India3.6% Consumer Discretionary30.2% Communication Services16.0% Consumer Staples11.6% Information Technology11.5% Health Care9.5% Financials8.3% Industrials5.4% Energy2.8% Cash and Cash Equivalents4.7% Media & Entertainment16.0% Retailing15.5% Consumer Services11.7% Software & Services11.5% Food, Beverage & Tobacco9.5% Pharma, Biotech & Life Sciences6.9% Diversified Financials6.1% Commercial & Professional Services3.5% Consumer Durables & Apparel3.1% Energy2.8%
|% OF PORTFOLIO|
|Alibaba Group Holding Ltd.||3.4%|
|Tencent Holdings Ltd.||3.2%|
|Fresenius Medical Care AG & Co. KGaA||2.9%|
|Auto Trader Group plc||2.9%|
|Royal Dutch Shell plc||2.5%|
|Just Eat plc||2.5%|
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.
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.
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.
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.
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
Yandex is the leading search engine in Russia and affiliated Commonwealth of Independent States (CIS) countries with significantly higher market share than Google, its closest competitor in the region. Yandex has been able to maintain its lead over time through continuous investment in technology with the goal of providing relevant, unbiased, country-specific search results, as well as localized information, maps and services.
The company is benefiting from a number of trends which may prove to be multi-year in duration. Broadband penetration in Russia remains well below developed world levels and continues to increase as infrastructure improves, and as disposable income increases. Yandex also benefits from a growing advertising market in Russia, where advertising spend as a percentage of GDP remains low. Finally, Yandex benefits from the global trend of online advertising taking market share from traditional media.
Over the medium term, the core PC-based search business at Yandex faces competitive threats from social media, and from smart phone-based mobile search. Yandex seems well-positioned to adapt to a changing technological landscape given its heritage as an engineering-oriented company with a long history of innovation. Yandex has a strong balance sheet and its core search business is now generating substantial funds to be re-deployed in related ventures domestically and in the surrounding region.
|Portfolio P/E Trailing 12 Months*||24.6x|
|Portfolio Price to Cash Flow*||17.1x|
|Portfolio Price to Book*||3.6x|
|Median Market Capitalization*||$10.4 B|
|Number of Holdings||52|
|7-Year Beta* (A shares vs. MSCI AC World ex-U.S. Growth Index)||0.94|
|Emerging Markets Exposure||22.3%|
|Active Share* (vs. MSCI AC World ex-U.S. Growth Index)||90.3%|Consistent Growth33.2% Growth Industry Leaders27.6% Emerging Growth34.5% Cash & Cash Equivalents4.7% Large Cap (> $12 B)59.5% Mid Cap ($2.5 to $12 B)31.1% Small Cap (< $2.5 B)9.3%