Lazard US Corporate Income Portfolio R6 Shares · NASDAQ:RLCIX
Lazard US Corporate Income Portfolio R6 Shares — Lazard Asset Management — Investor Presentation (December 2017)
17 slides from Lazard US Corporate Income Portfolio R6 Shares's investor presentation, December 2017
Slide 1: Mind the Gap: The Risks of Going Passive in EM
Lazard Insights Mind the Gap: The Risks of Going Passive in EM December 2017 Kim Tilley, CIMA Portfolio Manager/Analyst Information and opinions presented have been obtained or derived from sources believed by Lazard to be reliable. Lazard makes no representation as to their accuracy or completeness
Slide 2: Agenda
Agenda • A Global Shift to Passive? • The Drawbacks of EM Passive Investing • The Advantage of Active in Emerging Markets 2
Slide 3: Passive Assets Continue to Gain Market Share
Passive Assets Continue to Gain Market Share Global Assets Under Management Global Active and Passive Inflows ($T) ($B) 90 87 3,200 Active Mutual Funds Passive 72 ETFs & Passive Mutual Funds Active 2,400 60 64 43 1,600 56 34 30 37 800 30 23 16 6 0 4 0 2003 2008 2015 2020E 2006 2008 2010 2012 2014 20
Slide 4: Active Allocations to US Equities Have Plunged
Active Allocations to US Equities Have Plunged US Institutional Investors’ Active Allocations (%) 90 84 82 81 81 80 80 78 75 70 72 62 62 60 49 50 Fixed Income International Equity US Equity 41 40 2012 2013 2014 2015 As of 31 December 2015 Percentages are weighted in US dollars and projected to the G
Slide 5: EM Active and Passive Inflows Are Comparable
EM Active and Passive Inflows Are Comparable US Large Cap Flows Emerging Markets Flows ($B) ($B) 800 160 120 400 80 0 40 -400 0 ETFs & Passive Mutual Funds Active Mutual Funds Active Mutual Funds ETFs & Passive Mutual Funds -800 -40 2006 2008 2010 2012 2014 2016 2006 2008 2010 2012 2014 2016 As of 2
Slide 6: EM Equity ETF Assets Are Concentrated Among Three Funds
EM Equity ETF Assets Are Concentrated Among Three Funds (%) Highlights 100 85 US-listed emerging markets ETFs Vanguard FTSE Emerging 41 ETFs with assets over $100M Markets ETF, 75 37% 10 ETFs with assets over $1B 3 ETFs Capture 84% of the assets iShares Core (EEM, IEMG, VWO) MSCI 50 Emerging
Slide 7: Two of the Largest EM ETFs only Charge Basis Points
Two of the Largest EM ETFs only Charge 14 Basis Points Assets are Concentrated with EEM, IEMG, and VWO AUM ($B) Expense Ratio 66 0.96 AUM [LHS] Expense Ratio [RHS] 44 0.64 22 0.32 0 0.00 EEM SPEM EELV GEM QEMM EDIV EEMO JPEM PXH GMF BICK BKF EMQQ FNDE DBEM HEEM VWO ESGE DVYE FLQE FNI DEM FEM ECON EU
Slide 8: Flows Are Going to ETFs Charging Less than Basis Points
Flows Are Going to ETFs Charging Less than 15 Basis Points 3-Year Fund Flows ($B) Expense Ratio 30 0.96 3-Year Fund Flows [LHS] Expense Ratio [RHS] 20 0.70 10 0.44 0 0.18 -10 -0.08 EEM SPEM GEM PXH BKF DBEM ECON EDC VWO EEMV EEMO GMF DVYE BICK DEM FEM INCO ADRE TLTE CWI As of 21 November 2017 EM ETF
Slide 9: The Three Big EM ETFs: EEM, IEMG, VWO
The Three Big EM ETFs: EEM, IEMG, VWO EEM VWO IEMG iShares MSCI Emerging Vanguard FTSE iShares Core MSCI ETF Markets Emerging Markets Emerging Markets Expense Ratio 0.72 0.14 0.14 Fund AUM $38.3B $65.5B $40.9B FTSE Emerging Markets MSCI Emerging Markets MSCI Emerging Markets Index All Cap China A In
Slide 10: EM ETF Performance Can Deviate
EM ETF Performance Can Deviate Index 140 VWO EEM IEMG 23% 30% 30% 130 120 110 100 Jan '17 Feb '17 Mar '17 Apr '17 May '17 Jun '17 Jul '17 Aug '17 Sep '17 Oct '17 Nov '17 As of 30 November 2017 Source: Lazard, Bloomberg 10
Slide 11: Seemingly Similar Funds Can Provide Very Different Exposures
Seemingly Similar Funds Can Provide Very Different Exposures Vanguard FTSE EM (VWO) vs. iShares MSCI EM (EEM) Relative Country Weights Relative Sector Weights South Korea Information Technology China Germany Consumer Discretionary Pakistan Greece Telecom Services Chile Consumer Staples Turkey Indone
Slide 12: Passive Strategies Are Subject to Index Concentration
Passive Strategies Are Subject to Index Concentration LatAm EMEA EM Asia More than 2 4 4 80% countries countries countries represented by 3 largest sectors represent 63% 65% 64% As of 31 December 2016 Data are based on MSCI regional indices. Countries – LatAm: Mexico, Brazil; EMEA: South Africa, Tur
Slide 13: Stocks within EM ETFs Have Less Analyst Coverage
Stocks within EM ETFs Have Less Analyst Coverage iShares MSCI Emerging Markets iShares Core S&P 500 Analyst Coverage (EEM) (IVV) Number of Companies 855 505 Stocks with No Coverage 50 0 5 or Less 107 8 10 or Less 191 29 Analysts per Stock 18 22 As of 29 September 2017 Source: Bloomberg 13
Slide 14: EM Active Managers Have Historically Outperformed
EM Active Managers Have Historically Outperformed Returns (%) YTD 1 Year 3 Years 5 Years 7 Years 10 Years 5th Percentile 37.76 29.87 8.32 7.87 5.21 5.67 25th Percentile 31.03 23.72 6.73 6.08 4.09 2.69 Median 28.60 22.46 5.13 4.70 3.23 1.91 75th Percentile 27.78 22.07 4.90 3.99 2.54 1.32 95th Percent
Slide 15: Key Takeaways
Key Takeaways • Passive assets continue to gain global market share, a trend that we be believe is a structural shift. • Passive investing in emerging markets has several drawbacks, including index concentration, lower analyst coverage, and the potential for unwanted exposures. • Active managers hav
Slide 16: Biography
Biography Kim Tilley, CIMA Senior Vice President, Portfolio Manager/Analyst Lazard Asset Management LLC (New York) Kim Tilley is a Portfolio Manager/Analyst on the Lazard Multi-Asset team, specializing in ETFs. She began working in the investment field in 2000. Prior to joining Lazard in 2002, Kim w
Slide 17: Disclosures
Disclosures This presentation and all research and materials enclosed are property of Lazard Asset Management LLC © 2017 Lazard Asset Management LLC. Information and opinions presented have been obtained or derived from sources believed by Lazard to be reliable. Lazard makes no representation as to
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