Emerging and Frontier markets an investors view to an asset class - - PowerPoint PPT Presentation

Emerging and Frontier markets – an investors view to an asset class in transformation

Antti Raappana, Head of Global Emerging Markets Solutions

Marketing material Only for professional investors

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Let’s start off by defining Emerging and Frontier Markets

• Emerging countries: 23 countries
• Frontier Markets: 24 countries according to MSCI
• > 80% of the World population
• 75 % of the World land mass
• Appr. 12000 listed stocks with mkt cap > 100mio USD
• Only 10% of the MSCI AC World market cap

0,0 % 0,5 % 1,0 % 1,5 % 2,0 % 2,5 % 3,0 % 3,5 % 4,0 % 4,5 % 5,0 % 2015 2016 E 2017 E

GDP growth

Advanced economies Emerging Market and Developing Economies Source: IMF World Economic Outlook April 2016 Source: Danske Capital, FactSet MSCI EM index markets Rest of the universe

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EM is changing and it’s creating new opportunities

EM recovering from recession (in USD nominal usd terms) Changing role of China EM becoming more ”modern” Asset class characteristics Investment approach

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Typically EM investors have been looking for superior growth

• They were disappointed (in USD)…

Source: EM Advisors

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…and they voted with their feet

GFC Emerging Markets: locomotive of global growth Taper tantrum Throwing in the towel

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Role of China is changing

Source: Credit Suisse

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Vietnam is our beneficiary of choice from redistribution of FDI

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Key long term trends in EM are supported by expanding middle class

Globally the middle class should grow from 1.8bn to 4.9bn by 2030 — The growth will be in the emerging world

500 1000 1500 2000 2500 3000 3500 4000 4500 2009 2020 2030 Developed Market Emerging & Frontier Markets

Source: OECD, Danske Capital, Branko Milanovic

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EM retail ecosystems – formal, online, logistics

Source: Company web-sites, Citi Research, Danske Capital

20 40 60 80 100

Internet Penetration

Internet Users per 100 inhabitants, 2014

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Long term opportunities also in health care, travel, education

Source: World Bank, CLSA, Danske Capital, Karma Capital Advisers Outbound per capita, per year

Source: World Bank, CLSA - May 2016 Source: The World Bank data files, data retrieved on December 2, 2015

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Source: MSCI, Danske Capital

How changing China & EM is reflected in the equity markets?

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EPS revisions have finally stabilized – growth resuming in USD

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0,0 0,5 1,0 1,5 2,0 2,5 May 2011 September 2016

Price to Book ratio

MSCI Emerging Markets MSCI World 0,0 % 0,5 % 1,0 % 1,5 % 2,0 % 2,5 % 3,0 % May 2011 September 2016

Dividend Yield

MSCI Emerging Markets MSCI World

Emerging Markets offering combination of value, yield and growth

Source: MSCI, FactSet, Danske Capital

29 % discount From discount to par

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Danske Invest SICAV – Emerging & Frontier Markets Fund

Our core belief

Small and mid size companies are well positioned to capture domestic-driven growth in emerging and frontier markets Our approach exploits bottom-up opportunities across industries and market capitalizations

Differentiating characteristics

 Unconstrained and benchmark agnostic  Centralized, top-down portfolio construction  Bottom-up stockpicking by local investment

managers

 Long-term approach  Small and mid-cap; no liquidity constraints  SRI compliant

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Strategy Performance Overview

Performance Summary

Jan 13 - Jul 16 Composite Return (EUR) Benchmark return* Excess return Year to Date 5,70 8,57

• 2,87

1 Year

• 1,16
• 1,94

0,78 2 Years 7,00 1,42 5,58 3 Years 7,28 5,59 1,69 4 Years

• 5 Years
• 7 Years
• 10 Years
• Ann. since inc.

5,16 1,36 3,79 2015 4,38

• 5,23

9,61 2014 11,55 11,38 0,16 2013

• 2,71
• 8,41

5,70

• Composite Data
• No. of accounts

Assets (EUR) Annual Volatility (%) Current 1 246,77 Tracking Error 2015 1 279,59

• Info. Ratio

2014 1 428,68 Sharpe Ratio 2013 1 382,58

• Source: Danske Capital. All figures are based on gross perfomance not including commissions or other fees that may have a diminishing effect on return, the figures refer to past

performance and are not a reliable indicator of future results. All returns are annualised. Periods with negative returns may have occurred. Figures may increase or decrease as a result

• f currency fluctuations

Jan 13 - Jul 16 *MSCI Emerging Markets As of Jul 2016

Accumulating Risk / Return

14,35 7,87 0,48 0,35 85 90 95 100 105 110 115 120 125 130 Feb 13 Apr 13 Jun 13 Aug 13 Oct 13 Dec 13 Feb 14 Apr 14 Jun 14 Aug 14 Oct 14 Dec 14 Feb 15 Apr 15 Jun 15 Aug 15 Oct 15 Dec 15 Feb 16 Apr 16 Jun 16 Emerging and Frontier SMID (Incl Jan 2013) MSCI Emerging Markets

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Conclusions

• Asset class is recovering: growth, earnings, valuations and

positioning bottoming out

• Asset class has transformed
• China is changing
• More hi-tech than commodities
• Investors expectations are more realistic
• Pricing offers value components with growth option
• Long term growth trends to benefit from
• Being on the ground helps to achieve superior results

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Marc Homsy Head of Fund Distribution Germany Tel.: (+49) 69 50 50 47-151 Marc.Homsy@danskeinvest.com

Contacts

Visiting address: Danske Invest, a division of Danske Bank A/S, Tower 185, D-60185 Frankfurt/Main

Anders Mogensen Client Manager Tel.: (+45) 45 13 96 67 Anders.Mogensen@danskeinvest.com

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Risk statement

DI Emerging and Frontier Markets SICAV Fund invests in developing countries with new or developing capital markets. These countries may have relatively unstable governments, economies based on only a few industries and securities markets that trade a limited number of

• securities. Securities of issuers located in these countries tend to have volatile prices and offer the potential for substantial losses as well as
• gains. UCIs, which invest their assets in these countries, are subject to the same risks. In addition, these securities may be less liquid than

investments in more established markets as a result of inadequate trading volume or restrictions on trading imposed by the governments of such countries. A number of attractive emerging and frontier markets restrict, to varying degrees, foreign investment in securities. Further, some attractive equity securities may not be available to a Sub-Fund because foreign shareholders hold the maximum amount permissible under current local law. Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some emerging and frontier markets and may be subject to currency exchange control restrictions. In addition, developing markets may pose increased risks associated with their clearance and settlement systems. Delays in settlement could result in periods of uninvested assets, missed investment opportunities or losses to the fund. Furthermore, investments in some developing countries including Russia and China can be subject to certain heightened risks with regard to the ownership and custody of securities. The fund could lose its registration and ownership of securities through fraud, negligence or even mere oversight. Before investing in the fund, investors should familiarize themselves with the risk factors as described in the prospectus in the section 3 “Investment Policy and Restrictions – Risk Factors – Risk Management” under (D) “Risk Factors” of this Prospectus, including risks related to investing in China. Although the Management Company makes every effort to achieve the investment objectives of the Fund to the best of its knowledge, no guarantee can be given to whether the investment objectives will be achieved. As a result, the Net Asset Value of the Shares may be higher

• r lower, and therefore different levels of positive as well as negative income may be earned.

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Disclaimer

This publication has been prepared to be read exclusively in conjunction with the oral presentation provided by Danske Invest, a division of Danske Bank A/S. Readers should not replace their own judgement with any information or opinions herein and should consult with their legal, tax and financial advisors. Any information or opinions contained herein are not intended for distribution to or use by any person in any jurisdiction or country where such distribution or use would be unlawful and, specifically, are not intended for distribution to or use by any "US Person" within the meaning of the United States Securities Act. of 1934, nor any retail investors in the EU. This document should not be regarded as an offer to sell or as a recommendation or solicitation to buy shares of the Fund. For more information about the Fund and, specifically, the risks inherent in an investment in the Fund reference is made to the most recent prospectus of the Fund. Shares of the Fund may only be bought or subscribed for on the basis of the key investor information document, the most recent prospectus as well as the most recent annual and semi-annual reports of the Fund. These Fund documents can be downloaded from the following webpage http://www.danskeinvest.com. There is no guarantee that the investment objectives of the Fund will be achieved. This document contains forward looking statements which are projections or estimates based on assumptions which may not occur, while other conditions not taken into account may occur. Any comparative index shown is provided solely for information purposes and does not serve as a benchmark, nor should one conclude that the Fund's investment strategy will or will not be correlated with such index. The information in this document taken from external sources has not been verified and no guarantee can be given that such information is correct, accurate or complete. Danske Invest – a division of Danske Bank A/S Holmens Kanal 2-12 DK-1091 Copenhagen, Denmark Company reg. no.: 61 12 62 28 http://www.danskeinvest.com