Jersey Investment Briefings - November 2010 Re-emerging Asia Jonathan Schiessl November 2010
Jersey Investment Briefings - November 2010 Ashburton Investment Models 1. Back to basics…
Jersey Investment Briefings - November 2010 First & foremost, it's all about the oft forgotten power of compounding. And for compounding to work we need time. We can use compounding to estimate the time it takes to double your return, by using the rule of 72 - The (re)emerging Asian giants So why should we invest in economies like China & India? 48 1.5% 36 2% EUUSChinaIndia Growth/return 8% 8.5% 9 8.5Years taken to double …..and who said decoupling was impossible?
Jersey Investment Briefings - November 2010 Decoupling World Industrial Production comparisons Asia IP vs Developed and Developing markets Asian IP vs World IP and World trade Source: BNP Paribas, CPB
Jersey Investment Briefings - November 2010 Ashburton Investment Models 2. And what about valuations…
Jersey Investment Briefings - November 2010 So lets look at valuations Source: FactSet; BNP Paribas HK$ per share EPS (RHS) PE (LHS) PE (x) 5.0 10.0 15.0 20.0 25.0 30.0 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 MSCI China – 12 month forward PE vs EPS
Jersey Investment Briefings - November 2010 So lets look at valuations PE (x) INR per share EPS (RHS) PE (LHS) Source: FactSet; BNP Paribas MSCI India – 12 month forward PE vs EPS 5.0 7.0 9.0 11.0 13.0 15.0 17.0 19.0 21.0 23.0 25.0 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0
Jersey Investment Briefings - November 2010 Ashburton Investment Models 3. Are indices reflecting these changes?
Jersey Investment Briefings - November 2010 Index composition still living in the past Source: IMF, MSCI Estimated world nominal GDP 2010 (Oct 2010) Composition of MCSI AC World Index (Oct 2010)
Jersey Investment Briefings - November 2010 Source: MSCI Index composition still living in the past Sectoral composition (%) of MSCI China & MSCI India as at 20 October 2010 MSCI ChinaMSCI India Consumer Staples6.35 6.06 Consumer Discretionary6.02 4.76 Energy16.7113.42 Financials36.928.48 Healthcare0.913.69 Industrials7.8710.24 Technology 5.316.66 Materials5.7210.61 Telecoms12.33 0.66 Utilities 1.88 5.42
Jersey Investment Briefings - November 2010 Sectors - the relative game China consumer goods vs. MSCI China - a love-in Source: Bloomberg
Jersey Investment Briefings - November 2010 Sectors - the relative game China industrial goods vs. MSCI China - forgotten love Source: Bloomberg
Jersey Investment Briefings - November 2010 The move to high end manufacturing is a consequence of demographics, the environment and Hu Jintao’s push for a ‘harmonious society’ The government has decreed several newly emerging strategic industries that will receive active support: Aviation Satellites Rail transport Offshore engineering Smart equipment manufacturing We believe China will ultimately “own” this space… Chinese industrials Creating a future for “Made in China”
Jersey Investment Briefings - November 2010 Ashburton Investment Models 4. So how is Ashburton positioning itself?
Jersey Investment Briefings - November 2010 Chindia Main hot spots (% NAV) 0 5 10 15 20 25 AGRI & SOFT COMMODITIES CLEAN & GREEN CONSUMER & LIFESTYLE HARD & SOFT INFRASTRUCTURE INDUSTRIAL ADVANCEMENT REAL ESTATE TECHNOLOGY FINANCIAL INTERMEDIATION OTHER CASH Source: Ashburton
Jersey Investment Briefings - November 2010 Current positioning – Chindia Equity Fund Sector breakdown Country breakdown Top ten holdings% NAV Indian Overseas Bank2.56 Chunghwa Telecom2.50 State Bank of India2.44 China Everbright2.33 Tata Consultancy2.30 China State Const’n2.28 SinoTruck2.15 Sany Heavy Eqpt2.13 ITC Ltd2.12 China Const’n Bank2.10 0 5 10 15 20 25 30 35 BMSCSTCGDCOMCYCEGYFINHCETECUTSCASH FundMSCI Source: Ashburton
Jersey Investment Briefings - November 2010 Tom Zambon November 2010 Performance update
Jersey Investment Briefings - November 2010 % GrowthYTD1 Year3 Year5 Year Multi Asset Funds Ashburton Replica Sterling Asset Management7.4010.804.0523.72 Sector Average7.1410.461.9021.37 Ashburton Multi Asset Aggressive GBP6.0810.36-7.29- Sector Average 7.7712.69-0.07 - Ashburton Multi Asset Balanced GBP8.7912.192.65- Sector Average7.1410.461.90- Ashburton Multi Asset Cautious GBP6.308.551.16- Sector Average 7.199.496.21 - Equity Funds Ashburton Chindia Equity Fund PC17.5528.98-18.96- Chindia Benchmark 12.9822.79-17.85- Performance - as at end October 2010 Source: Lipper
Jersey Investment Briefings - November 2010 Performance Returns vs risk Replica Sterling asset Management Fund and MSCI World Index since 1992 Replica Asset Management Fund Source: Lipper as at 30 Sept 2010 0481216 Volatility Return Ashburton's Replica Sterling Asset Management Fund MSCI World
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