Financials27.1% Telecommunication Services20.3% Industrials8.8% Consumer Staples8.5% Health Care8.5% Energy8.1% Consumer Discretionary7.0% Information Technology4.1% Real Estate3.2% Utilities2.4% Materials1.7% Other0.1% Telecommunication Services20.3% Diversified Financials16.2% Pharma, Biotech & Life Sciences8.5% Energy8.1% Banks7.3% Food & Staples Retailing4.8% Capital Goods4.3% Semiconductors & Equipment4.1% Transportation3.9% Retailing3.9%
|% OF PORTFOLIO|
|China Mobile Ltd.||4.5%|
|Royal Dutch Shell plc||3.9%|
|JPMorgan Chase & Co.||3.0%|
|CME Group, Inc.||2.9%|
|The Home Depot, Inc.||2.4%|
|Roche Holding AG||2.2%|
|Taiwan Semiconductor Manufacturing Co., Ltd.||2.0%|
|BT Group plc||2.0%|
|% OF PORTFOLIO|
|Telefonica Emisiones SAU||0.6%|
|The Williams Companies, Inc.||0.4%|
|Laureate Education, Inc.||0.3%|
|QBE Insurance Group Ltd.||0.3%|
China Mobile is the incumbent wireless provider in China and is the world's largest wireless telecom operator with over 760 million mobile subscribers. The company holds licenses to operate nationwide 2G (GSM) and 3G (TD-SCDMA) services. China Mobile's dominant 2G network covers over 98% of the population. In its 3G network China Mobile continues to gain market share, having added over 100 million customers in 2013.
Towards the end of 2013, China Mobile was the first wireless telecom carrier in China to receive a 4G (TD-LTE) network license. The company is focused on building the infrastructure to support the 4G (TD-LTE) technology and have half a million base stations around China that will deliver continuous coverage to all cities and urban areas by the end of 2014. China Mobile may grow revenue and operating profit through driving higher data usage and 4G penetration, increasing minutes of use, managing churn, and continuing to add subscribers.
As the incumbent telecom, China Mobile benefits from significant economies of scale and a mature, cash generative, core franchise. Over the next few years capital expenditure should decrease and free cash flow generation should ramp up in a company that already pays an attractive dividend.
Royal Dutch Shell Plc produces oil and natural gas. It operates through three segments: Upstream, Downstream, and Corporate. The Upstream segment combines the operating segments Upstream International and Upstream Americas, which have similar characteristics and are engaged in exploring for and recovering crude oil and natural gas; the liquefaction and transportation of gas; the extraction of bitumen from oil sands that is converted into synthetic crude oil; and wind energy. The Downstream segment engages in manufacturing, supply and distribution and marketing activities for oil products and chemicals; alternative energy; and CO2 management. The Corporate segment represents the support functions, comprising holdings and treasury, headquarters, central functions and its self-insurance activities. The company was founded in February 1907 and is headquartered in The Hague, Netherlands.
Source - Factset
JPMorgan is a diversified financial company with banking, investment banking, private banking, asset management, securities services and credit card operations. The entity is the result first of a merger between JP Morgan and Chase Manhattan and then the acquisition of BankOne by JPMorgan Chase.
The diversified nature of JPM gives it some characteristics that are different from a traditional bank. Investment banking and securities processing are impacted more by the level of activity in the financial markets than by economic strength or interest rate movements. Revenue growth in asset management and private banking is mostly a function of growth in assets under management. Credit card operations are similar to traditional banking and can benefit from the economies of scale that have resulted from combining JPMorgan Chase and BankOne.
JPM believes that its various business units can improve the profitability of each other. Loans to potential investment banking clients have the potential to help win investment banking deals and increase loan volume. There may be synergies between asset management, private banking and investment banking. However, realizing the synergies between these businesses is not easy or automatic.
Jamie Dimon is the Chairman and CEO of JPM. Dimon is one of the most respected and highly thought of managers in the financial services sector. Prior to Dimon becoming CEO, JPMorgan Chase had not delivered the results that investors hoped for. The performance of the company in navigating the liquidity crisis and credit problems associated with the housing downturn and recession of 2007-2008 appears to have been extremely favorable relative to other industry leaders and could position the company for market share gains and high profitability in the future.
CME Group, Inc. operates securities and commodity exchanges. The company serves the risk management and investment needs of customers around the globe. It offers wide range of products across various asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. Its products include both exchange traded and over-the-counter derivatives. CME Group brings buyers and sellers together through its CME Globex electronic trading platform across the globe and its open outcry trading facilities in Chicago and New York City. It provides hosting, connectivity and customer support for electronic trading through its co-location services. It also provides clearing and settlement services for exchange-traded contracts, as well as for cleared over-the-counter derivatives transactions. The company also offers a wide range of market data services-including live quotes, delayed quotes, market reports and a comprehensive historical data service and have expanded into the index services business through CME Group Index Services. CME Group was founded in 1898 and is headquartered in Chicago, IL.
Source – FactSet
Atlantia SpA is a holding company which engages in the infrastructures and mobility networks sectors. It operates through the following business segments: Italian Motorways, Italian Airports, Overseas Motorways, Technology, Design and Construction, and Atlantia. The Italian Motorways segment consists of the management, maintenance, construction, and widening of the Italian motorway operators under concession. The Italian Airports segment operates and develops the Rome Fiumicino and Rome Ciampino airports. The Overseas Motorways includes the holders of motorways concessions in Chile, Poland, and Brazil, and the companies that provide operational support for these overseas activities and the related foreign registered holding companies. The Technology segment includes the subsidiaries that produce and operate free-flow tolling systems, traffic, and transport management systems, public information, and electronic payment systems. The Design and Construction segment covers the companies related to the design, construction, and maintenance of road infrastructure. The Atlantia segment performs parent company functions for its subsidiaries and associates whose business is the construction and operation of motorways, airports and transport infrastructure, parking areas and intermodal systems, and management of motorway or airport traffic. The company was founded in 1950 and is headquartered in Rome, Italy.
Source – FactSet
Orange SA operates as a telecommunication services company, which operates mobile and internet services. It provides telecommunication services to multinational companies, under the brand Orange Business Services. The company was founded in 1999 and is headquartered in Paris, France.
Home Depot, Inc. is a home improvement retailer that sells building materials and home improvement products. It operates The Home Depot stores, which provides full-service, warehouse-style stores that sells a wide assortment of building materials, home improvement products and lawn and garden products and provide a number of services. The company offers national installation services through pre-screened independent contractors for products ranging from floors to roofs, windows to water heaters, and kitchen cabinets to vinyl siding. Its retail stores offer professional customers, including repair and remodel contractors, special services and support to make them more successful on the job site. It serves professional remodelers, general contractors, repairmen, small business owners, and tradesmen. Home Depot was founded by Bernard Marcus, Arthur M. Blank, Kenneth Gerald Langone and Pat Farrah on June 29, 1978 and is headquartered at Atlanta, GA.
Source – FactSet
Headquartered in Switzerland, global pharmaceutical company Roche has been in operation for over a century. Roche is the world leader in oncology and virology, and its annual revenues exceed 45 CHF billion (Swiss Francs). Its main products include treatments for anemia (CERA), arthritis (Rituxin), cancer (Herceptin, Tarceva and Avastin) and Hepatitis C and HIV. The company also operates a diagnostics business, which specializes in disease monitoring, prevention and genetics testing. Roche owns a sizeable stake in U.S.-based Genentech and Japan-based Chugai.
Roche's solid cancer franchise largely originates from Genentech. In addition, a strong relationship with Chugai allows for penetration of the difficult to enter Japanese market. Collectively, the companies lead the oncology industry with popular cancer drugs like Rituxan (which also treats rheumatoid arthritis) and Herceptin, the latter of which has shown especially promising potential in combination with Avastin in certain cancers. Avastin is also in studies for additional cancers. Roche's diagnostics division has grown through products focusing on diabetes, molecular diagnostics, and immunochemistry. An improved product mix, with high barriers to entry given the biologic nature of many of its products, should serve to support Roche's sales and earnings over time.
Roche has an intriguing dividend yield. It has increased per share dividends by more than 15% annually over the last 5 years.
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.
BT Group Plc provides communication solutions and services. Its principal activities include networked IT services, local, national and international telecommunications services, higher value broadband, and Internet products and services. The company has five customer-facing businesses: BT Global Services, BT Business, BT Consumer, BT Wholesale and Openreach. The BT Global Services provides networked IT services to multinational corporations, domestic businesses, government departments and other communication service providers around the world. The BT Business provides a range of innovative communications products and services and serves consumer customers, small and medium sized enterprises in the United Kingdom. The BT Consumer provides consumer fixed voice and broadband in the U.K. with a growing base of TV and BT sport customers. The BT Wholesale provides broadband, voice, data connectivity, managed network outsourcing and value-added solutions to the UK communication providers. The Openreach owns, maintains and develops access network that links homes and businesses to the networks of Britain's communication providers. BT Group was founded on March 30, 2001 and is headquartered in London, the United Kingdom.
|Portfolio P/E Trailing 12 Months*||15.3x|
|Median Market Capitalization*||$21.8 B|
|Number of Equities||88|
|7-Year Beta* (A Shares vs. Blended Index)||0.91|
|Active Share (vs. MSCI World Index)**||90.5%|
|Number of Bonds||115|
|Yield to Worst||5.8%|
|Average Effective Maturity||9.7 Yrs|
|Effective Duration||4.1 Yrs|
- Foreign Equity52.8%
- Domestic Equity36.0%
- Domestic Corporate Bonds5.1%
- Foreign Bonds3.6%
- Domestic Other Bonds1.2%
- Cash & Cash Equivalents1.3%
- Large Cap (> $12 B)80.9%
- Mid Cap ($2.5 to $12 B)14.3%
- Small Cap (< $2.5 B)4.9%
- Investment Grade3711.0%
- Below Investment Grade5859.0%
- Not Rated431.0%
- Not Rated431.0%