EASTSPRING CHINA A SHARE GROWTH FUND
December 2020
eastspring.us/offshoreadvisor 2 LEADING ASSET MANAGER IN ASIA LEVERAGING OUR ASIAN DNA TO CAPITALISE ON GLOBAL OPPORTUNITIES
1994 USD 248bn 300+ INVESTMENT One of the DEEP INSIGHTS Founded 1994 in Managing USD 248bn PROFESSIONALS^ LARGEST Singapore (HQ) and assets on behalf of INTO ASIA Unrivalled on-the-ground Our investment teams' 100% owned by institutional and individual ASIAN ASSET investment presence in Asia deep understanding of Prudential plc (UK) investors globally MANAGERS Asian markets, provides us and a major Asian Fixed with a unique perspective United Kingdom Income player for global investments Luxembourg Japan United States
South Korea China* India* Hong Kong* Taiwan Thailand* Vietnam
Malaysia Singapore Indonesia
Sales and Investment office Sales Office Joint venture
Source: Eastspring Investments. As at 31 December 2020. ^Including joint ventures and sales offices in US, UK and Luxembourg. AUM size by contracted sales. Note: bn = billion.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 3 EXTENSIVE LOCAL PRESENCE IN ASIA ONSHORE ASSET MANAGEMENT ACROSS ASIA
Singapore Taiwan Hong Kong Indonesia Malaysia Vietnam Thailand China India Japan Korea (onshore*) (onshore*) (onshore*)
Aberdeen Standard Alliance Bernstein Allianz A.M. BNP Paribas A.M. DWS A.M. Fidelity Franklin Templeton HSBC Global A.M. JP Morgan A.M. Manulife A.M. Schroders
Market Top 10 Market Position No Presence Presence
Sources: Singapore and Hong Kong (Morningstar), Malaysia (Lipper), Thailand (Association of Investment Management Companies), Korea (Korea Financial Investment Association), India (Association of Mutual Funds in India), Japan (Investment Trusts Association, Japan), Taiwan (Securities Investment Trust & Consulting Association of R.O.C.), China (Wind), Indonesia (Otoritas Jasa Keuangan), Vietnam (State Securities Commission of Vietnam). All markets as of June 2020. Eastspring JVs include HK, India and China. Japan reflects Publicly Offered Investment Trusts market presence. China reflects public mutual funds market presence. Vietnam reflects open-ended mutual funds market presence only. *Market presence based on whether the AMCs offer onshore domiciled mutual funds. Market ranking based on 100% shareholdings. 1Combined market landscape of Franklin Templeton and Legg Mason as of June 2020, in consideration of the acquisition plans announced in Feb 2020.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 4 WHY EASTSPRING?
Pursuit of alpha through a differentiated, DIVERSITY OF Asian lens OUR PEOPLE AND PERSPECTIVES History of operating in some of the most diverse, illiquid and inefficient markets positions us well for emerging and developed markets investment 56% 40% of female Alignment of interests and history of of our workforce representation in our investing alongside our clients is female Executive Management Committee
Commitment of seed capital to innovate new strategies and willingness to 27 customize solutions for clients nationalities Risk management is embedded in our DNA with a long history of managing liability-linked assets
As of 31 December 2020.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 5 INVESTMENT CAPABILITIES OVERVIEW
Fixed Investment Fixed Investment Quantitative EquitiesEquities Income Solutions Income Solutions Strategies
AUM of AUM of AUM of AUM of USD 25bn USD 62bn USD 115bn* USD 3.5bn
Key capabilities: Key capabilities: Key capabilities: Key capabilities:
China A Growth EM Debt Multi Asset Solutions Global Low Vol Greater China Value Asian HY Asian Low Vol GEM Focus Value Asia FI (USD/Local) Multi-Factor Japan Focus Value Asian Sustainable China A Quant* Asia ex – Japan China (RMB)
Number of Investment Number of Investment Number of Investment Number of Investment professionals: 31 professionals: 22 professionals: 12 professionals: 8
Avg. yrs experience: 18 Avg. yrs experience: 15 Avg. yrs experience: 14 Avg. yrs experience: 13
Source: Eastspring Investments as at 31 December 2020. AUM for investment teams are internally calculated and includes advisory mandates. There might be double counting of assets within the individual investment teams. The figures above do not reflect joint venture assets under management. *Including sub-funds managed by other teams and investments into Eastspring SICAV funds. Note: bn = billion. *China A Quant in development.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 6 WHY EASTSPRING FOR CHINA? EXPERIENCE, LOCAL PERSPECTIVE, BREADTH OF SOLUTIONS
Strong China heritage with long history of investing in China Investment expertise across China debt, equity, and listed real estate
Began Began investing in Dedicated Established China A investing in Dedicated Onshore Offshore China and Shanghai Shares Greater China China A Share China bond China bonds Greater China investment Growth equities in strategy with strategy ($USD) in equity business equities regional JV partner3 (RMB) regional strategies (WFOE) strategy strategies strategies
1994 20021 20052 2007 2018 2019 2020
New investment initiatives in development to expand breadth of solutions Highly experienced China-dedicated investment teams with on the ground presence
Local and regional investment teams complement each other and provide forum for exchange of ideas and collaboration Institutional investment process and oversight with trading, risk management and operations executed in Singapore
Source: Eastspring Investments. 1.Eastspring Investments’ Singapore Fixed Income team has been investing in the China onshore bond market, as part of their regional Asian bond strategy, as well as via segregated mandates that focus on China onshore bonds since 2013. For hard currency bonds, Eastspring Investments’ flagship Asian USD bond strategy was incepted in 2002. 2.Eastspring Investments’ China Equity Strategy was incepted Nov 1, 2005. 3.JV partner is CITIC Prudential.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 7 EASTSPRING’S CHINA EQUITY CAPABILITIES
Strategy Name China Equity Greater China Equity China A-Shares Equity All China Sustainable Equity China A Quant
Strategy Overview Focus across capitalization Focus across capitalization Shanghai-based team Shanghai based team Proprietary, systematic multi- spectrum spectrum High conviction, concentrated All China ESG investment factor strategy Stock-specific risk dominates Stock-specific risk dominates growth approach approach Active quantitative strategy characteristics characteristics Focus across capitalization High conviction approach aiming to outperform China Low turnover Low turnover spectrum Focus across capitalization onshore benchmark with Core style Core style Combines top-down macro and spectrum similar market volatility Investment universe includes: Investment universe includes: fundamental stock selection Distinct sector specialization Incorporates many nuances in China (Onshore/Offshore) China (Onshore/Offshore), Lower turnover amongst China Combine macro and stock the A-share market and unique Hong Kong, Taiwan A-share manager picking analysis datasets that complement our Investment universe includes: global model China (Onshore/Offshore, Hong Kong, Taiwan)
Small focused team with portfolio manager/research advisor and 4 Experienced team of 8 portfolio Small focused team of 4 highly experienced portfolio managers experienced investment analysts based in Shanghai managers and 2 quant Fundamental, research-driven and valuation-focused stock selection with Shared, consistent understanding of asset price determination Investment Team developers disciplined portfolio construction and risk management at the core Disciplined investment process incorporating both top-down and Profile Deep and broad expertise in Disciplined investment process with a long-term investment horizon bottom-up investment analysis quantitative management and All investment outcomes are team-owned WFOE research advisor (Michelle Qi) has had a long successful track research record in managing Chinese A-shares
Jie Lu Lead portfolio manager John Tsai Jie Lu Michelle Qi (WFOE Research Advisor)
Key characteristics of representative strategy
Still in Still in Approach Larger relative bets Larger relative bets Concentrated ESG Thematic development ; development ; TBC TBC
Reference Index MSCI China 10/40 Index TR MSCI Golden Dragon Index TR MSCI China A-shares TR MSCI China All Shares ESG TR MSCI China A-shares Net TR
Typical no of holdings¹ 30 - 50 30 - 60 30 – 50 Still in development ; TBC Target Alpha² 2% 2% 4%+
Expected TE 3 – 6% 3 – 6% 4 – 10% 5 – 8% 2 – 4%
Outcome of top-down and bottom-up Sector range Still in development ; TBC Outcome of bottom-up stock selection Outcome of bottom-up stock selection stock selection Still in development ; TBC Market capitalization All-Capitalization All-Capitalization All-Capitalization All-Capitalization
Inception date 1 November 2005 31 December 2005 10 April 2019 Still in development ; TBC Strategy size (31 Dec USD$114 mn USD$179 mn USD$243 mn 2020)
Base currency USD USD USD USD
Source: Eastspring Investments, 31 December 2020. ¹ This is an internal guideline subject to changes at the sole discretion of the manager. ² This should not be construed as a guarantee for outperformance. Note: mn = million; bn: billion
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 8 EASTSPRING’S CHINA FIXED INCOME CAPABILITIES
China Onshore Bond (RMB) China USD Bond
Strategy Overview: Seeks to maximize returns by investing primarily in China onshore Seeks to maximize total returns primarily through investing in USD- renminbi (RMB) denominated bonds issued by government, quasi- denominated bonds issued by Chinese entities government, and non-government entities Can be managed as absolute return / benchmark aware strategy Benchmark unconstrained strategy with active management of duration Key source of value-add from credit allocation and selection and yield curve strategy, credit allocation and selection Leverage on the team’s existing experience and strength in Asian USD Moderate flexibility to own non-RMB securities (max. 30%) credit capabilities Leverages Eastspring Fixed Income team’s existing strength in Asian local bond capabilities, with research advisory by China
Award winning fixed income team Focused team* of 21 highly experienced investment personnel, with 8 directly involved in management or research for China fixed income strategies Investment Team: Dynamic and multi-factor investment approach, focusing on fundamental, valuation and technical factors Rigorous credit research process with an emphasis on proprietary research
Lead portfolio manager Low Guan Yi / William Xin (research advisor) Leong Wai Mei/ William Xin (research advisor)
Key characteristics of representative strategy
Benchmark Market iBoxx ALBI China Onshore Bond Index
Average duration N.A.
Country limit Up to 35% for single country of risk ex. China
Up to 10% per currency with exception of CNY/CNH; Max aggregate non- Currency limit CNY/CNH exposure: 30% Permissible currency universe: CNY, CNH, EUR, USD, JPY, AUD, SGD, HKD Parameters to be determined, depending on clients’ interests China government: Max 100% Single issuer limits IG Sovereign: Max 35% for single issuer ex. China IG/HY Non-Govt: Max 10%
HY exposure limit Max 30% Inception date 21 February 2020
Strategy size USD 434 mn
Base currency USD
Source: Eastspring Investments (Singapore) Limited, 30 December 2020. *Li Ping Yeo, Jerry Gwee and Peerampa assume both credit research and portfolio management responsibilities. The portfolio characteristics are subject to change at the fund manager’s discretion without notice. IG stands for Investment Grade, HY stands for High Yield. The strategy has not been incepted. Strictly for initial private discussion on fund strategy with professional investors only. Details are subject to change.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. WHY CHINA A SHARES? 10 THE CASE FOR A DEDICATED CHINA A SHARES ALLOCATION WITHIN GLOBAL PORTFOLIOS
Lower correlation with global developed Despite strong equity market performance, and broad emerging markets, providing China/China A shares continue to offer diversification and sources of compelling valuations in absolute terms differentiated alpha and relative to global peers
China’s fast growing domestic economy Shorter term factors and policy backdrop and impact on global GDP growth are are very supportive of continued economic meaningfully underrepresented in global recovery, while long term secular trends equity market capitalization and index provide significant runway for sustained inclusion growth
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 11 WHY ALLOCATE TO CHINA A SHARES
Comprehensive sector and company access not available through offshore markets (H/ADR) Lower correlation with global developed and other EM markets
Source: Eastspring Investments, Wind, CICC. The information provided herein are subject to change at the discretion of the Investment Manager without prior notice.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 12 UNDERREPRESENTING CHINA’S ECONOMIC MIGHT CHINA’S GDP AND EQUITY MARKET CAPITALIZATION
*Source: Bloomberg, Eastspring Investments; market cap data as 2019.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 13 CHINA A SHARES INCREASING IMPORTANCE IN GLOBAL ALLOCATIONS
Under the current MSCI market cap scenarios, Chinese A shares with 100% inclusion factor would mean that A-shares would account for almost 21% of MSCI EM Index
In the future, if China’s stock market growth were at a similar level as its GDP growth level relative to the other EM markets, then A-shares exposure in EM could account for over 40% of MSCI EM Index
Source: Eastspring Investments, Macquarie Securities; As of March 1, 2021 Note: Past performance is not necessarily indicative of the future or likely performance.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. CHINA A GROWTH TEAM PHILOSOPHY, PEOPLE & PROCESS 15 WHY EASTSPRING CHINA A GROWTH ?
Experienced mainland China (Shanghai) based investment team
Lead research advisor has 19 years of China A research and portfolio management experience – one of the longest tenured portfolio managers in the market
Concentrated, all-cap, best ideas portfolio (30-50 stocks) focused on long-term growth
Top down macro-economic + bottom-up fundamental seeking to outperform the benchmark through early identification of secular growth drivers
Integrated risk management and trading capabilities, leveraging one of the largest asset managers in Asia
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 16 INVESTMENT PHILOSOPHY
Our top-down Inefficiencies arising from As growth investors, we assessment of macro, the short-term nature of believe having a valuation policy and liquidity the many local investors discipline, rigorous risk dynamics coupled with and large retail presence management and a rigorous fundamental creates exploitable medium to long term analysis promotes a investment opportunities investment horizon are holistic research and rewarding strategic, long key to repeatable alpha investment framework term investors generation
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 17 DEDICATED SHANGHAI-BASED INVESTMENT TEAM
Research Advisor & Head of Investments, China Equities China Equity Head of Investments Michelle Qi (19) * with 19 years' investment experience in mainland China Macro Strategist/Research Analyst Financials, Cyclicals Outstanding and consistent Jingjing Weng (9) performance track record
Research Analyst 4 locally based analysts with average Healthcare, Chemicals, Consumer Staples Xiang Xu (7) of 8 years industry experience
Extensive company knowledge and Research Analyst research experience in China A Technology, EV, Renewables Xiaohua Xu (4) Share market
Research Analyst Embedded quantitative analysis and Consumer Discretionary, Industrials risk oversight Yijin Han (12)
Singapore Named Manager Quantitative and Risk Analysis Jie Lu, CFA (15)
Years of relevant investment experience in brackets (XX) as of 31st January 2021. *Michelle Qi functionally reports to Ooi Boon Peng, Head of Eastspring Portfolio Strategies.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 18 INVESTMENT PROCESS DISCIPLINED PROCESS TO CONSTRUCT A HIGH CONVICTION PORTFOLIO
Step 1: Step 2: Top down macro view Step 3: Strategic sector Step 4: Portfolio construction Filter universe and sector allocation allocation and stock selection and risk control
GDP Growth Technology Stock drivers development Risk control pool overlay 200-300 Stock stocks Selection Stock level Portfolio Level Demographics Manufacturing Universe upgrade Sell discipline ~3,500 stocks
Quantitative/Liquidity filter Form holistic macro view of the Identify long term growth drivers Portfolio guidelines and economy and winning sectors and objectives ESG & Qualitative adjustment companies Identify sectors benefiting High conviction ideas to reflect under current macro Company growth potential, sector preference environment quality, sustainable competitive advantage, valuation Risk oversight
Narrow Universe Macro and Sector Views Best Ideas High Conviction Portfolio
“+ve” = positive view “-ve” = negative view
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 19 STEP 1 – FILTER UNIVERSE QUANTITATIVE SCREENING TO NARROW RESEARCH UNIVERSE
Quantitative Qualitative Adjustment Screened Universe Screening & Scorecard 200 – 300 names
Communication Market cap Business model Services 1% Energy Real estate 4% 7% Materials Valuation ESG assessment 10%
Financials 13% Net profit growth Management quality
Utilities Industrials 4% 17% PEG Future growth potential Information Consumer Technology staples 11% 9%
ROE Business turning point Health care Consumer discretionary 10% 14%
Source: Eastspring Investments, as of May 2020.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 20 STEP 2 – TOP DOWN VIEWS MACRO, POLICY & LIQUIDITY FACTORS DRIVE CHINA A INVESTMENT CYCLES
Government objectives influence macro factors
Frequent policy changes impact sector outlook Improving Economy
Liquidity plays an important role -ve Economy +ve Economy +ve Liquidity +ve Liquidity
Macro Indicators Tightening Tightening Liquidity Growth PMI Fixed Asset Investment Industrial production Property starts / sales Retail sales Trade Liquidity Total social financing Interbank rates LiquidityImproving 10-year government bond yields Credit spreads Monetary policies (MLF, SLO, SLF, RRR, etc) -ve Economy +ve Economy Stock connect flows -ve Liquidity -ve Liquidity IPO/re-financing
Inflation CPI, PPI, Oil prices, Hog prices Deteriorating Economy
“+ve” = positive view “-ve” = negative view
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 21 STEP 2 - SECTOR ALLOCATION
Macro Analysis Sector Valuation Analysis
Sectors Economic / policy cycles Economy↓ Economy↑ Economy↑ Economy↓ Valuation comparison Liquidity↑ Liquidity↑ Liquidity↓ Liquidity↓
Financials ↑ → ↓ ↓ Relative to the market Real estate ↑ → ↓ ↓ Global peer comparison Materials ↑ → ↓ ↓ Historical comparison Energy ↑ → ↓ ↓ Top down Telecom ↓ → ↑ ↑ Sector Utilities ↓ ↓ ↓ → Allocation Industrials → ↑ ↓ ↓ Bias towards long term Consumer growth drivers → ↑ ↑ ↓ discretionary
Consumer Demographics → ↑ ↑ ↑ staples Technology development Health care ↓ ↓ → ↑ Manufacturing upgrade Information ↓ → ↑ ↑ Technology
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 22 CYCLICAL RECOVERY AND SECULAR GROWTH DRIVERS POSITIONED TO BENEFIT FROM CONTINUED RECOVERY & LONG-TERM THEMES
Potential Macro Drivers Opportunities & Risks Beneficiaries
Credit growth to slow and Financials, consumer Monetary policy interest rate to moderately staples trend up Normalizing SHORTSHORT-TERM-TERM Economic New infrastructure, new energy, CYCLICALCYCLICAL 14th Five-Year Plan New economy Growth 5G roll-out Property market New rules on leverage Building materials tightening
Domestic Single market Consumer consumption upgrade demographic/geographic diversity discretionary, staples Increasing demand for medical Structural Ageing population Healthcare, insurers LONG-TERM care and services LONG-TERM Trends & SECULARSECULAR Increasing allocations from Reforms Foreign capital inflows Blue chip stocks foreign investors
Technology Increasing support for Technology independence domestic R&D
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 23 STEP 3 – STOCK SELECTION FUNDAMENTAL RESEARCH & BOTTOM-UP COMPANY ANALYSIS
Competitiveness GARP Assessment Financial Risk Analysis
Industry & Policy Growth Assessment Financial Signals Market size & potential growth Sector outlook & growth Cash flow Policy direction potential vs. economic cycle Working capital Entry barriers and competitive Ability to expand during Capex landscape industry consolidation Share placement Sustainable growth strategy Core Competitiveness Good management track Irreplaceable record and executable plans Sustainable Valuation – (varies by sector) Other Risk Signals Management Quality Price multiples: PE/PB/EV Insider selling Management capability DCF model Alarming financial indicators Integrity and transparency Peak/trough valuations Executives departure Alignment of interests Balance of growth and ROE Change of auditor ESG considerations Valuation discipline Material ESG risks
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 24 STEP 3 – STOCK SELECTION FINANCIAL & RISK ANALYSIS INCORPORATED INTO ASSESSMENT OF RETURN EXPECTATIONS
Liquidity Operational
Industry landscape/Entry barrier Financial
Resource advantage/Input cost Strategic
Management quality/ESG Political
Cost of capital Risk Analysis Management
Fundamental Analysis Fundamental Earnings quality ESG
Assessment Earnings Expected Valuation of Growth Downside Volatility Risk
TARGET PRICE Analyst to provide 12-month target price when making recommendation. Target price will be reviewed after quarterly results and at the change of recommendation.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 25 STEP 4 – PORTFOLIO CONSTRUCTION
Risk Controls & Stock Level Portfolio Sell Discipline Monitoring
Best ideas reflect sector In accordance with Share price movement Portfolio guidance and preferences portfolio guidelines and 20% correction, review with analyst to objectives objectives assess risks Risk framework Conviction sizing*: Target price reached: fundamentals, embedded in Aladdin Absolute weight: max Top-down sector market sentiment and liquidity Quantitative framework at 10% allocation based on reassessment to calibrate position Active weight no more economic and liquidity Sell if fundamentals turn negative size based on than 5% cycles Unexpected structural change to the conviction and upside industry Independent risk Sector deviation from team’s post trade and Significant shift of management BM* (excl. financials) no compliance checks strategy more than 10% ESG evaluation Major sale of assets / divisions Monitored and Alternative opportunities supported by regional A more attractive investment risk team opportunity is identified Switch to replace the current holdings
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 26 STEP 4 – MULTI-FACETED RISK OVERSIGHT
Real-time Aladdin risk reports monitored closely by Research Advisor, Named Manager and CPM
Pre/Post trade investment compliance checks monitored by Investment Monitoring Team in Singapore
Investment Risk Team in Singapore conducts investment risk oversight and monitoring across all Eastspring strategies in a systematic manner
Named Manager in Singapore assists with portfolio construction and allocation of active risk budget to maximize highest conviction positions
Monitoring of intended/unintended risks, liquidity, trade execution, and capacity
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 27 INTEGRATING ESG FACTORS INTO DECISION MAKING
Incorporate both financial andnon-financial Engagement on non-financial issues is risks into company evaluation, research essential in maintaining and increasing opinions, and investment decisions our understanding of these risks and in determining materiality ESG integration not just a risk management endeavor but a tool that Local experience and judgment critical to enables us to identify sustainable, long interpret ESG factors – 3rd party inputs term winners and ESG scores insufficient in less efficient and transparent emerging ESG analysis embedded in research markets process and factored into bottom-up, fundamental analysis and stock selection Strict adherence to specific ESG guidelines, however, is not a requirement Research analysts drive ESG analysis at unless mandated by client-specific the onset of investment process as part of restrictions our quantitative and qualitative screens
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. CHINA A SHARES GROWTH STRATEGY 29 CHINA A SHARES GROWTH STRATEGY
Quick Facts Strategy
Strategy AUM USD243.4 million We believe the China A-share equity market is inefficient due to the short-term nature of many of the market participants The Portfolio seeks to maximize long-term growth of capital by investing primarily in With a holistic view of the macro environment, policy and industry onshore Chinese equities (A shares) listed on trends on top of an active fundamental approach, our focus on bottom- the Shanghai Stock Exchange and/or the up stock analysis seeks to generate alpha over the long term Investment Objective Shenzhen Stock Exchange. The strategy We prefer companies with strong growth profiles, quality earnings and combines top-down macro analysis with bottom- credible management up fundamental analysis to construct a concentrated growth portfolio Indicative investment guidelines* Eastspring Investments (Singapore) Limited Investment Manager Single stock initial weight relative to the benchmark ≤5% Eastspring Investment Management (Shanghai) Research Advisor Company Limited Single stock max weight 10% Launch Date 10 April 2019 Sector weight relative to the reference index (excl. ±10% Benchmark MSCI China A Gross Div TR Financials)
Return Objective 4%+ p.a. over BM Strategy vs. Benchmark Strategy Benchmark
Number of Holdings 30–50 Price to Earnings (F12M) (x) 25.4 17.7
Ave. Annual Turnover 80–120% Price to Book (x) 5.7 2.8
Tracking Error 4–10% ROE (%) 18.6 16.1 EPS Growth (FY1) (%) 41.4 31.4
Number of Holdings 49 751
Tracking Error (%) 7.4 n/a
Active Share (%) 74.1 n/a
Sources: Eastspring Investments, data as at 31 December 2020. *This is an internal guideline subject to change without prior notice. Past performance is not necessarily indicative of the future or likely performance.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 30 EASTSPRING INVESTMENTS – ASIAN BOND FUND FUND PERFORMANCE (CLASS A, USD)
3Y 5Y 10Y S.I. Performance (%) 1M 3M YTD 1Y 2019 2018 2017 p.a. p.a. p.a. p.a.
Eastspring Investments – Asian Bond Fund 0.7 2.4 5.9 5.9 4.5 4.5 4.2 4.8 11.0 -2.8 4.4 (Class A) (Bid-Bid)
JP Morgan Asia Credit 0.6 1.8 6.3 6.3 5.5 5.6 5.6 6.2 11.3 -0.8 5.8 Index
Relative Return 0.1 0.6 -0.4 -0.4 -1.0 -1.1 -1.4 -1.4 -0.3 -2.1 -1.4 (versus Bid-Bid)
Overall Rating
Source: Eastspring Investments (Singapore) Limited (Benchmark - JP Morgan Asia Credit Index), Morningstar Ratings as at 31 December 2020.; Returns are based in share class currency and computed using the NAV price on bid-bid basis with net income reinvested . The NAV price is net of all fees, expenses and withholding taxes. Calendar year returns are based on the share class performance for the year and if the share class is incepted during a particular year, the returns shown relate to the performance of the share class since its inception till end of that calendar year. Fees and expenses vary among share classes, further information is available in the Prospectus. Note: Funds are rated based on their risk- adjusted returns. Performance and benchmark values are rounded off to 1 decimal place. p.a. refers to per annum. Investors should be aware that past performance of the Fund is not necessarily indicative of the future or likely performance of the Fund. STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 31 CHINA A SHARES GROWTH STRATEGY SECTOR POSITIONING AS AT 31 DECEMBER 2020
Current Sector Weights (%)
25.0
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
Eastspring China A Reference Index Relative
Source: Eastspring Investments, as at 31 December 2020. Reference Index: MSCI China A USD Gross Index.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 32 CHINA A SHARES GROWTH STRATEGY TOP 5 OVERWEIGHTS AND UNDERWEIGHTS AS AT 31 DECEMBER 2020
Strategy End Benchmark Strategy End Benchmark Overweights Relative Underweights Relative Weight End Weight Weight End Weight
Bank Of Ningbo Co Ltd Kweichow Moutai Co 4.1 0.5 3.6 2.1 6.1 -4.0 (A-shares) Ltd (A-shares)
Hangzhou Great Star Foshan Haitian 3.3 0.0 3.3 0.0 1.3 -1.3 Industrial (A-shares) Flavouring (A-shares)
Sany Heavy Industry 3.9 0.7 3.2 Hangzhou Hikvision Co Ltd (A-shares) 0.0 1.1 -1.1 Digital (A-shares) Geely Automobile 3.2 0.0 3.2 Industrial Bank Co Ltd Holdings Ltd 0.0 1.1 -1.1 (A-shares) Contemporary China Yangtze Power Amperex Technology 4.5 2.0 2.5 0.0 1.0 -1.0 (A-shares) Co Ltd (A-shares)
Source: Eastspring Investments. 31 December 2020. Reference Index: MSCI China A USD Gross Index, for reference only. Past performance is not necessarily indicative of the future or likely performance of funds adopting the same strategy mentioned above. Please note that the securities mentioned are for illustrative purposes only. It should not be considered as a recommendation to purchase or sell such securities. There is no assurance that any security discussed herein will remain in the portfolio at the time you receive this document or that security sold has not been repurchased. The securities discussed do not represent the entire portfolio and in the aggregate may represent only a small percentage of the portfolio holdings. The information provided herein are subject to change at the discretion of the Investment Manager without prior notice.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 33 CHINA A SHARES GROWTH STRATEGY ATTRIBUTION ANALYSIS – PAST ONE YEAR
Strategy Benchmark Active Stock Selection Sector Sector Effect (%) Total Effect (%) (%) (%) (%) Effect (%)
Total 100.0 100.0 0.0 13.1 6.2 19.3
Cash 1.5 0.0 1.5 -1.4 0.0 -1.4
Equity 98.5 100.0 -1.5 14.5 6.2 20.7
Information Technology 18.2 13.8 4.3 3.9 3.5 7.4
Financials 12.7 22.6 -9.9 2.8 1.2 3.9
Industrials 10.6 12.5 -1.9 0.4 3.5 3.9
Consumer Discretionary 13.2 6.1 7.1 2.3 0.8 3.1
Energy 0.0 1.7 -1.7 1.2 0.0 1.2
Utilities 0.0 2.3 -2.3 1.0 0.0 1.0
Materials 9.2 7.4 1.8 0.6 0.0 0.7
Real Estate 3.8 3.5 0.3 0.0 0.6 0.6
Health Care 14.5 10.9 3.6 2.0 -1.4 0.6
Communication 0.6 2.5 -2.0 0.8 -0.5 0.3
Consumer Staples 15.7 16.6 -0.9 -0.3 -1.5 -1.8
Source: Aladdin, Eastspring Investments; from 01 January 2020 to 31 December 2020.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 34 CHINA A SHARES GROWTH STRATEGY RELATIVE CONTRIBUTORS AND DETRACTORS 1 YEAR AS AT 31 DECEMBER 2020
Strategy Benchmark Strategy Benchmark Contributors Attribution Detractors Attribution Avg Weight Avg Weight Avg Weight Avg Weight
Longi Green Energy Jiangsu Gian 2.3 0.5 3.0 Technology Co (A- 0.6 0.0 -1.5 Technology (A-shares) shares) Luxshare Precision Semiconductor 4.2 0.9 2.9 0.4 0.0 -1.4 Industry (A-shares) Manufacturing
China Tourism Group Meinian Onehealth 2.9 0.8 2.4 1.9 0.2 -1.3 Duty Free (A-shares) Healthcare (A-shares)
Fuyao Glass Industry Kweichow Moutai Co Ltd 1.2 0.0 2.1 2.5 5.5 -1.1 Group (A-shares)
Sany Heavy Industry Jiangsu Changshu Rural 3.3 0.6 2.0 0.8 0.1 -1.0 Co Ltd (A-shares) Commercial (A-shares)
Source: Eastspring Investments. From 1 January 2020 to 31 December 2020. Reference Index: MSCI China A USD Gross Index, for reference only. Past performance is not necessarily indicative of the future or likely performance of funds adopting the same strategy mentioned above. Please note that the securities mentioned are for illustrative purposes only. It should not be considered as a recommendation to purchase or sell such securities. There is no assurance that any security discussed herein will remain in the portfolio at the time you receive this document or that security sold has not been repurchased. The securities discussed do not represent the entire portfolio and, in the aggregate, may represent only a small percentage of the portfolio holdings. The information provided herein are subject to change at the discretion of the Investment Manager without prior notice.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 35 CHINA A SHARES GROWTH STRATEGY PORTFOLIO CHARACTERISTICS
Market Cap (USD) Eastspring Benchmark Characteristics Eastspring Benchmark
$50 billion + 34.0% 35.3% Weighted Market Cap (USD) $56.4B $67.7B
$25 – $50 billion 27.7% 14.8% Median Market Cap (USD) $30.2B $7.2B
$15 – $25 billion 11.5% 15.4% % in Top Ten 36.5% 21.6%
$5 – $15 billion 19.4% 27.0% % Cash 0.6% -
< $5 billion 6.8% 7.4% Active Share 74.1% -
Upside/Downside Capture Ratio 150% 111.3% 100%
50%
0% Upside Downside -50%
-100% 62.6%
Source: Aladdin, Morningstar, Eastspring Investments, data as at 31 Dec 2020.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 36 CHINA A SHARES GROWTH STRATEGY ALIGNED WITH MANDATE (AS OF 31 DECEMBER 2020) Aggregate Valuation Ratios Strategy Benchmark Position Metrics Strategy PB (F12m) 4.3 2.3 Names Held 49 PB (Last) 5.7 2.8 Benchmark Names 751 PE (F12m) 25.4 17.7 Summary Metrics Strategy PE (Last) 36.8 23.5 Est. Active Risk (TE) 7.4% Div Yld (F12m) 1.1% 1.8% Active Share 74.1% Div Yld Premium (F12m) -35.6% Estimated Strategy Risk 23.1% Div Yld (Last) 0.8% 1.4% Estimated Benchmark Risk 21.0% Div Yld Premium (Last) -40.1% Estimated Strategy-BM Risk 2.1% EV / EBITDA (Last) 18.5 19.9 Estimated Beta 1.05 Div Payout (F12m) - - Historical Beta 1.06 Sales Growth (3yr hist) 77.9% 52.1% Cash Weight 0.6% EPS Growth (3yr hist) -29.1% 3.6% EPS Growth (1yr est) 41.4% 31.4% Source Active Risk (sd) % of Active Risk ROA (Last) 9.4% 8.2% Factor Active Risk 6.95% 68.2% ROE (Last) 18.6% 16.1% Specific Active Risk 4.75% 31.8% Op Margin (Last) 17.4% 19.4% Net Margin (Last) 16.1% 17.7% LT Debt / Capital (Last) 15.4% 19.6%
Source: Eastspring Investments, as at 31 December 2020.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 37 CHINA A SHARES GROWTH STRATEGY ESG SCORE BREAKDOWN AS AT 31 DEC 2020
Strategy Benchmark
ESG Score 3.2 2.9
ESG Risk Score 31.4 33.1
Exposure to Significant 8.4% 13.2% Controversies Exposure to Fossil 2.6% 4.3% Fuel
Fund_weight bm_weight
Source: Eastspring, as at 31 Dec 2020; MSCI ESG.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. MACRO OVERVIEW 39 2021: A YEAR OF NORMALIZATION GDP TO GROW 9.1% IN FY21, WITH QUARTERLY GROWTH TRENDING DOWN TO A NORMALIZED PACE OF 5.5%
China Quarterly GDP Growth
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0% Q120 Q220 Q320 Q420 Q121E Q221E Q321E Q421E
Source: Wind, Eastspring Investments. Note: Any projection or forecast is not necessarily indicative of the future or likely performance.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 40 GLOBAL GDP GROWTH
Figure 1. Divergent Recoveries: WEO Forecast for Advanced Figure 2. Contributions of Consumption and Investment Economies and Emerging Market and Developing Economies to Global GDP Growth (Index, 2019:Q4=100) (Percentage points, year over year)
Source: World Economic Outlook, January 2021 Update.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 41 2021 POLICY OUTLOOK Key messages from China Economic Work Conference: Growth quality and domestic demand are key focuses Continued "necessary" policy support, without calling for a rapid exit of policy stimulus or deleveraging Emphasis on risk control, anti-monopoly and data collection & usage Innovation and tech self-reliance; carbon reduction and neutrality
18.0
16.0 De-leveraging Re-leveraging 14.0
12.0
10.0
8.0
6.0 01/16 04/16 07/16 10/16 01/17 04/17 07/17 10/17 01/18 04/18 07/18 10/18 01/19 04/19 07/19 10/19 01/20 04/20 07/20 Adjusted TSF growth (led by 6-month)
Source: Wind, Eastspring Investments.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 42 GLOBAL MARKET VALUATIONS A SHARES VALUATION UN-DEMANDING IN THE GLOBAL CONTEXT
(x) Global valuation comparison：2020 P/E 45
40 40
35 34
30 28 27 27 25 25 24 22 22 23 21 22 20 20 21 20 19 17
15
10 6 5
0
Source: Bloomberg, Eastspring Investments.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 43 CHINA A VALUATIONS REFLECTS STRONG FUNDAMENTALS STRUCTURAL OPPORTUNITIES FROM GROWTH SECTORS
18
16
14
12
10
8
6
4 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
CSI 300 12m fwd PE Avg +1SD -1SD
Source: Go-goal, Eastspring Investments.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 44 “MADE IN CHINA” CHINESE HIGH-END MANUFACTURING SET TO COMPETE WITH GLOBAL PEERS
Auto and EV The largest market of passenger vehicle Stable supply with economy of scale Improving manufacturing efficiency Narrowing R&D gap with global competitors
Technology Increasing technological self-reliance and production Consistent policy supports for innovation The largest smartphone market and comprehensive supply chain eco-system
Renewable energy Strong commitment by Chinese government of carbon neutral by 2060 Increasing investment on cleaner energy infrastructure The largest supplier of solar panels and batteries
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 45 EMERGING DOMESTIC CONSUMPTION TRENDS
Premiumization Digitalization Wellbeing and healthcare Trend seeker: experiences, Large internet platforms awareness hobbies, travels, extreme Emerging brands and More investment on medical sports product growth facilitated by infrastructure Connected consumer: online platforms Increasing demand for digitized lifestyles and product Service providers that preventive medicine; needs, e-entertainment, connect brands, platforms Healthcare service such as anime and comics culture and consumers (Multi- dental and cosmetic surgery Looking good: self-identify, channel network, SaaS…) Sportswear cosmetics, gym, plastic New digital infrastructure surgery, brand such as 5G, AI and IoT Personalization: higher standards for convenience, quality and variety, less price conscious
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. APPENDIX 47 EASTSPRING INVESTMENTS – CHINA A SHARES GROWTH FUND SHARE CLASSES AVAILABLE FOR INVESTMENT
*Minimum *Minimum Class Currency Bloomberg ticker ISIN Inception initial subsequent date investment investment
Class A USD ESCAGFA LX LU1969619763 10-Apr-19 USD500 USD50
Class R USD ESCAGRU LX LU2199555967 15-July-20 USD500 USD50
Initial sales Annual Annual admin Initial sales Annual Annual Ongoing Class charges% management fee% (max) charges% management admin fee% charges % (max) fee% (max) (current) fee% (current) (current)
Class A 5.000 1.500 0.500 5.000 1.500 0.250 1.830
Class R None 0.750 0.500 None 0.750 0.250 1.100
Annual Ongoing charges vary from year to year and do not include portfolio transaction cost. Distribution Dividend per Ongoing charges are based on annualized expenses for the year ending December 2020 Class Ex-date dividend for Share Class A and based on another share class for Share Class R. frequency share yield % R-class shares are not sold directly to investors, but to financial intermediaries that serve investors. The intermediary executes the purchase of the funds on behalf of the investor, as well as the sale and exchange. The Sales Charge may be modified for certain financial Class A N.A N.A N.A N.A intermediaries who submit trades on behalf of eligible investors. As allowed in the Prospectus, Eastspring and the financial intermediaries have agreed to waive the Sales Charge for all purchases for the fee-based R share class. Always consult your financial Class R N.A N.A N.A N.A adviser. For more about charges, see the Prospectus.
Distributions are not guaranteed and may fluctuate. Past distributions are not necessarily indicative of future trends, which may be lower. Distribution payouts and its frequency are determined by the Board of Directors, and can be made out of (a) income; or (b) net capital gains; or (c) capital of the Fund or a combination of any of (a) and/or (b) and/or (c). The payment of distributions should not be confused with the Fund’s performance, rate of return or yield. Any payment of distributions by the Fund may result in an immediate decrease in the net asset value per share. Funds with Monthly and Quarterly Distribution Frequency: Annualised Dividend yield = (Dividend per share / Reference NAV at start of distribution period) x (No. of calendar days in a year / No. of calendar days in distribution period) x 100%. Funds with Yearly Distribution Frequency: Annualised Dividend Yield = (Dividend amount / Total Net Assets) x (No. of calendar days in a year / No. of calendar days in distribution period) x 100%. *Or their near equivalent in any major freely convertible currency of the amounts specified. "N.A.": This share class does not distribute dividends. STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 48 EASTSPRING INVESTMENTS – CHINA A SHARE GROWTH EQUITY COMPOSITE DECEMBER 2020 (USD)
Annualised figures Calendar Year Data 2020 Rolling Results 1 M 1 Y S.I Composite Return - Net (%) 63.2 Composite Return - Net (%) 12.9 63.2 59.7 Composite Return - Gross (%) 64.1 Composite Return - Gross (%) 12.9 64.1 60.3 Benchmark Return (%) 43.5 Benchmark Return (%) 7.8 43.5 36.8 Relative to Gross (%) 5.1 20.7 23.5 Relative to Gross (%) 20.7 Composite Annualised Volatility (%) N/A 25.0 21.0 Composite 3-Year Annualised Volatility (%) N/A Highest Return in Composite (%) 12.9 64.1 60.3 Benchmark 3-Year Annualised Volatility (%) N/A Lowest Return in Composite (%) 12.9 64.1 60.3 Number of Portfolios 1 Tracking Error (%) N/A 9.8 8.3 Information Ratio N/A 2.1 2.8 Market Value at End, USD (bn) 0.24
Eastspring Investments claims compliance with Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. To receive a complete list and description the composites and/or a presentation that adheres to the GIPS standards, contact the relevant sales representatives or email [email protected]. The Firm is defined as all portfolios, except those that are predominantly Private Equity portfolios, of Eastspring Investments (Singapore) Limited and Eastspring Investments (Hong-Kong) Limited (collectively referred to as "Eastspring Investments"), which are business units within the Prudential Plc Group. This composite includes a single portfolio that maximize long-term capital growth by investing primarily in China A equity and equity-related securities managed to MSCI China A USD Gross Index. This Composite was created on 1 Jun 19 and Composite Performance starts from 1 Jun 19. A full List of the Firm's Composites is available upon request. No alteration of composite as presented here has occurred because of changes in personnel or other reasons at any time. Eastspring Investments has been independently verified for the periods 1 Jan 1995 - 31 Dec 2009 and 1 Jan 2018 - 31 Dec 2018. The verification reports are available upon request.Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firms policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation. The minimum fund size requirement for a fund to be included in a composite is USD3 million. All returns are presented in Dollar. Market Values are presented in Dollar. Policies for valuing portfolios, calculating performance and preparing compliant presentations are available upon request. Performance results are presented gross of investment management fees and net of trading expenses. The results are also gross of other fees and foreign withholding tax on dividend, interest income and capital gains. Additional information on other fees treatment are available upon request. Portfolios within the composite has no or minimal derivatives exposure If a fund has a cash flow or in-specie transfer (either in or out) that is greater than 10% of the opening balance of the fund, then the impact on portfolio performance has to be assessed to determine whether it should be held out-of- structure. If the impact on performance is equal to or greater than 20 basis points, then the fund can be excluded from composite performance until it is back in structure. Additional information regarding the treatment of significant cash flows is available upon request. The highest % of management fee charged are as per below: Equity Strategies : 2.00% per annum Fixed Income Strategies : 1.25% per annum Additional information regarding policies for calculating and reporting returns is available on request The Firm total assets under management as of 31 December 2019 was USD125 billion. Net composite returns shown do not represent actual net returns of underlying portfolios but are calculated net of the highest band fee (net down by 0.75% p.a.) in the tiered management fee schedule applicable to an institutional investor investing in such a strategy. However, the firm reserves the right to change this fee structure and hence net composite returns might change without prior or subsequent notifications to current or potential investors Effective 1st November 2018, Information Ratio is calculated as (Annualized Fund Return - Annualized Bench Return) / Tracking Error. Prior to 1st November 2018, Information Ratio was calculated as (Average Annualized Excess Return / Tracking Error).
Source: Eastspring Investments, 31 December 2020 (C0289). Benchmark: MSCI China A USD Gross Index. This is for information purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, investment product, security or service.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 49
Michelle joined Eastspring Investments, the initially as senior research analyst, then Asian asset management business of portfolio manager, deputy head of equity Prudential plc, as Research Advisor of investment department and most recently China Equities (Shanghai based Head of Head of QFII and QDII Investment. Michelle Investments) – Equities China, in June was QFII portfolio manager at BOCOM 2018. Schroders since 2007. She has over 22 years of investment experience. She is responsible for overseeing the China Growth team at Eastspring Shanghai and is Michelle previously held Shanghai-based Michelle Qi, CFA the Portfolio Manager for our onshore China roles at ING Barings Securities and Arthur Head of Investments, Equities, China A-Shares strategy. Anderson. (Shanghai) Research Advisor of China Equities Prior to joining Eastspring, Michelle was Michelle holds a Master of Applied Finance Head of QFII and QDII Investment and from Macquarie University and Bachelor of Portfolio Manager at BOCOM Schroders. Art from Shanghai University. She is also a Michelle held various roles at BOCOM CFA charterholder. Schroders from October 2005 to June 2018,
Source: Eastspring Investments, As of January 31, 2021.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 50
Jie Lu is a member of our Quantitative factor research for global equity markets as Strategies (QS) team, Lead Portfolio well as systematic country and industry Manager for our Multi Factor strategies and allocation strategies. Jie helped design Back-up Portfolio Manager for our Global Acadian's factor backtesting framework and Low Volatility strategy. In addition, Jie is the was a member of their investment policy named Portfolio Manager for our China A- committee overseeing changes to their share Growth SICAV Fund. He is investment models. Jie has 15 years of responsible for research and development investment experience. of QS strategies and funds. Jie joined Jie Lu, CFA Eastspring Investments (Singapore) Limited Jie holds a PhD in Physics from the Portfolio Manager in April 2017. Massachusetts Institute of Technology Named Manager for China A Shares (MIT) and a Financial Technology Option Growth Prior to joining our Firm, Jie was a Portfolio from the MIT Sloan School of Management Manager and Senior Vice President at in the USA. He also holds a MSc and a BSc Acadian Asset Management in Boston, in Physics from Tsinghua University in where he worked for over 10 years. He has China. He is also a CFA charterholder. extensive experience in stock selection
Source: Eastspring Investments, As of January 31, 2021.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 51
Jingjing joined Eastspring Investments in September 2018 as Senior Analyst, Previously, Jingjing was China equity macro strategist at UBS securities, Eastspring Shanghai. covering both A and H shares markets. Jingjing also covered China A- She is part of the China Growth Equity team and is responsible for macro share banking sector as well as China macro economy from 2011 to economic research. She contributes to the team’s investment performance by 2015. Jingjing Weng forming top-down strategy and macro analysis and implications for sector Jingjing holds Master of Finance from Renmin University of China and Senior Analyst allocation. Bachelor of Economics from Zhejiang University.
Zach joined Eastspring Investments in October 2018 as Senior Analyst, In 2016, Zach started his financial career at Horizon Insights Research Eastspring Shanghai. as a Semiconductor Analyst. He is part of the China Growth Equity team and is responsible for conducting Zach worked as a research engineer at El- Cat Inc, a US equity research in technology, electric vehicles and renewables sector. semiconductor material company from 2010 to 2015. Previously, Zach was a lead Electronic and Semiconductor Analyst at BOCOM Zach holds Master of Electrical Engineering from New York University Xiaohua(Zach) Xu Schroders from 2017 to 2018. His coverage included A/H and US shares. and Bachelor of Microelectronics from Shanghai Jiao Tong University. Senior Analyst
Xiang Xu joined Eastspring Investments in September 2018 as Senior Analyst, International Asset Management. Xiang have been covering A/H-share Eastspring Shanghai. healthcare sector since 2013 and petrochemical since 2015. He is part of the China Growth Equity team and is responsible for conducting Xiang also worked at Greenwoods Asset Management and equity research for healthcare, consumer staples, chemical and PricewaterhouseCoopers. Xiang holds Master of Neuroscience and petrochemicals companies. Bachelor of Life science from Fudan University. Xiang Xu Previously, Xiang was the lead healthcare analyst in Bank of China Senior Analyst
Yijin Han joined Eastspring Investments in August 2019 as Senior Analyst, Yijin started her financial career at HFT Investment Management Eastspring Shanghai. Company in 2007 as equity analyst covering consumer sectors. Yijin was She is part of the China Growth Equity team and is responsible for conducting also Assistant Portfolio Manager in 2008. equity research for consumer discretionary and industrials companies. Yijin holds Master of Finance from University of New South Wales Previously, Yijin was senior analyst at UBP Investment Management Company Sydney and Bachelor of Management studies from Shanghai Yijin Han Shanghai from 2015 to 2018, covering both A and H China consumer sectors. International Studies University/Waikato University New Zealand. Senior Analyst
Source: Eastspring Investments, As of January 31, 2021.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 52
INDEX DEFINITIONS
It is not possible to invest directly in an index. The performance of foreign indices may be based on different exchange rates than those used by a Fund and, unlike the Fund’s NAV, is not adjusted to reflect fair value at the close of regular trading on the NYSE (generally 4:00 PM Eastern Time) on each day that the exchange is open for trading.
MSCI AC Asia Pacific ex Japan Index captures large and mid cap representation across 4 of 5 Developed MSCI Singapore Free Index is a free-float adjusted market capitalization weighted index that is designed Markets countries* (excluding Japan) and 8 Emerging Markets countries* in the Asia Pacific region. With to track the equity market performance of Singapore securities listed on Singapore Stock Exchange. The 678 constituents, the index covers approximately 85% of the free float-adjusted market MSCI Singapore Free Total Return Index takes into account both price performance and income from capitalization in each country. dividend payments. The MSCI Singapore Free Index is constructed based on the MSCI Global Investable Market Indexes Methodology targeting a free-float market capitalization coverage of 85%.HSBC ALBI with MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to Government & Corporate Bonds measure equity market performance of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, J.P. Morgan Asia Credit Index (JACI) tracks total return performance of the Asia fixed-rate dollar bond Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey* and United Arab market. JACI is a market cap-weighted index comprising sovereign, quasi-sovereign and corporate bonds Emirates. and it is partitioned by country, sector and credit rating. Quasi-Sovereign, Sovereign, Utility, Conglomerates, Telecom, Banks, Petrochemical, Petroleum, Electronics, Industrial, Infrastructure, Automobile, and Property. MSCI Golden Dragon Index captures the equity market performance of large and mid cap China JACI sub-indexes include: JACI Sovereign and Quasi-sovereign Index, JACI Corporate Index, JACI securities (H shares, B shares, Red-Chips and P-Chips) and non-domestic China securities listed in Hong Investment Grade Index, JACI Non-investment Grade Index, etc. Kong and Taiwan. UOB SGS Index is designed to provide Singapore fund managers and interest rate market participants with FTSE Asia Pacific ex Japan Index is one of a range of indices designed to help investors to benchmark a Singapore government bond index calculated using internationally accepted practices. The Index is an their Asia Pacific investments. The index comprises Large and Mid cap stocks providing coverage of the accumulation index incorporating price and income components covering only Singapore government Developed and Emerging markets in Asia Pacific excluding Japan. bonds.
Topix 100 Index is a capitalization-weighted index designed to measure the performance of the 100 most MSCI ACWI Index captures large and mid cap representation across 23 Developed Markets (DM)*** and liquid stocks with the largest market capitalization that are members of the TOPIX Index, also known as the 23 Emerging Markets (EM)** countries. With 2,446 constituents, the index covers approximately 85% of the Tokyo Stock Price Index, which is a capitalization weighted index of all companies listed on the First global investable equity opportunity set. Section of the Tokyo Stock Exchange. The index is supplemented by the sub indices of the 33 industry sectors. MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers FTSE Japan Index is comprised of large and mid cap Japanese companies that are constituents of the approximately 85% of the free float-adjusted market capitalization in each country and MSCI World FTSE All-World Index. FTSE Kaigai Index (FTSE Developed ex Japan Index) consists of Large and Mid cap benchmark does not offer exposure to emerging markets. companies from the Developed markets of the FTSE All-World Index excluding Japan. The FTSE All-World S&P Emerging BMI Index captures all companies domiciled in the emerging markets within the S&P Index in turn represents the Large and Mid Cap companies within the FTSE Global Equity Index Series Global BMI with a float-adjusted market capitalization of at least USD 100 million meeting 6- and 12-month (GEIS). median value traded requirements. Jakarta Stock Exchange Composite Index is a modified capitalization-weighted index of all stocks listed MSCI China A Index Net Total Return is derived from the MSCI China A International Index but only on the regular board of the Indonesia Stock Exchange. includes securities that are accessible through “Stock Connect”. The index is designed for international investors and is calculated using China A Stock Connect listings based on the offshore RMB exchange rate S&P Korea BMI (US Dollar) Index captures all companies domiciled in South Korea within the S&P Global (CNH). Also, the index constituents are weighted by the security free-float adjusted market capitalization BMI with a float-adjusted market capitalization of at least USD 100 million meeting 6- and 12-month median calculated based on the Foreign Inclusion Factor (FIF) and subject to Foreign Ownership Limits (FOLs). value traded requirements. The MSCI China A Index is rebalanced simultaneously with the MSCI Global Investable Market Indexes, using the same price and data cut-off dates. The index is calculated in a net total return form (i.e. JPM GABI Index consists of the JPM GABI US, a U.S. dollar denominated, investment-grade index reinvestment of net dividend payout into the index portfolio). spanning asset classes from developed to emerging markets, and the JPM GABI extends the U.S. index to also include multi-currency, investment-grade instruments.
Source: Eastspring Investments *Developed Markets countries in the index include: Australia, Hong Kong, New Zealand and Singapore. **E M include: China, India, Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand. ***DM include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the UK and the US. EM countries include: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 53 DISCLAIMER FOR INSTITUTIONAL, WHOLESALE OR PROFESSIONAL INVESTORS ONLY. ONE ON ONE PRESENTATION.
Strictly Private and Confidential. Past performance and the predictions, projections, or forecasts on the economy, This document is produced by Eastspring Investments (Singapore) Limited and securities markets or the economic trends of the markets are not necessarily issued in : indicative of the future or likely performance of Eastspring Investments or any of the funds managed by Eastspring Investments. An investment is subject to investment - Singapore and United States by Eastspring Investments (Singapore) Limited risks, including the possible loss of the principal amount invested. Where an (UEN: 199407631H) ; investment is denominated in another currency, exchange rates may have an adverse effect on the value price or income of that investment. Furthermore, The afore-mentioned entities are hereinafter collectively referred to as Eastspring exposure to a single country market, specific portfolio composition or management Investments. techniques may potentially increase volatility. The information contained herein does not have any regard to the specific investment objective(s), financial situation or the This document is solely to be used for informational purposes only and is not particular needs of any person. intended for anyone other than the recipient. This information is not an offer or solicitation to deal in shares of any securities or financial instruments and it is not Where included, benchmark and index data included in this document are provided intended for distribution or use by anyone or entity located in any jurisdiction where for illustrative purposes only. The portfolio and/or services mentioned do not formally such distribution would be unlawful or prohibited. This document may not be copied, track any such benchmarks or indices and no representation is made as to relative published, circulated, reproduced or distributed without the prior written consent of future performance or tracking deviation. You should note that investing in financial Eastspring Investments. instruments carries with it the possibility of losses and that a focus on above-market returns exposes the portfolio to above-average risk. Performance aspirations are not The Fund is not registered in the U.S. under the Investment Company Act of 1940, as guaranteed and are subject to market conditions. Higher yielding investments can amended, nor the Securities Act of 1933, as amended (1933 Act). Shares may not be produce income at the expense of capital growth or the capital value of the offered or sold, directly or indirectly, in the U.S. or to any ‘U.S. Person,’ as defined by investment. High volatility investments may be subject to sudden and large falls in Regulation S of the 1933 Act. This information is not an offer or solicitation to deal in value, and there could be a large loss on realization which could be equal to the shares of any securities or financial instruments and it is not intended for distribution amount invested. or use by anyone or entity located in any jurisdiction where such distribution would be unlawful or prohibited. Any investment or potential transaction described or Gross-of-fee performance figures presented do not reflect the deduction of contemplated in connection with the information published is subject to legal and investment advisory fees. A client’s returns will be reduced by the advisory fee and regulatory requirements applicable in your jurisdiction and you shall be solely other expenses incurred in the management of its account. For example, the responsible for complying with such legal and regulatory requirements. deduction of a 1% advisory fee over a 10-year period would reduce a 10% gross return to an 8.9% net return. Adviser’s fees are disclosed in Form ADV, Part II. Information herein is believed to be reliable at time of publication but Eastspring Investments does not warrant its completeness or accuracy and is not responsible for error of facts or opinion nor shall be liable for damages arising out of any person’s reliance upon this information. Any opinion or estimate contained in this document may subject to change without notice.
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY. 54 DISCLAIMER FOR INSTITUTIONAL, WHOLESALE OR PROFESSIONAL INVESTORS ONLY. ONE ON ONE PRESENTATION.
Supplemental information, benchmark illustrations and representative accounts were contract directly with any prospective client, nor does it have any discretion over all selected on best available data. The representative accounts chosen best client assets, nor does it trade, deal or direct trading in any security, client account or represents guidelines, objectives and restrictions for this strategy and not based upon fund. Eastspring US does not receive or retain any assets or securities, nor does it investment performance. Illustrations shown or issuer specific examples in this serve as a custodian or direct any custodial decisions. Additional information about presentation are not in and of itself specific recommendations and by themselves Eastspring Investments is also is available on the SEC’s website at cannot be used to determine which securities to buy or sell or when to buy or sell. www.adviserinfo.sec.gov The illustrations are based upon those issuers and/or benchmark specific circumstances that best represent our proprietary systematic investment process and Atlantic Zagros Financial Partners, LLC, (“AZFP”) is a Delaware limited liability not performance-based criteria. The securities identified and described do not company with its principal office and place of business 1345 Avenue of the Americas, represent all the securities purchased, sold or recommended for client accounts. The 33rd Floor, New York, NY. AZFP as selling agent provides marketing and selling reader should not assume that an investment in the securities identified was or will be services on behalf of Eastspring Investments and individuals referenced are profitable. members of the Financial Industry Regulatory Authority (“FINRA”). AZFP is not affiliated with Eastspring Investments, and additional information about those The performance of the composites shown herein reflects the deduction of registered representatives is available at https://brokercheck.finra.org. standardized management fees and brokerage commissions. You should note that expenses incurred may be different in character and amount from those that will be Information provided by independent data providers (Bloomberg, Wind, Go-Goal, incurred by the portfolio in the future. Note also that the performance reflects the Aladdin, Refinitiv Datastream, QUICK) herein is believed to be reliable at time of reinvestment of interest and other earnings. The performance illustrations have not publication, Eastspring Investments utilizes independent data for illustrations, been audited. representations, and modeling, but Eastspring Investments does not warrant its completeness or accuracy and is not responsible for error of facts or opinion nor shall Eastspring Investments (excluding JV companies) companies are ultimately wholly- be liable for damages arising out of any person’s reliance upon this information. Any owned / indirect subsidiaries / associate of Prudential plc of the United Kingdom. opinion or estimate contained in this document may subject to change without notice. Eastspring Investments companies (including JV's) and Prudential plc are not affiliated in any manner with Prudential Financial, Inc., a company whose principal Prior to investing, Investors should read the Prospectus and Key Investor Information place of business is in the United States of America or with the Prudential Assurance Document (“KIID”). Company, a subsidiary of M&G plc, a company incorporated in the United Kingdom. Morningstar Rating measures how funds have performed on a risk-adjusted basis Eastspring Investments Inc. (“Eastspring US”) primary activity is to provide certain against their category peers. It gives investors the ability to quickly and easily identify marketing, sales servicing, and client support in the US on behalf of Eastspring funds that are worthy of further research. The Morningstar Rating is calculated for Investment (Singapore) Limited (“Eastspring Singapore”). Eastspring Singapore is an three years, five years, and 10 years, and the overall rating is a weighted average of affiliated investment management entity that is domiciled and registered under, the time-period ratings. Morningstar Risk-Adjusted Return is calculated based on among other regulatory bodies, the Monetary Authority of Singapore (MAS). expected utility theory, a framework that recognizes that investors are risk-averse and Eastspring Singapore is also registered with the US Securities Exchange willing to give up some portion of expected return in exchange for greater certainty of Commission (SEC) as a registered investment adviser. Eastspring US seeks to return. Morningstar calculates risk-adjusted return by adjusting total return for the identify and introduce to Eastspring Singapore potential institutional client prospects. risk-free rate and risk. Such prospects, once introduced, would contract directly with Eastspring Singapore for any investment management or advisory services. Eastspring US does not
STRICTLY PRIVATE AND CONFIDENTIAL. FOR PROFESSIONAL INVESTORS ONLY.