Vontobel Fund - Emerging Markets Equity - Investment Commentary 1Q 2020 Quality Growth Boutique - Vontobel Asset ...
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Vontobel Fund –
Emerging Markets
Equity
Investment Commentary 1Q 2020
Quality Growth Boutique
Asset Management
Approved for institutional investors in: AT, CH, DE, ES, FI, FR, GB, IT, LI, LU, NL, NO, PT, SE, SG
(professional investors).
4
Matthew Benkendorf
Managing Director
Market Review
CIO, Lead Portfolio Manager
23 years in industry
21 years with Vontobel
6 Outlook
Brian Bandsma
Executive Director
Portfolio Manager
22 years in industry
18 years with Vontobel
12 Reference Materials
3 Jin Zhang, CFA
Key Takeaways & Performance Executive Director
Portfolio Manager
20 years in industry
4 15 years with Vontobel
Market Review
6
Outlook
8 Igor Krutov
Performance Drivers Executive Director
Director of Research
10 26 years in industry
Portfolio Changes 18 years with Vontobel
11
Portfolio Data
12
Reference Materials
3/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
Key Takeaways
‒ Emerging market equities fell sharply in the first quarter. Large numbers of people working from home have also put
Every country and sector in the MSCI EM index finished lower, pressure on companies’ IT capacity. We expect demand for
many down double digits, as investors reacted to the escalation cloud-based services to continue to increase following the crisis,
of the coronavirus (COVID-19) pandemic. The Vontobel Fund - in turn driving demand for memory and logic chips.
Emerging Markets Equity produced negative absolute returns
for the quarter, in-line with the benchmark. ‒ Investors should consider the effects of the liquidity
squeeze in emerging markets. Countries like Brazil that have a
‒ Our lack of exposure to the energy and materials sectors large percentage of national debt in local currency are in a
helped our relative performance, with energy in particular the better position to survive the short-term effects of a stronger
weakest performer in the benchmark as oil prices fell dollar. Also, developing economies that have maintained fiscal
precipitously. Our holdings in the consumer discretionary sector discipline should be less vulnerable.
also contributed positively to relative returns. On the negative
side, our consumer staples and financials holdings detracted ‒ We remain confident in the medium-to-long term prospects
from relative performance. of our current holdings, despite the near-term volatility. In this
unique environment, a different kind of playbook is required to
‒ Online retailers and entertainment companies have held up assess individual stocks and to evaluate portfolio positioning.
well during the lockdown in China. As restrictions are lifted, we Amid the sometimes indiscriminate selling, we were able to
expect that consumers will have formed new habits and these make some trades that we believe can further upgrade the
businesses will have gained new customers for the long run. quality of the portfolio.
Fund characteristics Rolling 12-month net returns (in %)
Share Class Vontobel Fund – Emerging Markets Equity I 01.04.2019- 01.04.2018- 01.04.2017- 01.04.2016- 01.04.2015-
PERIOD
31.03.2020 31.03.2019 31.03.2018 31.03.2017 31.03.2016
Reference Index MSCI Emerging Markets Index TR
Vontobel Fund –
Currency USD
Emerging Markets -18.71 -4.34 18.78 11.25 -8.12
Inception Date 3/30/2007 Equity I
MSCI Emerging
Reporting Period 3/30/2007 – 3/31/2019 -17.69 -7.28 24.76 17.22 -12.03
Markets Index TR
Performance (%) as of 1Q 2020 (I-share class)
25% 18.44
20% 18.28
15%
10% 3.60 3.77 1.70
5% 0.68
0%
-5% -1.14 -0.37
-10% -2.61 -1.62
-15%
-20%
-25% -18.71 -17.69
-30% -23.47 -23.60 -23.47 -23.60
QTD YTD 2019 1 year 3 years p.a. 5 years p.a. 10 years p.a. Since inception
p.a.
Fund Reference Index
Past performance is no guide to future performance. Performance data does not take account of commission or costs charged when units are issued or
redeemed. The return of the fund may go down as well as up due to changes in rates of exchange between currencies. Source & Copyright: Vontobel Asset
Management.
4/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
Market Review
The fight to contain the coronavirus (COVID-19) and its impact Global Markets FIRST
Performance (%) as of March 31, 2020 QUARTER 1 YEAR
on the global economy dominated market movements in the first
quarter. Stock prices fell sharply as global lockdown measures MSCI All Country World Index -21.37 -11.26
combined with an emerging oil price war to undermine investor MSCI All Country World ex US Index -23.36 -15.57
confidence. The sell-off was broad based with all sectors and -22.83 -14.38
MSCI EAFE (Europe, Australasia, Far East)
countries in the MSCI Emerging Markets Index producing
MSCI Europe Index -24.33 -15.50
negative returns, many in double digits.
MSCI Japan Index -16.79 -6.69
Emerging markets endured declines similar to developed MSCI All Country Asia Pacific ex Japan Index -20.71 -15.24
markets as the virus spread around the globe. China, first into MSCI Emerging Markets Index -23.60 -17.69
the crisis, imposed stringent lockdowns across Hubei province S&P 500 Index -19.60 -6.98
and activity indicators slumped as a result. But towards the end Source: FactSet, MSCI, S&P
of March some green shoots began to appear as restrictions Expressed in US dollars.
were eased. The official national manufacturing PMI rebounded
MSCI Emerging Markets Index
to 52.0 in March from 35.7 in February, indicating that many Sector Performance (%) as March 31, 2020 FIRST
companies were getting back to business. QUARTER 1 YEAR
Health Care -8.49 -8.45
Elsewhere across Asia, countries grappled with soaring case Communication Services -9.61 -8.22
numbers. South Korea implemented measures to boost its Information Technology -17.82 3.17
economy, already flagging from the impact of the trade war Consumer Discretionary -18.05 -8.33
between China and the US, as well as its ongoing dispute with
Consumer Staples -19.76 -15.67
Japan. On the plus side, the country did receive a boost from
improved semiconductor sales as international demand for Utilities -25.99 -23.41
teleconferencing technology surged. Real Estate -26.74 -21.50
Industrials -28.03 -26.46
Materials -30.68 -31.32
Financials -31.07 -27.61
Energy -39.87 -35.80
Source: FactSet, MSCI
Expressed in US dollars.
5/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
“The sell-off was broad based
with all sectors and countries
in the MSCI EM Index
producing negative returns,
many in double digits.”
India, hit later than nearby Southeast Asian countries, brought in In Latin America, the Brazilian and Mexican administrations
lockdown measures on short notice in March to slow the spread drew criticism for their relaxed response to the coronavirus
of the virus across the densely populated country, putting crisis. As the outbreak worsened, Brazil’s central bank unveiled
pressure on the already slowing economy. The government was a large liquidity package, including loans to banks and a cut in
also forced to rescue the nation’s fourth-largest private lender the reserve requirement. Mexico was hit hard by the collapse in
Yes Bank amid a credit crisis that continued to engulf the the global oil price – brought about by a slump in global demand
country’s shadow banking industry. and Saudi Arabia’s decision to increase production following a
row with Russia over cutting output.
6/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
Outlook
Pockets of resilience countries have learned their lessons from past crises and
recognized the need to issue debt in local currency rather than
US dollars. They are therefore in a good position to survive the
‒ Emerging market equities sold off late in the first quarter.
short-term effects of a stronger dollar. Brazil is a good example
While the energy sector was the hardest hit, we saw
with over 90% of its government debt predominantly issued in
indiscriminate selling, including consumer-oriented names,
local currency. Over the long term, many emerging markets
which should be resilient in an economic downturn.
have also learned the importance of fiscal discipline. Major
developing economies that have maintained fiscal discipline
‒ Under these conditions, investors should triple-check their
should be less vulnerable.
investments. There are essentially three types of businesses:
those that will be challenged short term and long term; those
‒ China entered the crisis earlier and has thus been
challenged short term but which should recover, and those
emerging earlier. As a result, some stocks have performed
companies that are less affected short term and which should
relatively strongly. In addition, Chinese bank stocks have
actually do better in the long run. We think investors should
benefited from government policy to extend rather than
focus on the companies that fall in the second and ideally the
foreclose loans. However, we believe that there are better
third categories.
opportunities in other sectors.
‒ Online retailers like Alibaba and entertainment companies
‒ India’s lockdown response may be different in major cities
like Tencent have held up well during the lockdown in China. As
than in rural areas, as many millions still live a hand-to-mouth
restrictions are lifted, we expect that consumers will have
existence. In its favor, the country has a young population with a
formed new habits and these businesses will have gained new
low proportion of over-65 year olds. Investors will need to look
customers for the long run. Large numbers of people working
closely at the long-term prospects of businesses they own.
from home have also put pressure on companies’ IT capacity.
There are strong companies in sectors like IT services, which
We expect demand for cloud-based services to continue to
are less exposed to the domestic market and are providing
increase following the crisis, in turn driving demand for memory
critical support for businesses around the world.
and logic chips made by companies such as SK Hynix and
Taiwan Semiconductor Manufacturing Company (TSMC).
Sincerely,
Emerging Markets Equity Portfolio Management Team
‒ Investors need to consider the short and long-term effects
Matthew Benkendorf, Jin Zhang and Brian Bandsma
of the liquidity squeeze in emerging markets. Many EM
7/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
“We expect demand for
cloud-based services to
continue to increase
following the crisis.”
Jin Zhang explains that many EM countries can survive the short-term effects of a
stronger dollar and major developing economies that have maintained fiscal
discipline should be less vulnerable.
To access the full
2Q 2020 Outlook, listen here.1
Jin Zhang Ben Falcone
Portfolio Manager Head of Client Portfolio
Manager Team
1
https://am.vontobel.com/en/insights/2020-2q-emerging-markets-equity-outlook8/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
Performance Drivers1
During the first quarter, the COVID-19 pandemic roiled global Attribution
markets. Investors focused on the rapid spread of the virus Sector
versus company fundamentals. In the indiscriminate sell-off, the Vontobel Fund - Emerging Markets Equity vs.
MSCI Emerging Markets Index declined 23.6% and our
MSCI Emerging Markets Index
Emerging Markets Equity Fund performed in line.
1.50
Our lack of exposure to the energy and materials sectors helped
1.00
our relative performance. Energy was the weakest sector in the
benchmark as oil prices fell precipitously, a result of the 0.50
increased risk of global recession and the geopolitical battle
0.00
between Saudi Arabia and Russia. We typically avoid energy
and commodity-based businesses due to their lack of earnings -0.50
consistency. Our underweight to industrials also benefitted our
-1.00
performance.
-1.50
Industrials
Real Estate
Health Care
Consumer Discretionary
Financials
Energy
Communication Services
Materials
Consumer Staples
Utilities
Information Technology
The consumer discretionary sector positively contributed to our
relative returns, led by our investments in Yum China and
recent addition Adidas. Yum China operates the KFC and Pizza
Hut chains in China. While the company closed a significant
portion of its stores during the Lunar New Year shutdown, its
online business continued to expand thanks to its investment in
delivery operations over recent years. Stores have started to
reopen, and while many people are still understandably cautious
about dining out, we expect that will eventually change. We Total Effect
believe Yum China will resume business faster than the mom-
and-pop restaurants and small chains due to its strong logistics
Country
capability and consistent customer experience.
Vontobel Fund - Emerging Markets Equity vs.
MSCI Emerging Markets Index
Adidas is a global leader in athletic footwear and apparel,
commanding roughly a 20% market share. The company has a 1.50
strong brand built over 50 years, with approximately 50% of its 1.00
EBIT today generated in emerging markets. Partnerships with
0.50
athletic clubs and associations, coupled with its scale, are
significant competitive advantages. While the extent to which 0.00
the COVID-19 crisis will impact 2020 results is unknown, we -0.50
look past short-term disruption to the long-term prospects. The
-1.00
company also has a strong balance sheet (net cash). We took
advantage of a pullback in Adidas shares to add it to the -1.50
India
Russia
Hong Kong
Korea
Taiwan
South Africa
Indonesia
China
Netherlands
Belgium
portfolio and it delivered positive returns for the first quarter.
On the negative side, our investments in consumer staples
detracted from our relative performance. Ambev, Brazil’s
dominant brewer with a significant presence in non-alcoholic
Total Effect
beverages, underperformed over concerns about a meaningful
slowdown in “on-premise” consumption. (On-premise” refers to Source: FactSet, MSCI
Attributions for the quarter ending March 31, 2020.
sales through bars and restaurants, many of which have been Based on cumulative gross performance (USD) of Vontobel Fund - Emerging
closed due to COVID-19.) Brazil was slowly emerging from a Markets Equity. The gross rates of return are presented before the deduction
deep recession when the virus hit. But, while the virus will of investment management fees, other investment-related fees, and after the
deduction of foreign withholding taxes, brokerage commissions and
impact business and consumer confidence in the near term, we transaction costs. An investor’s actual return will be reduced by investment
believe Ambev is well positioned to navigate through the crisis, advisory fees. Country attribution based on top 5 / bottom 5 countries by total
as it has weathered many crises in its 100-plus year history. effect. Past performance is not indicative of future results. Total Effect:
The net effect of the allocation and selection effects. A single-period sector or
Ambev has an unlevered balance sheet and is a strong cash
country’s geometric total effect is calculated by multiplying the product of one
generator. The company also has strong brands, scale, and a plus the allocation effect (AE/100 + 1) by one plus the selection effect
(SE/100 + 1) and subtracting one from the result before multiplying by 100.
1
Please see full list of top and bottom 5 contributors at the end of this
commentary.9/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
significant long-term opportunity to grow consumption and get the economy moving again – whatever the cost to the
benefit from consumers trading up to more premium brands. businesses themselves.
Anheuser-Busch InBev, the largest beer producer in the world Within financials, our holdings in HDFC Bank and
and Ambev’s parent, likewise detracted from performance due Kasikornbank Public Co. negatively impacted relative
to concerns over how COVID-19 will impact its on-premise performance. HDFC Bank is India’s largest private retail bank
consumption – although its off-premise sales may benefit. The with 5,000+ branches and a strong deposit franchise. It operates
company has some leverage as a result of its large acquisition in an underbanked market where most of its competitors are
of SABMiller in the not-so-distant past. However, we are less efficient state-owned (SOE) banks. HDFC Bank
comfortable with Anheuser-Busch InBev’s balance sheet as it is underperformed over the quarter due to concerns about its
a strong cash generator and does not have any liquidity issues. exposure to consumer credit amid the current challenging
economic environment. The bank has a strong track record of
Mexico’s Fomento Economico Mexicano (Femsa) also dealing with slowdowns, and has strong capital adequacy ratios.
underperformed in the first quarter. Femsa operates a chain of HDFC Bank remains a core holding although we modestly
roughly 20,000 convenience stores under the OXXO brand and trimmed our position in the quarter.
a smaller chain of pharmacies. Additionally, the company is
Latin America’s leading Coca-Cola bottler and has a 14.8% Thailand’s Kasikornbank Public Co. reported quarterly results
stake in Heineken. Femsa reported healthy 4Q19 results and its that were below expectations as the market had anticipated a
stock performance was in-line with the Mexican market. The recovery in net margins that did not materialize. The export-
convenience store industry is fragmented, and the OXXO chain driven Thai economy had already been under pressure over the
represents about 2% of mom-and-pop stores. As a result, we last year as the trade war increased uncertainty. The
believe Femsa has a long runway for growth. The company has coronavirus added to those concerns with worries that the
a strong balance sheet and in our view, is well-positioned to economy will face an additional hit from a decrease in tourism
withstand the crisis – its convenience stores and pharmacies from China (and elsewhere). Kasikornbank deposits are the
are considered essential and remain open. Additionally, it may lowest cost in the system and the bank is well capitalized.
see accelerated consolidation from smaller operators that will Despite underperformance in the quarter, we believe its
have a much harder time surviving. fundamentals remain intact.
On a sector basis, financials was the second most significant On a country basis, China was the most significant detractor
detractor from relative performance. Chinese banks from our relative performance. It was the strongest market in the
outperformed and our lack of exposure negatively impacted benchmark and our lower weight negatively impacted attribution.
relative returns. We have never owned a Chinese bank due to a Our stock selection within China, however, was strong. Online
lack of transparency and our belief that shareholders’ interests gaming/communications companies NetEase and Tencent,
and the government’s interests are not in alignment. We are along with e-commerce company Alibaba, outperformed as
comfortable with this position. Coming out of the crisis, we their businesses were less impacted by housebound
believe Chinese banks will be the government’s policy tools to consumers.10/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
Portfolio Changes1
In the consumer discretionary sector, we bought German-based
Adidas, the second largest athletic brand globally. We find this
Allocation
segment attractive for the leading players as it takes decades of Sector 22.6% Consumer Staples
investment behind branding, marketing and products to develop 20.1% Consumer Discretionary
credibility across sports at a global level. Aside from Nike,
19.7% Financials
Adidas has a massive marketing scale advantage versus other
competitors. We believe the company has sufficient product 19.2% Information Technology
diversification to drive continued growth. 13.5% Communication Services
1.9% Industrials
Also in consumer discretionary, we purchased Chinese-based
Shenzhou International Group Holdings, one of the largest 1.5% Utilities
vertically-integrated knitwear manufacturers globally. The 0.7% Real Estate
company has diversified brand exposure, as well as a 0.0% Materials
geographically diversified client mix and production sites. Given 0.9% Cash & Cash Equivalents
the momentum in the trend towards sportswear and athleisure
(driven by increasing health awareness), leading textile players
like Shenzhou can add high value in the supply chain by helping Country
24.2% China
major sportswear brands reduce costs and production cycle
13.5% India
time, while providing flexible orders and consistent quality 8.4% Taiwan
products. 8.3% Korea
7.0% Netherlands
In the information technology sector, we purchased shares in 6.7% Brazil
four companies: 5.0% Hong Kong
5.0% Mexico
‒ Taiwan’s Win Semiconductors Corporation is the largest 4.4% Belgium
standalone foundry specializing in compound semiconductors, 2.9% Indonesia
which are used in radio frequency (RF) wireless 2.8% South Africa
communications. The company is a significant enabler of 2.6% Thailand
2.3% Singapore
connectivity in the age of 5G and big data, poised for enhanced
1.8% Germany
profitability and solid growth. It also provides optoelectronic 1.5% Malaysia
device fabrication services for optical communication and three- 1.2% Peru
dimension sensing applications. 0.6% Poland
0.5% Vietnam
0.3% United States
‒ Taiwan’s Largan Precision Company is one of the world's 0.9% Cash & Cash Equivalents
leading manufacturers of camera lenses used in mobile phones.
With over 30 years of design and production expertise, the
company generates the industry’s highest revenue and access to equities and fixed income securities, mutual and
profitability from relationships with major global smartphone hedge funds, and other investment products. It is growing faster
OEMs (original equipment manufacturers) including Apple. For than the banking industry as its large platform continues to
most consumers, the camera remains one of the most important attract funds and independent financial advisors.
features of a smartphone and OEMs are allocating more
resources to optical features as a source of differentiation. Thus, In the communication services sector, we entered a position in
Largan Precision should continue to benefit from ongoing Tencent Music Entertainment (TME), the largest music
smartphone camera design and technology improvement. entertainment platform in China. The company represents a
long-term play on China’s music industry, which is in the early
‒ China’s Sunny Optical Technology is a leading optical stages of monetization. TME has a strong competitive position
components manufacturer of camera modules and camera as the beneficiary of Tencent’s ecosystem and as the dominant
lenses used in smartphones as well as a leading vehicle lens operator with the largest scale. Further, the company is able to
maker globally. Similar to Largan Precision mentioned above, extract a higher ROI for its content by leveraging it across
Sunny Optical should continue to benefit from improvements in multiple revenue streams, driving profitability and better margins
camera design and technology. It should also benefit from an than the competition.
increased focus on safety and driving experience by vehicles.
To reallocate capital to better opportunities, we exited our
positions in Indian consumer staples company ITC Limited,
‒ XP Investimentos is a leading Brazilian wealth
Indian communications services company Bharti Infratel and
management company that provides brokerage and wealth
Colombian financials company Bancolombia.
management services. Through its platform, investors get
Sector and country allocations are as of March 31, 2020 and are based on the Vontobel Fund – Emerging Markets Equity.
1
Purchases provided are the new purchases with positions greater than 50 basis points in the Vontobel Fund – Emerging Markets Equity for the period. Sells
provided are all names that were fully liquidated in the Vontobel Fund – Emerging Markets Equity for the period. The holdings may not represent all of the
securities purchased, sold, or recommended for advisory clients.11/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
Portfolio Data
Top 10 Holdings 1 Top 5 Contributors1 by Security (3 Months)
% OF AVERAGE CONTRIBUTION
SECTOR COUNTRY PORTFOLIO SECTOR WEIGHT (%) TO RETURN (%)
Alibaba Group Consumer Consumer
China 7.4 adidas AG 0.28 0.26
Holding Ltd. Discretionary Discretionary
Communication Communication
Tencent Holdings Ltd. China 7.2 Tencent Holdings Ltd. 6.01 0.18
Services Services
Taiwan Semiconductor Information
Taiwan 6.5 Communication
Manufacturing Co., Ltd. Technology NCsoft Corporation 2.36 0.00
Services
Anheuser-Busch InBev
Consumer Staples Belgium 4.4 Bancolombia S.A. Financials 0.08 0.00
SA/NV
Information Win Semiconductors Information
SK hynix Inc. Korea 4.3 0.13 -0.02
Technology Corp. Technology
Unilever NV Consumer Staples Netherlands 4.2
Tata Consultancy Information
Bottom 5 Contributors1 by Security (3 Months)
India 3.4
Services Limited Technology AVERAGE CONTRIBUTION
HDFC Bank Limited Financials India 3.1 SECTOR WEIGHT (%) TO RETURN (%)
Yum China Consumer HDFC Bank Limited Financials 3.80 -1.57
China 2.9
Holdings, Inc. Discretionary Consumer
Fomento Economico Ambev SA 2.79 -1.44
Consumer Staples Mexico 2.9 Staples
Mexicano SAB de CV Housing Development
Total 46.3 Finance Corporation Financials 2.62 -1.09
Limited
Fomento Economico Consumer
3.00 -1.07
Characteristics Mexicano SAB de CV Staples
Itau Unibanco Holding
Financials 1.73 -0.93
VONTOBEL EM1 MSCI EM S.A.
Market Capitalization (US$ bn), 116.4
119.2
weighted average
P/E - Forecast 12-month, Top 5 Contributors1 by Security (1 Year)
15.6 11.0
weighted harmonic average
AVERAGE CONTRIBUTION
Dividend Yield (%) 2.2 3.2 SECTOR WEIGHT (%) TO RETURN (%)
Communication
NetEase, Inc. 2.46 0.48
5 Yr Historical EPS Growth (%) 15.7 14.7 Services
Alibaba Group Holding Consumer
Return on Equity, 5.60 0.47
20.1 15.6 Ltd. Discretionary
weighted average (%) Taiwan Semiconductor Information
3.49 0.42
Manufacturing Co., Ltd. Technology
Communication
Risk Statistics (5 Year) Tencent Holdings Ltd.
Services
4.46 0.39
Consumer
VONTOBEL EM 2 MSCI EM adidas AG 0.07 0.26
Discretionary
Annualized Alpha -0.9 –
Beta 0.8 1.0 Bottom 5 Contributors1 by Security (1 Year)
Sharpe Ratio -0.2 -0.1 AVERAGE CONTRIBUTION
SECTOR WEIGHT (%) TO RETURN (%)
Annualized Standard Deviation 15.1 17.6 Zee Entertainment Communication
1.35 -1.33
Enterprises Limited Services
HDFC Bank Limited Financials 4.69 -1.27
Consumer
Ambev SA 3.69 -1.18
Staples
Kasikornbank Public
Financials 1.86 -1.05
Co. Ltd.
Fomento Economico Consumer
3.29 -0.96
Mexicano SAB de CV Staples
Portfolio data as of March 31, 2020.
Source: FactSet. All returns are expressed in US dollars.
1
Based on the Vontobel Fund – Emerging Markets Equity. The securities identified and described do not represent all of the securities purchased, sold or
recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. For more information on
the calculation methodology or a complete list of holdings which contributed to overall performance during the period, please contact a Vontobel representative
at ClientServices@vontobel.com.
2
Based on gross performance of the Vontobel Fund – Emerging Markets Equity. The fund’s gross rates of return are presented before the deduction of
investment management fees, other investment-related fees, and after the deduction of foreign withholding taxes, brokerage commissions and transaction costs.
An investor’s actual return will be reduced by investment advisory fees.
Past performance is not indicative of future results.12/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel
Reference Materials
BLOG 1 About Us
Coronavirus – 3 steps through chaos
Vontobel Asset Management’s Quality Growth Boutique is the
New York-based global investment management business
CONFERENCE CALLS 2 dedicated exclusively to managing global and regional long-only
CIO Matt Benkendorf and CPM Doug Bennett conference call equity portfolios. We seek to invest in high-quality growth
replay and summary Coronavirus: A Different Playbook companies with the goal of outperforming the benchmark, with
PM Ramiz Chelat, PM Jin Zhang, and CPM Doug Bennett less risk, over a full market cycle. Our goal is not unique – what
conference call replay and summary Coronavirus: How to Stay sets us apart is our execution. One team of experts consistently
the Course in the Global Equity Markets. applies the same approach to all our global equity products.
Vontobel Asset Management is a global multi-boutique asset
manager with Swiss roots and investment teams in Zurich, New
Subscribe to our Equity Research at Work
York and London. Vontobel Asset Management is one of the
podcast on your favorite player:
three business units of Vontobel Holdings AG.
Follow us on:
1
https://am.vontobel.com/en/insights/coronavirus-3-steps-through-chaos
2
https://am.vontobel.com/en/insights/coronavirus-a-different-playbook
https://am.vontobel.com/en/insights/how-to-stay-the-course-in-the-equities-markets13/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel Opportunities1 – “Quality growth” investment style aimed at the preservation of capital. – Invests primarily in securities of companies that have relatively high long-term earnings growth and above-average profitability. – Broad diversification across numerous securities. – Possible extra returns through single security analysis and active management. – Gains on invested capital possible. – Use of derivatives for hedging purposes may increase subfund’s performance and enhance returns. – Price increases of investments based on market, sector and company developments are possible. – Gains through participating in the growth potential of emerging markets are possible. Risks – Investment style may lead to more heavily concentrated positions in individual companies or sectors. – Limited participation in the potential of single securities. – Success of single security analysis and active management cannot be guaranteed. – It cannot be guaranteed that the investor will recover the capital invested – Derivatives entail risks relating to liquidity, leverage and credit fluctuations, illiquidity and volatility. – Price fluctuations of investments due to market, industry and issuer linked changes are possible. – Investments in emerging markets may be affected by political developments, currency fluctuations, illiquidity and volatility. 1 The listed opportunities and risks concern the current investment strategy of the fund and not necessarily the current Portfolio. Subject to change, without notice, only the current prospectus or comparable document of the fund is legally binding. Disclaimer This marketing document was produced for institutional clients, for distribution in AT,CH,DE,ES,FI,FR,GB,IT,LI,LU,NL,NO,PT,SE,SG (professional investors). This document is for information purposes only and does not constitute an offer, solicitation or recommendation to buy or sell shares of the fund/fund units or any investment instruments, to effect any transactions or to conclude any legal act of any kind whatsoever. Subscriptions of shares of the fund should in any event be made solely on the basis of the fund's current sales prospectus (the Sales Prospectus), the Key Investor Information Document (KIID), its articles of incorporation and the most recent annual and semi-annual report of the fund and after seeking the advice of an independent finance, legal, accounting and tax specialist. This document is directed only at recipients who are institutional clients such as eligible counterparties or professional clients as defined by the Markets in Financial Instruments Directive 2014/65/EC (MiFID) or similar regulations in other jurisdictions.In particular, we wish to draw your attention to the following risks: Investments in the securities of emerging-market countries may exhibit considerable price volatility and – in addition to the unpredictable social, political and economic environment – may also be subject to general operating and regulatory conditions that differ from the standards commonly found in industrialized countries. The currencies of emerging-market countries may exhibit wider fluctuations. Past performance is not a reliable indicator of current or future performance. Performance data does not take into account any commissions and costs charged when shares of the fund are issued and redeemed, if applicable. The return of the fund may go down as well as up due to changes in rates of exchange between currencies. The value of the money invested in the fund can increase or decrease and there is no guarantee that all or part of your invested capital can be redeemed. Interested parties may obtain the above- mentioned documents free of charge from the authorized distribution agencies and from the offices of the fund at 11-13 Boulevard de la Foire, L-1528 Luxembourg, the representative in Switzerland: Vontobel Fonds Services AG, Gotthardstrasse 43, 8022 Zurich, the paying agent in Switzerland: Bank Vontobel AG, Gotthardstrasse 43, 8022 Zurich, the paying agent in Germany: B. Metzler seel. Sohn & Co. KGaA, Grosse Gallusstrasse 18, 60311 Frankfurt/Main, the paying agent in Liechtenstein: Liechtensteinische Landesbank AG, Städtle 44, FL-9490 Vaduz, the paying agent in Austria Erste Bank der oesterreichischen Sparkassen AG, Graben 21, A-1010 Vienna. Refer for more information on the fund to the latest prospectus, annual and semi-annual reports as well as the key investor information documents (KIID). These documents may also be downloaded from our website at vontobel.com/am. Please note that certain subfunds are exclusively available to qualified investors in Andorra or Portugal. The KIID is available in Finnish. The KIID is available in Swedish. The KIID is available in Norwegian. The Fund and its subfunds are included in the register of Netherland's Authority for the Financial Markets as mentioned in article 1:107 of the Financial Markets Supervision Act (Wet op het financie¨le toezicht). Refer for more information regarding subscriptions in Italy to the Modulo di Sottoscrizione. For any further information: Vontobel Asset Management S.A., Milan Branch, Piazza degli Affari 3, 20123 Milano, telefono: 0263673444, e-mail clientrelation@vontobel.it. The KIID is available in French. The fund is authorized to the commercialization in France since 09-JAN-04. Refer for more information on the funds to the Document d’Information Cle´ pour l’Investisseur (DICI). In Spain, funds authorized for distribution are recorded in the register of foreign collective investment companies maintained by the Spanish CNMV (under number 280). The KIID can be obtained in Spanish from Vontobel Asset Management S.A., Spain Branch, Paseo de la Castellana, 95, Planta 18, E-28046 Madrid or electronically from atencionalcliente@vontobel.es. The funds authorized for distribution in the United Kingdom can be viewed in the FCA register under the Scheme Reference Number 466625. This information was approved by Vontobel Asset Management SA, London Branch, which has its registered office at Third Floor, 22 Sackville Street, London W1S 3DN and is authorized by the Commission de Surveillance du Secteur Financier (CSSF) and subject to limited regulation by the Financial Conduct Authority (FCA). Details about the extent of regulation by the FCA are available from Vontobel Asset Management SA, London Branch, on request. The KIID can be obtained in English from Vontobel Asset Management SA, London Branch, Third Floor, 22 Sackville Street, London W1S 3DN or downloaded from our website vontobel.com/am. The fund and its subfunds are not available to retail investors in Singapore. Selected subfunds of the fund are currently recognized as restricted schemes by the Monetary Authority of Singapore. These subfunds may only be offered to certain prescribed persons on certain conditions as provided in the “Securities and Futures Act”, Chapter 289 of Singapore. The fund is not authorized by the Securities and Futures Commission of Hong Kong. It may only be offered to those investors qualifying as professional investors under the Securities and Futures Ordinance. The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution and if you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This information was approved by Vontobel Asset Management Asia Pacific Ltd., which has its registered office at 1901 Gloucester Tower, The Landmark 15 Queen’s Road Central, Hong Kong. The MSCI data is for internal use only and may not be redistributed or used in connection with creating or offering any securities, financial products or indices. Neither MSCI nor any other third party involved in or related to compiling, computing or creating the MSCI data (the MSCI Parties) makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and the MSCI Parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to such data. Without limiting any of the foregoing, in no event shall any of the MSCI Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.This document is not the result of a financial analysis and therefore the “Directives on the Independence of Financial Research” of the Swiss Bankers Association are not applicable.
14/14 Investment Commentary / Vontobel Fund – Emerging Markets Equity / 1Q 2020 Vontobel Vontobel Asset Management AG, its affiliates and/or its board of directors, executive management and employees may have or have had interests or positions in, or traded or acted as market maker in relevant securities. Furthermore, such entities or persons may have executed transactions for clients in these instruments or may provide or have provided corporate finance or other services to relevant companies. Although Vontobel Asset Management AG (Vontobel) believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained in this document. Except as permitted under applicable copyright laws, none of this information may be reproduced, adapted, uploaded to a third party, linked to, framed, performed in public, distributed or transmitted in any form by any process without the specific written consent of Vontobel. To the maximum extent permitted by law, Vontobel will not be liable in any way for any loss or damage suffered by you through use or access to this information, or Vontobel’s failure to provide this information.Our liability for negligence, breach of contract or contravention of any law as a result of our failure to provide this information or any part of it, or for any problems with this information, which cannot be lawfully excluded, is limited, at our option and to the maximum extent permitted by law, to resupplying this information or any part of it to you, or to paying for the resupply of this information or any part of it to you. Neither this document nor any copy of it may be distributed in any jurisdiction where its distribution may be restricted by law. Persons who receive this document should make themselves aware of and adhere to any such restrictions. In particular, this document must not be distributed or handed over to US persons and must not be distributed in the USA. Vontobel Asset Management Gotthardstrasse 43, 8022 Zürich Telefon +41 58 283 71 50 Telefax +41 58 283 71 51
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