Ausbil Active Dividend Income Fund - Active ETF · ASX:DIVI
Ausbil Active Dividend Income Fund - Active ETF — Ausbil Investment Management — Non-Deal Roadshow (May 2017)
63 slides from Ausbil Active Dividend Income Fund - Active ETF's roadshow presentation, May 2017
Slide 1: Investment Roadshow 2017
Investment Roadshow 2017 Seeing clarity in an uncertain world May 2017
Slide 2: Investment Roadshow 2017 – Mark Knight
Investment Roadshow 2017 Seeing clarity in an uncertain world May 2017 Mark Knight – Head of Distribution
Slide 3: Investment Performance
Investment Performance Strong results over the long term March 2017 3 months (% pa) 6 months (% pa) 1 year (% pa) 5 years (% pa) Inception* (% pa) Return Excess Return Excess Return Excess Return Excess Return Excess Active Equity 5.3 +0.6 11.3 +1.4 20.4 +0.2 12.5 +1.6 11.2 +3.0 Geared Equity 10.2 +
Slide 4: Candriam Sustainable Global Equity Fund
Candriam Sustainable Global Equity Fund Sustainability + Alpha delivery 4
Slide 5: MacKay Shields Unconstrained Bond Fund
MacKay Shields Unconstrained Bond Fund Seeking the highest absolute, risk adjusted return • Adds alpha through top-down asset allocation and Risk and Return Outcomes bottom-up credit research (Annualized, Over a Full Market Cycle) • Dynamic asset allocation: Because different fixed income sectors ou
Slide 6: Our speakers
Our speakers Jim Chronis Paul Xiradis Måns Carlsson-Sweeny Chief Economist Executive Chairman Head of ESG Research Head of Equities 6
Slide 7: Investment Roadshow 2017 – Jim Chronis
Investment Roadshow 2017 Seeing clarity in an uncertain world May 2017 Jim Chronis– Chief Economist
Slide 8: Reflation theme
Reflation theme Economic outlook • Ausbil early to the reflation theme, Q2 2016 • Synchronised global growth, inflation higher • Rising bond yields and cash rates • Expansionary fiscal policy • Risks − populism − protectionism − military action 8
Slide 9: Reflation – global
Reflation – global Synchronised growth, accelerating since Q2 2016 9
Slide 10: Reflation – global
Reflation – global Rising bond yields, long term trend reversed 10
Slide 11: US – robust growth
US – robust growth Accelerating GDP >2.3% and at full employment 11
Slide 12: US – robust growth
US – robust growth Business optimism to drive capital investment 12
Slide 13: US – robust growth
US – robust growth Diminishing labour spare capacity supports higher wages 13
Slide 14: Europe – expanding
Europe – expanding Business sentiment drives activity, GDP best in 7 years 14
Slide 15: China – committed to 6.5% GDP
China – committed to 6.5% GDP Growth recovery, infrastructure investment driving activity 15
Slide 16: China – committed to 6.5% GDP
China – committed to 6.5% GDP Accelerating input prices drive global inflation higher 16
Slide 17: Japan – stimulus driving growth and inflation
Japan – stimulus driving growth and inflation Profile evolving to be the best since 2006 17
Slide 18: Australia – trend growth
Australia – trend growth Lower unemployment for the year ahead 18
Slide 19: Australia – trend growth
Australia – trend growth Household debt at record high, fuelled by cheap money 19
Slide 20: Australia – trend growth
Australia – trend growth Terms of trade surges on commodities, pay rise for the economy Definition: Terms of trade is the ratio of the price of exports to the price of imports. An increase in the terms of trade means that fewer exports are needed to pay for a given volume of imports. This means that
Slide 21: Australia – trend growth
Australia – trend growth National income recovery will lead to modest rate hikes Definition: RNDI is an adjusted measure of the volumes of goods and services that Australian residents have command over. RNDI takes into account changes in the terms of trade (the price of imports relative to the price
Slide 22: Reflation theme – key economic message
Reflation theme Key economic message • Accelerating synchronised global growth • Cash rates and bond yields higher − US ‘Quantitative Tightening’ to commence Q417 • Currency – average US78c in 2017 and US80c in 2018 • Expansionary fiscal policy − Trump’s tax and $1tr infrastructure spend compounds r
Slide 23: Investment Roadshow 2017 – Paul Xiradis
Investment Roadshow 2017 Seeing clarity in an uncertain world May 2017 Paul Xiradis – Executive Chairman / Head of Equities
Slide 24: Australian equity earnings
Australian equity earnings EPS growth was scarce 25% EPSg (%) 20% 15% 2012 10% 2014 5% 0% 2013 2015 -5% -10% 2016 -15% 2009 2010 2011 2012 2013 2014 2015 2016 Source: Ausbil, Morgan Stanley 24
Slide 25: Best reporting season in 7 years
Best reporting season in 7 years EPS growth finally improving 16% EPSg (%) 2017 14% 12% 10% 8% 6% 4% 2% 0% 2014 2015 2016 Source: Ausbil, Morgan Stanley 25
Slide 26: Australian equity market
Australian equity market Valuations: 12-month forward P/E 28 ASX 200 Resources Defensives + REITs 26 24 22 20 18 16 14 12 10 8 Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Mar 17 Source: Credit Suisse, Thomson Reuters, Datastream 26
Slide 27: Portfolio relative positioning
Portfolio relative positioning Ausbil was set for reflation 20% Active weight vs S&P/ASX 300 Index 15.1% 15% 14.2% 12.2% 11.4% 10.6% 10% 5.0% 5% Bond Proxies 0% Resources Offshore Earners -5% -7.1% -10% -11.4% -12.4% Mar-16 Nov-16 Mar-17 -15% Source: Ausbil Investment Management, Bloomberg 27 Bond P
Slide 28: Australian equity performance
Australian equity performance Strong outcome despite risks 58,000 S&P/ASX 300 Accumulation Index Market: +15.5% May 2016 56,000 54,000 52,000 50,000 48,000 US election 46,000 44,000 42,000 40,000 Jun-15 Jun-16 Mar-15 Mar-16 Mar-17 Dec-14 Dec-15 Dec-16 Sep-14 Sep-15 Sep-16 Source: Ausbil, Bloomberg.
Slide 29: Key themes
Key themes Growth, Reflation, Earnings • Synchronised global strongest in a decade • Inflation trending higher – Ausbil early to the reflation theme • Cash rates and bond yields higher • Further earnings growth expected • Market will focus on fundamentals once geopolitical risk subsides 29
Slide 30: Market drivers for FY2018
Market drivers for FY2018 Outlook for key sectors • Financials – Banks and housing • Resources – Materials and Energy • Global interest rate sensitives – Bond proxies – Beneficiaries of rising interest rates • Industrials – Offshore earners – Disruptors • Capital management 30
Slide 31: Financials: Performance of Bank sector
Financials Performance of Bank sector 220 180 S&P/ASX 300 Accum Banks Index (LHS) Neutral 175 Banks NPAT (ANZ, BEN, BOQ, CBA, NAB, WBC) (RHS) 170 200 165 160 180 155 Overweight Banks 150 160 145 31 Jul 2016 to 28 Feb 2017: +16.5% 140 140 135 130 125 120 120 115 100 110 105 80 100 Dec-09 Jun-10 Dec-1
Slide 32: Banks
Banks P/E Relative to Industrials bounce from 2008 levels 1.10 Banks Relative P/E LTA 1.05 1.00 0.95 Neutral 0.90 Banks 0.85 Overweight 0.80 Banks 2008 0.75 2006 2011 2016 Source: UBS (FactSet) 32
Slide 33: Housing overheating..?
Housing overheating..? Mortgage repayment share of income 36 36 % Flat/falling housing prices % Mortgage repayment share of income (LHS)* 32 32 if rates +100bp * 28 28 24 24 Average 20 20 16 16 * Required mortgage repayments on a new 80% LVR loan on median-priced home, as % of pre-interest household
Slide 34: Banks well capitalised
Banks well capitalised Bad and doubtful debts remain low 12% 1.00% Average Tier 1 capital ratio (ANZ, BEN, BOQ, CBA, NAB, WBC) (LHS) 11% Average loan loss as % of total loans (ANZ, BEN, BOQ, CBA, NAB, WBC) (RHS) 10% 0.80% 9% 8% 0.60% 7% 6% 5% 0.40% 4% 3% 0.20% 2% 1% 0% 0.00% 2000 2001 2002 2003 2004
Slide 35: Metals & Mining
Metals & Mining Earnings strengthen 50% 6000 S&P/ASX 300 Metals & Mining Index 30% 5500 5000 10% FY 2017 4500 FY 2016 -10% 4000 3500 -30% 3000 -50% 2500 -70% 2000 1500 -90% Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 J
Slide 36: Significant free cash flow generation
Significant free cash flow generation FY2017: A$35b FCF, good for Australian terms of trade $40 40 Free Cash Flow A$b (BHP RIO FMG S32) (LHS) Average P/E ratio (RHS) $35 35 $30 30 $25 25 $20 $15 20 $10 15 $5 10 $- 5 $(5) $(10) 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2
Slide 37: China supply constraints
China supply constraints Reducing inefficient/excess capacity Source: Ausbil, CLSA 37 This is a picture of an illegal steel furnace in a residential area in China.
Slide 38: Resources
Resources Commodities expected to stabilise from improving outlook 300 Bloomberg Commodity ex-Precious Metals Index 250 200 150 100 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Ausbil, Bloomberg 38
Slide 39: The case for oil
The case for oil Oil demand vs supply and WTI oil price 4 150 Oil excess demand/supply (mmbpd) (LHS) WTI oil price (US$/bbl) (RHS) 3 130 Demand > Supply 2 110 1 90 0 70 -1 50 -2 Demand < Supply 30 -3 -4 10 Dec-93 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Dec-11 Dec-13 Dec-15 Source: Au
Slide 40: Global interest rate sensitives
Global interest rate sensitives Bond proxies: structural shift underway 1550 3.75% S&P/ASX 300 Property Index (LHS) Reduced Forecast 3.50% US 10yr (RHS) bond proxies 1500 in Aug-2016 3.25% 1450 3.00% 1400 2.75% 2.50% 1350 2.25% 1300 2.00% 1.75% 1250 1.50% 1200 1.25% 1150 1.00% Jan-15 Jul-15 Jan-16 J
Slide 41: Global interest rate sensitives
Global interest rate sensitives Beneficiaries of rising interest rates $16 3.75% CPU ($ LHS) QBE ($ LHS) US10yr (% RHS) 3.50% $15 3.25% $14 3.00% $13 2.75% 2.50% $12 2.25% $11 2.00% 1.75% $10 1.50% $9 1.25% $8 1.00% Jan-16 Jul-16 Jan-17 Jul-17 Oct-16 Oct-17 Apr-16 Apr-17 Source: Ausbil, Bloomberg 41
Slide 42: Earnings and Earnings Revisions drive share prices
Earnings and Earnings Revisions drive share prices Offshore earners – significant earnings upgrades 145 $1.20 Price (LHS) EPS (RHS) 140 135 $1.15 130 125 120 $1.10 115 110 $1.05 105 100 95 $1.00 90 85 80 $0.95 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Equally weighted price performance (LHS) and FY2
Slide 43: Earnings and Earnings Revisions drive share prices
Earnings and Earnings Revisions drive share prices Brambles active positioning $14.00 $0.46 Price (LHS) A$ EPS (RHS) US$ Partial Sell $13.50 $0.45 $13.00 $0.44 $12.50 $12.00 $0.43 Buy $11.50 $0.42 $11.00 $10.50 Partial Sell $0.41 $10.00 $0.40 $9.50 Buy $9.00 $0.39 Jan-16 Feb-16 Mar-16 Apr-16 May-16
Slide 44: Retail disruption
Retail disruption “Your margin is my opportunity” – Amazon CEO Jeff Bezos Billion $250 15% Amazon revenue (US$b) (LHS) 14% Amazon EBITDA margin (%) (RHS) Average competitor EBITDA margin (%) (RHS) * 13% $200 12% 11% $150 10% 9% $100 8% 7% $50 6% 5% $- 4% 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 45: Retail disruption
Retail disruption Will the US experience repeat here in Australia? Amazon is bigger than most brick and mortar retailers put together Stock Price Return Dec 2006 to Apr 2017 $355.9B Amazon +2,200% Sears -89% JC Penny -93% $297.8B Nordstrom -4% Khol's -42% Macy's -23% Best Buy 5% Target -3% Walmart +
Slide 46: Retail disruption: CODB margin
Retail disruption “Your margin is my opportunity” – Amazon CEO Jeff Bezos 60% High margin High cost 50% Kathmandu 40% BCF & Rays Outdoors Myer Rebel & Amart Sports CODB margin Target 30% Big W Supercheap Harvey Norman 20% Coles Kmart JB Hi-Fi Woolworths 10% Flight Centre 0% 0% 10% 20% 30% 40% 50% 60
Slide 47: Capital management
Capital management Share buybacks total more than $8bn in 2017 and 2018 2017 2018 $5.1bn $3.3bn 47
Slide 48: Ausbil Australian Active Equity Fund
Ausbil Australian Active Equity Fund Key portfolio themes and holdings Offshore Earners Beneficiaries of rising interest rates Synchronised global growth Capital management 48
Slide 49: Emerging Leaders opportunities
Emerging Leaders opportunities Key portfolio themes and holdings Offshore Earners Beneficiaries of rising interest rates Synchronised global growth 49
Slide 50: Summary
Summary Key messages • Synchronised global growth sustained by fiscal spend • Interest rates and inflation higher • FY2018 will deliver positive earnings growth • Capital management to again feature in FY18 • Fundamentals overcome geopolitical uncertainty 50
Slide 51: Investment Roadshow 2017 – Måns Carlsson-Sweeny
Investment Roadshow 2017 Seeing clarity in an uncertain world May 2017 Måns Carlsson-Sweeny– Head of ESG Research
Slide 52: Evolution of responsible investment
Evolution of responsible investment Better informed investment decisions Responsible Investment Socially responsible ESG integration / Ethical investment investment sustainable investment 52
Slide 53: Why ESG integration?
Why ESG integration? Increasingly important to dig deeper in research • ESG can capture downside risk / generate short ideas. • ESG makes better informed decision making 53
Slide 54: What are ESG drivers?
What are ESG drivers? Examples • Environmental: Environmental risk management, CO2 and other greenhouse gas emissions, EPA compliance, climate change adaptation / risk mitigation… • Social: Corporate culture, supplier relationships, customer relationships, human capital development, occupational hea
Slide 55: ESG elements in the Australian equities process
ESG elements in the Australian equities process Capture risks and opportunities from ESG factors 55
Slide 56: ESG Integration
ESG Integration Better informed investment decisions Direct impact – earnings revisions • Examples: food safety standards (product recalls), safety risk management (loss of key customers) Indirect impact – quality management • Issues in one area could indicate hidden risks. ESG = proxy for managemen
Slide 57: Direct impact – earnings revisions
Direct impact – earnings revisions Example: food safety recall 57
Slide 58: Indirect impact
Indirect impact ESG serves as a proxy for quality of management • ESG research covers a wide range of factors – Not all have a direct earnings impact – Collectively, can serve as a proxy for management quality • Practical applications: premium / discount multiples, reinforcement of an investment cas
Slide 59: Assessment of earnings sustainability
Assessment of earnings sustainability Payday Lending Industry 59
Slide 60: Active ownership and engagement
Active ownership and engagement Better investment outcomes Example: ethical sourcing − Indicative of management quality − Brand damage and loss of sales − Earnings sustainability and productivity gains Photo from ESG field trip: garment factory in Guangzhou, China 2016 60
Slide 61: Active ownership
Active ownership Field trips and engagement Rana Plaza building collapse (April 2013), which killed at least 1,138 workers. 61
Slide 62: Summary
Summary Key ESG messages • Ethical investment evolving to ESG integration • ESG integration makes better informed investment decisions • Company value is driven by intangible factors • ESG analysis captures intangible factors and indirect earnings risks • Engagement results in better investment and
Slide 63: Disclaimer
DISCLAIMER Important information for presentation recipients The information contained in this presentation has been prepared for general use only and does not take into account your personal investment objectives, financial situation or particular needs. Before you make any decision about whether t
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