AXA Financial
Fund Guide – April 2010
2010 For Financial Adviser use only. This document has been FINANCIAL approved for use by Financial Advisers only and should not be distributed to, or relied upon by retail clients. FINANCIALa reliable financial partner
The AXA Financial proposition consists of over 50 funds, across 18 fund managers and 13 sectors that have been selected by the independent fund selection process. The goal is to provide both choice and conviction within each sector to facilitate the construction of appropriate and flexible investment portfolios for your clients.
Market Capitalisation/Financial Strength
35.0
30.0
25.0
20.0 €bn 15.0
10.0
5.0
0 BBB+ A A A+ AA– AA AA– AA Irish Life AIB Bank of Standard AVIVA Great-West Zurich AXA Ireland Life Life Co Market capitalisation and financial strength rating of parent group. All ratings are from S&P and relate to long term debt where a financial strength rating is unavailable. Market capitalisation and financial strength as at December 4th, 2009. 3
Introduction
Contents Welcome to the updated AXA Financial Fund Guide. This is a step-by-step, reference guide to our Tailored
Page Selection of funds. 3 Introduction The guide provides, in easy to follow sections, details 4 The Way Forward and information on the fund sectors, fund groups and 6 Fund Groups Overview the funds themselves. 7 Funds by Sector In addition, summary charts and tables are provided 7 Asia Pacific ex Japan Equity Sector to aid you in your investment planning with your 8 Eurozone Equity Sector clients. 10 Global Emerging Equity Sector 12 International Equity Sector This guide is part of an extensive library of aids 15 Irish Equity Sector designed and aimed at helping you, the adviser. 15 Japan Equity Sector For further information please contact us directly 16 North American Equity Sector or visit our website www.axafinancial.ie. 18 Specialist Equity Sector 20 UK Equity Sector 22 Managed Sector 23 Property Sector 24 Fixed Interest Sector 26 Cash 27 Fund Groups 30 Funds Sector Overview 31 Fund Index
AXA Financial provides one tax structure – hundreds of investment choices 4
The Way Forward
AXA Financial offers over 50 funds on a single fund platform (The Tailored Selection). AXA Financial does NOT promote an in-house fund manager. Our entire focus is on the AXA Financial Investment Process. This process distinguishes the AXA Financial fund offering from the typical fund offering available in the Irish market. The process is split into two phases as discussed below.
The AXA Financial Investment Process The quantitative analysis secures that Qualitative Phase The AXA Financial Investment Process factors such as luck are not inadvertently The qualitative phase of the Investment distinguishes the AXA Financial fund credited and that emotion does not enter Process begins with a high level review offering from the fund selection available the selection process at any stage. The of the fund, analysing the fund’s history from competitors. The process comprises team of a dozen fund analysts can then from a number of aspects. It then moves a quantitative and a qualitative phase. be sure that their time is spent on only to examine the constituent holdings of those funds most likely to succeed from a each fund from a number of perspectives Quantitative Phase quantitative perspective. including industrial sectors, market We are unique in that we employ a capitalisation, geographical allocation proprietary fund screening tool that The existence of a clear audit trail from and foreign currency exposures. The AXA exercises sufficient rigour to reduce the sourcing to selection of funds is a further fund analysts also look for any biases and universe of funds (excess 30,000) to a compelling recommendation for the establish how various underweight and number that can be passed through a Investment Process. This transparency overweight holdings relative to benchmark qualitative screening phase. This filtering provides comfort to clients and investment and sector average have influenced ensures that the number of funds passed advisers alike. The process also performance and volatility. to the qualitative phase is manageable eliminates the requirement for extensive while ensuring that no funds that exhibit and time consuming research by the Each fund manager is formally interviewed performance consistency (as measured investment adviser. by our analysts. The interviews are by a range of parameters and not just important as they grant valuable insight investment return) are missed. The funds emerging from the quantitative into how fund managers structure phase of the analysis are shaped by and process information that leads to Measuring a fund by its performance qualitative analysis. Our fund analysts rely investment decisions. Ultimately, the only tells one story. Each fund needs to on their experience, various backgrounds analysts are looking to assess how any be measured against a number of other and disciplines to rigorously interview and past out-performance will be sustained in salient parameters. Our analysis uses assess fund managers. The purpose of the future. 10 parameters including investment the interview is to seek an understanding return, maximum loss, volatility and of the processes that fund managers The level of interaction between the team correlation. Additionally, due to the follow and how they can sustain superior of AXA fund analysts and fund groups is nature, complexity and volatility of the performance into the future. extensive and this is illustrated by the fact underlying investments, measuring funds that there are in excess of 1000 research- over static 1, 3 and 5 year time periods is The power of this assessment is the based contacts with fund groups annually. inappropriate. The primary objective of the combined inputs from various fund This highlights the depth of the knowledge quantitative analysis is to find consistency. analysts to produce an evaluation of the base within the team of analysts. Each fund is compared with each other specific fund. With over 150 years of It is important to note, that once a fund fund within its peer group across 156 experience within the fund analyst team, secures a place on the Tailored Selection, different time periods for each parameter. it ensures that each fund is assessed it is not necessarily there to stay. Each The analysis then weights observations thoroughly. fund is continuously monitored to ensure with greater weight given to more recent that the parameters that it satisfied on its results. initial selection are maintained. 5
AXA Financial – Diversification when investing helps to reduce risk by allocating investments providing choice, among various financial instruments, industries and other categories. The goal is to maximise return by investing in different areas that would each react differently
conviction and Choice to the same event. flexibility
AXA Financial differs from traditional product providers, who promote in-house fund managers and a limited choice of external funds, by offering access to an unbiased range of external funds. The Fund Selection Process applies a rigorous and uniform research approach to each fund selected. Conviction
AXA Financial recognises that your needs can change with time, personal experience and necessity, and that your investments should be able to evolve and change with them. Because the funds and sectors within Evolution are all available through the one tax structure, selections and decisions can be changed at any stage
Flexibility throughout an investment lifecycle.
Consistently Consistent Investment performance is often have reviewed the investment We believe that the consistency of presented as a snapshot in time performance of the Tailored these performance figures is more with selected funds and selected Selection for the 5 year periods powerful than any performance time periods used to position fund to each of last four quarter ends snapshot over any specific time performance in the best light. At (31st March 2009, 30th June period. In volatile investment AXA Financial, we believe that 2009, 30th September 2009 times, these numbers should give consistent performance is more and 31st December 2009). confidence to the professional important and more valuable for The percentage of the Tailored Investment Adviser. the investor in the long run. Our Selection funds with a five year Source – Financial Express Irish fund sectors Investment Process is designed performance history that fall in the to achieve this consistency. top two quartiles were 93%, 86%, To illustrate the effectiveness 89% and 90% for each of these five of the Investment Process, we year periods. 6
Fund Groups Overview The following table provides a simple one page synopsis of the international fund groups associated with our Tailored Selection of funds. Further information on each of the fund groups can be found on page 27.
No of AXA AUMs as at Financial Fund Group Website Founded AUMs Date Funds
http://www.allianzglobalinvestors.com/en/Pages/default. Allianz aspx 1890 €1.0 trillion 31/12/2009 2
Baillie Gifford http://www.bailliegifford.com/ 1908 £56 billion 31/12/2009 2
10 http://www.blackrock.co.uk/Intermediaries/index.htm (incl 7 Blackrock 1988 $3.2 trillion 30/09/2009 passive funds)
Fidelity http://www.fil.com/ 1969 $210 billion 30/09/2009 4
First State http://www.firststate.co.uk/HomeEnGB.aspx#2 1911 £70.8 billion 31/07/2009 3
Gartmore http://www.gartmore.com/ 1969 £21 billion 30/09/2009 2
Invesco http://www.invescoperpetual.co.uk/portal/site/splash-uk 1935 $423.1 billion 31/12/2009 1
JPMorgan http://www.jpmorgan.com/pages/jpmorgan 1871 $1.2 trillion 31/12/2009 4
Jupiter http://www.jupiteronline.co.uk/ 1985 €527 million 30/11/2009 2
Legal and General www.landginvestments.com 1836 £311 billion 30/09/2009 1 Investments
M & G http://www.mandg.co.uk/GlobalHome/ 1931 £169 billion 30/09/2009 3
Martin Currie http://www.martincurrie.com/ 1881 £11.8 billion 31/12/2009 2
Merrion http://www.merrion-investments.ie/ 1986 €1.0 billion 31/12/2009 2
Neptune http://www.neptunefunds.com/ 2002 £5.0 billion 31/12/2009 1
Newton http://www.bnymellon.com/ 2007 $1.1 trillion 31/12/2009 1
Schroders http://www.schroders.com/global/home/ 1804 £138.9 billion 30/09/2009 6
Standard Life http://www.standardlifeinvestments.com/ 1998 £150 billion 30/09/2009 1
Threadneedle http://www.threadneedle.com/ 1994 £60 billion 31/12/2009 1 7
Funds by Sector
MoneyMate Star Ratings MoneyMate Fund Ratings are a simple visual way to evaluate a fund’s The ratings are intended only for use as a first step in the fund selection historic risk-adjusted performance compared to other funds with a similar process and should be used with extreme care and in combination with Equity risk profile. other information and analysis to make informed investment decisions. £ The MoneyMate ratings are a quantitative assessment of a fund’s past For further information and a comprehensive overview of MoneyMate Fund Fixed Interest behaviour over a three-year period, measured from one to five stars. Ratings, please visit www.moneymate.ie However, before individual funds are rated, they are placed in risk profiles or contact MoneyMate directly. £ based on their volatility. Funds are then ranked within those risk profiles Property Funds that do not have MoneyMate Ratings have not been rated. using a risk-adjusted return measure, with an additional mechanism to promote funds which have a stronger capital preservation record. £ £ Cash MoneyMate will rate funds on a quarterly basis. When the total score for each fund in each of the risk profiles has been calculated, MoneyMate will distribute stars (on a scale of one to five) based on ranking within each risk £ Managed profile, where the top funds receive the top ratings.
Asia Pacific ex Japan Equity Sector
AXA Financial BlackRock Pacific Rim Index
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating This fund invests in the shares of companies in the Pacific BlackRock $862M 148 Passive N/A HHHHH Rim and aims to achieve a return that is consistent with 31/01/2010 the return of the FTSE All-World Developed Asia Pacific £ ex-Japan Index.
Investment Approach Key Points
The vast majority of funds are managed on a ‘fully replicated’ basis, where the fund’s • This fund invests in the shares of companies in the Pacific Rim and aims to achieve exposure to each security in the index is in line with the weight it has in the underlying index. a return that is consistent with the return of the FTSE All-World Developed Asia Pacific BlackRock believe this is the most reliable approach to equity indexation for a number of ex-Japan Index. This index is widely regarded as the benchmark for UK pension fund reasons: investment in shares of companies in the Pacific Rim. • Risk relative to the index is minimised. • Portfolios automatically rebalance, which minimises turnover and trading costs.
AXA Financial Fidelity South East Asia
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To invest principally in equity securities quoted on stock Allan Liu $5,735M 150 Growth Multi-Cap HHHHH exchanges in the Pacific Basin excluding Japan. 31/01/2010
£ Investment Approach Key Points • As a growth-orientated investor Allan looks for attractively valued companies that reflect • Managed by Allan Liu since 2001. The fund has a growth orientation, it diversifies risk strong growth prospects, with above average earnings growth potential relative to both with a long portfolio of 150 stocks plus. the sector and the market. Stock selection results from bottom-up, detailed fundamental • All cap with a bias away from large cap. It typically has a higher risk and return profile. analysis of company and industry. • It aims to produce long - term capital growth through investment in a diversified portfolio of stocks across the South East Asia region.
AXA Financial First State Asia Pacific Leaders
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve long term capital growth. The Fund invests in Angus Tulloch £3,674M 50 Value Large & large and mid capitalisation equities in the Asia Pacific Mid Cap Alistair 31/01/2010 region (excluding Japan, including Australasia). Thompson £
Investment Approach Key Points
• A long term view fund. The fund invests with a 3-5 year horizon which the manager feels • Corporate governance is key part of their investment process. gives the investment a chance for better company relationships. Will top & tail when • Tends not to chase momentum. opportunities arise. • Experienced team, disciplined process, long & successful performance history and a • Fund has an absolute return mindset. long term stewardship of the fund. • Bottom up - focused on quality companies. • Preservation of capital is key to the fund management team. • Strong valuation disciplines. • High level of conviction in positions – typically top 10 has approximately 50% of fund. • Seeks sustainable and predictable growth. 8
AXA Financial Martin Currie Global Funds Asia Pacific
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To produce capital growth by investing in all or any of Richard Evans $257M 40-60 Growth Multi-Cap the Indian sub-continent, Australia, New Zealand and /Value Jason McCay 31/01/2010 the Far East, excluding Japan. The portfolio will be £ invested principally in equity securities.
Investment Approach Key Points • The returns are based on stock selection and focus on momentum and change. Martin • Martin Currie is a strong fund group that has captured the essential aspects of a Currie utilise a numerical screening system – the Dynamic Stock Matrix – which screens ‘boutique’ investment house despite it’s long history. Its employee ownership brings and identifies potential stocks. stability for investment managers to thrive. • They identify change as the central dynamic behind stock price movements. They believe • Martin Currie specialises in equity fund management and has adapted the conventional market participants tend to underestimate both the duration and magnitude of change boutique model to ensure that all equity managers have access to specialist global at the stock level. The process is designed to identify and exploit the opportunities this analysts. presents. • A proprietary stock ranking tool (Dynamic Stock Matrix) is used to identify company change • The investment managers conduct primary research and make investment decisions. at an early stage, thus identifying how positive and negative changes impact the direction This makes for quicker and more effective decision-making and ensures a combination of stock prices. of strong team culture with individual ownership and accountability. • This fund offers an interesting and contrasting core proposition for the Asia Pacific (ex • They control very strong research resources and as such the fund focuses on a wider Japan) fund range as it includes Australia and New Zealand within its investment scope Asia Pacific region including Australasia. believing they are at the centre of the Asia Pacific economic environment. • The fund has a consistent and strong investment process that has delivered excellent investment performance and is an extension of choice within the new Tailored Selection range. Eurozone Equity Sector
AXA Financial Allianz RCM Euroland Equity Growth
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating The fund primarily invests in Eurozone equity markets. Gerrit Mader €129M 50 to 80 Growth Large Cap HHHH Fund management focuses on securities it considers Matthias Born 31/12/2009 to have growth potential that is not fully taken into £ consideration in the price of the security (growth approach). The investment objective is to achieve long-term capital growth
Investment Approach Key Points • A research driven investment process is based primarily on bottom-up stock selection, • Portfolio managers draw input from all resources of RCM’s global equity platform. although this is done within a top-down framework. The top down overlay serves two Generating information advantage is one of the cornerstones of the investment process. functions. Firstly, it contributes to idea generation by highlighting countries or sectors that • Allianz employs “Grassroots” research to complement fundamental research. It is an may have attractive growth characteristics. Secondly, it operates as a risk control feature, investigative research tool which increases conviction on holdings and buy/sells. It also which ensures that country or sector weighting ranges take full account of the macro identifies potential new ideas and possible surprises. It uses circa 300 independent consideration. Sector and industry weights are monitored to ensure that deviations are researchers around the world to investigate critical issues and marketplace trends. within pre-defined ranges relative to the benchmark. • The investment process is focused on structural growth (which is less dependent on global GDP growth). 9
AXA Financial BGF Euro-Markets
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To maximise total return, the fund invests at least 70% Alice Gaskell €1,815M 50 N/A Flexible HHHH of its total assets in the equity securities of companies Andrras 31/01/2010 domiciled in those EU member states participating in Zoellinger £ EMU. Other exposure may include, without limitation, investments in those EU member states that, in the opinion of the investment adviser, are likely to join EMU in the foreseeable future and companies based elsewhere that exercise the predominant part of their economic activity in EMU participating countries.
Investment Approach Key Points
The approach is flexible, varying through market and economic cycles to position the Experienced research team with collaborative culture; portfolio appropriately. Sector and factor exposures are principally the result of stock • All 13 investment professionals on the European Equity Style Diversified team are selection. involved in the research process. BlackRock make sure that at any given time they understand the riskiness of the • The team includes five senior portfolio managers with an average of over 18 years portfolio relative to the benchmark and, crucially, the sources of risk. The Fund’s portfolio experience including during recessionary conditions. construction adheres to three risk parameters which ensure that risk is diverse, deliberate and appropriately scaled: • In total the team can draw on over 140 years of investment experience. • Portfolio typically hold between 30 and 50 stocks. • Structured, rigorous investment process with emphasis on risk awareness. • Strict control of portfolio construction to combine focus with risk. • Idea generation from a vast range of internal and external sources afforded by BlackRock’s global reach. • Maximise stock specific risk (aim for >50% of total portfolio risk). • Rigorous in-depth fundamental analysis conducted by experienced analysts within a • Minimise unintended risk - no blind spots. consistent framework and targeted to the best money making ideas. • Have diverse range of exposures (individual stock / factor risk <10%). • A commitment to disciplined portfolio construction and a constant awareness • Key aim is to avoid performance being driven by a single stock or ‘factor’. of portfolio risk. • Largest positions will reflect risk adjusted upside to price target, level of conviction and visibility of catalysts. • Sector positions primarily driven by bottom-up input but checked against macro view.
AXA Financial BlackRock Euro Equity Index
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve a return in line with international equity BlackRock €277M 357 Passive N/A markets. 31/01/2010
£ Investment Approach Key Points The vast majority of funds are managed on a ‘fully replicated’ basis, where the fund’s • The investment objective of the fund is to track closely the MSCI EMU Index which is a exposure to each security in the index is in line with the weight it has in the underlying index. free floating adjusted market capitalisation weighted index that is designed to measure BlackRock believe this is the most reliable approach to equity indexation for a number of the equity market performance of countries within the EMU. reasons: • The MSCI EMU Index consists of the following 11 developed market euro zone • Risk relative to the index is minimised. country indices: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, the • Portfolios automatically rebalance, which minimises turnover and trading costs. Netherlands, Portugal and Spain. • It is often easier and more cost effective to trade a broader index basket. 10
AXA Financial Fidelity Euro Blue Chip
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To invest principally in blue chip equities in those Alexandra €496M 50 to 100 Growth Large Cap HHH countries which are members of the Economic Monetary Hartmann Union (EMU) and primarily denominated in Euro. Currently £ these are the twelve member countries but if other countries join the EMU in the future then investment in these countries may also be considered for inclusion in the fund.
Investment Approach Key Points Portfolio Manager Alexandra Hartmann regards blue chip companies not primarily as large- • The fund is actively managed and follows a disciplined approach to identify companies cap stocks per se, but first and foremost as high-quality businesses with a sustainable which can ‘grow from within’. business model, a management with a good track record and strong internal - rather than • The manager draws upon Fidelity’s extensive research resources to identify investment macro- growth drivers that can fuel ‘growth from within’ regardless of market external opportunities arising from supply/demand imbalances, unrecognised growth potential, conditions. The characteristics of growth from within can come in a variety of different structural growth and restructuring opportunities. The portfolio would typically hold shapes and forms, including: a firm with a strong market position, a business that benefits 50-100 with a bias away from mega cap companies. The fund is not constrained by a from a good geographical roll-out story, an industry that enjoys high barriers to entry or where stock’s weight in the benchmark in portfolio constructing. there is a demand/supply imbalance.
AXA Financial Schroder Euro Equity
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide capital growth primarily through investment Gary Clarke €1,275M 50 to 60 Growth Multi-Cap HHH in equity securities of companies in countries 31/01/2010 participating in the EMU. £
Investment Approach Key Points
Investment Process; • The fund is run on a pragmatic basis seeking growth from a multi-cap stock portfolio. • Bottom up stock selection drives the investment process. • The fund has the flexibility to adapt to different market conditions. • Large cap research driven by sector analysts, small and mid cap stocks researched by • There is no structural bias to any country, sector or market cap tier. European Equity fund managers and Pan European Small and Mid Cap Team. • Typical portfolio of 50-60 stocks with reasonably tight control around its MSCI EMU • Strong proprietary stock research database for information sharing, Global Research benchmark weights on a stock and sector level. Investment Database (GRiD). • Fund tries to identify simple, demonstrable drivers of superior growth e.g. competitive • Rigorous active risk controls. structure, end market growth, operational and financial leverage.
Global Emerging Equity Sector
AXA Financial Allianz RCM BRIC Stars
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating The Fund’s aim is to achieve long-term capital growth by Michael €181M 50 to 70 Blend Large Cap investing predominantly in the equity markets of Brazil, Konstantinov 31/12/2009 Russia, India and China. Up to one third of the Fund’s £ assets may be invested outside the BRIC countries including developed countries and/or other emerging markets.
Investment Approach Key Points • The fund’s robust investment process is a unique combination of systematic country • The manager is valuation conscious and risk aware. His staring point is systematic allocation and bottom-up stock selection, providing a high quality portfolio that drives country allocation which is based upon macro and market factors. performance (a third of the performance is expected to come from country allocation with • Allianz employs “Grassroots” research to complement fundamental research. It is an the remainder from stock selection). investigative research tool which increases conviction on holdings and buy/sells. It also • The fund has a weighted benchmark strategy with equal weights to each BRIC country, identifies potential new ideas and possible surprises. It uses circa 300 independent providing fund managers with a clear focus on allocation. researchers around the world to investigate critical issues and marketplace trends. • A flexible approach means that up to a third of the fund may be invested in non-BRIC countries that will benefit from the BRIC effect. 11
AXA Financial First State Global Emerging Markets Leaders
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve long term capital growth through investing Jonathan £809M 55 Value Large & in large and mid capitalisation equities in emerging Asante Mid Cap 31/01/2010 economies, including those companies listed on David Gait £ developed market exchanges whose activities predominantly take place in emerging market countries.
Investment Approach Key Points
• Fund has an absolute return mindset. • Corporate governance is a key part of their investment process. The team travels extensively when researching and are not constrained by their Edinburgh location. • Bottom up - focused on quality companies. Strong valuation disciplines. • The management team is insistent on finding out about company drivers. Due diligence • Seeks sustainable and predictable growth. is part of core investment process. They seek to discover how company management really works. • The style of the fund is long term value. They tend not to chase short term earnings’ growth. • The portfolio will range in size from 30 to 60 stocks depending on the market cycle. • The fund tends to perform better in relative terms during adverse market conditions. • The management team’s extensive research and due diligence gives a level of reassurance that they really understand the companies they are buying into.
AXA Financial Gartmore Emerging Markets
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve a long-term return in excess of the long-term Chris Palmer $455M 80 to 90 N/A Large Cap HHHH return that is typically achieved from emerging equity 31/01/2010 market £
Investment Approach Key Points • The Team’s investment approach is based upon identifying and exploiting unexpected • The fund typically holds between 80 and 90 stocks in its portfolio. earnings potential at a stock, industry and country level. Dedicated sector analysts strive • The fund’s cap bias reflects where the team identifies greatest potential for adding to gain an information advantage and exploit it. They achieve this through comprehensive, value. Investment decisions are based on a balance of the upside implied in the target forward-looking research to identify the best ideas and a risk-controlled portfolio price against the risk involved in the inclusion of a stock in the portfolio. construction process. • At the heart of the Gartmore investment philosophy is a team-based approach to detailed research and discovery of the unexpected, coupled with hands-on company interaction and monitoring.
AXA Financial JPM Emerging Markets Equity
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide long-term capital growth by investing primarily Austin Forey $6,567M 65 Growth N/A HHHHH in emerging markets equities. 31/12/2009 £ Investment Approach Key Points The investment approach is concentrated upon two core principles; understand what we • Managed by Austin Forey for almost 15 years, he operates in one of the best resourced own and value what we understand. JPM look to take advantage of the high relative volatility Emerging Market equity teams available, with significant resources on a global basis as of emerging markets by investing for the long-term, beyond the investment horizon of the well as a specialist regional team generating research led best ideas. average investor. The investment process aims to achieve superior returns by combining • The fund has a growth bias seeking growing companies at a reasonable price that can ideas from JPM’s well-resourced and experienced team in an appropriate way according to be held for the longer term. each client’s or Fund’s risk profile and performance requirements. Portfolio managers are active participants in the process of idea generation, not simply passive recipients of the • The fund has a very low turnover for an equity fund, particularly an Emerging Market one, analysts’ ideas. and this underlines the emphasis on a longer-term investment horizon both for portfolio construction and for the research process. • The fund is willing to take large active positions principally through stock selection, but balances this across a 60–75 stock portfolio. • This is a complementary core-growth offering within the expanded Global Emerging Markets sector available on the Tailored Selection. It is more suited towards investors with a longer-term investment horizon. 12
International Equity Sector
AXA Financial Baillie Gifford International
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve capital growth by investing principally in Charles £187M 88 Growth Multi-Cap HHHH companies worldwide, excluding the United Kingdom. Plowden 10/03/2010 Malcolm £ MacColl Spencer Adair
Investment Approach Key Points •Baillie Gifford are active managers and are prepared to back their judgement in the • The fund has a growth bias orientated towards the long term. Investment is principally in composition of portfolios and their management. They seek to invest in well-managed equities of companies worldwide, excluding the UK. businesses where they can see sustainable competitive advantages. • Baillie Gifford has a distinctive investment approach that focuses on quality, longer term investment opportunities to companies who can grow sustainably. • Baillie Gifford is focused primarily on the analysis of businesses rather than economic data and seeks companies that have a combination of above average earnings and cash flow growth together with sustainable returns. • This fund seeks to capture the best investment ideas from across all Baillie Gifford equity teams and to incorporate them into a global equity best ideas portfolio that offers broad diversification within a genuinely global context. • The fund offers exposures to this established investment process and diversification with a Global ex UK mandate.
AXA Financial Gartmore Global Focus
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve a long-term return, in excess of the long- Neil Rogan $774M 30 to 40 Growth Large Cap HHH term return that is typically achieved from global equity 31/01/2010 markets, by investing in a concentrated portfolio of
£ companies in global markets.
Investment Approach Key Points • The investment process seeks to combine an eclectic mix of investment ideas for the fund. • The Gartmore Global Focus Fund is an unconstrained best-ideas fund, with typically These themes are then thoroughly researched by a small but boutique-like equity team for 30-40 stocks, aiming to outperform in all market conditions. This investment strategy potential inclusion in the portfolios. is in direct contrast to a typical diversified investment fund that generally holds over 75. Fewer holdings mean each stock position has a significant weighting and this • Portfolio construction follows a core and satellite approach. Core stocks represent concentration can amplify the effect of an outperforming stock holding. strategic holdings with long-term growth characteristics. Satellite stocks represent tactical opportunities with a shorter-term investment horizon with well defined exit points. • It has large cap growth bias – it seeks unexpected earnings. • Managed by global high alpha specialist Neil Rogan since 2004. Neil is supported by a highly experienced Global Equity Team who between them have over 100 years’ combined experience. • The manager operates a strong sell discipline with stocks sold dispassionately on achieving predetermined price targets or an expectation of lower than anticipated earnings growth. • This is a concentrated global best ideas fund which seeks to exploit unexpected earnings growth. • The addition of this fund to the Tailored Selection provides access to an established investment process among Global equity funds with a strong performance record that Winterthur’s Investment Team believes has the potential to be replicated in the future. 13
AXA Financial Jupiter Global Financials
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating
To achieve long-term capital growth, principally through Philip Gibbs €78M 40 to 60 Value Large Cap HH investment in equities of financial sector companies on 31/12/2009 an International basis. £
Investment Approach Key Points • The fund manager, Philip Gibbs, uses a combined top-down and bottom-up investment • A large cap value orientated fund. approach. After an initial idea generation phase, Philip takes a macro view of the economy • Managed by Philip Gibbs, he initially takes a macro view of the economy and aims and identifies themes which have the most potential. to identify themes that have the most potential. He then looks for reasonably priced • He then looks for reasonably priced companies through which to play out his best ideas companies through which to play out his best ideas on these themes. He is not afraid to on these themes. Through detailed quantitative and qualitative analysis, he reduces the back strong convictions about a company with a sizeable weighting in the fund. In order investment universe to a list of potential companies which combine the optimal mix of to deliver returns, he believes it is sensible to concentrate the fund’s assets only on his growth, financial strength and undervaluation. He is not afraid to back strong convictions very best ideas. about a company with a sizeable weighting. • He looks for strongly incentivised and committed management before investing. He also • To deliver returns, Philip concentrates the strategy’s assets on his very best ideas, and has strict guidelines on the price he is prepared to pay for shares. Usually, he finds the he is willing to back strong convictions about a company with a sizeable weighting in the best returns can be secured by seeking out lowly-rated companies with strong underlying portfolio. He is less concerned about index weightings but looks for absolute returns, and growth where the wider market has simply not recognised this. spreads risk through exposure to different types of companies. • Valuation is a key measure of risk control. A tendency to buy when valuations are particularly low (for a given growth rate) builds in a margin of safety at purchase. Philip has a tendency to sell when valuation gaps have closed. • Philip has strict guidelines on the price he is prepared to pay for shares. Usually he finds the best returns can be secured by seeking out lowly-rated companies with strong underlying growth where the wider market has simply not recognised this. Once a stock has realised its potential he will, more than likely, remove it completely from the portfolio. Please note: Under UCITS III regulation, Philip may employ a range of strategies, including the use of derivatives, for investment purposes, hedging and efficient portfolio management. This means he can take a flexible approach to managing the fund and can seek to profit in a variety of market conditions.
AXA Financial M&G Global Leaders
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To maximise long term total return (the combination of Aled Smith £959M 65 Value Large Cap HHH income and growth of capital) by investing in a wide range (Deputy Stuart 31/01/2010 of global equities that the fund manager considers to be Rhodes) £ leading in their field.
Investment Approach Key Points • The M&G Global Leaders Fund is a global equity fund with a clear investment strategy – to • The fund aims to generate long-term growth from a diversified portfolio of global invest in companies which are undertaking positive internal changes that have not yet equities that the fund manager considers to be leading in their field. been recognised by the wider market. The fund manager follows a clearly defined active • A value fund with a large cap orientation. investment approach, consisting of systematic bespoke screening of the global equities universe followed by rigorous company specific fundamental analysis. He tends to avoid • The portfolio will typically hold around 65 stocks which are selected without reference imposing top-down views on sector, country or currency selections but will take into account to benchmark weights or top down factors and are determined primarily on the level of macroeconomic factors where they impact on a particular stock. There is no reference to conviction in the stock. The process is supported by a well-resourced team of analysts a benchmark in the stock selection process. The key test is the fund manager’s conviction and fund managers. over each company’s prospects of long-term success. His judgement is based on two • The fund’s valuation bias is a key feature of the investment approach. key factors: the company’s valuation and the ability of its management to deliver the appropriate corporate strategy. After making his selections, the fund manager employs a • This Fund provides an extension of choice on Tailored Selection for investors seeking risk management process to ensure that the portfolio is properly diversified. exposure at a global level to companies which it is believed will benefit from undergoing internal change. 14
AXA Financial Neptune Global Equity
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To generate capital growth from a concentrated portfolio Robin Geffen £1,006M 50 Growth Large Cap HHHH of global securities, selected from across world equity (Fund Manager) 29/01/2010 markets, with a view to attaining top quartile performance Douglas Turnbull within the appropriate peer group. £ (Assistant Fund Manager) Ewan Thompson (Assistant Fund Manager)
Investment Approach Key Points •The Manager adopts a very active approach to stock selection uninhibited by benchmark • It is a concentrated and high-conviction portfolio investing in Neptune’s favourite stock weights. Benchmarks are considered to be a reflection of past performance with ideas from around the world. benchmark awareness likely to deliver exposure to growth below that of the market. • They apply a rigorous process that identifies those global investment sectors with the best opportunities for growth. The manager, Robin Geffen, selects the best companies in those sectors, regardless of where they are based. • Driven by a top down sector selection, it has a large cap growth bias with approximately 50 stocks in its portfolio. It focuses on holding its stocks over the long term. • Neptune, with its boutique approach to investing, is an exciting investment house. Neptune’s house approach is focused on top-down analysis of global industry sectors combined with bottom-up stock selection. • The fund benefits from internal fundamental research which seeks to identify companies which are likely to benefit most from Neptune’s global view on industries and sectors and where growth is unappreciated by markets. • The active stock selection process focuses on catalysts for change in earnings growth profiles. Deterioration in company fundamentals acts as the key catalyst in realising value from portfolio holdings. • The relatively concentrated nature of the portfolio, together with a high level of exposure to growth characteristics, means this fund may at times experience performance at variance to its peer group. This provides a complementary portfolio to the existing Global Equity funds available through the Tailored Selection.
AXA Financial Threadneedle Global Select
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve above average capital growth through Jeremy Podger £587M 90 to 140 Growth Large Cap HHH investment in equities issued by companies worldwide. 31/01/2010 The portfolio may be concentrated geographically or with respect to stock and sector positions, which may £ lead to increased levels of volatility. If desirable, it may further invest in other securities (including fixed interest securities, other equities and money market securities).
Investment Approach Key Points • The first step is to create a pool of ideas from which to pick suitable stocks to build • Large cap growth biased fund with a diversified portfolio of 90-140 stocks. the portfolio. Threadneedle seek to identify multiple sources of alpha during the stock • The fund is bottom-up driven with stock selection regarded as the main source of alpha, selection process. The best stock ideas are then discussed and considered by the Global with a top-down check. Equity Team within a global context. • Fundamental company analysis is undertaken using primary information sources. • The approach is to consider the way in which a company creates value and compare Sources of alpha are sought from valuation anomalies, misguided consensus forecasts, this to its share price. Threadneedle look at how a particular business operates, talk corporate change and under-researched stocks within the context of Threadneedle’s to its management, and examine how it competes in the market place. They typically thematic and economic views. run global portfolios with around 120 stocks. This gives a well-diversified portfolio, while at the same time creating the potential to meet the objective of outperforming the • They have access to and rely on “best ideas” from across the group. benchmark. Price targets and timelines are agreed along with recommended portfolio • The initial global universe of about 25,000 stocks is filtered down to about 6,000 by weights. Stocks are only added to the core holdings if the Global Equity Team unanimously rejecting all those with a market cap of <$1bn. Of these, about 1,800 are held on watch agrees. Threadneedle then hold global research meetings every week to review individual lists by Threadneedle regional teams (UK, Europe, US, Asia, Japan & GEM). About 300 companies, as well as a separate meeting to review the existing portfolio. Threadneedle are then held in the core list for each region. These core lists provide the Global team also adopt a strict sales discipline, reviewing the stock as soon as the set target has been with their biggest source of high conviction ideas and are a major input into the final met. portfolio of 90-140 stocks. • This fund is managed by a dedicated global equity fund desk that is both long established and well resourced. • Threadneedle, as an investment house, has a well defined and strong equity investment process that spans all equity regions and global equity sectors. • The global equity team seeks to capture and optimise the best ideas from all Threadneedle’s equity desks. • The portfolio is then constructed on a truly global basis. • This fund offers investors genuine diversification with a global mandate. 15
Irish Equity Sector
AXA Financial Merrion Irish Opportunities
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To invest in equities domiciled in or having substantial Merrion €3M N/A N/A HH business interests in Ireland. The companies may be Investment 28/01/2010 listed on the Irish Stock Exchange or another international Managers Ltd £ exchange.
Investment Approach Key Points • Merrion follow a pragmatic investment approach which combines top down sector selection • The Merrion Irish Opportunities Fund follows the investment process detailed which is with fundamental bottom up security selection. unconstrained by benchmark with regards to minimum sector or stock allocations. Up to 25% of the fund can be invested in non Irish listed stocks, but this component is • The top down thematic focus in the investment process looks at industry (or regional) expected to be comprised of companies with significant linkages to the Irish market. restructuring; long term capital investment trends; demographics and social or technological developments to identify factors which would be favourable to an industry; region or company. • This top down framework forms an important context for stock selection which is based on fundamental company analysis.
Japan Equity Sector
AXA Financial Baillie Gifford Japanese
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve capital growth through investment in Japan in Sarah Whitley £148M 59 Growth Multi-Cap HH any economic sector. Matthew Brett 10/03/2010
£
Investment Approach Key Points • Baillie Gifford are active managers and are prepared to back their judgement in the • A growth biased fund managed by a team that is widely regarded as one of the best composition of portfolios and their management. They seek to invest in well-managed resourced teams in this sector. Baillie Gifford have a long and successful history businesses where they can see sustainable competitive advantages. investing in Japan and have been investing in Japanese equities since 1966. The team consists of sector specialists who make stock recommendations across the cap-range and all holdings are regularly debated within the team. Company contact is a key element with over 450 companies visited each year. • Baillie Gifford is focused primarily on the analysis of businesses rather than economic data and seeks companies that have a combination of above average earnings and cash flow growth together with sustainable returns.
AXA Financial BlackRock Japan Index
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide a total return, taking into account both capital BlackRock $1,716M 345 Passive N/A HH and income returns, which reflects the total return of the 31/01/2010 equity market in Japan. £
Investment Approach Key Points
The vast majority of funds are managed on a ‘fully replicated’ basis, where the fund’s • The investment objective of the fund is to provide a total return, taking into account both exposure to each security in the index is in line with the weight it has in the underlying index. capital and income returns, which reflects the total return of the equity market in Japan. BlackRock believe this is the most reliable approach to equity indexation for a number of The fund invests in the shares of Japanese companies and aims to achieve a return reasons: that is consistent with the return of the FTSE All-World Japan Index. • Risk relative to the index is minimised. • Portfolios automatically rebalance, which minimises turnover and trading costs. • It is often easier and more cost effective to trade a broader index basket. 16
AXA Financial Schroder Tokyo
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve capital growth by investing in Japanese Andrew Rose £542M 60 to 70 Value Large Cap HHH equities. The fund manager focuses on companies 31/01/2010 with a proven track record and solid profits growth £ prospects which are not fully reflected in the current share price relative to other companies. These valuation discrepancies are caused by short term sentiment, and tend to narrow in the long term as other investors take advantage of good value share prices among good quality companies.
Investment Approach Key Points • Schroders investment style is based on identifying mispriced opportunities through • A large cap value fund with a portfolio of approximately 70 stocks. fundamental research. This research means that they can identify both price-based and • A global research resource with a standardised approach to valuation and rating. earnings-driven opportunities relative to their fair value P/E ratio. The advantage of this strategy is that it can be applied in all stages of the economic cycle. • The strength of the investment resources means the funds can carry out highly-detailed company research and get access to the best investment opportunities. Characteristics • In Japan, this style translates into looking for companies with strong potential earnings they look for when conducting company research include the ability to deliver sustainable growth and earnings visibility over the long term. These tend to be companies with a profits growth, attractive valuations and management teams focused on improving sustainable competitive advantage, for example a technological edge, patents or a efficiency. dominant market share. • Schroders do not target any specific style bias or apply a style overlay. Any style biases are a by-product of a portfolio construction process that relies on fund manager experience to combine the strongest, highest conviction ideas that emerge from the stock selection process within an appropriate risk budget. Essentially the process seeks to build portfolios of stocks where the long-term growth prospects are, based on research, undervalued. Given that markets frequently over-value strong growth, historically the style balance between growth and value in the portfolios has tended towards value. The investment style of the fund manager, Andrew Rose, makes it likely that this mild value bias will be more pronounced for the Tokyo Fund and continue going forward, though of course this will depend on market conditions at any given time. • At the same time, Schroders will tend to have greater confidence in their assessment of undervalued situations if they perceive that the risk of a company failing to deliver the predicted level of growth is low. In aggregate, Schroders has a stock selection bias in favour of higher than average quality companies (financially sound, proven management, with a focus on shareholder returns, etc). This bias fluctuates depending on the valuation of ‘quality’, but it has been a relatively consistent feature of the Japanese equity portfolios over time. North American Equity Sector
AXA Financial BlackRock US Index
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating The investment objective of the fund is to provide a BlackRock $617M S&P futures Passive N/A HHH total return, taking into account both capital and income 31/01/2010 returns, which reflects the total return of the FTSE All- £ World USA Index.
Investment Approach Key Points
The vast majority of funds are managed on a ‘fully replicated’ basis, where the fund’s • The investment objective of the fund is to provide a total return, taking into account exposure to each security in the index is in line with the weight it has in the underlying index. both capital and income returns, which reflects the total return of the FTSE All-World BlackRock believe this is the most reliable approach to equity indexation for a number of USA Index. reasons: • Risk relative to the index is minimised. • Portfolios automatically rebalance, which minimises turnover and trading costs. • It is often easier and more cost effective to trade a broader index basket. 17
AXA Financial Fidelity American
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve long - term capital growth through a portfolio Aris Vatis £1,116m 100 to 120 Growth Large Cap HHH composed primarily of US equities. The fund is suitable 31/01/2010 for investors seeking exposure to actively managed US £ stocks.
Investment Approach Key Points • Aris has a “go-anywhere” unconstrained approach to stock picking, and proprietary • A large cap growth orientated fund whose objective is to use informational advantage to research with a global perspective underpins his own company analysis, which focuses on add value. finding companies with an improvement in fundamentals that is not reflected in the share • Tends to have a large number (100-120) of portfolio holdings. price. • Fidelity have extensive local market coverage, proprietary research, analysts manage industry funds, equity and credit teams work closely together. This equates to a significant knowledge advantage.
AXA Financial M&G American
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To aim for long term capital growth through investment Aled Smith £1,323M 63 Value N/A HHH wholly or mainly in securities of North American (including (Deputy Stuart 31/01/2010 Canadian) issuers. When not wholly invested as above, it Rhodes) may only invest in companies which are listed, registered, £ or trading within North America.
Investment Approach Key Points • The fund manager aims to outperform the benchmark S&P 500 Composite Index over the • The portfolio will typically hold around 65 stocks which are selected without reference long run and deliver competitive returns in the North American peer group. Stock selection to benchmark weights or top down factors and are determined primarily on the level of is designed to be the key driver of fund performance. conviction in the stock. This process is supported by a well-resourced team of analysts and fund managers and implemented using a coherent risk management framework. • It is the core belief of the fund manager that value creation for shareholders – a company’s return in excess of the cost of capital – drives share prices over the long run. Consequently, • This is an actively managed core US equity fund which aims to generate long-term investment decisions are determined by the fundamental analysis of individual companies. growth through a diversified portfolio. There is no reference to a benchmark in the stock selection process. Valuation is a key • This fund provides additional choice amongst core North American funds on the Tailored element of the fund’s investment approach and the fund manager’s skill lies in identifying Selection. companies that are better than the stockmarket realises. The fund manager does not take top-down views to determine sector exposures. • Risk management is an integral part of the investment process and the fund aims to add value through efficient portfolio construction. The fund usually holds between 50 and 70 stocks, with a typical holding period of three years.
AXA Financial Martin Currie Global Funds North American
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To produce capital growth by investing in the USA and David Forsyth €75M 40 Blend Large Canada. This fund will invest a minimum of two thirds of Tom Walker 31/01/2010 its total assets (after deduction of ancillary liquid assets) £ in equities of companies domiciled in or exercising the predominant part of their economic activity in the US or in Canada.
Investment Approach Key Points
A flexible and pragmatic approach: • Martin Currie specialises in equity fund management and has adapted the conventional boutique model to ensure that all equity managers have access to specialist global • Returns driven by stock selection; analysts. • No bias to value or growth; • A proprietary stock ranking tool (Dynamic Stock Matrix) is used to identify company • Focus on factors that have a proven impact on share price momentum - quality, value, change at an early stage, thus identifying how positive and negative changes impact the growth and positive change; and direction of stock prices. • Fully-integrated investment process, employing fundamental company and sector research, • This core fund is an actively managed US equity fund with a relatively concentrated with numerical screening. portfolio of 40 stocks, with no structural bias to value or growth. It is also unconstrained by benchmark sector weights. The portfolio will typically be invested in Bottom-up process (75%) drives portfolio construction: large cap stocks with selected mid cap opportunities. • Fundamental research – identifying and quantifying change factors; and • The fund is style agnostic through the investment cycle – they expect to be style neutral. • Priority rankings – an assessment of change factors. • The fund’s investment process consistently challenges market consensus and • Macro/ sector/ industry themes (25%) from portfolio managers, sector managers and emphasises four factors: quality, value, growth and change. global perspective. • Martin Currie is a strong fund group that has captured the essential aspects of a ‘boutique’ investment house despite is long history. Its employee ownership brings stability for investment managers to thrive. 18
Specialist Equity Sector
AXA Financial BlackRock Gold & General
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve long-term capital growth by investing in gold, Evy Hambro £2,008M 65 Value Multi-Cap HHHHH mining and precious metal related shares. It tends to be 31/01/2010 volatile and is particularly suitable for diversification in a £ larger portfolio.
Investment Approach Key Points • The team believes that they can add value through portfolio construction because of their • An all cap (limited exposure towards smaller cap) value orientated fund with a portfolio detailed knowledge of resource companies and a valuation approach that is suited for this between 50 – 80 stocks. sector which allows them to identify value. They do not use optimisation tools but instead • It is particularly suitable for diversification in a larger portfolio. try to understand the risks and rewards of each stock in the portfolio which they believe is a better method. For example, placing a premium on longer mine life differs from the • The fund allows investors access to gold mining and precious metal related shares. traditional methods of valuing companies that discount future income streams. In addition, The fund could be an ideal addition to a larger portfolio as these types of shares are the manager will look to add smaller companies and companies in less developed markets, widely recognised as offering important diversification benefits as gold tends to be where the pricing inefficiencies should be greater than core companies that have key uncorrelated to the wider stockmarket. ‘super’ company characteristics. • The investment team use an extensive in-house global mining database to enable them to construct detailed models of prospective holdings so they can choose those companies with the most positive outlook to produce returns for investors. • Historically investing in gold securities has been useful when seeking a long term hedge against inflation. • Gold tends to be a safe haven asset, and during periods of capital market volatility or political uncertainty its physical attributes become more highly valued.
AXA Financial First State Global Listed Infrastructure
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To deliver capital growth and inflation - protected Peter Meany £147M 30 to 50 N/A Multi-Cap income by investing in a globally diversified portfolio 31/01/2010 of listed infrastructure and infrastructure related £ securities.
Investment Approach Key Points
• Fund has an absolute return mindset. • It offers indirect exposure to infrastructure. It typically has a portfolio of between 30 and 50 stocks invested in inflation linked opportunities, e.g water, toll roads. • Bottom up stock selection balancing value and quality. • It balances infrastructure opportunities in both developed and emerging markets and • High conviction portfolio with sensible diversification. targets integrated energy companies with stable cash flows. • Aims to exploit market inefficiencies. • The fund offers a credible diversification opportunity, albeit with the risk that, over the • Assets should have sustainable growth, high barries to entry, strong pricing power and short term, the performance of company shares may be at variance with the underlying predictable cash flow. fundamentals of infrastructure assets. The volatility of the fund may therefore not always reflect an investor’s view of an infrastructure asset class. • It also offers the potential for a high and growing yield given the high yielding nature of infrastructure shares and the current growth rates in global infrastructure. It therefore offers attractive fund characteristics for a wide range of investors, including those with retirement portfolios. • The fund invests in the listed equity securities of companies whose primary focus is the provision and construction of key infrastructure assets. It invests on a global basis and has a good diversification of investments with no undue concentration. • It seeks to capture the underlying returns of long-term cash flows, which it is believed offer a predictable investment return with some aspect of inflation proofing. • The fund offers an excellent opportunity for asset class diversification, albeit through indirect exposure. It is managed by a team with extensive experience in infrastructure investment, and in the Investment Team’s opinion, is an exciting addition to the Tailored Selection.
19
AXA Financial JPM Global Natural Resources
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide long term capital growth by investing primarily Ian Henderson €2M 250 to 300 Growth Mid-Cap in natural resources companies, many of which are in the 28/02/2010 early stages of exploration £
Investment Approach Key Points • The fund will include investments in companies from discovery/preproduction stage to reserve • The portfolio offers exposure to gold and other mining, and oil and gas investments at definition with an emphasis on the upside from developing world class bodies. In addition, an early stage of development, and also seeks to capture gains from the commodity the manager will also seek to uncover stocks with valuation anomalies that he believes go far cycles. beyond the anomalies that come from extrapolating political risks and considers transborder/ crossborder valuations very relevant in the stock selection process. A raft of valuation methods is used including DCF analysis to value a company. In general the manager’s investment style will be influenced by a number of factors: his view on where markets and sectors are in the economic cycle; the price conclusions he draws from productive capacity and demand forecasts; the opportunities to exploit market inefficiencies as they appear and the value that can be added from investing in small and mid-cap names. • A holistic understanding of risk is taken to portfolio construction. Volatility is reduced as the fund invests in a number of commodity sectors and stock specific risk is reduced by holding 250-300 stocks in the portfolio. The fund’s neutral position will be 30% invested in energy, 30% gold & precious metals, 30% base metals and 10% in other resource/commodity related areas. In practice, the fund can deviate significantly from these percentages, though the manager will never hold more than 50% in any one sector; he aims to change the portfolio mixture to reflect current global conditions and his perception of investment opportunities.
AXA Financial Jupiter Climate Change Solutions
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To generate long-term capital growth from investment Charlie Thomas €12M 60 to 80 Growth Mid-Cap HH worldwide in companies that are responding positively to Emma Howard 31/12/2009 the challenge of environmental sustainability and climate Boyd £ change.
Investment Approach Key Points • This is a stock picking fund first and foremost, with the portfolio strongly biased towards • A mid cap growth orientated fund. identifying emerging growth trends, on a global basis. While there is a thematic overlay (based • Jupiter has been running Socially Responsible Investment and green funds for over 20 on the SRI team’s six green investment themes), every stock within the portfolio is there on years. The SRI team researches and manages over €527m (as at 31/03/09) in SRI its own fundamental merits, based on the fund manager, Charlie Thomas’ view of the growth and green portfolios potential for its products, its profitability and valuation. Given this focus on emerging growth, the portfolio tends to be significantly skewed towards small and mid caps, as these are the • The fund manager, supported by a team of environmental analysts and the SRI natural hunting ground for this kind of fund. Though a global fund, there is no asset allocation & Governance team, applies a rigorous approach to company selection, with within the portfolio – the geographical spread at any one time is largely a function of bottom-up environmental, social and financial assessments made separately. stock picking. • The fund invests in companies which have a significant focus on environmental and/ • Typically, Charlie invests across a long time horizon. He aims to hold stocks for three to five or climate change solutions that fit into one of their six green investment themes: years, in order to give companies a chance to build a successful business. The portfolio is Clean Energy, Water Management, Green Transport, Environmental Services, Waste predominantly biased towards the smaller end of the market cap spectrum, and given the Management and Sustainable Living. smaller company focus, stock specific risk within the portfolio tends to be fairly high. The • The fund manager is supported by a team of environmental analysts who together investment objective of the fund is to generate long-term capital growth from investment ensure that each company meets the strict financial criteria and fits into the overall fund worldwide in companies that are responding positively to the challenge of environmental objective. sustainability and climate change. Prior to making any investment, the manager, supported by the SRI and governance team, conducts research into companies, ensuring that each investment falls within at least one of the six green investment themes, and performs an initial assessment of the investment’s risk/return profile and growth prospects. Detailed due diligence is then carried out on those companies which have been identified in this initial research and screening process. This typically involves consideration of both quantitative and qualitative factors. • Charlie combines a top down and bottom up selection methodology. Starting with the market drivers around the core green investment themes, a stock universe is created from which stock selection emerges. The Climate Change Solutions Fund’s approach is longer term than most investment horizons used by fund managers. Stock selection is about correlating the long-term environmental drivers with a company’s ability to generate sustainable profits. A large part of Charlie’s analysis is based on talking to companies directly and building close relationships with larger holdings. He has as many as 450 company meetings in a year. In Charlie’s view, there are three long-term drivers of growth within the environmental investment universe. Firstly, the impact of government policy and regulation. This is proving vital in forcing the pace of change and therefore the adoption of new technologies and services. Secondly, adoption of environmentally-friendly practices in the corporate sector is generating opportunities for service and product providers. Finally, the consumer sector is beginning to become increasingly important. Consumer choice could be a key determinant in the drive for further adoption of environmental products and services. • Climate Change Solutions will typically run between 60-80 stocks, as Charlie tends to run a fairly long tail, as this gives him the chance to remain in touch with a broad range of businesses. This also gives him the chance to support smaller companies if they need to raise new capital. He will typically reduce the number of stocks if he is bullish and increase diversification if more cautious, depending on his current macroeconomic view. 20
UK Equity Sector
AXA Financial BlackRock UK Index
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide a total return, taking into account both capital Barclays Global £627M 104 N/A N/A HHH and income returns, which reflects the total return of the Investors 31/01/2010 equity market in the United Kingdom. £
Investment Approach Key Points
The vast majority of funds are managed on a ‘fully replicated’ basis, where the fund’s • The investment objective of the fund is to provide a total return, taking into account both exposure to each security in the index is in line with the weight it has in the underlying index. capital and income returns, which reflects the total return of the FTSE All- Share Index. BlackRock believe this is the most reliable approach to equity indexation for a number of reasons: • Risk relative to the index is minimised. • Portfolios automatically rebalance, which minimises turnover and trading costs. • It is often easier and more cost effective to trade a broader index basket
AXA Financial Invesco Perpetual Income
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve a reasonable level of income, together with Neil Woodford £7,854M 70 to 100 Value Large Cap HH capital growth. The fund intends to invest primarily 29/01/2010 in companies listed in the UK, with balance invested £ internationally. In pursuing this objective the fund managers may include other investments that they consider appropriate which may include units in collective investment schemes, warrants and other permitted investments and transactions.
Investment Approach Key Points
• At the core of our investment philosophy is a belief in active investment management. • Fund manager, Neil Woodford, has an enviable long-term track record that has delivered Fundamental principles drive a genuinely unconstrained investment approach, which aims significant excess returns over extended periods, that are often based on contrarian to deliver attractive total returns over the long-term. investment positions. • Invesco believe that investors’ behavioural biases repeatedly give rise to short-term • A 70-100 stock portfolio unconstrained with no strongstyle basis – although it has been market inefficiencies. To a large extent, these inefficiencies derive from three interlinked value orientated through time. sources: • The manager invests on a long-term basis, and consequently has a low level of turnover, • Markets often overreact by placing undue focus on near-term issues often holding stocks for five or more years. • The manager is supported in his search for investment ideas by a particularly well • Market expectations are often overly influenced by the extrapolation of current trends resourced and experienced team of analysts and managers around his strategy. • Markets respond to momentum and other technical drivers as well as to fundamentals • The manager has strong convictions which are reflected in significant investment • By exploiting these market inefficiencies through careful fundamental analysis and a strong positions across industries and sectors where he believes there is considerable long- emphasis on valuation, Invesco aim to deliver consistent, long-term out performance under term value. most market conditions. • This addition to the Tailored Selection offers an extension of choice for advisers and their client seeking further exposure to this strong UK equity fund manager.
AXA Financial M&G Recovery
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating The fund’s sole aim is capital growth by investing Tom Dobell £4,699M 97 N/A Multi-Cap HHHH predominantly in a diversified range of securities issued (Deputy David 31/01/2010 by companies which are out of favour, in difficulty or Williams) whose future prospects are not fully recognised by the £ market. There is no particular income yield target,
Investment Approach Key Points • The M&G Recovery Fund focuses on troubled companies where a good management team is • The fund invests in approximately 100 stocks across market capitalisation including making concerted efforts to turn the business around. The fund manager seeks opportunities large, mid, small and AIM. from across the UK stockmarket and the portfolio aims to contain a wide and interesting mix • Fundamental company analysis together with constructive engagement with company of companies. management are central characteristics of the investment process. These help the • The fund manager seeks to identify stocks whose share prices have fallen well below their manager to identify catalysts for recovery in companies. true worth, rendering them good value. He is prepared to take a contrarian view and consider • A typical portfolio holding will be going through different stages of recovery, categorised areas that are out of favour among investors. These can include restructuring stories, special as Unloved; Stabilising; Recovering and Mature. This gives the portfolio structure with situations and the seeking out of hidden value. different holdings driving performance through time. • The fund manager takes a flexible and pragmatic approach to stocks and aims to have a • The fund has been operating for 40 years and has only had 3 fund managers in that holding period of between three and five years, possibly longer where ongoing potential is time. identified. Company meetings and visits, as well as internal and external research, are used to identify stocks for inclusion in the portfolio. The fund manager considers it most important to meet the management of all the fund’s holdings personally, on a regular basis, ideally at their own premises. He will never invest in a stock without having met the management team first. 21
AXA Financial Schroder Income Maximiser
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To generate good returns by investing in the shares of Thomas See £518M 30 to 50 N/A Large Cap HHH attractively priced companies that pay high, sustainable 31/01/2010 dividends. These are likely to be mature, well - established £ organisations such as banks or oil companies. These shares also offer the potential of capital growth, especially if they are currently undervalued by the market. The fund also seeks income from the sale of 'options'.
Investment Approach Key Points • Schroder Income Maximiser is an equity-based fund that aims to generate an income of • Seeks income from UK large and medium-sized companies 7% per annum. In order to achieve this, we follow a two-pronged approach. Firstly, we invest • Fund writes covered calls to add to income generated in a portfolio of stocks that we believe have reasonable growth prospects, healthy balance sheets and sustainable profits, but which currently appear to be underpriced by the market. • The fund uses covered call options, which are derivatives, as part of its income strategy. They will also tend to be high yielding stocks – shares that offer a generous dividend Purchasing covered call options limits the upside potential of the fund to an extent but payment as well as the ability to grow that dividend over time. does not increase the risk of loss. • The income that these stocks generate is then topped up (to reach the 7% target) by • A value orientated fund with a contrarian view selling options on the holdings. These are derivatives that enable us to receive a premium • The fund invests in the shares of attractively priced companies that pay high, in return for sacrificing some of the potential capital growth on the underlying stocks. sustainable dividends. These are likely to be mature, well established organisations By taking this approach investors are still able to gain access to equity markets and the such as banks or oil companies. These shares also offer the potential of capital growth, potential for some share price growth, but with the added security of a regular income and especially if they are currently undervalued by the market. lower volatility than a similar fund without the option overlay.
AXA Financial Schroder UK Alpha Plus
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide capital growth through investment in UK and Richard Buxton £1,845M 30 to 35 Growth Large Cap HHHH other companies. In order to achieve the objective the 31/01/2010 manager will invest in a focused portfolio of securities. £ The emphasis of the fund will be investment in UK companies. The fund may also invest in companies headquartered or quoted outside the UK where those companies have material or critical operations within, or derive significant business from, the UK. Fixed interest securities may be included in the portfolio. Investment will be in directly held transferable securities. The fund may also invest in collective investment schemes, warrants and money market instruments.
Investment Approach Key Points The fund has no predetermined style bias – i.e. there is no exclusive focus on ‘growth’, • Aims for market-beating returns in any environment ‘value’ or ‘earnings momentum’, but on each individual company’s ability to create value for • Absolute return focus – index neutral approach shareholders and its degree of undervaluation. The fund manager looks to add value through individual stock-picking as well as through thematic positioning and market timing. Stocks • Managed by Richard Buxton, it is a large cap fund which blends both growth and value are selected from the large and mid cap areas of the market and the fund has the flexibility strategies to hold up to 20% of its value in cash and cash equivalents. • The fund invests in a relatively small number of stocks, around 30, seeking to identify those which will provide superior returns • Only those stocks in which the fund manager has the highest level of conviction will be included in the portfolio, making this a truly “best ideas” investment • The flexible nature of the fund means that the fund manager is able to shift in and out of investment themes and sectors, aiming to capture the best investment opportunities in the UK market. 22
Managed Sector
AXA Financial Fidelity Euro Balanced
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To invest primarily in equities and bonds denominated in Alexander €579M 425 N/A N/A HHHH £ Euro. The fund will invest at least 30% and a maximum Scurlock 31/01/2010 of 60% of the total assets in equities. The remainder Alexandra (minimum 40%, maximum 70%) will be invested in bonds. Hartmann David Simner
Investment Approach Key Points • The fund invests in one equity and four bond funds from Fidelity. All are Euro denominated. • Equities and bonds show a negative correlation over different time horizons and this diversified fund offers the chance to reduce the overall volatility while participating in the expected long-term returns of equities. • Fund is overseen by Richard Skelt, Chief Investment Officer of Fidelity’s Investment Solutions Group.
AXA Financial JP Morgan Global Capital Appreciation
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve capital appreciation in excess of its cash Talib Sheikh €104M 268 Total N/A HHHHH £ benchmark by investing primarily in securities, globally. Return Neill Nuttall 31/12/2009
Investment Approach Key Points
The investment process leverages JPM’s core investment thinking and builds on their strong • The fund is part of a family of multi asset funds that is managed by the Global Multi- investment track record a wide range of asset classes. Compared to a more traditional Asset Group at JP Morgan. Its position allows it to leverage the best stock and macro approach, the investment process aims to deliver more added value (alpha) from asset economic ideas across JP Morgan whilst retaining its independence. allocation - a source of return uncorrelated to benchmarks - thus providing a better balance • The Capital Appreciation fund aims to deliver a return over the medium term, 2 to with the alpha derived from security selection. 3 years, of 5% over cash (after fees). Moreover the funds have a strong regard to JPMorgan’s investment process is based around the following inputs; safeguarding capital. Capital preservation underpins the absolute return approach to investing. The benchmark of the fund is cash and the culture of the Global Multi-Asset • Tactical asset allocation model; Group is to invest only when positive returns above cash are anticipated. • Bottom-up research from locally based equity research teams; • Managing for absolute and not relative return requires an independent culture. AXA • Analysis from fixed income teams; and Financial’s Investment Team believes the Multi Asset Group can sustain this investing culture. • Convertibles research and analysis from dedicated convertibles team.
AXA Financial JP Morgan Global Capital Preservation
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To achieve, over a medium term horizon (2 to 3 years), a Talib Sheikh €1,995M 141 Total N/A HH £ return in excess of its cash benchmark from a portfolio of Return Neill Nuttall 31/12/2009 securities, globally.
Investment Approach Key Points
The investment process leverages JPM’s core investment thinking and builds on their strong • The Fund is part of a family of multi asset funds that is managed by the Global Multi- investment track record a wide range of asset classes. Compared to a more traditional Asset Group at JP Morgan. Its position allows it to leverage the best stock and macro approach, the investment process aims to deliver more added value (alpha) from asset economic ideas across JP Morgan whilst retaining its independence. allocation - a source of return uncorrelated to benchmarks - thus providing a better balance • The Capital Preservation Fund aims to deliver a return over the medium term, 2 to with the alpha derived from security selection. 3 years, of 3% over cash (after fees). Moreover the funds have a strong regard to JPMorgan’s investment process is based around the following inputs; safeguarding capital. Capital preservation underpins the absolute return approach to investing. The benchmark of the fund is cash and the culture of the Global Multi-Asset • Tactical asset allocation model; Group is to invest only when positive returns above cash are anticipated.. • Bottom-up research from locally based equity research teams; • Analysis from fixed income teams; and • Convertibles research and analysis from dedicated convertibles team. 23
AXA Financial Merrion Balanced
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide the potential for long term growth by investing Merrion €30M N/A N/A HHHH £ in a diverse portfolio of UK commercial properties Investment 28/01/2010 Managers Ltd
Investment Approach Key Points
• Merrion follow a pragmatic investment approach which combines top down sector selection • The Merrion Balanced Fund would typically have 60-80% in global equities with fixed with fundamental bottom up security selection. income fixed deposits and cash constituting the rest. • The top down thematic focus in the investment process looks at industry (or regional) • The Merrion Irish Opportunities Fund follows an investment process which is restructuring; long term capital investment trends; demographics and social or unconstrained by benchmark with regards to minimum sector or stock allocations. Up technological developments to identify factors which would be favourable to an industry; to 25% of the fund can be invested in non-Irish listed stocks, but this component is region or company. expected to be comprised of companies with significant linkages to the Irish market. • This top down framework forms an important context for stock selection which is based on fundamental company analysis. Property Sector
AXA Financial L & G UK Property
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide the potential for long term growth by investing Michael Barrie £314M 47 Growth N/A in a diverse portfolio of UK commercial properties 31/01/2010
£
Investment Approach Key Points
• The investment style combines both a topdown and bottomup approach. The topdown • The overall criteria for this fund is to maintain a broadly balanced portfolio which is element focuses on creating the sector strategy which contributes about one third of the representative of the market as a whole total returns available. • The bottomup element, which contributes about two thirds of the available returns, is focused on property selection and the identification of added value initiatives.
AXA Financial Schroder Global Property Securities
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide a total return primarily through investment Jim Rehlaender £358M 45 to 70 N/A Mid-Cap HHHHH in equity and debt securities of property companies 29/01/2010 worldwide. £
Investment Approach Key Points • The investment universe for the Global Property Securities product incorporates all listed • The fund invests in property securities, such as real estate investment trusts (REITs) and property stocks globally. Schroders look to incorporate all the stocks identified by the listed property companies, rather than investing in ‘bricks and mortar.’ This approach major real estate securities indices as well as other stocks not yet discovered by the index allows flexible access to commercial property markets in many countries, where it may within appropriate investment controls and parameters. be difficult and costly to benefit through buying property directly. • The global presence enables Schroders to take advantage of the world’s varying property cycles rather than just relying on the real estate trends in one region. Therefore, the fund does not follow a benchmark, which allows Schroders to target opportunities as and when they arise, the fund has a total return focus. • This approach is very different to many property funds, whose global allocation is more aligned to the benchmark, which is biased towards certain markets like the US. • Invests in a diverse range of property opportunities – residential, hotels, offices, leisure and retail complexes. • Overcomes accessibility and liquidity issues associated with direct property. 24
Fixed Interest Sector
AXA Financial BGF Euro Bond
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To maximise total return. The fund invests at least 80% Michael €830M 332 N/A N/A HHHH of its total net assets in investment grade fixed income Krautzberger 31/01/2010 transferable securities. At least 70% of total net assets £ will be invested in fixed income transferable securities denominated in euro. Currency exposure is flexibly managed.
Investment Approach Key Points
Within European fixed income the following securities are considered: BlackRock’s sustainable long-term competitive advantages as a fixed income manager include: • government and agency obligations, • Experience, depth and stability of professional fixed income resources. Since the • obligations of supranational organisations, firm’s inception, BlackRock has focused on using a cross-disciplinary team approach, • mortgage-backed securities, which enables clients to benefit from the pooled expertise of the firm’s resources: its investment and risk management professionals, and its highly sophisticated, integrated, • corporate bonds, proprietary analytical tools. BlackRock’s founders remain affiliated with the firm, and the • asset-backed securities, investment team has worked together for many years. • inflation-linked bonds; and • A risk management culture and discipline that allows for no surprises for clients. BlackRock’s strong risk management orientation and the substantial investment made • money market instruments. in proprietary analytical systems strongly differentiate the firm. BlackRock’s investment There are three key steps to the decision-making process for European bond portfolios, technology includes an integrated, on-line automated transaction processing and risk the focal point of which is the Investment Strategy Group (ISG) meeting. The other 2 steps management analytics system. Transaction processing components facilitate operating involve Global Pre-ISG Meetings and Euro Post-ISG Team Meeting. Following the ISG meeting, efficiency, linking together trade information, security data, account compliance and the Euro Post-ISG meeting includes senior local currency portfolio managers. This forum portfolio operations. The analytics provide valuable information to portfolio managers for addresses how the outcome of the ISG meeting will apply to non-dollar portfolios. their use in making investment decisions and calibrating risk positions.
AXA Financial BlackRock Euro Corporate Bond Index
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To closely track the returns of the Citigroup Non - BlackRock €1,077M 1,469 Passive N/A HHHHH EGBI EuroBIG Index; an index designed to reflect the 31/12/2009 performance of the euro -denominated non - government £ bond market.
Investment Approach Key Points BlackRock aim to fully replicate the benchmark in markets where it is practical to do so. • The BlackRock Euro Corporate Bond Index Fund aims to closely track the returns of the In other markets, where issues can be illiquid or expensive to buy, a stratified sampling Citigroup Non-EGBI EuroBIG Index; an index designed to reflect the performance of the approach would be applied. This, while exposing the fund to some degree of sampling Euro denominated non-government bond market. error, will ultimately reduce trading costs within the portfolio. The process subdivides the • Diversified portfolio of securities tracking the credit, sector, duration and yield curve benchmark index by currency, maturity, country, credit rating, liquidity and issuer to form three exposure of the benchmark index. dimentional cells. Although a cell may contain numerous bonds, it may be impractical, and unnecessary, to invest in all of them. Therefore, the portfolio manager will create a sampled • Minimises transaction costs through crossing and by leveraging their trading expertise cell with the same characteristics as the overall cell. The cells are put back together into the and experience. overall bond portfolio. This sampled portfolio must be stress tested against different moves • Reduces tracking error to the benchmark index through rigorous risk control. in interest rates, to ensure that it will react in the same proportion as the index itself.
AXA Financial BlackRock Euro Government Bond Index
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To closely track the returns of the Citigroup Euro BlackRock €2,055M 233 Passive N/A HHHHH Government Bond Index (EGBI); an index designed to 31/12/2009 reflect the performance of the euro - denominated EMU £ government bond market.
Investment Approach Key Points • BlackRock aim to fully replicate the benchmark in markets where it is practical to do so. • The fund aims to closely track the returns of the Citigroup Euro Government Bond Index In other markets, where issues can be illiquid or expensive to buy, a stratified sampling (EGBI); an index designed to reflect the performance of the Euro denominated EMU approach would be applied. This, while exposing the fund to some degree of sampling government bond market. error, will ultimately reducing trading costs within the portfolio. BlackRock fully replicate • Diversified portfolio of securities tracking the country, duration and yield curve exposure the over 10 year maturity sector of the index, but use sampling in shorter maturities of the benchmark index. where there is less investment risk of doing so. In addition, it is not economical to hold Portuguese bonds (as investors suffer withholding tax on income) and therefore they hold • Reduces transaction costs through crossing and by leveraging Blackrock’s trading Italian bonds as a proxy. expertise and experience. 25
AXA Financial Newton BNY Mellon Global Bond
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To maximise total returns from income and capital growth Paul Brain $701M N/A N/A HHH through investment primarily in a portfolio of international 31/01/2010 sovereign, government, agency, corporate, bank and asset
£ backed debt and debt related securities and in derivatives.
Investment Approach Key Points • To maximise total returns from income and capital growth through investment primarily in a • It focuses on high credit quality – principally 90% government (i.e. new government portfolio of international sovereign, government, agency, corporate, bank and asset backed – world bank, government backed companies, European investment bank) and 10% debt and debt related securities and in derivatives. emerging markets government debt. • It researches fixed interest with currency expectations as its starting point and exposure to high quality international fixed interest asset class that offers diversification.
AXA Financial Schroder Euro Corporate Bond
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide a return of capital growth and income primarily Adam Cordery €5,555M N/A N/A HHHH through investment in a portfolio of bonds and other fixed 29/01/2010 and floating rate securities denominated in Euro issued £ by governments, government agencies, supra-national and £ corporate issuers. A minimum of 80% of the net assets of the fund will be held in non - sovereign securities.
Investment Approach Key Points • The investment process combines traditional economic and company analysis to make top- • The fund is an actively managed Euro corporate bond fund which aims to consistently down and bottom-up investment decisions in a disciplined and risk-focused manner, with risk add value across market cycles. It also aims to be in the 1st or 2nd quartile with lower budget spent on asset allocation; Stock selection and interest rates. volatility. • The manager draws upon Schroder’s in-house team of credit analysts and government market specialists. • The focus of this fund is primarily investment grade credit, although the fund has the ability to invest in high yield securities, emerging markets debt and convertible bonds (totalling <20%). • Additionally, with no minimum limitations on sectors or ratings, the fund’s structure provides the manager the opportunity to add value from active credit selection.
AXA Financial Standard Life Investments Euro Inflation Linked Bond
Fund Style MoneyMate Type Fund Group Fund Aim Manager(s) Fund Size No of Holdings Bias Cap Bias Rating To provide a real return in Euro over longer time periods. Jonathan Gibbs €49M 22 N/A N/A HHHH It will do this by investing primarily in euro denominated 31/01/2010 sovereign issued and corporate inflation - linked debt. The fund may also invest in conventional government £ bonds, investment grade corporate entities, and other interest bearing securities. On an ancillary basis, the fund may hold cash and invest in other forms of transferable securities, in collective investment schemes, short term debt instruments, regularly traded money market instruments the residual maturity of which does not exceed 12 months.
Investment Approach Key Points
• Standard Life’s approach is based on fundamental analysis, combined with proprietary • Invests primarily in euro-denominated sovereign-issued and corporate inflation linked quantitative models to provide greater clarity in decision making. They put their success debt. down to a close-knit team of bond experts with strong leadership, harnessed by a • Designed to protect against the impact of market instability and limit the effect of distinctive investment process. The team is structured to encourage rapid and responsive inflation on investments over the longer term. decision-making, supported by the best and latest technology. Standard Life have developed a range of quantitative models that ensure they continue to focus research on • It can also invest in conventional government bonds, investment grade corporate key drivers of change. At Standard Life Investments, they have a strong risk-management entities, and other interest bearing securities. process, placing great emphasis on internal processes and controls. This fosters a consistent internal culture of high professional standards and integrity. 26
Cash
AXA Financial Money Dollar Fund
MoneyMate Type Fund Aim Rating To invest in short and medium term cash deposits. This fund is designed to protect capital over the short term. HHHHH £
AXA Financial Money Euro Fund
MoneyMate Type Fund Aim Rating To invest in short and medium term cash deposits. This fund is designed to protect capital over the short term. HHHH £
AXA Financial Money Sterling Fund
MoneyMate Type Fund Aim Rating To invest in short and medium term cash deposits. This fund is designed to protect capital over the short term. HHHH £ 27
Fund Groups – An Overview
With about one trillion Euros of assets under Baillie Gifford is an independent investment BlackRock is one of the world’s preeminent asset management management, Allianz Global Investors is one management firm based in Edinburgh, Scotland. firms and a premier provider of global investment management, risk management and advisory services to institutional, of the top five asset management companies The firm has built its success around the intermediary and individual investors around the world. worldwide - with access to approximately 75 stability of its partnership structure which BlackRock offers a range of solutions — from rigorous million clients around the globe. Allianz Global provides reassurance for clients and motivation fundamental and quantitative active management approaches aimed at maximising outperformance to highly efficient Investors employ a staff of more than 5,000, for employees. As at 31 December 2009 the indexing strategies designed to gain broad exposure to the with more than 1,000 investment professionals firm managed more than £56 billion (US$90 world’s capital markets. among them. billion) in active equity and bond portfolios for Blackrock’s clients can access its investment solutions Allianz Global Investors offers excellent clients in the UK and throughout the world, through a variety of product structures, including individual and combining experience, enthusiasm and sound institutional separate accounts, mutual funds and other pooled products, covering all major equity and fixed- investment vehicles, and the industry-leading iShares® ETFs. income investment styles and providing judgement. balanced products as well as alternative BlackRock is a truly global firm that combines the benefits of worldwide reach with local service and relationships. The firm investment solutions. Allianz Global Investors manage assets for clients in North and South America, Europe, has organised its business into two global Asia, Australia and the Middle East, employs more than 8,500 lines: Fixed Income and Equities, with PIMCO talented professionals and maintains offices in 24 countries serving as the global investment platform for around the world. Fixed Income and RCM for Equities. Nicholas- The foundation of BlackRock’s business is its belief that Applegate, Oppenheimer Capital, and NFJ the clients’ needs are of paramount importance. The firm’s commitment to investment excellence is anchored in a shared Investment Group serve as specialist managers. culture that always places a client’s interests first, from individual investors to the world’s largest institutions. Blackrock act always as a fiduciary for clients, never trading as a principal on its own behalf. As of September 30, 2009, BlackRock’s assets under management totaled approximately US$3.2 trillion* across equity, fixed income, cash management, alternative investment, real estate and advisory strategies. Through BlackRock Solutions®, it offers risk management, strategic advisory and enterprise investment system services to a broad base of clients with portfolios totaling over US$8 trillion.* * Data is as of September 30, 2009, is subject to change, and is based on a pro forma estimate of assets under management at BlackRock, Inc. and Barclays Global Investors.
Established nearly 40 years ago, Fidelity First State Investments is a specialist asset Gartmore only do one thing, fund management, International is committed to delivering management business focused on developing and and they do it from its offices in London, Tokyo, superior returns for clients by finding the managing innovative investment products which Boston, Madrid and Frankfurt. Gartmore has best global investment opportunities in any seek to outperform clients’ objectives. more than £21 billion* invested and continue to prevailing market environment. Its success focus on delivering investment performance on in understanding what investors want and The firm offer a range of product structures behalf of its clients. across categories including Asia Pacific and global delivering superior products is reflected in Many of Gartmore’s senior fund managers and its remarkable growth - Fidelity International emerging markets, global resources and global equities, property securities and infrastructure. executives own part of the company. That’s why has become one of the UK’s largest mutual they’re committed to the long term success fund managers and the European leader in First State forms part of the consolidated asset of their individual funds, their teams, their pan-European equities with assets under management business of the Commonwealth Bank clients, and Gartmore as a whole. And because management of $210.1 billion*. of Australia, managing £70.8 billion* on behalf its managers’ rewards are linked to their Fidelity International attributes the main reason of investors worldwide. This association gives the performance, their interests match those of the for success as being its approach to investment, strength of capital required to bring innovative clients. products to market. encouraging fund managers to develop their During 2007 and 2008 Gartmore won more than individual flair, while basing every investment First State investment teams are structured so 20 industry awards. In both years they won a choice on rigorous research, the cornerstone of managers and analysts are given a strong sense Gold Standard Award, recognising a high level its global investment process. The independence of portfolio ownership by way of team-focused of service, fair value for clients and financial it enjoys as a privately-owned company enables incentives. The firm believes this promotes stability. Fidelity International to take the longer-term commitment and intellectual engagement, aligning view and concentrate on developing innovative its interests and success with those of its clients. *Source: Gartmore as at 30 September 2009. products while delivering the highest levels of customer service. The firm manages segregated mandates for clients globally and have pooled funds registered in the * Assets as at as at 30/09/2009 are those of following countries: UK, Ireland, Germany, Austria, FIL Limited. France, Italy, Sweden, Switzerland, Singapore, Hong Kong, Taiwan, Macau, Australia and New Zealand. *as at 31 July 2009 28
Fund groups
Invesco Perpetual is one of the largest independent J.P. Morgan is a leader in financial services, Jupiter Investment Management Group Limited investment managers in the UK, currently managing offering innovative and intelligent solutions to launched in 1985 as a specialist boutique, assets on behalf of consumers, institutional clients clients in more than 100 countries with one Jupiter has grown to be one of the UK’s and investment professionals through a broad of the most comprehensive global product most successful and respected investment product range, which includes ICVCs, investment platforms available. management groups. The firm currently trusts, ISAs, pension products, offshore funds and manage assets spread across a range of UK other specialist mandates. J.P. Morgan have been helping clients to do business and manage their wealth for more than and offshore mutual funds, multi-manager With $423.1 billion in assets under management 200 years and keep their interests foremost products, hedge funds, institutional mandates (as of December 31, 2009), Invesco is a leading in their minds at all times. This combination and investment companies. For more than independent global investment management of product strength, intellectual capital and 20 years, Jupiter has gained a reputation for company, dedicated to helping people worldwide build achieving outperformance across a broad variety their financial security. By delivering the combined character sets J.P. Morgan apart as an industry leader. of portfolios specialising in different markets, power of its distinctive worldwide investment including UK equities, Europe, global financials management capabilities, Invesco provides a J.P. Morgan Asset Management is a leading and emerging Europe. comprehensive array of enduring investment asset manager for institutions, individuals solutions for retail, institutional and high net worth and financial intermediaries, worldwide and its It’s this consistency which has earned a series clients around the world. Operating in 20 countries, investment professionals are located around of awards, including the Citywire Team All Stars the company is listed on the New York Stock the world providing strategies that span the Award for 2007*. In addition Jupiter is the only Exchange (NYSE) under the symbol IVZ. full spectrum of asset classes including equity, fund management group to have achieved the With 4,908 employees in 55 offices worldwide, fixed income, cash liquidity, currency, real estate, Investment Week Global Group of the Year for Invesco has a significant presence in the institutional infrastructure, hedge funds and private equity. three years in succession - 2004, 2005 and and retail markets across North America, Europe and 2006**. Jupiter is the only fund management Asia-Pacific. Invesco’s extensive global footprint, high J.P. Morgan is part of JPMorgan Chase & Co. group to have achieved this record in the 11 level of diversification and full range of investment (NYSE: JPM), a global financial services firm with years since these prestigious awards have been capabilities enable Invesco to quickly and effectively assets of $2.0 trillion. in existence. meet the diverse needs of its clients, wherever they * Awarded to Jupiter Asset Management in July 2007 reside. The firm’s single focus on asset management means that the investment and marketing ** Awarded to Jupiter Unit Trust Managers in July 2006 professionals are dedicated to achieving the strongest, most consistent investment performance over the long term.
Legal & General Investment Management (LGIM) M & G have been investing money on their Martin Currie invest in international equities for is one of the leading fund management groups clients’ behalf for nearly 80 years. As a company clients worldwide. From their office in Edinburgh, in the UK, offering a full range of funds and driven by performance, M & G are passionate Martin Currie manage £11.8 (US$19.1)* billion services from index and active equities to fixed about generating the best possible results for for financial institutions, charities, foundations, income, property and cash through to transition its customers. This is why M & G have a solid pension funds and investment trusts. Martin management and cash flow matching. LGIM offer history and reputation for industry-leading Currie collective funds include an Oeic, Sicav dedicated client relationship teams to meet the innovation and for continually providing new and range of hedge funds. needs of different institutional clients ranging investment products and initiativeslook after Martin Currie describe themselves as ‘The from multi-billion pound pension schemes to investments for more than 346,000 investors, Big Boutique’. In practice, this means having small charities. with almost £169 billion under management the solidity, professionalism of execution and In total, LGIM manage £311 billion* of assets, invested in equities, fixed income and property*. robustness of process of a large company, and are responsible for around 5% of the UK M & G manage assets on behalf of a wide combined with the distinctiveness, client focus stock market on behalf of their clients. LGIM’s variety of investors across UK, Europe, Asia, the and sense of personal ownership of a small success has been driven by a clear focus on Americas and South Africa. company. delivering investment solutions to meet the *As at 30 September 2009 *As at 31 December 2009 needs of clients and their advisors. Legal & General Investment Management Holdings Ltd, is a subsidiary of Legal & General Group plc. *source: LGIM 30 September 2009 29
Fund groups
Established in 1986, Merrion Investment Neptune was formed in May 2002 as an Established in 2007 from the merger of Mellon Managers is Ireland’s leading independent and independent and privately owned company, built Financial Corporation and The Bank of New top performing investment manager. Merrion upon principles of teamwork and partnership. York Company, Inc., BNY Mellon is a leading Investment Managers approach to investment Neptune identified a space in the market asset management and securities services has been extremely rewarding for their clients, for a new, dynamic investment management company, uniquely focused to help clients with funds consistently outperforming both firm that concentrated on long-only fund manage and move their financial assets the underlying markets and the returns of management powered by high quality, internally and succeed in the rapidly changing global competitors. At Merrion, the investment produced research. The firm’s focus has always marketplace. Headquartered in New York, approach is to construct portfolios with been on delivering excellence in investment BNY Mellon has $22.3 trillion in assets under reference to the sectors in the global equity management, whatever the economic conditions, custody or administration and $1.1 trillion market, rather than the average regional split using a rigorous and unique investment process. under management (as at December 2009). of competitors. This approach enables Merrion This same process has been in place since The multi-boutique asset management model to capture the global themes that are driving inception. Founder Robin Geffen transferred encompasses the skills of a number of world market returns. to Neptune four funds that he had managed class specialist investment managers including Merrion received the Best Pension Fund for his previous employer, maintaining his own Newton, Standish and Walter Scott. In the UK, Manager title at the 2005 Moneymate/Investor investment style. Robin has gone on to build a Newton which is perhaps thes best known of Magazine awards. strong and committed investment team, which BNY Mellon Asset Management’s specialist managers, has built its reputation on the Merrion Investment Managers is a subsidiary of manages a varied fund range designed to suit the needs of most investors. integrity of its team-based, global thematic Merrion Capital Group. investment approach. Neptune remains privately owned, with employees and directors owning approximately three-quarters of the Company. This ensures that staff and client interests are aligned.
Schroders is a global asset management Based in Edinburgh, Standard Life Investments Threadneedle is an award-winning provider of company. Asset management is Schroders only have a number of offices worldwide including investment solutions to institutional and retail business and its goals are completely aligned Boston, Dublin, London, Montreal, Hong Kong clients across the globe. Founded in 1994, with that of their clients’ - the creation of long- and Sydney. They also have representative Threadneedle is fully-owned by Ameriprise term value. offices in Beijing and Seoul and a joint venture Financial, a publicly quoted investment company that is listed on the NYSE. Schroders manage £138.9 billion (€152 billion in India. Worldwide, over five million clients / $222.2 billion) under management (as at have entrusted Standard Life Investments to Threadneedle’s reputation has been built on 30 September 2009) on behalf of institutional look after assets of £150 billion*, based on its strong and consistent long-term performance, and retail investors, financial institutions and ability to meet their needs. superb customer service and a broad and high net worth clients from around the world, * as at 30/09/2009 complementary range of products. With a invested in a broad range of asset classes team of more than 130 talented investment across equities, fixed income and alternatives. professionals, its expertise extends to equities, bonds, property and alternative investments. Schroders employ 2,614 talented people worldwide operating from 32 offices in 25 Threadneedle manage more than £60 billion different countries (as at 30 September 2009) (as at 31.12.2009) of assets for investors that across Europe, the Americas, Asia and the include central banks, financial institutions, Middle East, close to the markets in which they pension schemes, corporations, public bodies, invest and close to the clients. intermediaries and private investors. Schroders has developed under stable As a truly international asset manager, the ownership for over 200 years and long-term firm has customers in over 80 countries and thinking governs our approach to investing, distribution reaches across four continents. building client relationships and growing the Threadneedle offer clients expertise spanning all business. major asset classes from equities and bonds to property and alternative investments. 30
Fund Sectors
AXA Financial offers access to a large selection of internationally recognised fund sectors. Details about the fund sectors can be found in this section (sector overview provided by Financial Express).
Fund Sector Fund Sector Overview
Cash Funds which invest a minimum of 85% of their assets in Money Market Instruments
Fixed Interest Funds which invest a minimum of 85% of their assets (after deducting any cash in the fund) in Global Fixed Interest Securities. These will include government bonds, corporate bonds, index-linked bonds, and supranational bonds
Asia Pacific ex Japan Equity Funds which invest at least 80% of their funds in Asia Pacific equities and exclude Japanese securities
Eurozone Equity Funds which invest a minimum of 85% of their assets (after deducting any cash in the fund) in equities within Greater Europe. This also includes the UK, but excludes funds that would fall into the UK equity sector
Global Emerging Equity Funds which invest 80% or more of their assets directly or indirectly in emerging markets as defined by the World Bank, without geographical restriction.
International Equity Funds which invest a minimum of 85% of their assets (after deducting any cash in the fund) in global equities excluding Ireland
Irish Equity Funds which invest at least 85% of their assets (after deducting any cash in the fund) in equities in Ireland
Japan Equity Funds which invest at least 85% of their assets (after deducting any cash in the fund) in equities in Japan
North American Equity Funds which invest at least 85% of their assets (after deducting any cash in the fund) in equities from the USA, Canada, Greenland & Caribbean Islands
Specialist Equity Funds that have a particular specialist objective or invest at least 85% of their assets in securities from a particular sector
UK Equity Funds which invest at least 85% of their assets (after deducting any cash in the fund) in equities in the UK
Managed Funds which invest a maximum of 60% of assets within equities, with a minimum holding of 40% equities and a minimum of 15% in a combination of fixed interest securities, property, hedge funds and structured products
Property Funds which invest a minimum of 85% of their assets (after deducting any cash in the fund) in property 31
Fund Index
Fund Page AXA Financial Allianz RCM BRIC Stars 10 AXA Financial Allianz RCM Euroland Equity Growth 8 AXA Financial Baillie Gifford International 12 AXA Financial Baillie Gifford Japanese 15 AXA Financial BGF Euro Bond 24 AXA Financial BGF Euro-Markets 9 AXA Financial BlackRock Euro Corporate Bond Index 24 AXA Financial BlackRock Euro Equity Index 9 AXA Financial BlackRock Euro Government Bond Index 24 AXA Financial BlackRock Gold & General 18 AXA Financial BlackRock Japan Index 15 AXA Financial BlackRock Pacific Rim Index 7 AXA Financial BlackRock UK Index 20 AXA Financial BlackRock US Index 16 AXA Financial Fidelity American 17 AXA Financial Fidelity Euro Balanced 22 AXA Financial Fidelity Euro Blue Chip 10 AXA Financial Fidelity South East Asia 7 AXA Financial First State Asia Pacific Leaders 7 AXA Financial First State Global Emerging Markets Leaders 11 AXA Financial First State Global Listed Infrastructure 18 AXA Financial Gartmore Emerging Markets 11 AXA Financial Gartmore Global Focus 12 AXA Financial Invesco Perpetual Income 20 AXA Financial JP Morgan Global Capital Appreciation 22 AXA Financial JP Morgan Global Capital Preservation 22 AXA Financial JPM Emerging Markets Equity 11 AXA Financial JPM Global Natural Resources 19 AXA Financial Jupiter Climate Change Solutions 19 AXA Financial Jupiter Global Financials 13 AXA Financial L & G UK Property 23 AXA Financial M&G American 17 AXA Financial M&G Global Leaders 13 AXA Financial M&G Recovery 20 AXA Financial Martin Currie Global Funds Asia Pacific 8 AXA Financial Martin Currie Global Funds North American 17 AXA Financial Merrion Balanced 23 AXA Financial Merrion Irish Opportunities 15 AXA Financial Money Dollar Fund 26 AXA Financial Money Euro Fund 26 AXA Financial Money Sterling Fund 26 AXA Financial Neptune Global Equity 14 AXA Financial Newton BNY Mellon Global Bond 25 AXA Financial Schroder Euro Corporate Bond 25 AXA Financial Schroder Euro Equity 10 AXA Financial Schroder Global Property Securities 23 AXA Financial Schroder Income Maximiser 21 AXA Financial Schroder Tokyo 16 AXA Financial Schroder UK Alpha Plus 21 AXA Financial Standard Life Investments Euro Inflation Linked Bond 25 AXA Financial Threadneedle Global Select 14 AXA Financial Limited Wolfe Tone House Wolfe Tone Street Dublin 1, Ireland Ph: +353 1 471 1310 Fax +353 1 471 1888 Email: [email protected] Web: www.axafinancial.ie
01 471 1310 AFEIB15_04/10 www.axafinancial.ie
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