Canada4.1% Financials19.2% Consumer Discretionary18.9% Industrials15.2% Consumer Staples8.8% Information Technology8.6% Health Care7.9% Telecommunication Services5.5% Materials4.9% Real Estate2.3% Utilities2.1% Cash and Cash Equivalents6.7% Banks11.8% Pharma, Biotech & Life Sciences7.9% Capital Goods6.4% Telecommunication Services5.5% Transportation5.1% Retailing5.1% Materials4.9% Insurance4.9% Food, Beverage & Tobacco4.5% Semiconductors & Equipment4.5%
|% OF PORTFOLIO|
|Resona Holdings, Inc.||3.5%|
|Compass Group plc||3.0%|
|AIA Group Ltd.||3.0%|
|ING Groep N.V.||2.9%|
|ASML Holding N.V.||2.3%|
|UBS Group AG||2.3%|
|Taiwan Semiconductor Manufacturing Co. Ltd.||2.3%|
Compass Group Plc provides food and support services to customers in the workplace, which includes schools & colleges, hospitals, at leisure and in remote environments. It operates in following sectors: Business & Industry, Education, Healthcare & Seniors, Sports & Leisure and Defense, Offshore & Remote. Compass Group was founded in 1941 and is headquartered in Chertsey, the United Kingdom.
AIA Group Ltd. is the largest independent, publicly listed pan-Asian life insurance group in the world. It has wholly-owned main operating subsidiaries or branches in 14 markets in Asia-Pacific and a joint venture in India. AIA meets the savings and protection needs of individuals by offering a range of products and services including retirement planning, life insurance, and accident and health insurance.
Estimates suggest that the life insurance gap in Asia is ~$30-35T and twice that amount when one considers health insurance, accident insurance, etc. AIA has the ability to sell its products into this large unmet need and provide consumers with a social safety net.
AIA was previously owned by AIG. During the financial crisis, the business became distracted by the issues at AIG. Now as an independent, public company, AIA has the ability to improve its margins and return profile. Additionally, the business is in a net cash position and can deploy it excess capital to improve returns.
ING was created in 1991 through a merger of two of the Netherlands' largest banks. The Group has since become one of Europe's largest financial institutions, active in traditional banking, insurance, and asset management. The share price of ING declined dramatically in the financial crisis as material holes in the group strategy and balance sheet were revealed. In 2009 management announced plans to shrink the company, simplify its operations by disposing of all non-banking assets, and sell new shares in order to redeem quasi-equity previously issued to the Dutch government. After this "back to basics" restructuring, ING Group is positioned to become a more pure bank (rather than a financial conglomerate) with a strong market position. As ING completes the final phases of restructuring shares should command a more normalized valuation, commensurate with its competitive earnings power.
Sony is a global conglomerate with various business segments and is best known for the development of consumer electronic products including televisions, personal computers, gaming hardware, and software. Sony is also engaged in the production and broadcasting of motion pictures, home entertainment, television programming, and recorded music. In 2004, Sony established a wholly owned subsidiary, SFH, which owns Sony Life, a Japanese life insurance company, Sony Assurance, a Japanese non-life insurance company, and Sony Bank, a Japanese Internet-based bank. Sony also owns a network services business and an advertising agency in Japan.
Sony is undergoing a transformation from low margin hardware sales to an increased focus on recurring revenue streams. The sale of its PC business and promotion of its Playstation streaming subscription services are examples. Sony has been reducing its global workforce, with the goal of becoming a more efficient and more profitable company. In recent years, through its gaming hardware, Sony has been able to successfully create an attractive entertainment eco-system that encompasses gaming, movies, TV shows, and music, which should be a growth area for the company in the next several years.
Zurich-based UBS is one of the largest investment management companies in the world, providing Wealth Management, Asset Management and Investment Banking services globally, and traditional banking in Switzerland. Following the turmoil of the global financial crisis and a US tax inquiry, UBS has been focused on improving its core businesses. Improved capital ratios, growth in the wealth management segment, and an emphasis on cost control have allowed the group to regain its footing and return to profitability.
The company remains one of the largest asset managers in the world with assets under management in the trillions. Economic growth in developing markets has also boosted the number of high-net worth individuals looking to diversify their financial holdings to areas outside of their home markets.
Taiwan Semiconductor is the largest independent semiconductor foundry in the world. The industry is characterized by process orientation and scale, and TSM leads in both. It is the only company in its industry with the financial resources to continue to invest in both R&D and capital equipment/process technologies throughout the business cycle. TSM has manufactured chips for over 500 different customers globally, with a huge array of end market applications, including automotive, cell phones, video games, DVD players, digital camera, medical devices, etc.
Although margins are very volatile, cash flow generation has been robust, and TSM continues to gain share over time. Since being founded in 1987, TSM has been at the leading edge of technology manufacturing.
Swiss-based Novartis manufactures and sells pharmaceutical and nutrition products worldwide. Novartis was formed from the 1996 merger of Sandoz and Ciba-Geigy, and is the world's fifth largest producer of non-prescription over-the-counter drugs. Novartis also holds nearly one-third of the voting stock of Roche, Europe's fifth largest drug company. Novartis also has a strong generic franchise, mostly marketed under the Sandoz name. The company is currently the number two global generics manufacturer after Teva. The acquisition of Alcon in 2010 has helped Novartis gain a leading position in the global eye-care market.
A solid balance sheet enables Novartis to pay a strong and growing dividend.
|Portfolio P/E Trailing 12 Months*||19.7x|
|Portfolio Price to Cash Flow*||11.1x|
|Portfolio Price to Book*||2.2x|
|Median Market Capitalization*||$26.5 B|
|Number of Holdings||52|
|Emerging Markets Exposure||17.2%|
|Active Share* (vs. MSCI AC World ex-U.S. Index)||91.1%|Basic Value35.4% Consistent Earners39.9% Emerging Franchises18.1% Cash & Cash Equivalents6.7% Large Cap (> $12 B)75.3% Mid Cap ($2.5 to $12 B)20.8% Small Cap (< $2.5 B)3.9%