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Citywire Wealth Manager Retreat 201317 October 2013
222
Ed ColeAnalyst EMEA
Simon PickardHead of Emerging Markets Equities
333
Who are we?
444
Emerging markets is at the heart of our fund management
1997Carmignac Emergents
2007Carmignac
Emerging Discovery
2011Carmignac
Emerging Patrimoine
1989Carmignac Investissement
Carmignac Patrimoine
555
Carmignac Emergents: Over 16 Years of Performance, 3 Fund Management Teams
*From 01/ 01/2013 the equity index reference indicators are calculated net dividends reinvested. Past performance is not a reliable indicator of future performance and can vary over time.Source: Carmignac Gestion, 30/09/2013Basis 100 as of 03/02/1997
19971997
19981999
19992000
20012001
20022003
20032004
20052005
20062007
20072008
20092009
20102011
20112012
20130
100
200
300
400
500
600
03/02/1997 LAUNCH OF CARMIGNAC EMERGENTS
2001HIRING OF AN ANALYST
(ASIA)WEN ZHANG-GOLDBERG
HIRING OF A NEW ANALYST (ASIA)
DAVID YOUNG PARK
1997-2003
Edouard CARMIGNAC
Eric LE COZ
2003 - SEPTEMBER 2008 SEPTEMBER 2008-…
IMPLEMENTATION OF A NEW FUND MANAGEMENT
TEAMCarmignac Emergents+368,24%
MSCI EM (Eur)*
+78,63%
TEAM
Wen ZHANGGOLDBERGManager
David YOUNG PARKAnalyst
Simon PICKARD Manager
+ 4 EM Fund Managers/Analysts Xavier HOVASSEDavid YOUNG PARKHaiyan LI-LABBÉEdward COLE
OBJ
ECTI
VE Seek of a maximal performance
Growth Fund
Seek of outperformance compare to performance indicator with lower volatility Blend Fund
Seek of a maximal performanceGrowth Fund
666
A Compact, Experienced and Versatile Fund Management Team Edouard CARMIGNAC
Chairman – Fund Manager
Frédéric LEROUXGlobal Fund Manager
Laurent CHEBANIERAnalystCountry Risk
Julien CHERONQuantitative Analyst
MULTISTRATEGY
François-Joseph FURRYFund Manager
Rose OUAHBA Head of Team Fund Manager
Charles ZERAHFund Manager
Carlos Andres GALVISFund Manager
Keith NEYFund Manager
Caroline SLAMACredit Analyst
BOND MANAGEMENT
Laurent DUCOIN Head of Team Fund Manager
Samir ESSAFRIFund Manager
Markus KULESSAAnalyst
EUROPEAN EQUITIES
David FIELD Head of Team Fund Manager
Simon LOVATAnalyst
COMMODITY EQUITIES
Xavier HOVASSEFund Manager
David YOUNG PARKFund Manager
Haiyan LI-LABBÉAnalystChina and Taiwan
Simon PICKARD Head of Team Fund Manager
EMERGING EQUITIES
Matthew WILLIAMSAnalystFinancial Sector
Antoine COLONNAAnalystConsumer sector
Tim JAKSLANDAnalystInnovation Sector
Vincent STEENMANAnalystIndustry Sector
Pierre VERLÉCredit Analyst
Edward COLEAnalystEMEA
SECTOR ANALYSTS
777
Key Allocation Decisions for Emerging Markets
Consumer
Cyclical Rotation
Non-Benchmarked Financials
Latin America opportunities
Exposure Management
888
Consumer
999
Why do we think that an Emerging fund should have consumer stocks in the portfolio? Very cash generative businesses…
Source: Forbes
Name Source Country of Citizenship
1 Carlos Slim Helu & family Telecom Mexico2 Bill Gates Microsoft USA3 Amancio Ortega Zara Spain4 Warren Buffett Berkshire Hathaway USA5 Larry Ellison Oracle USA6 Charles Koch diversified USA6 David Koch diversified USA8 Li Ka-shing diversified Hong Kong9 Liliane Bettencourt & family L'Oreal France
10 Bernard Arnault & family LVMH France11 Christy Walton & family Wal-Mart USA12 Stefan Persson H&M Sweden13 Michael Bloomberg Bloomberg LP USA14 Jim Walton Wal-Mart USA15 Sheldon Adelson casinos USA16 Alice Walton Wal-Mart USA17 S. Robson Walton Wal-Mart USA18 Karl Albrecht Aldi Germany19 Jeff Bezos Amazon.com USA20 Larry Page Google USA
Amongst the 20 richest people in the world, 10
run highly cash generative consumer
companies
101010
09/0803/09
09/0903/10
09/1003/11
09/1103/12
09/1203/13
09/130%
10%
20%
30%
40%
50%
60%
Carmignac Emergents: Key Changes by the Fund Management Team
Source: Carmignac Gestion, 30/09/2008 to 30/09/2013
Change in our consumer, commodity and financial sector allocation in Carmignac Emergents
Commodities
Consumer
Finance
111111
The outperformance of our defensive stock selection…… Illustrates the value added in our stock-picking process
01/0908/09
03/1010/10
05/1112/11
07/1202/13
09/130
50
100
150
200
250
300
350
400
450
Source: Carmignac Gestion, Bloomberg, 30/09/2013
Consumer stocks in Carmignac Emergents
Consumer stocks in the MSCI Emerging
Markets
MSCI Emerging markets
Performance of Carmignac Emergents’ consumer stock selection
121212
Consumer Staples: we should not be complacent with valuations
Source: Thomson Reuters, Credit Suisse, septembre 2013
EM
Europe
US
Fd/Bev/Tob, 12m fwd P/E relative to domestic market
131313
A more balanced consumer staples portfolio
12/11 04/12 08/12 12/12 04/13 08/1325%
26%
27%
28%
29%
30%
31%
32%
33%
34%
35%
Source: Carmignac Gestion, 30/09/2013
Ambev (Brazil) CP All (Thailand) Femsa Units (Mexico) ITC (India) LG Household (South Korea) Shoprite (South Africa) United Spirits (India) Want Want China (China)
Q3 2013: stocks we have reduced
Grupo Paõ de Açucár (Brazil) Sabmiller (South Africa)
Q3 2013: stocks we have reinforced
Cosan (Brazil) Jeronimo Martins (Poland)
Q3 2013: stocks we have maintained
Evolution of the consumer staples weighting in Carmignac Emergents
141414
Cyclical Rotation
151515
Reinforcement on pro-cyclical stocks
Cyclical stocks
AUTOMATIONFanuc (Japan)
AUTOMOBILE Isuzu Motors (Japan) Hyundai Motors
(South Korea) Tata Motors (India)
LOGISTIC / TRANSPORTSGlobaltrans (Russia)
EXPORTERSEmbraer of Brazil
(Brazil)
161616
Non-Benchmarked Financials
171717
Evolution of our financial exposure over timeFrom development property companies to diversified banks
Source: Carmignac Gestion, 30/09/2013
01/09
04/09
07/09
10/09
01/10
04/10
07/10
10/10
01/11
04/11
07/11
10/11
01/12
04/12
07/12
10/12
01/13
04/13
07/13
0%
5%
10%
15%
20%
25%
30%
Diversified Banks Properties
% of assets
181818
A more concentrated portfolio on financials, proof of our selectivity for countries that have not experienced the credit excesses of the 90’s
Source: Carmignac Gestion, 30/09/2013
Carmignac Emergents: breakdown of financial sector
MSCI Emerging Markets: breakdown of financial sector
21% of Carmignac Emergents
22% of MSCI Emerging Markets
2.3%
13.2%
1.7%
3.7%1.4%
18.2%
0.7%
2.0%
Others*4,7%
* Others: Companies feat. Real-estate, Regional Banks, Savings and Mortgages, other diverse financial services, specialized financial institutions, Consumer Credit, Deposit Banks, Investment banking, diversified capital markets, casualty insurance, diversified real-estate activities, Residential REIR, diversified REIT
Real Estate Diversified Banks
Multisectoral Holdings Life Insurance
191919
Focus on markets where credit creation has been muted over the past 5 years
Hungary Mexico India Brazil China Russia Indonesia-10%
-5%
0%
5%
10%
15%
20%
25%
Source: Anderson, June 2013
Erste Bank
Grupo BanorteBanco Santander Mexico
Private Credit Growth (% y/y)
ICICI BankIndusInd Bank
202020
The LATAM Opportunity
212121
Amongst Emerging Markets, Latam is the big winner over the past 13 years
Source: Emerging Advisors Group, April 2013Base 100: 01/01/ 2000
Central Eastern Europe
Asia
ME/Africa
LATAM
Market performance
222222
Our positioning on Latin America in our Emerging markets Equity Funds
Source: Carmignac Gestion,30/09/2013
PERU Alicorp Inretail Peru Corp Credicorp Intergroup Financial
MEXICO Femsa Units Grupo Banorte Banco Santander TF Administrador Mexichem Promotora
CHILE Cerveceria CIA Cervecerias Unidas Embotelladora Andina
BRAZIL Ambev Cosan Grupo Paõ de Açucar CCR Ecorodovias Embraer General Shopping Brasil Rossi Residencial
Carmignac EmergentsCarmignac Emerging Discovery
COLOMBIA Almacenes Éxito Banco Davivienda Bancolombia Cementos Argos Cemex Latam Holdings Gran Tierra Energy Pacific Rubiales Energy
232323
One of our favorite markets: Colombia Benefiting from infrastructure developments…
5.8%2.2%
1.3%
Source: Carmignac Gestion, 30/09/2013
Cement companies & oil
producer
Private Financial Companies
Consumer goods
Colombian stocks: 9.3% of Carmignac Emerging Discovery
Colombia: Four Lane Highways to Build (Kilometers)
Cementos Argos & Cemex Latam should benefit from a massive infrastructure spending program
announced by President Santos last year.
242424
Risk Management
252525
Carmignac Emergents: active management of our exposure
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q308 09 10 11 12 13
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
Source: Carmignac Gestion, 30/09/2013
SHORT POSITIONS on Hang Seng China Enterprises, S&P
500, Bovespa, Nifty indexes…
SHORT POSITIONS on Nifty, Kospi, MSCI Taiwan semi
conductor indexes…
SHORT POSITIONS on Bovespa, Hang Seng , Kospi, Nifty, Turk ISE and Russian
index
SHORT POSITIONS on Nifty, S&P500 and MSCI Emerging
Markets indexes…
SHORT POSITIONS on Bovespa, Hang Seng , Kospi, Nifty, Turk ISE, MSCI Taiwan
index
12 3 4
5
1
2
3
4
5
262626
Improvement in the portfolio liquidity… … by refocusing on large & mid caps
04/0612/06
08/0704/08
12/0808/09
04/1012/10
08/1104/12
12/1208/13
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Large Medium Small Cash and others
Source: Carmignac Gestion, 30/09/2013
MID AND LARGE CAPS INCREASE
SMALL CAPS AND CASH REDUCTION
Capitalization breakdown of Carmignac Emergents
SIMON PICKARD’S ARRIVALCARMIGNAC EMERGING DISCOVERY CREATION
272727
Carmignac Emergents: a very liquid fund
Source: Carmignac Gestion, 14/10/2013
3/4 of the portfolio can be liquidated in less than 4 days
Day 0 Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 80%
20%
40%
60%
80%
100%
120%
100.0%
66.6%
45.3%
32.5%24.4%
19.5% 15.7% 12.3% 9.4%
Time to liquidate 90% of the portfolio(using 30% of the 3 months average volume)
282828
Excellent Risk-Return profile of our fund range
Past performance is not a reliable indicator of future performance and can vary over time.Source: Morningstar, 30/09/2013
Performance/volatility over 5 years
17.0% 17.5% 18.0% 18.5% 19.0% 19.5% 20.0% 20.5% 21.0% 21.5% 22.0%30%
35%
40%
45%
50%
55%
60%
65%Carmignac
Emerging Dis-covery
MSCI Emerging Markets
Carmignac Emergents
Volatility
Perf
orm
ance
292929
Appendix
303030
Our strategyNon-benchmarked, discipline, expertise…
313131
Our Emerging Markets Fund Range is Simple and defined
Source: Carmignac Gestion, 30/09/2013
Carmignac Emerging Patrimoine
(equity part)
Carmignac Emergents
Carmignac Emerging Discovery
No stock in common between the two
strategies
49 stocks in large/midcap strategy 62 stocks in mid/small cap and Frontier markets strategy
323232
Carmignac Emergents: A non-benchmarked approach
Source: Carmignac Gestion, 09/10/2013
03/0909/09
03/1009/10
03/1109/11
03/1209/12
03/1309/13
8%
9%
10%
11%
12%
13%
14%
03/0909/09
03/1009/10
03/1109/11
03/1209/12
03/1309/13
40%
45%
50%
55%
60%
65% Active share of the Fund vs. its benchmark
Coverage of the Fund vs. its benchmark
333333
A large universe, giving us freedom We are currently invested in 33 countries
Source: Carmignac Gestion, 30/09/2013
Carmignac Emerging DiscoveryCarmignac Emergents Carmignac Emergents& Carmignac Emerging Discovery
Mexico
Brazil
Colombia
Chile
Nigeria
South Africa
Czech Rep.
Turkey
Saudi Arabia
Russia
ChinaUAE
TanzaniaKenya Sri
LankaPapua New
Guinea
South KoreaAlbania
Slovenia
Poland
PhilippinesTaiwan
Vietnam
IndonesiaThailand
Peru
Israel
Mauritius
India
Malaysia
343434
Fund management with strong long-term convictions An equal-weighting discipline and a more concentrated portfolio
0-0,5 0,5-1 1-1,5 1,5-2 2-2,5 2,5-3 3-3,5 3,5-40
5
10
15
20
25
30
35
40
45
19
43
26
52
0 1 102
14
9
14
7
1 2
March 2008 September 2013
Source: Carmignac Gestion, 30/09/2013
Num
ber o
f sto
cks
Weighting in the portfolio (in %)
Breakdown of the stocks weighting in Carmignac Emergents
90% of our stocks represents between 1 and
3% of the portfolio
MARCH 2008 97 STOCKS
SEPTEMBER 2013
49 STOCKS
353535
03/0609/06
03/0709/07
03/0809/08
03/0909/09
03/1009/10
03/1109/11
03/1209/12
03/1309/13
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Commodities Financials Cyclicals Non-cyclicals
A defensive core portfolio sustained by non cyclical and quality stocks…
Source: Carmignac Gestion, 30/09/2013
SIMON PICKARD’S ARRIVAL
REDUCTION OF THE
FINANCIALS AND
COMMODITIES WEIGHTING
STRONG NON-CYCLICAL STOCKS
WEIGHTING INCREASE
Sector breakdown of Carmignac Emergents
RECENT INCREASE OF OUR CYCLICAL
STOCKS
363636
2009 2010 2011 2012 2013-4%
-2%
0%
2%
4%
6%
8%
10%
12%
3.4%4.4%
5.8%7.4%
1.3%-0.6%
6.2%1.2%
-0.6%
-1.9%
Stock-Picking Geographic Allocation
Performance Attribution: Geographic Allocation vs. Stock-Picking
Past performance is not a reliable indicator of future performance. Performance may vary over time. Source: Carmignac Gestion, 30/09/2013
Carmignac Emergents: Relative performance contribution
373737
Efficient stock selection: What do we look at?
Low capital intensity (high ROIC) Cash realization ratio i.e. cash flow well in
excess of net income…
Adjusted FCF yield i.e. after maintenance, not total capex
Intense focus on profitability Sensible funding and capital management High levels of equity ownership
management/staff …
PER vs. diluted EPS growth and vs. market Price to Book Value vs. ROE and BVPS growth DCF for high growers; cash diluted yield…
High grade deposits Infrastructures…
EV and Capex remaining / Ebitda P/NPVs (especially for the gold space)…
Net Working Capital Patents Competitive edge and its sustainability…
FCF generation Price to Book
Selected qualitative criteria Selected valuation measures
CONSUMER
FINANCIALS
COMMODITIES
TECHNOLOGY
383838
CARMIGNAC EMERGENTS
Simon PICKARD
Past performance is not a reliable indicator of future performance. Performance may vary over time. Source: Carmignac Gestion, 31/08/2013; Base 100: 31/08/2010
A Core – Satellite approach
A large and mid cap fund: average weighted market cap of EUR19.3bn
Assets: 1710.01 Million €
50 holdings
* The fund performance indicated is based on the A EUR acc Share Class** From 01/01/2013, the equity index reference indicators are calculated net dividends reinvested.
Carmignac Emergents*
+4.99%
MSCI Emerging Markets**
-5.84%
08/1011/10
02/1104/11
07/1110/11
12/1103/12
06/1208/12
11/1201/13
04/1307/13
80
90
100
110
120
130 Performance over 3 years
393939
Main movements in the portfolio Our strong geographic diversification: our frontier markets exposure
404040
CARMIGNAC EMERGING DISCOVERY
Past performance is not a reliable indicator of future performance. Performance may vary over time. Source: Carmignac Gestion
Carmignac Emerging Discovery(1)
1.00%
Reference indicator(2)
-9.44%
David Park
Xavier Hovasse
A “frontier” markets exposure
A small and mid cap fund: average weighted market cap of EUR3.3bn
Assets : 312.49 Million €
62 positions
(1) The fund performance indicated is based on the A EUR Acc Share Class(2) 50% MSCI EM Mid Cap NR (EUR) + 50% MSCI EM Small Cap NR (EUR))
09/10 03/11 09/11 03/12 09/12 03/13 09/1370
80
90
100
110
120 Performance over 3 years
414141
5.4%
3.8%
12.5%
Carmignac Emerging Discovery: Geographic Diversification Giving Access to Frontier Markets
(1) South Africa, Singapore, South Korea, Taiwan(2) Albania, Papua New Guinea, Slovenia, Sri Lanka, Vietnam, United Arab Emirates(3) Kenya, Nigeria, Mauritius,TanzaniaSource: Carmignac Gestion, 30/09/2013
Carmignac Emerging Discovery: Geographic Breakdown
Brazil, China, India22% Traditional markets
33%
3.6%
1.2%
2.5%3.2%
3.8%
18.6%
Frontier markets40%
9.3%
7.0%
7.5%
5.2%
3.1%
7.9%
ChinaIndia
Brazil
Others (1)
ThailandChile
IndonesiaTurkey
MexicoPhilippines
ColombiaOthers(2)
AfricaPeru
Saudi Arabia
Liquidity: 5% of the fund
424242
Carmignac Emerging Discovery: a very liquid fund
Source: Carmignac Gestion, 16/09/2013
Day 0Day 1
Day 2Day 3
Day 4Day 5
Day 6Day 7
Day 8Day 9
Day 10Day 11
Day 12Day 13
Day 14Day 15
Day 16Day 17
0%
20%
40%
60%
80%
100%
120%
100.0%
75.9%
56.4%
44.0%
36.0%30.6%
26.2%22.3% 19.4% 17.4% 15.8% 14.5% 13.4% 12.5% 11.6% 10.8% 10.2% 9.5%
2/3 of the portfolio can be liquidated in less than 5 days
Time to liquidate 90% of the portfolio(using 30% of the 3 months average volume)
434343
Over the last 12 months, Frontier Markets offered better return than traditional markets
Source: Emerging Advisors Group, October 2013
Saud
i Ara
bia
Pola
ndPh
ilipp
ines
Hon
g Ko
ngTh
aila
ndIs
rael
Chin
aSo
uth
Afric
aTa
iwan
Turk
eyM
alay
sia
Sout
h Ko
rea
Sing
apor
eCo
lom
bia
Czec
h Re
p.Ru
ssia
Mex
ico
Hun
gary
Indo
nesi
aIn
dia
Chile
Braz
ilU
AEAr
genti
naBu
lgar
iaU
rugu
ayPa
kist
anN
iger
iaRo
man
iaEs
toni
aSe
rbia
Viet
nam
Latv
iaKe
nya
Mau
ritius
Qat
arLi
thua
nia
Pana
ma
Kuw
ait
Tanz
anie
Slov
enia
Ecua
dor
Jord
anie
Sri L
anka
Bosn
iaKa
zakh
stan
Tuni
sia
Egyp
tU
krai
nePe
ru
Large vs. small market returns12-month equity performance (national index, USD terms)
444444
Frontier Markets: Still Undiscovered
Source: Datastream, IMF, Citigroup, September 2013
Developed Markets
Emerging Markets
Frontier Markets
Market cap/GDP ratios (since 1988)
454545
The increase of our Frontier Market exposure
01/08
05/08
09/08
01/09
05/09
09/09
01/10
05/10
09/10
01/11
05/11
09/11
01/12
05/12
09/12
01/13
05/13
09/13
0%
20%
40%
60%
80%
100%
Frontier BIC Traditional
Source: Carmignac Gestion, 30/09/2013
Breakdown of Carmignac Emerging Discovery
464646
This presentation has been conceived for information purposes only and is intended to professional clients. It cannot be used for another purpose than the one it has been conceived for, and cannot be reproduced, distributed or communicated, partly or entirely, to third parties without prior written approval from Carmignac Gestion. This presentation is not an investment advice nor is it contractually binding. Due to their simplification, the information contained in this presentation are inevitably partial. This document may be subject to changes, without prior notice.
Past performance does not guarantee future returns. The value of an investment can rise or fall with market fluctuations, and shareholders may lose, as the case may be, the amount originally invested. The fund performance indicated is based on the A EUR acc Share Class. Fees are included in the performance.
The access to the products and services described in this presentation may be subject to restrictions towards some persons or countries.
The risks and fees relative to the products are described in the KIID (Key Investor Information Document).
The UCITS Funds presented in this presentation are authorized for distribution in the United Kingdom by the FCA. The Prospectus and KIID as well as annual reports of the UCITS Funds can be obtained free of charge from the Carmignac Gestion Luxembourg London Branch at: No. 29 Cornhill - LONDON EC3V 3NF
The KIID must be given to the investor before any investment.
Copyright : The data published in this presentation are the exclusive property of their owners as mentioned on each slide.
Non contractual document, redaction achieved on 14/10/2013Carmignac Gestion – Société Anonyme au capital de 15 000 000 € - RCS de Paris B 349 501 676
Agrément AMF n° GP 97-08 du 13/03/1997 24 Place Vendôme – 75001 Paris – Tel : +33 1 42 86 53 35
Disclaimer