Mark Baribeau Jennison Associates Navigating Global Equities Through
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Transcript of Mark Baribeau Jennison Associates Navigating Global Equities Through
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INVESTMENT PRESENTATION TO
For investment professional use only. Not for redistribution. September 30, 2015
Momentum: Think-tank 2015
Mark B. Baribeau, CFA Managing Director,
Head of Global Equity and
Global Equity Portfolio Manager
The information contained in this presentation is directed only to qualified professionals and eligible institutional investors. Distribution of this information to anyperson other than the person to whom this presentation has been originally delivered, and to such person's advisers, is not permitted. Any reproduction of thesematerials, in whole or in part, or the disclosure or redistribution of any of its contents, without the prior written consent of Jennison, is prohibited. These materials
may contain confidential information and the recipient thereof agrees to maintain the confidentiality of such information.
The information provided herein is being provided at your request for informationa l purposes only. Jennison Associates LLC has not been licensed or registered to
provide investment services in any jurisdiction outside the United States. The information contained in this presentation should not be construed as a solicitation oroffering of investment services by Jennison or a solicitation to sell or a solicitation of an offer to buy any shares of any securities (nor shall any such securities beoffered or sold to any person) in any jurisdiction where such solicitation or offering would be unlawful under the applicable laws of such jurisdiction. This material is
not intended to be relied upon as investment advice and is not a recommendation to adopt any investment strategy.
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1
Navigating Global Equities Through a Maturing Cycle
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2For investment professional use only.
What has happened Since the Global Financial Crises Ended?The China Super Cycle is Ending
Chinese transition from Investment/Export led GDP growth to Consumption led model has
led to a bumpier ride for the global economy
Global Deleveraging has Contributed to Structurally Lower Global GDP Growth
The current economic cycle is mature and the typical inflation increase and capex cycle has yet
to materializeThe Dispersion of Equity Returns has been Elevated
Both sector and geographic return attribution has seen a pattern of growing dispersion since
early 2011
Innovative sectors have benefited from strong organic growth, unique and disruptive business
models, and share gains
More traditional sectors were dampened by low unit growth, excess capacity, and lack of
pricing power
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3For investment professional use only.
The US has Produced Robust Returns Since Early 2011
Total Return %
Developed North America
10.59
United States
11.82
Canada
-3.27
Developed Europe
4.58
Ireland
16.10
Denmark
12.71
Belgium
11.82
Switzerland
8.47
Netherlands
7.24
United Kingdom
4.57
Germany
4.50
France
3.53
Sweden
2.92
Finland
1.38
Spain
1.04
Israel
0.91
Italy
0.35
Norway
-4.05
Austria
-8.93
Portugal
-11.94
Greece
-31.76
Developed Asia / Pacific
2.82
New Zealand
6.35
Japan
4.28
Hong Kong
4.05
Australia
-1.43
Singapore
-1.54
MSCI All Country World Index Geographic Total Returns, January 1, 2011 through August 31, 2015
Total Return %
Emerging Markets
-4.52
Philippines
11.95
Thailand
2.45
China
0.26
Taiwan
-0.29
Qatar
-0.52
Mexico
-1.69
South Africa
-2.33
India
-2.48
Egypt
-2.59
Korea
-3.24
Malaysia
-3.60
Indonesia
-4.04
Czech Republic
-4.29
Poland
-5.46
Morocco
-6.69
Hungary
-7.58
Turkey
-8.44
Russia
-11.59
Peru
-11.75
Colombia
-12.34
Chile
-13.34
Brazil
-18.35
Source: FactSet and MSCI. Past performance does not guarantee future results. See Notes 1, 2, 3 & 4.
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4For investment professional use only.
Four Sectors have Driven the Positive Return of Global
Equity Markets MSCI All Country World Index Sector Returns, January 1, 2011 through August 31, 2015
Total Return %
Health Care 18.10
Consumer Discretionary 11.42
Information Technology 9.80
Consumer Staples 9.76 Telecommunication Services 5.73
Industrials 5.50
Financials 4.81
Utilities 2.16
Energy -3.92
Materials -7.08
Source: FactSet and MSCI. Past performance does not guarantee future results. See Notes 1, 2, 3, 4 & 5.
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5For investment professional use only.
Case Study:
Navigating in an Era of Disruptive TechnologySMARTPHONE REVOLUTION
2 billion people use smartphones with an Internet connection (Strategy Analytics)
From 2009 to 2013, the mobile industry invested $1.8 trillion on improving its infrastructure around the world (Boston Consulting Group)
Download speeds have increased by a factor of 12,000; Data rates have dropped to cents per megabyte. With Wi-Fi, it’s feasible to supplement phone computing power with data-centers
Source: © The Economist Newspaper Limited, London (February 28, 2015). See Note 3.
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Investment Opportunities and Risks from Innovation and
Disruption in the Digital Age
What does innovation, technological disruption, and change mean for equity investors inthe digital age?
Winner take all
First-mover advantage
Accelerated response to shifting consumer behavior is critical
Scientific advances are applied faster
Business models can skip brick and mortar
Longer-duration competitive advantage is sticky with success
Hurdle for business success of well-capitalized later-stage entrants is very high
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China Will Drive the Incremental Opportunity and Risks for
Global Equity Markets China is not in a recession, however, growth has slowed quickly and has surprised to the downside
Chinese investment and export led growth is weak and no longer provides a path forward for higher
Chinese GDP growth
The Chinese consumer remains strong and the economy has only started the transition to a more
consumption led GDP growth phase, however, economic transitions of this type have typically been
disruptive
Deleveraging of corporate balance sheets in China have only started and SOE reform has slowed whilecapacity utilization remains low for all industrial sectors
Recent policy decisions and implementation have been poorly handled across both the FX and domestic
equity markets- elevating the risks associated with economic rebalancing
Residential property prices remain high and remain the key driver of household wealth
Chinese corporate performance and profitability growth is uneven with pockets of strength in the new
economy
See Note 6.
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Notes These materials may not take into account all individual client circumstances, objectives or needs. Jennison makes no representations regarding the suitabilityof any securities, financial instruments or strategies described in these materials for particular clients or prospects.
These materials do not purport to provide any legal, tax or accounting advice.
1 The MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance ofdeveloped and emerging markets. The MSCI ACWI consists of 45 country indices comprising 24 developed and 21 emerging market country indices. The net benchmarkreturn is reported net of reclaimable and non-reclaimable withholding taxes. Withholding tax rates used for the benchmark differ from, and may be higher than, the
withholding tax rates used when calculating the composite return. Index returns are not covered by the report of the independent verifier. The financial indices referencedherein are provided for informational purposes only. When comparing the performance of a manager to its benchmark(s), please note that the manager's holdings and
portfolio characteristics may differ from those of the benchmark(s). Additional factors impacting the performance displayed herein may include portfolio-rebalancing, thetiming of cash flows, and differences in volatility, none of which impact the performance of the financial indices. Financial indices are unmanaged and assumereinvestment of dividends but do not reflect the impact of fees, applicable taxes or trading costs which may also reduce the returns shown. All indices referenced in this
presentation are registered trade names or trademark/service marks of third parties. References to such trade names or trademark/service marks and data is proprietaryand confidential and cannot be redistributed without Jennison's prior consent. Investors cannot directly invest in an index.
2 MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component ofany financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain
from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of anyfuture performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of anyuse made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information
(collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCIParty have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages.
3 Certain third party information in this document has been obtained from sources that Jennison believes to be reliable as of the date presented; however, Jennison cannot
guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as ofthe date of issuance (or such earlier date as reference herein) and is subject to change without notice. Jennison has no obligation to update any or all such third partyinformation; nor do we make any express or implied warranties or representations as to the completeness or accuracy of the third party information.
4 Total Return is the price change of a security or group including dividends accrued over the report period or the "in-portfolio return" which includes only the time period
that each security was in the portfolio.
5 The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI, Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”) and is licensed for use by Jennison Associates LLC “as is”. As of October 1, 2009, Jennison Associates LLC (“Jennison”) does not
reclassify securities classified by S&P/MSCI GICS. Only securities not classified by S&P/MSCI GICS will be classified by Jennison. Therefore, this report may includecompanies that have been classified by S&P/MSCI GICS or classified by Jennison. Companies classified by Jennison are not sponsored by the S&P/MSCI GICSclassification system.
6 The views expressed herein are those of Jennison investment professionals at the time the comments were made. They may not be reflective of their current opinions, are
subject to change without prior notice, and should not be considered investment advice.