CB European Quality Fund Quarterly update 31 March 2016 Morningstar - - PowerPoint PPT Presentation

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CB European Quality Fund Quarterly update 31 March 2016 Morningstar - - PowerPoint PPT Presentation

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CB European Quality Fund Quarterly update 31 March 2016 Morningstar Sweden and Included in Morningstar Dagens Industri: Best Swedens model portfolio portfolio manager in the for the Swedish Pension European equity category system (PPM)

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SLIDE 1

CB European Quality Fund

Quarterly update 31 March 2016

Morningstar Sweden and Dagens Industri: Best portfolio manager in the European equity category 2012 Included in Morningstar Sweden’s model portfolio for the Swedish Pension system (PPM) since January 2015

YTD 2016

  • 7.6%

Year 2015 +18.1% Fund inception 1995 (annualised) +7.4% AUM (million) 62.8.

Fund performance* and AUM NAV, 31 March 2016 (EUR)

  • 6.9%

+14.7% +7.4% 580.1.

EUR SEK

Sicav A 95.29 Sicav D 84.80 Sicav I 124.48 *Sicav A

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SLIDE 2

The strategy and the team

CB European Quality Fund

2

  • Company founded in 1994
  • Family owned, acting under the supervision of the Swedish

Financial Supervisory Authority

  • Guidelines: active, ethical and long-term
  • An ethical and sustainable framework is applied in the portfolio

management

  • The team is based in Stockholm, Sweden; all fund administration

is performed in Luxembourg

Overview - CB Fonder

  • A long-only equity fund with a focus on European quality growth

companies

  • The strategy was launched in 1995
  • Concentrated portfolio (20-33 holdings) and a long-term perspective
  • Benchmark: MSCI Europe Net
  • Objectives:
  • Lower standard deviation than benchmark
  • Outperform benchmark over 12 months

Overview - CB European Quality Fund The team

Carl Bernadotte, Portfolio manager & owner

>25 years’ experience Born 1955 Owns shares in CB European Quality Fund

Marcus Grimfors, Portfolio manager

7 years’ experience Born 1981 Owns shares in CB European Quality Fund

Alexander Jansson, Portfolio manager & CEO

7 years’ experience Born 1983 Owns shares in CB European Quality Fund

Erik Allenius Somnell, Business development

3 years’ experience Born 1984 Owns shares in CB European Quality Fund

Viktor Sonebäck, Intern

Royal IT (KTH) 2012-2017 Born 1993

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SLIDE 3

Strategy: Investment criteria

CB European Quality Fund

3

Large/mid caps

  • Min. market cap EUR 1 bn -

Primary Mature industries

  • Proven management -

Resilient profit growth

  • In any econ. environment -

Secondary Stable dividend yield

  • Not necessarily high -

Conservative valuation “GARP” Internal recruiting

  • Subject to tradition -
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SLIDE 4

Strategy: Structural growth

CB European Quality Fund

4

Credit: Allianz GI Design: CB Fonder

  • Structural growth is more value generating than cyclical growth and less

dependent on the economic cycle

Stable profit growth Structural growth is independent of the economic cycle Drivers:

  • Secular trends
  • Leading business

model

  • Technical leadership

Strong multiple expansion relative to the market Structural growth component Cyclical growth component

Purely driven by macro factors

Limited multiple expansion relative to the market

Structural vs. cyclical growth

Cyclical model Structural model

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SLIDE 5

Strategy: High barriers to entry protected growth

CB European Quality Fund

5

Competetiveness: Porter’s 5 forces-model

Competitive rivalry among incumbents

Threat of new entrants Threat of substitute products or services Bargaining power of customers (buyers) Bargaining power

  • f suppliers

Barriers to entry

  • Cost, time, knowledge
  • Economies of scale
  • Technologies, patents etc.

Customer/client relationship

  • Degree of customer loyalty
  • Switching costs
  • Pricing power

Barriers to substitution

  • Brand recognition
  • Product complexity, patents etc.

Negotiating power versus suppliers

  • Fragmentation of suppliers
  • monopoly to perfect competion
  • Degree of specialisation

Source: Competitive Strategy: Techniques for Analyzing Industries and Competitors, Michael E. Porter, 1980. Design: CB Fonder

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SLIDE 6

Strategy: Stock selection according to a bottom-up-strategy

CB European Quality Fund

6

Fundamental analysis Quantitative analysis Technical analysis

  • Structural growth and barriers to

entry/moat – see p. 4 and 5.

  • Business idea – robust enough to

deliver stable profit growth over an entire economic cycle?

  • Management – do they deliver as

promised?

  • Internally developed models for

screening and ranking based on quantitative variables.

  • Valuation: in comparison to peers

and the company's own history and growth rate.

  • Main multiples: P/E, P/B and PEG.
  • Momentum factors – is the short-term

trend supportive of the sector/style?

  • No target prices: ”let the trend be

your friend”.

  • Timing for entry and exit levels;

increasing and reducing portfolio positions.

The fundamental and quantitative analysis form the investment universe. The technical analysis plays a crucial role for the weighting of the portfolio.

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SLIDE 7
  • 3%
  • 2%
  • 1%

0% 1% 2% Dec-15 Jan-16 Feb-16 Mar-16 CB European Quality Fund A vs MSCI Europe Net 80 85 90 95 100 105 Dec-15 Jan-16 Feb-16 Mar-16 CB European Quality Fund A (EUR) MSCI Europe Net (EUR)

Performance: The fund and the index

CB European Quality Fund

7

  • The fund has returned -6.8% during the last 12 months; significantly better than benchmark, MSCI Europe,

which during the same period had a -13.7% return.

  • The last three months the fund has returned -7.6%, which is 0.6% lower than benchmark.

The fund and the benchmark index, 1 year (EUR) The fund and the benchmark index, 3 months (EUR)

  • 3%
  • 2%
  • 1%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 CB European Quality Fund Sicav A vs MSCI Europe Net 75 80 85 90 95 100 105 110 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 CB European Quality Fund A (EUR) MSCI Europe Net (EUR)

  • 0.6%
  • 7.6%
  • 7.1%
  • 6.8%
  • 13.7%

+8.0% Source: MSCI, CB Fonder *Data as of 31 March 2016

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SLIDE 8

Performance: The fund and the index

CB European Quality Fund

8

50 75 100 125 150 175 50 75 100 125 150 175 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 CB European Quality Fund SICAV A MSCI Europe Net

Key ratios (10 years)* EQF Europe

Performance, % Standard deviation, % Sharpe (0%) Max drawdown, % Beta against MSCI Europe Alpha against MSCI Europe, % p.a. Consistency with MSCI Europe, % Tracking error, % Information ratio +33.7 13.14 +0.22

  • 45.78

+0.70 +1.07 50.0 8.72 +0.03 +30.1 15.38 +0.17

  • 54.10

The fund (EQF) and the benchmark index, 10 years (EUR)

The fund has outperformed the benchmark index, and has due to its lower risk (beta: 0.70) generated a significant positive alpha. The fund’s risk-adjusted return, Sharpe, is higher than that of the index.

Source: MSCI, CB Fonder *Data as of 31 March 2016

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SLIDE 9
  • 1,2%
  • 1,0%
  • 0,8%
  • 0,6%
  • 0,4%
  • 0,2%

0,0% 0,2% 0,4%

The Portfolio: Contributors and detractors

CB European Quality Fund

9

Company Contr./Detr. %

  • Avg. weight*, % Performance, %

Top three quarterly contributors and detractors, Q1 2016 (EUR)

*Average values in Q1 2016. Source: Bloomberg, CB Fonder

Kerry Geberit TKH Group Shire Prudential Next Plc +0.30 +0.16 +0.12

  • 0.78
  • 0.78
  • 1.14

+7.3 +5.2 +0.5

  • 21.3
  • 23.1
  • 30.5

4.2 3.9 0.3 3.1 1.2 3.9

  • Ireland’s Kerry – a global supplier of additives/ingredients to the food industry – benefit from the increasing outsourcing in terms of manufacturing and

product innovation by the major players (Nestle, Unilever etc.). The company offers its customers complete solutions in taste, texture and nutrition and has delivered an annual profit growth of over 9% per year since 2006. Shares rose 7% during the quarter, in EUR.

  • Swiss Geberit is a market leading producer of products for the sanitation and HVAC industries. The company is exposed to a weak business cycle in the

construction sector but have managed to deliver an organic growth of 4-6% annually over the last couple of years through a large market share and exposure to ”the right” markets (Germany and Switzerland). Since their acquisition of Sanitec in 2015 they are also behind well known Nordic brands such as IDO and lfö. The growth is in line with their medium-term objective and the stock rose 5% during the quarter, in EUR.

  • TKH Group – a Dutch tech company which delivers telecom, building and industry solutions – was added to the fund in the first quarter. The company is

rather independent of the macro climate; their success builds on more company specific factors (such as increased market share through innovation and acquisition), something they historically have succeeded well with. Their average annual organic revenue growth has been 6% during the period 2006-2015 and their EPS growth has been 14% during the same period. The stock rose 1% during the quarter, in EUR.

  • .
  • British Shire – market leading in the treatment of ADHD, Gastroenterology and rare genetic disorders – experienced a weak quarter as a result of a weak

stock price development within the biotech and health care sectors. The company has an appealing valuation as a result of the recent decrease in the stock

  • price. The stock lost 21% during the quarter, in EUR.
  • Prudential – a British insurance company with a focus on Asia, the US and the UK – was hit hard by the general uncertainty regarding the financial stability

in Asia and in China particularly. The stock lost 23% during the quarter, in EUR.

  • The British retail company Next – ”the H&M of the UK” – reported in line with expectations regarding the full year 2015 but expressed themselves very

carefully regarding 2016. As a result, the stock lost 31% during the first quarter, in EUR.

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SLIDE 10

13% 13% 10% 11% 12% 12% 8% 1%

  • 6%
  • 6%

2% 0%

  • 2%

2%

  • 10%
  • 5%

0% 5% 10% 15% 2011 2012 2013 2014 2015 Average 11-15 2016E CB European Quality Fund Stoxx600

7% 8% 6% 6% 9% 7% 8% 7% 4%

  • 2%
  • 1%
  • 3%

1% 0%

  • 4%
  • 2%

0% 2% 4% 6% 8% 10% 2011 2012 2013 2014 2015 Average 11-15 2016E CB European Quality Fund Stoxx600

The Portfolio: Holdings

CB European Quality Fund

10

The portfolio as of 31 March 2016 Revenue growth, the portfolio and Stoxx600 EPS-growth, the portfolio and Stoxx600

Included in one or more of the following sustainability indices:

  • FTSE4Good Index
  • Dow Jones Sustainability Europe Index
  • STOXX Europe Sustainability Index

Source: MSCI, Bloomberg, FTSE, Dow Jones, STOXX, Factset, CB Fonder

Company Country Sector Market cap € bn Share of AUM Share of MSCI Europe

Kerry Ireland Consumer Staples 14 4.5% 0.2% Orpea France Health Care 4 4.5% 0.0% Fresenius AG Germany Health Care 35 4.5% 0.4% AAK Sw eden Consumer Staples 3 4.4% 0.0% Continental Germany Consumer Discr. 38 4.4% 0.3% Geberit Sw itzerland Industrials 13 4.3% 0.2% Halma UK IT 4 4.3% 0.0% Sampo Finland Financials 23 3.9% 0.3% Legrand France Industrials 13 3.6% 0.2% Reckitt UK Consumer Staples 59 3.5% 0.8% Bunzl UK Industrials 8 3.4% 0.1% Assa Abloy Sw eden Industrials 19 3.1% 0.3% Dignity UK Consumer Discr. 2 3.1% 0.0% Shire UK Health Care 31 3.0% 0.4% Novo Nordisk Denmark Health Care 128 2.9% 1.4% DSV Denmark Industrials 7 2.9% 0.1% Henkel Germany Consumer Staples 40 2.7% 0.3% Nestlé Sw itzerland Consumer Staples 208 2.6% 3.1% Vinci France Industrials 39 2.3% 0.4% Essilor France Health Care 23 2.2% 0.3% Schindler Sw itzerland Industrials 18 2.1% 0.1% SGS Sw itzerland Industrials 15 2.0% 0.2% SCA Sw eden Consumer Staples 19 2.0% 0.2% Sika AG Sw itzerland Materials 9 1.9% 0.1% Novozymes Denmark Materials 12 1.8% 0.1% TKH Group Netherlands Industrials 2 1.6% 0.0% Next UK Consumer Discr. 10 1.6% 0.2% Sage Group UK IT 9 1.5% 0.1% Ingenico Group France IT 6 1.5% 0.1% Spirax Sarco UK Industrials 3 1.3% 0.0% Capita Group UK Industrials 9 1.2% 0.1% Wirecard Germany IT 4 1.2% 0.0% Handelsbanken Sw eden Financials 21 1.0% 0.3%

Total/Median 13 90.6% 10.4%

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SLIDE 11

The Portfolio: Exposure, share of AUM

CB European Quality Fund

11

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Cash IT Consumer Discr. Health Care Materials Industrials Consumer Staples Financials 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Cash Finland Ireland Denmark Netherlands Sweden Switzerland Germany France UK

Source: MSCI, Ishares, CB Fonder

Geographical exposure, 36 months Sector exposure, 36 months Geographical exposure, as of 31 March 2016 Sector exposure, as of 31 March 2016

30% 15% 14% 14% 5% 3% 1% 2% 6% 23% 14% 13% 13% 11% 8% 5% 4% 2% 9% 0% 10% 20% 30% 40% MSCI Europe CB European Quality Fund 12% 16% 13% 12% 4% 20% 7% 6% 5% 4% 28% 20% 17% 9% 8% 5% 4% 0% 0% 0% 9% 0% 10% 20% 30% MSCI Europe CB European Quality Fund

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SLIDE 12

Case: Fresenius

CB European Quality Fund

12

Among other things, the leading private operator of hospitals in Germany

  • A global health care group with operations in dialysis, clinical nutrition, hospital management and engineering and

services for health care facilities.

  • Defensive growth: all businesses are exposed to structural growth trends supported by demographics and growing

healthcare consumption per capita.

  • Diversified growth: the company derives it’s earnings from numerous businesses that have quite distinct dynamics –

that brings diversification and a quite unique profile within the sector.

  • 22 consecutive years with increased dividend!

Source: Fresenius

Revenues, total and by region Organic growth – track record

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SLIDE 13

Case: Orpea

CB European Quality Fund

13

  • European leader in dependency care (with attractive

real estate holdings) – a structural growth sector due to demographics.

  • Opportunity, and aim, to consolidate a fragmented

sector.

  • Pricing power owing to local regulation.

Source: Orpea, CB Fonder

Number of beds Revenues, m€ Geographic exposure – focus on Europe Organic growth – track record

14% 11% 15% 11% 9% 9% 8% 7% 6% 0% 5% 10% 15% 20% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Organic growth

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SLIDE 14

Risk profile: Standard deviation and beta

CB European Quality Fund

14

0,2 0,4 0,6 0,8 1 1,2 0,0 0,2 0,4 0,6 0,8 1,0 1,2 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 0% 10% 20% 30% 0% 10% 20% 30% Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 CB European Quality Fund MSCI Europe

The fund’s standard deviation is consistently lower/in line with that of the benchmark index, MSCI Europe. This becomes particularly evident when the risk in the market is rising.

Standard deviation*

The fund’s beta is consistently below 1

Beta against MSCI Europe*

*36 months data on a 60-day rolling basis (EUR); Source: MSCI, CB Fonder

25.6% 20.8% +0.75

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SLIDE 15

CB European Quality Fund

15

Risk profile: Deviation from index

0% 2% 4% 6% 8% 10% 12% Tracking error 0% 20% 40% 60% 80% 100% Active share

Active Share Tracking error, 60-day rolling basis

  • Active

share for the portfolio is consistently above 90%, which indicates that the portfolio, composition-wise, deviates more than 90% from the benchmark index. The limit for what is perceived as active management is usually set at 60%.*

  • The fund’s tracking error – a ratio which

measures the deviation of the return of the fund compared to the return of the benchmark – is also high and has been

  • approx. 6-8% on average the past years.

Hence, the fund is located in the top right corner in the management type-matrix

*Model by Cremers och Petajisto (2009)

High Low

Active share Tracking error

Low High

Diversified stock picks Closet indexing Concentrated stock picks Factor bets

CB European Quality Fund

Types of management*

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SLIDE 16

40 60 80 100 120 140 MSCI Europe Net

Risk profile: The fund’s ability to preserve capital

CB European Quality Fund

16

The fund has consistently outperformed the index during drawdowns

  • The fund’s objective is to market perform in a rising market and outperform during drawdowns; that will
  • ver time generate alpha.

The fund compared to MSCI Europe Net during the largest drawdowns (EUR)

1 2 3 4 6 5

The fund outperformed also during the last drawdown, this time by +7.8%

Source: MSCI, CB Fonder

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SLIDE 17

Analysis: Allocation – Europe versus EM and Sweden

CB European Quality Fund

17

  • MSCI Sweden has been an amazing

market for many years and has

  • utperformed the MSCI Europe index

massively.

  • Part of the explanation is to be found in

the many and successful exporting companies, that prospered during the boom years in EM (2002-2011).

  • Since 2011 – when the boom in EM

started to fade – Sweden has underperformed Europe.

MSCI Sweden relative to MSCI Europe, 15 years in same currency

  • Emerging markets (EM) outperformed

Europe massively during the period 2001-2012.

  • Europe has outperformed emerging

markets during the last five years, but has so far only regained a fraction of the lost ground.

MSCI Emerging Markets relative to MSCI Europe, 15 years in same currency

Source: MSCI, CB Fonder

  • 20%

0% 20% 40% 60% 80% 100% Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15

MSCI Sweden vs MSCI Europe

  • 50%

0% 50% 100% 150% 200% Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 Mar-15

MSCI EM vs MSCI Europe

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SLIDE 18

Analysis: Allocation – Europe versus the U.S.

CB European Quality Fund

18

MSCI Europe relative to MSCI USA. Periods of out-/underperformance MSCI Europe relative to MSCI USA, same currency

  • Europe has four explicit periods of underperformance against the U.S., all of which bottomed out when the

accumulated underperformance reached ~40%. This time Europe has underperformed by 45%!

  • Does a new period of outperformance stand before Europe? Never before (with data going back to 1969) has

Europe underperformed more than current levels. The duration (see table) also speaks for Europe.

Source: MSCI, CB Fonder, Bernstein, Deutsche Bank Research

From To Duration Months

1 975- 02- 28 1 976- 1 0- 29

  • 1

8% 30%

  • 37%

20 1 976- 1 0- 29 1 978- 1 0- 31 76%

  • 4%

84% 24 1 978- 1 0- 31 1 985- 02- 28 34% 1 32%

  • 42%

76 1 985- 02- 28 1 990- 1 0- 31 283% 90% 1 02% 68 1 990- 1 0- 31 1 999- 06- 30 224% 451 %

  • 41

% 1 04 1 999- 06- 30 2007- 1 1

  • 30

1 02% 1 5% 75% 1 01 2007- 1 1

  • 30 201

6- 03- 31

  • 1

2% 58%

  • 45%

1 00

Time period Absolute return (USD) MSCI Europe MSCI USA Relative return

  • 40%
  • 20%

0% 20% 40% 60% 80% 100% 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 MSCI Europe vs MSCI USA

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SLIDE 19

Analysis: Are the benefits of a lower oil price underestimated?

CB European Quality Fund

19

The falling oil price contribute to growth – to an extent that might be underestimated

  • There is an inverse relationship between oil prices and GDP growth in the G7 countries (Europe, Japan and the

US): a falling oil price leads to higher GDP growth, with growth lagging 18 months.

  • The sharp fall in the oil price may, given the historical correlation with GDP growth, raise the growth rate in G7

countries to 4% in 18 months.

Source: Deutsche Bank Research

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SLIDE 20

Analysis: The market – historical drawdowns

CB European Quality Fund

20

  • 60%
  • 50%
  • 40%
  • 30%
  • 20%
  • 10%

0% 50 100 150 200 250 300 350 400 450 500 550 600 650 1999-07-05 2000-09-04 2006-05-09 2007-07-16 2010-04-15 2011-02-17 2012-03-16 2013-05-22 2014-09-04 2015-04-15

Source: MSCI, CB Fonder

Number of days

Study of historical drawdowns for MSCI Europe Net, daily data in EUR

Most drawdowns have been 10% in a short time period and recovered within 100 days. We are here as of 31 March 2016 Drawdown Market peaks

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SLIDE 21

Analysis: The market – historical drawdowns

CB European Quality Fund

21

  • 60%
  • 50%
  • 40%
  • 30%
  • 20%
  • 10%

0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 1972-08-31 1976-01-31 1981-08-31 1987-09-30 1990-06-30 1992-05-31 1994-01-31 1998-07-31 2000-08-31 2007-05-31 2010-03-31 2011-04-30 2012-02-29 2015-05-31

Source: MSCI, CB Fonder

Number of months Drawdown Market peaks

Study of historical drawdowns for MSCI Europe Net, monthly data in EUR

We are here as of 31 March 2016

slide-22
SLIDE 22

25 50 100 200 400 800 1600 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 25 50 100 200 400 800 1600 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 25 50 100 200 400 800 1600 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 25 50 100 200 400 800 1600 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Analysis: The market – long-term trend

CB European Quality Fund

22

Real return (inflation adjusted) and long-term trend (local curr., incl. div.)*

MSCI USA MSCI United Kingdom MSCI France MSCI Switzerland

Source: MSCI, inflation.eu, CB Fonder *Logarithmic scale

= Year before large drawdown

+6.0%

+X.X% = Long-term trend. Return p.a.

+6.6% +6.7% +6.4%

slide-23
SLIDE 23
  • 100%
  • 50%

0% 50% 100% 150% 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 MSCI USA MSCI UK MSCI France MSCI Switzerland

Analysis: The market – long-term trend

CB European Quality Fund

23

Deviation from trend for each respective market

Source: MSCI, inflation.eu, CB Fonder

Our take: The year before prior large drawdowns (here: 1972, 1986, 1989, 1999, 2006), we have seen a positive deviation from the long- term trend (>0% on the y-axis) in 80% of the cases above. This suggests that we are not facing a significant drawdown, given that the US as well as the three largest markets in MSCI Europe are below the long-term trend (i.e. a negative deviation, <0% on the y-axis). However, the current deviation from the trend is similar to that during the ‘70s and ’80s – a period during which we saw larger negative deviations from the trend than we have today.

= Year before large drawdown

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SLIDE 24

Risks

CB European Quality Fund

24

Small Medium Big Huge

Impact

Low Medium High

Probability

1 2 3 4 5 6

Downside risks

Unknown unknowns (black swans etc.) Currency wars Hard landing in Brazil, China and Russia Brexit A strong USD and/or prematurely interest rate hikes (compare 1937) suppresses the U.S economy. Geopolitics: Russia, Japan/China, North Korea, IS etc.

7

Grexit and other Eurozone troubles

1 2 3 5 6 7 4

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SLIDE 25

The investment case for CB European Quality Fund

CB European Quality Fund

25

  • 3%
  • 2%
  • 1%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 CB European Quality Fund Sicav A vs MSCI Europe Net 75 80 85 90 95 100 105 110 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 CB European Quality Fund A (EUR) MSCI Europe Net (EUR)

  • Long-term structural growth in mature industries; proven

management and stable profit growth.

  • Competitive returns and lower risk than the benchmark, MSCI

Europe Net. Consistent outperformance against the index during drawdowns.

  • An ethical and sustainable framework: no exposure to alcohol,

pornography, gambling, tobacco, weapon and fossil energy (stranded assets).

  • Concentrated portfolio: 33 holdings today; Active Share 89%.
  • With a relatively low correlation compared to its benchmark

index, MSCI Europe, as well as other important indices, the fund will add diversification to most portfolios.

  • The distributing share class, SICAV D, pays a dividend

amounting to 6% of the NAV each year (ex date: October 31).

The fund vs index, 12 months, as of 31 March (EUR)

+8.0%

  • 6.8%
  • 13.7%

Source: MSCI, CB Fonder

slide-26
SLIDE 26

CB European Quality Fund

26

Share classes

CB European Quality Fund, SICAV A

  • Management Fee: 1.5%
  • Performance Fee: No
  • Dividend: No
  • ISIN: LU0112589485

CB European Quality Fund, SICAV I

  • Management Fee: 0.5%
  • Performance Fee: 20% of outperformance vs. MSCI Europe Net, with collective, eternal and

relative High-Water Mark; the share class is 6% below HWM as of 31 March 2016

  • Dividend: No
  • ISIN: LU0806934948

CB European Quality Fund, SICAV D

  • Management Fee: 1.5%
  • Performance Fee: No
  • Dividend: Yes, 6% of NAV as of 31 October each year
  • ISIN: LU1179404386
slide-27
SLIDE 27

Fund facts

CB European Quality Fund

27

  • Fund name:

CB European Quality Fund

  • Manager:

CB Asset Management AB

  • Domicile:

Luxembourg

  • Mgmt company/Custodian:

Luxcellence / CACEIS Investor Services, Luxembourg

  • Auditor:

PricewaterhouseCoopers S.ár.I.

  • UCITS:

Yes

  • Currency:

EUR

  • Liquidity/NAV:

Daily/Daily

  • Subscription/redemption fee:

SICAV A: No/Yes*, SICAV I: No/No, SICAV D: No/Yes*

  • Strategy launch:

November 1995

  • Minimum investment:

No

  • ISIN-code/Bloomberg:

SICAV A: LU0112589485 / EUREUEA LX SICAV I: LU0806934948 / EUREQIC LX SICAV D: LU1179404386 / CEQEEFD LX

*Max 1%, dependent on client relationship

slide-28
SLIDE 28

Disclaimer

CB European Quality Fund

28 Issued by CB Asset Management AB. It is intended solely to provide certain information (the “Information”) about CB European Quality Fund and CB Save Earth Fund (the “Funds”). CB Asset Management AB has taken all reasonable care to ensure correctness and accuracy of the Information published in that Article, at the time of its publication. Share prices and values may increase or decrease and investments are always associated with a risk of loss. Past performance is never a guarantee for future performance. The information provided in this report is what we to our knowledge believe are correct based on the information made available to us for the purpose of this

  • document. No representation or warranty of any nature, express or implied, is made about its completeness,

accuracy, reliability or suitability. Nothing contained in this document shall be deemed to constitute a financial, legal, tax or other advice of any kind and no information in this document shall constitute or deem to constitute a solicitation or an offer to purchase, or invest in, any financial products which are referred to on it. The offering of the shares of the Funds is restricted in many jurisdictions and must not be marketed or offered in

  • r to residents of any such jurisdictions unless such marketing or offering is made in compliance with applicable

exemptions for the private placement of collective investment schemes and other applicable jurisdictional rules and regulations. It is the responsibility of every recipient to inform themselves and observe applicable regulations and restrictions in their jurisdiction. Potential investors in the Funds should inform themselves of the applicable laws and regulations of the countries

  • f their citizenship, residence or domicile and which might be relevant to the subscription, purchase, holding,

conversion and redemption of shares in the Funds. Should you wish to obtain further information on the Funds, please consult our website, where the Prospectus, the latest available annual and semi-annual reports, and the Key Investor Information Document (KIID) of the Funds are provided.

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  • Appendix. Correlations

CB European Quality Fund

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The fund’s (EQF) correlation with different MSCI indices, 5 years*

With a relatively low correlation compared to its benchmark index, MSCI Europe, as well as other important indices, the fund will add diversification to most

  • portfolios. The fund has the

highest correlation with MSCI Europe Growth.

*Monthly data for the period 31 March 2011 – 31 March 2016 (EUR) Source: MSCI, CB Fonder

EQF Europe World EM Sweden EQF 1.00 0.85 0.84 0.60 0.83 Europe 1.00 0.90 0.72 0.91 World 1.00 0.75 0.84 EM 1.00 0.71 Sweden 1.00

Regional and country indices Investment style indices Market cap indices

EQF Europe Europe Value Europe Growth EQF 1.00 0.85 0.76 0.90 Europe 1.00 0.98 0.98 Europe Value 1.00 0.91 Europe Growth 1.00 EQF Europe Europe Large Cap Europe Mid Cap Europe Small Cap EQF 1.00 0.85 0.84 0.87 0.82 Europe 1.00 1.00 0.97 0.90 Europe large cap 1.00 0.96 0.89 Europe mid cap 1.00 0.96 Europe small cap 1.00

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