰 Hong Kong Singapore Shangha誰
9 202.45 23 096.32 3 142.62 290.99
World
Value
MSCI World
1 222.23
1 year 3.22% 15.17% 11.56% 5.52% 7.51%
2010 -2.61% 13.12% 7.81% -0.02% 0.24%
1 year 9.50% 0.72% 14.50% 10.46%
2010 4.41% -4.05% 7.39% 4.85%
1 year 11.60% 10.99% 19.54% 6.55%
6.62% 6.11% 10.50% 6.70%
2010 -12.74% 5.60% 8.46% 15.29%
1 year 8.37%
Eonia Euribor 3 months Euribor 6 months Euribor 1 year Fed Funds
2010 4.60%
0.724% 1.045% 1.269% 1.540% 0.200%
1 year 0.376 0.323 0.265 0.305 0.090
2010 0.314 0.345 0.275 0.292 0.150
Fixed Income
2010
1 year -6.96% 8.61% 19.39% 41.35%
Money Market Rate
Rate 5 years French Treasury Bond 5 years USTN 10 years French Treasury Bond 10 years USTN 30 years French Treasury Bond 30 years USTN
1.906% 1.179% 2.913% 2.612% 3.379% 3.999%
1 year -0.695 -1.251 -0.708 -0.874 -0.856 -0.33
2010 -0.573 -1.507 -0.68 -1.221 -0.881 -0.631
Currencies Value Euro/Dollar Euro/Yen (100) Euro/Sterling Dollar/Yen
1.3899 111.9565 0.8694 80.5500
1 year -6.21% -17.35% -2.86% -11.89%
2010 -3.13% -16.18% -2.15% -13.48%
The monthly index Emerging currencies
The South Korean won and the Brazilian real vs. the US dollar 1700 1600
South Korean won
US dollar appreciation
Brazilian real
2.7 2.5
1500 2.3
1400
2.1
1300 1200
1.9
1100 1000
1.7 US dollar depreciation
During the crisis, emerging market currencies fluctuated considerably. One example of this is the movements seen in the South Korean won and the Brazilian real. In the fall of 2008, the US dollar was perceived as a safe-haven currency amidst a very uncertain environment. As a result, the greenback quickly appreciated against other currencies. Subsequently, driven by the recovery, risk aversion shifted and the emerging markets, as the leaders of global economic growth, saw their currencies rise in value.
The probable introduction of yet more accommodating monetary policies in the United may 08 sept 08 jan 09 may 09 sept 09 jan 10 may 10 sept 10 States leads us to predict that an interest rate Source: Datastream hike by the US Federal Reserve will not be in the cards immediately. This is feeding capital flows in the direction of the emerging markets where yields are attractive. Their currencies thus continue to appreciate. Local authorities, in Brazil for example, have been prompted to institute taxes on transactions in order to limit the impact of these capital movements. Their objective is to ensure that these movements do not endanger the stability of their growth process. 900 jan 08
Natixis Asset Management
1.5
Perspectives /// November 2010
PAGE 8
our international Product range
Brief overview of our international product range The key expertise of Natixis Asset Management dedicated to international clients are gathered in n 7 sub-funds of the Natixis International Funds (Lux) I SICAV and the Impact Funds SICAV (pages 8 to 9), n and in a selection of 24 complementary funds covering all asset classes (listed on page 10).
Sub-funds of the Natixis International Funds SICAV
Isabelle Delannée-Méric
Natixis Euro Aggregate Plus Fund 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
Sophie Potard
Natixis Global Inflation Fund Get the most out of diversification in inflation-indexed bonds in a global universe • Investment universe: International inflation-linked bonds • Benchmark: Barclays World Government Inflation linked all maturities Index hedged in euro • Minimum recommended investment period: 2 years
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
Christine Barbier
Natixis Impact Euro Corporate Bond Fund Combining responsability and conviction-based strategies in the eurocredit universe • Investment universe: Mainly Euro-denominated investment grade debt 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.
Perspectives /// November 2010
Natixis Asset Management
PAGE 9
our international Product range
Sub-funds of the Natixis International Funds SICAV
Matthieu Belondrade & François Théret
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 (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
Thierry Cuypers
Natixis Europe Smaller Companies Fund Make the most of attractive European small and mid caps in a conviction investment style • I nvestment universe: European Equities •B enchmark: MSCI Europe Small Caps NDR (indicative only) •M inimum recommended investment period: 5 years •R isk Indicator: Target tracking-error ex ante between 2 and 7 (indicative, barring crisis context)
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0095827381 LU0095828272 LU0064070138 LU0064070211
Christine Lebreton
Natixis Impact Europe Equities Fund Benefit from the growth potential of socially responsible European companies through conviction-based management • Investment universe: European equities • Benchmark: MSCI Europe (indicative only) • Minimum recommended investment period: 5 years
I, A I, D R, A 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.
Natixis Asset Management
Perspectives /// November 2010
PAGE 10
our international Product range
Sub-fund of the Impact Funds SICAV
Clotilde Basselier & Suzanne Senellart
Impact Funds Climate Change Reconciling climate change with a performance oriented strategy in a global equity fund • Investment universe: Global equities • Benchmark: The MSCI World index (indicative only). • Minimum recommended investment period: 5 years
I, C I, C J, C
USD EUR EUR
LU0448199025 LU0448199371 LU0448199454
A selection of 24 complementary funds This quarterly reviewed list of funds aims to highlight Natixis Asset Management's most innovative products and its wide range of expertise. Fund name
Fixed Income
Money Market
Asset Class
Natixis Cash Première
IA: FR0010157834
Natixis Cash A1P1
IA: FR0010322438
Natixis Cash Eonia
IA: FR0010298943
Natixis Tréso Euribor 3 mois
IA: FR0010831693
Natixis Tréso Plus 3 mois
IA: FR0007075122
Natixis Court Terme 6 mois
IA: FR0010885236
Natixis Souverains Euro 1-3
IA: FR0010208421
Natixis Souverains Euro 3-5
IA: FR0010036400
Natrixis Souverains Euro 5-7
A: FR0010201699
Natixis Souverains Euro 7-10 Natixis Souverains Euro Natixis Inflation Euro Natixis Obli Opportunités 12 mois
Equity
Natixis Crédit Euro
Alternative investment
Share and ISIN code
FR0000449092 IA: FR0010655456 I: FR0010680223 IA: FR0010796391 I: FR0010171108
Natixis Convertibles Euro
IA: FR0010658963
Natixis Convertibles Europe
IA: FR0010171678
Natixis Actions Euro Value
IA: FR0010270025
Natixis Actions US Growth
IA: FR0010256404
Sonic Monde
IA €: FR0010555797
Natixis Actions Global émergents
IA: FR0010711051
Natixis Performance Strategic Bond
IA: FR0010008250
Natixis Performance Swap Arbitrage
IA: FR0010654921
Natixis Performance Active Allocation
IA: FR0010688812
Natixis Constellation European Event
IA €: LU0161071237
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.
Perspectives /// November 2010
Natixis Asset Management
PAGE 11
FOCUS EXPERTISE
Emerging markets: Identifying investment opportunities Following their strong performance early in the year, equity markets are now seeing a period of heightened volatility, against the backdrop of indecisive macroeconomic forecasts both in the United States and in Europe. The experts of Natixis Asset Management nevertheless remain bullish about prospects for emerging markets between now and the year-end, given the outlook for sustained economic growth in most countries and their attractive valuation level due to the expected rise in profits.
The crisis has not cast doubt on the long-term growth perspectives of emerging markets For a number of the emerging economies, the level of activity is higher today than it was before the crisis. Thus the shock weathered was only temporary. “Nevertheless, following a strong upturn until spring 2010, activity worldwide is dropping off,” says Philippe Waechter, Chief Economist at Natixis Asset Management. “It is continuing to grow, but at a slower rate. Thus the expansion will be a little less buoyant during the second half of the year.”
Focus on emerging Europe François Théret and Matthieu Belondrade(1), co-portfolio managers of Natixis Emerging Europe Fund, invest across a diversified investment universe (Russia, Turkey, Poland, Kazakhstan, Hungary, Czech Republic, etc). They explain their resolutely positive François Théret and Matthieu Belondrade(4) outlook on emerging Europe in these words: Co-portfolio managers of “Markets across the region are trading on Natixis Emerging Europe Fund average at eight times 2010 earnings, thus at a significant discount to developed markets and at nearly a 50% discount to other emerging markets.”(2) With a domestic market of 450 million consumers whose purchasing power is on the rise, emerging Europe has become one of the main drivers of worldwide economic growth and one of its key beneficiaries. In a region dominated by Russia and by commodity industries (oil, gas, minerals, steel), the portfolio managers are pursuing a diversification strategy summarized as follows: • from a geographic perspective: apart from Russia, Turkey and Poland are the markets given special emphasis, due to the strong growth rates seen in these countries and the level of domestic demand, together with their increasing integration into the world economy;
The industrialized countries will therefore need to seek out avenues for more sustainable and robust growth, in particular through a rebalancing of the labor market and the implementation of proactive economic policies.
• from a sector-based perspective: positions embracing long-term growth themes that will accompany development in these countries (infrastructure improvements, emergence of the middle class, growth of the services sector).
Emerging market activity must also be given a stronger foundation and made viable over the long term, as it has a major role to play in worldwide economic recovery. However, the crisis has not cast doubt on the long-term growth perspectives of emerging markets.
Natixis Emerging Europe Fund(3), was ranked in the second quartile over 1 year and in the first quartile over 5 years in the Lipper classification "Equity Emerging Markets Europe" as of September 30, 2010. With total assets under management of nearly $ 195 million, Natixis Emerging Europe Fund had a cumulative total return on NAV(4) in dollars of 10.20%, with an 11-year volatility of 29.95% (versus a performance of 8.67% and a volatility of 33.25% for the fund’s indicative benchmark: MSCI Emerging Europe) between 17/05/2002 and 30/09/2010.
(1) Chartered Financial Analyst. (2) Source: FactSet Research, as of 30/09/2010. (3) a sub fund of the Luxembourg-registered SICAV Natixis International Funds (LUX) I. (4) Shares H-I / A: (EUR) LU0258447001 - (USD) LU0095830922. Performance net of operating and management fees. The figures mentioned refer to previous years: past performance by the fund is no guarantee of future results (Sources: Natixis AM and Natixis Global Associates).
Natixis Asset Management
Perspectives /// November 2010
PAGE 12
FOCUS EXPERTISE
Our range of funds investing in emerging markets In order to provide active allocation across all asset classes in emerging markets, Natixis Asset Management offers 6 UCITS funds invested in equities or bonds as well as balanced funds.
6 emerging market UCITS funds
Investment universe
Benchmark
Minimum recommended investment period
Sovereign or government bonds (hard currencies hedged in euro)
JP Morgan Emerging Market Bonds Global Diversified
2 years
Investment-grade European issuers of fixed income products, both public (min. 80%) and private
50 % Citigroup Europe WGBI + 50 % Barclays Capital Central Europe Treasury
3 years
UCITS investing in equities, bonds and alternative instruments in emerging markets
60 % MSCI Emerging Markets DNR + 40 % JPM Government Bond Emerging Markets DNR
5 years
UCITS and equity ETFs (from 0% to 100%), UCITS investing in Eurozone and emerging market fixed income products
50 % MSCI Emerging Markets PI + 50 % capitalized Eonia
5 years
Equity ETFs focusing on countries, regions and/or having a global focus as well as futures
MSCI Emerging Markets DNR
5 years
Equities in Russia, Turkey, Poland, Kazakhstan, Hungary, Czech Republic, etc.
N/A (MSCI Emerging Europe Index, for indicative purposes only)
5 years
Natixis Obli Global émergents IC EUR: FR0010716381 Natixis Asset Management Natixis Obli Europe Convergence IC EUR: FR0010175422 Natixis Asset Management Reactis émerging IC EUR: FR0010634345 Natixis Multimanager* Dorval Flexible émergents IC EUR: FR0010312991 Dorval Finance** Natixis Actions Global émergents IC EUR: FR0010711051 Natixis Asset Management Natixis Emerging Europe Fund IC EUR: LU0147917792 IC USD: LU0095830922 Natixis Asset Management
*Natixis Multimanager - a wholly-owned subsidiary of Natixis Asset Management is Natixis’s multimanagement expert center registered by the French Financial Markets Authority (AMF) on 21/12/2001. [More information: www.multimanager.natixis.com] **Within the framework of a partnership in the IFA market, Natixis Asset Management acquired 25% of the Dorval Finance share capital on the 12/09/2008. Dorval Finance is an independent investment management company authorized 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, characterized by active and non-benchmarked asset management. [More information: www.dorvalfinance.fr].
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Perspectives /// November 2010
Natixis Asset Management
PAGE 13
NEWS
Product news
Resounding success for the first NAM Investors Forum On October 21 and 22, 2010, Natixis Asset Management held its first NAM Investors Forum in Paris, bringing together more than 160 participants to discuss key issues in asset management.
Natixis Dollar Reserve A cash management solution in dollars Within its range of money market funds, and as a complement to its cash management funds in euros, Natixis Asset Management offers a US dollar-denominated fund: Natixis Dollar Reserve. This fund provides a cash management solution in dollars, allowing investors to benefit from its expertise of one of Europe’s leading money market fund management companies. The investment objective of Natixis Dollar Reserve is to increase its net asset value to an extent greater than the Effective Federal Funds Rate, which is a volume-weighted average of overnight rates for US dollar interbank loans, computed daily, over a recommended minimum investment horizon of one week. To achieve this objective, the fund invests in fixed-rate debt securities or money market securities denominated in US dollars, either directly by reason of their issue conditions or indirectly through the use of interest rate swaps. The investment universe consists of issuers considered as “investment grade”, usually in the private sector. Natixis Dollar Reserve’s management team bases its approach on the central scenario developed by the Macroeconomic and Money Market Committees of Natixis Asset Management. In line with forecasts relating to the monetary policies of central banks and movements in the yield curve, the investment team decides upon the appropriate allocation between fixed rate and floating rate securities. The Natixis Dollar Reserve’s rate corresponding to AA/V2* by Fitch Ratings, indicates a low level of credit risk and modest net asset value volatility.
More than 160 participants at the 1st NAM Investors Forum As pioneer in Socially Responsible Investment (SRI) since more than 25 years, Natixis Asset Management dedicated the first day of NAM Investors Forum to the theme “Investing Responsibly”. Forum attendees had the opportunity to hear and respond to a debate between panelists entitled “Are environmental and social concerns redefining the boundaries of the economic and financial world?”, featuring Sylvie Lemmet, Head of the Division of Technology, Industry and Economics (DTIE) at the UNEP and Blaise Desbordes, Head of Sustainable Development of Caisse des Dépôts et Consignations. Several experts from Natixis Asset Management also served as panelists, together with Carlos Joly, Chairman of The Climate Change Scientific Advisory Committee.
Natixis AM, partner of the French Solidary Finance Week
* As from 06/04/2010, ratings assigned by Fitch Ratings reflect the credit quality of funds (ranging from AAA, the highest rating, to CCC, the lowest) and the volatility or liquidity of the funds (from V1, the lowest level, to V6, the highest). [For further information, visit www.fitchratings.com].
Portfolio composition by type of instrument as of 30/09/2010 Instruments
Portfolio weight
Commercial paper
53.01%
Certificates of deposit
26.87%
Deposits
12.79%
Bonds
7.27%
Cash and cash equivalents
0.06%
Securitization TOTAL
0% 100% Source: Natixis Asset Management.
Natixis Asset Management and Natixis Interépargne, respectively the French market leaders in solidaritybased asset management with a 36.6% market share(1) and in solidarity-based employee savings with a 56.5% market share(2), were active participants, for the third consecutive year, in the French Solidarity Finance Week organized by Finansol(3). A number of events were organized throughout France between November 3 and 10, 2010 to raise awareness about solidarity finance, an savings approach to combine performance with social solidarity. (1) Source: Baromètre professionnel de la finance solidaire (2010 edition), Finansol. (2) Source: Finansol.
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Natixis Asset Management
(3) Finansol is a french professional association that aims to promote and advance solidarity finance and investment. [More information: www.finansol.org]
Perspectives /// November 2010
www.am.natixis.com Natixis Multimanager Subsidiary of Natixis Asset Management A French simplified joint-stock company Share Capital of 7 536 452 € 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 - November 2010. Cover picture : © Kanwarjit Singh Boparai / Shutterstock
Perspectives is a Natixis Asset Management's publication - Natixis Asset Management - Communications Department - Business Development -
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