DWS Global Small Cap Fund - Class S · NASDAQ:SGSCX
DWS Global Small Cap Fund - Class S — DWS Group — Investor Day (December 2019)
46 slides from DWS Global Small Cap Fund - Class S's investor day presentation, Dec 10, 2019
Slide 1: DWS Investor Update
DWS INVESTOR UPDATE Frankfurt, December 10, 2019
Slide 2: Agenda
AGENDA 01 DWS Strategy 02 Financial Performance 03 Investment Group 04 Distribution 05 Operating Platform 06 Closing 07 Q&A DWS Investor Relations / Investor Update / December 10, 2019 /2
Slide 3: DWS Strategy
01 DWS STRATEGY Dr Asoka Woehrmann, Chief Executive Officer
Slide 4: Recap – 2019
01 DWS STRATEGY RECAP – 2019 It has been a successful year KEY ACHIEVEMENTS Products Flows Financials External recognition _ Outperformance of _ Flow turnaround _ Cost measures on track _ Top ESG rating Flagships & targeted FY 2018: €(22)bn from UNPRI strategies _ AuM increased from markets 9M 2019:
Slide 5: Industry view – push out of the comfort zone
01 DWS STRATEGY INDUSTRY VIEW – PUSH OUT OF THE COMFORT ZONE The Asset Management environment is becoming more challenging SECULAR MARGIN GEOGRAPHIC LICENSE TO STAGNATION EROSION WEALTH SHIFT OPERATE INVESTOR TECH MARKET SOPHISTICATION REVOLUTION CONSOLIDATION Change of tides requires reshaping of s
Slide 6: Industry challenges + DWS strengths = new era
01 DWS STRATEGY INDUSTRY CHALLENGES + DWS STRENGTHS = NEW ERA Strategic priorities aimed at becoming a modern asset manager STRATEGIC PRIORITIES _ Asset Management focussed processes & policies PUSH OUT EFFICIENCY _ Distinct IT infrastructure, state of the art AM technology OF THE COMFORT ZONE _ Com
Slide 7: Making ESG the core of what we do
01 DWS STRATEGY MAKING ESG THE CORE OF WHAT WE DO Leading the coherent implementation of ESG in both fiduciary & corporate activities ESG ACCELERATORS NEED FOR STRATEGIC RESPONSE Investment Processes FIDUCIARY Product Offering CLIENTS & _ ‘Zeitgeist’ SOCIETY _ Rising demand Thought Leadership Stewar
Slide 8: Becoming leading ESG-integrated AM
01 DWS STRATEGY BECOMING LEADING ESG-INTEGRATED AM DWS ready to define a new level of ESG – retaining the license to operate OUR OBJECTIVES INCREASE IN ECONOMIC VALUE New organisational set-up, making ESG the highest management priority Protect asset base Smart integration of ESG criteria into the i
Slide 9: Employees – our key asset
01 DWS STRATEGY EMPLOYEES – OUR KEY ASSET Unlocking full potential by focusing on functional roles & contribution CULTURE DRIVES PERFORMANCE SCOPE _ Remove corporate titles PERFORMANCE ACTIONS _ Reduce hierarchical layers _ Increase competitiveness regarding brand image and compensation _ Timeline t
Slide 10: Financial Performance
02 FINANCIAL PERFORMANCE Claire Peel, Chief Financial Officer
Slide 11: DWS is growing sustainably and steadily in 2019
02 FINANCIAL PERFORMANCE DWS IS GROWING SUSTAINABLY AND STEADILY IN 2019 9M 2019 9M 2018 CHANGE vs 9M 2018 Strong AuM growth €752bn €692bn €61bn 9% Positive Net Flows €12.9bn €(15.4)bn €28bn Stable adjusted €1,702m €1,710m (0)% €(8)m Revenues Reduced adjusted Costs €1,194m €1,244m €51m (4)% Lower ad
Slide 12: On track to reach FY 2019 targets as committed
02 FINANCIAL PERFORMANCE ON TRACK TO REACH FY 2019 TARGETS AS COMMITTED TARGETS 2019 9M 2019 STATUS 2021 Adjusted CIR ~70% (assuming flat revenues yoy) 70.1% On track <65% Net flows (% of BoP AuM) Outperform industry 2.6% On track 3-5% (on average1) € Dividend payout ratio 65% to 75% On track
Slide 13: Strong growth into targeted asset classes
02 FINANCIAL PERFORMANCE STRONG GROWTH INTO TARGETED ASSET CLASSES Total AuM has risen by ~€90bn year-to-date, driven by market performance, positive FX movements and net inflows into targeted asset classes AUM BY ASSET CLASS (€BN) Annualized net flows as % BoP AuM 63 752 Total AuM 2.6% 13 15 (1) Pa
Slide 14: Strategic priorities reflected in 9M 2019 inflows
02 FINANCIAL PERFORMANCE STRATEGIC PRIORITIES REFLECTED IN 9M 2019 INFLOWS Targeted asset classes are key flow drivers, supported by partnerships and ESG TARGETED ASSET CLASSES €13bn into PASSIVE, outpacing FY 2018 inflows €6bn across ALTERNATIVES, up more than five-fold from FY 2018 Ambition to out
Slide 15: Stable revenues in line with 2019 expectations
02 FINANCIAL PERFORMANCE STABLE REVENUES IN LINE WITH 2019 EXPECTATIONS Total adjusted revenues have remained stable in spite of broader AM industry pressures, reflecting the benefits of having a diversified business model ADJUSTED REVENUES (€M) MANAGEMENT FEES (€M) 1,710 1,702 1,573 1,585 19 72 _ P
Slide 16: Breaking down the revenue composition
02 FINANCIAL PERFORMANCE BREAKING DOWN THE REVENUE COMPOSITION Challenging market environment significantly impacts other revenues, while Alternatives investments are driving higher performance fees OTHER REVENUES (€M) PERFORMANCE & TRANSACTION FEES (€M) 97 72 21 19 66 13 Harvest 32 Transaction fees
Slide 17: Management fee margin development
02 FINANCIAL PERFORMANCE MANAGEMENT FEE MARGIN DEVELOPMENT Increasing pressure primarily from non-controllable effects relating to incumbent assets CHANGE IN MANAGEMENT FEE MARGIN (BPS) 31.5 Fee compression Market / FX 29.8 (1.2) (0.5) FY 2017 AuM Net flows 9M 2019 _ DWS Investor Relations / Investo
Slide 18: DWS revenue projection
02 FINANCIAL PERFORMANCE DWS REVENUE PROJECTION Net flows will be fundamental to support revenue development TOTAL ADJUSTED REVENUES (€BN) 2.3 2.3 FY 2018 Consensus Market & Margin Performance Net Flows FY 2021 FY 2019 Erosion Fees _ DWS Investor Relations / Investor Update / December 10, 2019 / 18
Slide 19: Efficiency efforts underpin cost reductions
02 FINANCIAL PERFORMANCE EFFICIENCY EFFORTS UNDERPIN COST REDUCTIONS Total adjusted costs have fallen significantly since 2017 TOTAL ADJUSTED COSTS (€M) (7)% (6)% 1,710 ~150 ~1,600 FY 2017 Cost efficiency DB Group MiFID II, VAT & Growth Consensus initiatives charges IPO dis-synergies initiatives FY
Slide 20: DWS cost development outlook
02 FINANCIAL PERFORMANCE DWS COST DEVELOPMENT OUTLOOK Identified further cost measures to reach adjusted CIR target of <65% by 2021 ADJUSTED COSTS (€M) STRATEGIC INITIATIVES Adj. CIR 72 ~70 _ Investment into digital <65 (%) 1,633 _ Platform improvement and innovation ~1,600 ~150 FURTHER EFFICIENCIES
Slide 21: Medium-term targets
02 FINANCIAL PERFORMANCE MEDIUM-TERM TARGETS TARGETS 2019 2021 Adjusted CIR ~70% <65% (assuming yoy flat revenues) Net flows Outperform 3% to 5% (% of BoP AuM) industry (on average1) Dividend € 65% to 75% 65% to 75% payout ratio 1 Annual flows could be volatile depending on market circumstances _ DW
Slide 22: Investment Group
03 INVESTMENT GROUP Stefan Kreuzkamp, Chief Investment Officer
Slide 23: Investment platform supports targeted growth areas
03 INVESTMENT GROUP INVESTMENT PLATFORM SUPPORTS TARGETED GROWTH AREAS PLATFORM PERFORMANCE PRODUCT PROCESS Alignment of Superior Focus on Smart investment product innovations & integration of capabilites quality efficiencies ESG aspects _ DWS Investor Relations / Investor Update / December 10, 2019
Slide 24: Investment platform
03 INVESTMENT GROUP INVESTMENT PLATFORM Investment capabilities aligned to capture growth in targeted asset classes ONE GLOBAL PORTFOLIO MANAGEMENT PLATFORM FURTHER PROGRESS: 1 MULTI-ASSET & SOLUTIONS €752bn AuM ~900 Investment Combining & strengthening Multi-Asset & Solutions (Advisory) capabilitie
Slide 25: Performance
03 INVESTMENT GROUP PERFORMANCE Strong investment performance across all asset classes drives growth OUTPERFORMANCE RATIO # OF 4 & 5 MS STAR FUNDS TOP RATED STRATEGIES 81% 197 Fixed Income DWS INVEST ASIAN BONDS MS-Rating™ of AuM outperforming 3y-benchmarks1 Funds with 4&5 MS stars2 DWS SMART
Slide 26: Product
03 INVESTMENT GROUP PRODUCT Streamlining product range & increased focus on innovation PRODUCT RATIONALIZATION PRODUCT INNOVATION WHAT’S NEXT? (12)% AuM1 Σ 6.6 €bn # of mutual funds Q3 2019 vs Q1 2018 Xtrackers MSCI USA INTELLIGENT BETA Passive ESG Leaders Equity _ Research enhanced indices Xtracker
Slide 27: Process
03 INVESTMENT GROUP PROCESS Smart integration of ESG criteria into the investment process REGULATORY PERSPECTIVE PROCESS PERSPECTIVE PRODUCT PERSPECTIVE EU COMMISSION DATA RETAIL OFFERING Disclosure Regulation ESG/S-Ray: Various ESG data ESG versions of key strategies, providers and different method
Slide 28: Distribution
04 DISTRIBUTION Dirk Goergen, Head of EMEA Coverage
Slide 29: 'True North' transformation program
04 DISTRIBUTION ‘TRUE NORTH’ TRANSFORMATION PROGRAM Three building blocks to unlock the full potential of Coverage EMEA EXTERNAL FACTORS Search for yield FOCUS INNOVATION DELIVERY ‘Fridays for future‘ Customized solutions Margin pressure Strategic Partners Thought Leadership Organisation Late cycle
Slide 30: Focus: Strategic Partnerships and 'Thematic Landscape'
04 DISTRIBUTION I.I FOCUS Dialogue with clear focus on Strategic Partnerships and ‘Thematic Landscape’ STRATEGIC DIALOGUE / CLIENT COVERAGE ‘THEMATIC LANDSCAPE‘ / CLIENT NEEDS Driving our flows: Strategic Partnerships Intelligent β & High conviction cost-efficient α & Alternatives _ High volume _ Hi
Slide 31: Innovation: Shift of mindset
04 DISTRIBUTION II II INNOVATION Shift of mindset - Bringing together client demand and DWS’ capabilities INNOVATION PROCESS CASE STUDIES: BLUEPRINT FOR WAY FORWARD PAST FUTURE MATCHING CLIENT DEMAND FOR COMBINING HIGHER DIRECT LENDING YIELD AND INCOME IN FIXED INCOME from product from client MATCHI
Slide 32: Innovation: Platforms are key to the future of distribution
04 DISTRIBUTION II II INNOVATION Platforms are key to the future of distribution AM WORLD IS CHANGING DWS FUND PLATFORM IN PROMISING TARGET SEGMENTS POSITION Rising importance of Digitalization Fund Platform capabilities creates a favorable position _ Distribution in the future is significantly _ Mu
Slide 33: Delivery: Changes implemented to 'Win as One Team'
04 DISTRIBUTION III DELIVERY III Changes implemented to ‘Win as One Team’ ORGANIZATION / ‘WHAT’ CULTURE / ‘HOW’ CLIENT CENTRIC ACCOUNTABLE TEAM SPIRIT _ Empowerment of regional heads _ Reduce layers & duplications _ Performance culture _ Integrate investment specialists _ Switch resources to focus a
Slide 34: 2019 results - sustainability of flows
04 DISTRIBUTION 2019 RESULTS - SUSTAINABILITY OF FLOWS Targeted asset classes with consistently positive flows YTD 9M 2019 EMEA FLOWS CUMULATIVE DEVELOPMENT OF NET FLOWS IN 2019 (EMEA) In €bn ACTIVE MULTI-ASSET PASSIVE ALTERNATIVES 4.0 11.1 7.1 Jan Feb Mar Apr May June July Aug Sep Oct Nov Jan Feb M
Slide 35: Operating Platform
05 OPERATING PLATFORM Mark Cullen, Chief Operating Officer
Slide 36: Cost targets delivered & adjusted CIR on track
OPERATING PLATFORM COST TARGETS DELIVERED & ADJUSTED CIR ON TRACK Action across cost drivers KEY ACHIEVEMENTS BREAKDOWN Reorganisation Active workforce management Workforce Internalisation Efficiency Vendor spend reduction Enhanced hiring and offboarding discipline Real estate rationalisation Vendor
Slide 37: Building blocks on the way to a standalone asset manager
05 OPERATING PLATFORM BUILDING BLOCKS ON THE WAY TO A STANDALONE ASSET MANAGER TARGET – ‘STATE OF THE ART’ _ Asset Managers owned by financial institutions with strong Appropriate Efficient investment banking arms typically operate with a higher CIR technology platform operating model compared to se
Slide 38: Efficient operating model
05 OPERATING PLATFORM EFFICIENT OPERATING MODEL Continued focus on organisational efficiency TARGET STATE Fit for purpose Organisational efficiency achieved through: technology platform _ Adoption of functional role framework _ Improvement in internal to external staff ratios through internalization
Slide 39: DWS - Leased offices
05 OPERATING PLATFORM DWS - LEASED OFFICES Continue to build our own identity and drive costs down through an effective DWS real estate strategy TARGET STATE Cost reduction across the real estate platform through: _ Move to DWS premises _ Optimising solutions for smaller locations including promotin
Slide 40: Strategic vendor partnerships
05 OPERATING PLATFORM STRATEGIC VENDOR PARTNERSHIPS Cost transparency as a basis for better decisions TARGET STATE Evergreen programme to build strategic vendor partnerships and internal capability through: NEGOTIATION _ Simplification of the vendor landscape to achieve a more efficient model at a l
Slide 41: Reliance on DB services - journey to standalone
05 OPERATING PLATFORM RELIANCE ON DB SERVICES - JOURNEY TO STANDALONE PRE IPO IPO Q1 2018 2019 FUTURE STATE _ Integration within DB _ Legal entity separation _ Continued insourcing Infrastructure Group’s technology, formulated in of services from DB platform operations and control Relationship Agree
Slide 42: Closing
06 CLOSING Dr Asoka Woehrmann, Chief Executive Officer
Slide 43: DWS is strongly positioned for success in 2020 and beyond
06 CLOSING DWS IS STRONGLY POSITIONED FOR SUCCESS IN 2020 AND BEYOND EFFICIENCY GROWTH & PROTECT Further measures for continued cost control, Grow in targeted areas, and protect “state of the art” asset management against industry pressures systems and processes DELIVERING LONG-TERM SHAREHOLDER VALU
Slide 44: Entrusted to build the best foundation for our clients' future
ENTRUSTED TO BUILD WE ARE THE BEST FOUNDATION INVESTORS FOR OUR CLIENTS’ FUTURE
Slide 45: Q&A
07 Q&A
Slide 46: Cautionary statements
CAUTIONARY STATEMENTS This presentation contains forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about our beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates and pro