Intended for professional clients only
productseptember flash 2009 Natixis Impact Nord-Sud Développement Natixis Impact Nord-Sud Développement is celebrating its 25th birthday this year. Over its 25 years of social commitment, the SICAV has sought to balance performance(1) with solidarity.
Natixis Impact Nord-Sud Développement: an original SICAV In a deteriorating economic environment where policy interest rates are at historically low levels, Natixis Impact Nord-Sud Développement’s exposure to supranational institutions is a real strength. At the same time, the SICAV’s financing of microfinance institutions reflects the socially responsible element of the fund.
Financial innovation in the service of development Natixis Impact Nord-Sud Développement has for 25 years combined investment in international bonds with a commitment to solidarity with developing countries. The SICAV was created in 1984 as a pioneering fund that incorporated a commitment to promoting development within a classic investment process. Natixis Impact Nord-Sud Développement seeks to outperform the JP Morgan Government Bond Index Global All Maturity Hedged(2), by investing in three types of asset: International bonds used to finance major infrastructure projects, such as those issued by supranational institutions: the World Bank, European Development Bank and Asian Development Bank. These make up 75% of the portfolio. Bonds issued by emerging market countries, which are selected via a two stage process: • first, the universe is screened using the World Bank’s composite Governance index which analyses each country according to 6 indicators: namely democracy, political stability, government effectiveness, regulatory quality, rule of law and control of corruption ; • second, the Natixis Asset Management “Emerging market” committee analyses potential investments to determine whether this diversification is attractive on risk/return grounds. Emerging market bonds represent between zero and 10% of the portfolio. Microcredit companies, also known as microfinance institutions (MFI), which provide access to credit for the most under-privileged segment of society, which are excluded from the “traditional” financial system. MFIs make up between zero and 10% of the portfolio; historically around 5% to 7%.
Solidarity investment at every stage of the process Fixed-income Committee
Emerging markets Committee
Ethics Committee
Supranational institutions
Emerging market bonds
Microcredit institutions
75% to 100% of assets
0% to 10% of assets
0% to 10% of assets
International aid
National aid
Local aid
(1) Natixis Impact Nord-Sud Développement is an AMF-approved "International bonds and other debt securities" type open-end investment fund (SICAV). It does not guarantee capital or performance. (2) Calculated in euros and hedged for exchange risk.
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Product flash
An environment favoring supranationals and microfinance institutions Supranational: high credit ratings and attractive yields compared to sovereign debt Natixis Impact Nord-Sud Développement is 75% invested in supranational securities and currently benefits from the extra yield these offer over bonds issued by individual states. At a time when the ratings of many countries have deteriorated, supranational securities have retained their financial solidity as they group together different and diversified sovereign states. Most are AAA rated. At 30 July 2009, for instance, a 10-year bond issued by the EIB(3) was yielding 30bp more than a French government bond of the same maturity.
Yield on the EIB 2018 versus Swap
Average current spread of supranational bonds over government debt of 30bp*
*Source: Bloomberg, as of 30/07/2009
Breakdown by credit rating of bonds held by Natixis Impact Nord-Sud Développement
Breakdown by credit rating of the benchmark: JP Morgan Government Bond Index Global All Maturity Hedged
AAA: 88.3 %
AAA: 53.30 %
BB1 (Brasil): 3%
A2: 31.80 %
AA2: 2.1 %
A1: 8.80 %
A1: 0.4 %
AA1: 6.10 %
AA1: 6.2 %
Source: Natixis Asset management as of 30/07/2009
The breakdown of securities held in the portfolio above does not include investments in microfinance institutions, as they are unrated.
Enhanced role for microcredit and socially responsible finance since the crisis The eruption of the subprime crisis in the US during the summer of 2007 unleashed a historic financial and economic crisis. The financial system’s impact on the global economy and its repercussions for the lives of millions of people prompted a revival of interest in securities that looked beyond the simple pursuit of performance. More than ever, social solidarity is developing and microcredit along with it. Whether in developing countries or in France, many people excluded from the traditional banking systems are turning to microfinance, notably to set up their own companies. Today, Natixis Impact Nord-Sud Développement finances some ten microfinance institutions (MFIs) across the globe: in Africa, Eastern Europe, the Middle East, Asia and Latin America. In 2009, two new MFIs were selected: FDL in Nicaragua and KRK in Kosovo. KRK is one of Kosovo’s biggest MFIs and has a key position in rural finance as it chiefly provides loans to farmers and micro-entrepreneurs in the countryside.
(3) The EIB is the European Investment Bank. It was created in 1958 by the Treaty of Rome as an institution providing long-term finance for the European Union.
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Product flash
MFI
Country
Investment
Currency
Banco Solidario
Ecuador
1,000,000
USD
Amret
Cambodia
750,000
USD
BTFF
Kyrgyzstan
500,000
USD
Confianza
Peru
700,000
USD
Hatta Kaksetar
Cambodia
300,000
USD
Micro-Invest
Moldova
200,000
USD
AgroInvest
Montenegro
500,000
USD
MikroFin
Bosnia-Herzegovina
500,000
USD
FDL
Nicaragua
500,000
USD
KrK
Kosovo
250,000
USD
Geographical distribution of MFIs financed by Natixis Impact Nord-Sud Développement Eastern Europe: 35 % Middle East: 9 % Asia: 18 % Latin America: 38 % Source: Natixis Asset Management as of 30/07/2009
Current competitive positioning and strategy of Natixis Impact Nord-Sud Développement Having suffered from the widening of spreads between supranational securities and government bonds during the flight to quality of 2008, the SICAV is now benefiting from their high yields. At 18 August 2009, Natixis Impact Nord-Sud Développement recorded a year-to-date performance of +1.43 % compared to +0.09 % for its benchmark index, the JP Morgan Government Bond Index Global All Maturity Hedged. Natixis Impact Nord-Sud Développement is rated Lipper Leader in the category Bond Global, Regular Performance over 3 years(4). Net performance of Natixis Impact Nord-Sud Développement ( I share) 6 months
1 year
3 years
5 years
YTD
Natixis Impact Nord-Sud Développement
At 18/08/2009
1 month 2 months 1.01 %
1.16 %
1.44 %
5.53 %
14.29 %
19.39 %
1.43 %
Benchmark: JP Morgan Government Bond Index Global All Maturity Hedged
0.93 %
1.05 %
0.76 %
7%
17.55 %
24.21 %
0.09 %
Performance differential
0.08 %
0.11 %
0.68 %
-1.47 %
-3.26 %
-4.82 %
1.34 %
Source: Natixis Asset Management Figures mentioned refer to previous years. Past performances do not guarantee future returns.
The Natixis Impact Nord-Sud Développement investment management team continues to invest in supranational securities. Sovereign policy rates are still at historically low levels and this trend is likely to persist for the next few months. In terms of diversification into emerging markets, the SICAV is only invested in Brazil at the moment. Brazil enjoys a robust economy: • it has substantial reserves of foreign currency that allow it to implement expansionary monetary and fiscal policies which should sustain economic activity; • domestic demand remains robust, a major resistance factor.
Finansol label since 2006 The Finansol label identifies social-solidarity investment products. It is awarded based on solidarity and transparency criteria and guarantees to savers that they are helping finance activities that generate social benefits. It testifies to the commitment of the financial intermediary to offer its subscribers clear, accurate and regular information on the saving product carrying the label. The Finansol label is granted for an indefinite period: compliance with the criteria is checked every year by the label’s independent committee. Natixis Impact Nord-Sud Développement first received the Finansol label in 2006. Written on 18/08/2009
(4) Lipper rating of 30 July 2009 (updated monthly). The Lipper Regular Performance rating reflects the performance of funds with a 3-year track record, adjusted for short-term and long-term risk, against all other funds in the same Lipper category. A “Leader” rating means that it is among the 20% of best-performing funds in its category and has achieved the top rating of 5 (the worst funds are rated 1). Quartile classifications: each fund is classed by quartile in a universe of funds marketed in France that belong to the same Lipper category. Past performance or reference to any rankings or awards cannot be interpreted as indicating the future performance of a fund.
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Product flash Key dates Examples of partnerships and investments in microcredit
1984
25 years of commitment 1991 SAFRID
1985 SIDI
1996 Banco Solidario
Africa 1984 SICAV created by CDC
2007 MICROINVEST
Asia
Eastern Europe
1992
2005
Sold through the Public Treasury
Hedging of exchange risk (80 %) and new benchmark
Sold by Crédit du Nord, BNP and the Caisses d’Epargne et de Prévoyance
2001 AMRET
South America
1985
History of the SICAV
2009
2006
1994
Finansol Label
European passport
Name change: Nord Sud Développement becomes Natixis Impact Nord-Sud Développement
1994 1996 1998
Emerging market exposure up to 2 % 4 % 10 %
1987 International environment
Global market crash (October)
2008
2009 25th anniversary
1995
2001
2007
Argentinean crisis
Dollar slump
Subprime crisis
1994 Devaluation of the CFA franc
Biography Sophie Potard, Senior fixed income portfolio manager Sophie Potard has been manager of Natixis Impact NordSud Développement since 2002 as part of Natixis Asset Management’s Fixed Income team and is also head of the “International & Currencies” sector team. She joined the company in 1994 as an assistant manager in the Fixed-income investment department, after starting her career at the Caisse des Dépôts et Consignations in 1993 as a quantitative analyst in the trading room. In 2002, she joined Natixis Asset Management’s Fixed Income Diversification team, which covers management of international bonds, emerging market debt, inflation-linked bonds and absolute return fixed-income strategies.
For further information Find the Fund Product Profile under “Our Products” section on our website at www.am.natixis.com
Sophie Potard has a master in Mathematics from the University of Grenoble and a DESS in Mathematical Engineering, Finance option, from the University of Lyon.
Disclaimer This document is intended for professional clients. It may not be used for any purpose other than that for which it was intended and may not be reproduced, disseminated or disclosed to third parties, whether in part on in whole without prior authorization in writing from Natixis Asset Management. No information contained in this document may be interpreted as being contractual in any way. This document is produced purely for informational purposes. It is a presentation created and prepared by Natixis Asset Management based on sources considered to be reliable. Natixis Asset Management reserves the right to change the information in this document at any time without notice, and in particular anything relating to the description of the investment process, which under no circumstances constitutes a commitment from Natixis Asset Management. Natixis Asset Management will not be held liable for any decision taken or not taken on the basis of the information in this document, nor for
any use that a third party might make of the information. The Fund is authorized for sale in France and possibly in other countries where the sale is not contrary to local legislation. Prior to any investment, investors must check that they are legally authorized to invest in a Fund. The risks and fees connected to investment in a Fund are described in the relevant prospectus. The prospectus and periodic documents are available from Natixis Asset Management upon request. The prospectus must be given to the investor prior to the subscription. Under Natixis Asset Management’s social responsibility policy, and in accordance with the treaties signed by the French government, the funds directly managed by Natixis Asset Management do not invest in any company that manufactures sells or stocks anti-personnel mines and cluster bombs.
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COMMITTED.
Natixis Impact Nord-Sud Développement
25 years of commitment to combining solidarity with performance* in a solidarity fund with 25 years of experience, particularly • Iinnvest the financing of microcredit programs from the potential performance of supranational bonds • Borenefit emerging market securities selected through an active management process
• P rovide real support to economic and social development projects
*Non-contractual document. Natixis Impact Nord-Sud Développement is an AMF-approved "International bonds and other debt securities" type open-end investment fund (SICAV). It does not guarantee capital or performance. The fund's simplified prospectus must be provided to the investor prior to purchase. This prospectus can be obtained from Natixis Asset Management or at www.am.natixis.com Natixis Asset Management - AMF authorization no. GP 90-009 – Paris Trade and Companies Register (RCS) 329 450 738