India2.8% Consumer Discretionary29.6% Communication Services13.2% Health Care11.2% Information Technology11.2% Consumer Staples9.8% Financials7.4% Industrials5.6% Energy2.5% Cash and Cash Equivalents9.6% Retailing17.5% Media13.2% Software & Services11.2% Consumer Services9.6% Food, Beverage & Tobacco7.6% Pharma, Biotech & Life Sciences6.9% Diversified Financials5.4% Health Care Equipment & Services4.3% Commercial & Professional Services3.7% Consumer Durables & Apparel2.5%
|% OF PORTFOLIO|
|Fresenius Medical Care AG & Co. KGaA||2.8%|
|Auto Trader Group plc||2.5%|
|Alibaba Group Holding Ltd.||2.5%|
|Galaxy Entertainment Group Ltd.||2.4%|
|Tencent Holdings Ltd.||2.3%|
|Just Eat plc||2.3%|
Wirecard AG offers internet payment and processing services. The Company provides software and systems for online payment, electronic funds transfer, fraud protection, and enterprise solutions. As credit and debit transactions continue to take share from cash and checks, ecommerce and mobile payments should benefit.
Worldpay Group Plc engages in global payment solutions. It operates through the following business divisions: global ecommerce, Worldpay UK, and Worldpay U.S. The global ecommerce division provides a range of online and mobile multi-currency payment acceptance, validation, and settlement services. The Worldpay UK division offers in-store, phone, online, and mobile payment acceptance solutions. The Worldpay U.S. division includes in-store, online, and mobile payment acceptance solutions for United States-based merchants, with a focus on developing omni-chanel and integrated payment solutions. The company is headquartered in London, the United Kingdom.
Auto Trader Group Plc engages in the operation of an online procurement site for automotives. It sells cars, bikes, vans, motor homes, caravans, and trucks. It also offers automotive insurance products. The company was founded in 1977 and is headquartered in Manchester, United Kingdom.
Alibaba Group was the largest online and mobile commerce company in the world by gross merchandise volume in 2013. Alibaba operates platforms for third parties and does not engage in direct sales or hold inventory. Alibaba Group started as an online B2B marketplace platform, alibaba.com, in 1999. In 2003, it launched an online C2C marketplace platform, Taobao. In 2008, it launched an online B2C marketplace platform, Tmall.
Taobao currently has 85% market share in China C2C ecommerce market. Tmall has 55% market share in China B2C ecommerce market. We believe Alibaba Group is a beneficiary of 1) growth in China consumption, and 2) increasing penetration of online retail to offline retail.
Galaxy Entertainment is one of six casino operators with a license to operate in Macau. The company operates two flagship properties at the moment: Galaxy Macau and Starworld and is in the process of doubling the size of Galaxy Macau through Phase 2 expansion on the Cotai Peninsula.
The majority of Macau casino customers originate from China and Hong Kong with most of the revenue currently driven by the VIP market. The mass market opportunity though is increasing with rising wealth in China and infrastructure projects that enable easier access into Macau. Galaxy is well positioned to capture this incremental share.
Tencent is a leading Chinese Internet company offering an instant messaging service, a social networking site, a news/entertainment portal, and an online gaming platform. In the gaming division, Tencent is a leading provider of both casual games and massively multiplayer online games (MMOG) and utilizes in-house development and third party licensing. Its key asset is its large instant messaging user base, which allows it to cross sell and monetize other services.
Even with a relatively low level of Internet penetration, China already boasts the world's largest online population. The number of Chinese people accessing the Internet should continue to increase as physical telecommunication infrastructure is built out and as more individuals are able to afford PCs. Tencent, which already has more than 500 million active users, will benefit from increasing internet penetration to the extent it can continue to monetize its massive user base. Today Tencent derives revenue from premium instant messaging services, online advertisements, wireless messaging, and online gaming. Notably, it has become a key online gaming player in a relatively short period of time.
Barriers to entry in the Internet space are relatively low given low capital intensity, and the rapid pace of technological innovation can make the competitive environment quite dynamic. Tencent's famous "QQ" brand, user base, significant net cash balance sheet, and substantial free cash generation are key competitive advantages which may be leveraged to grow both organically and inorganically.
|Portfolio P/E Trailing 12 Months*||29.3x|
|Portfolio Price to Cash Flow*||20.6x|
|Portfolio Price to Book*||4.5x|
|Median Market Capitalization*||$12.5 B|
|Number of Holdings||52|
|7-Year Beta* (A shares vs. MSCI AC World ex-U.S. Growth Index)||0.91|
|Emerging Markets Exposure||19.9%|
|Active Share* (vs. MSCI AC World ex-U.S. Growth Index)||91.1%|Consistent Growth31.0% Growth Industry Leaders26.3% Emerging Growth33.1% Cash & Cash Equivalents9.6% Large Cap (> $12 B)62.5% Mid Cap ($2.5 to $12 B)31.4% Small Cap (< $2.5 B)6.1%