Financials35.1% Communication Services14.2% Consumer Discretionary11.1% Information Technology11.0% Energy8.1% Consumer Staples6.2% Industrials6.0% Health Care5.0% Materials3.2%
|% OF PORTFOLIO|
|Alibaba Group Holding Ltd.||6.3%|
|Tencent Holdings Ltd.||5.8%|
|HDFC Bank Ltd.||4.9%|
|ICICI Bank Ltd.||4.8%|
|AIA Group Ltd.||4.1%|
|Industrial & Commercial Bank Of China Ltd.||4.0%|
|Reliance Industries Ltd.||3.7%|
|Samsung Electronics Co. Ltd.||3.5%|
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.
HDFC Bank Ltd. engages in providing a wide range of banking and financial services, including commercial banking and treasury operations. It provides financial services to upper and middle income individuals and corporations in India. The company has two subsidiaries: HDFC Securities Ltd. and HDB Financial Services Ltd. HDFC Securities is primarily engaged in the business of providing brokerage services through the Internet and other channels with a focus to emerge as a full-fledged financial services provider. HDB Financial Services Ltd. is a non-deposit taking non-bank finance company typically underserviced by the larger commercial banks. The bank operates its business through four segments: Treasury, Retail Banking, Wholesale Banking and Other Banking Business. The Treasury segment consists of net interest earnings from the Bank's investment portfolio, money market borrowing and lending, gains or losses on investment operations and on account of trading in foreign exchange and derivative contracts. The Retail Banking segment serves retail customers through a branch network and other delivery channels. It raises deposits from customers and makes loans and provides advisory services to customers. The Wholesale Banking segment provides loans, non-fund facilities and transaction services to large corporates, emerging corporates, public sector units, government bodies, financial institutions and medium scale enterprises. The Other banking business segment includes income from para banking activities such as credit cards, debit cards, third party product distribution, primary dealership business and the associated costs. The company was founded in August 1994 and is headquartered in Mumbai, India.
Source – FactSet
ICICI Bank Ltd. is engaged in providing a wide range of banking and financial services, which includes commercial banking and treasury operations to corporate and retail customers through a variety of delivery channels. Through its specialized subsidiaries in the areas of commercial banking, retail banking, life and non-life insurance, project and corporate finance, working capital finance, venture capital and private equity, investment banking, asset management, broking and treasury products and services.
The company operates through four segments: Retail Banking, Wholesale Banking, Treasury and Other Banking. The Retail Banking segment includes exposures of the bank, which satisfy the four qualifying criteria of regulatory retail portfolio as stipulated by the RBI guidelines on the Basel II framework. The Wholesale Banking segment includes all advances to trusts, partnership firms, companies and statutory bodies, by the bank which are not included in the Retail Banking segment, as per the RBI guidelines for the bank. The Treasury segment includes the entire investment portfolio of the bank. The Other Banking segment includes leasing operations and other items not attributable to any particular business segment of the bank. ICICI Bank was founded on January 5, 1994 and is headquartered in Mumbai, India.
Source - Factset
Unilever NV engages in the production and marketing of consumer goods in the nutrition, hygiene, and personal care categories. It operates its business through the following segments: Personal Care, Foods, Refreshment, and Home Care. The Personal Care segment covers the sales of skin and hair care products, deodorants and oral care products. The Foods segment includes the sales of soups, bouillons, sauces, snacks, mayonnaise, salad dressings, margarines and spreads. The Refreshment segment sells ice cream, tea-based beverages, weight-management products and nutritionally enhanced staples sold in developing markets. The Home Care segment is in charge of the sales of home care products such as powders; liquids and capsules; soap bars; and a wide range of cleaning products. The company was founded on November 9, 1927 and is headquartered in Rotterdam, Netherlands.
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.
Industrial and Commercial Bank of China (ICBC) is the largest commercial bank in China in terms of total assets, loans and deposits. ICBC primarily operates in China and provide an extensive range of commercial banking products and services through over 18,000 branches and outlets.
ICBC was converted from a state-owned commercial bank to a joint-stock limited company in 2005, with the Ministry of Finance (MOF) and Huijin Investment as the promoters as well as international strategic investors including Goldman Sachs, Allianz and American Express. Since then, ICBC has been a key player in China's modern banking history. While ICBC remains primarily a corporate lender, the retail banking franchise is growing fast, accounting for one third of revenue.
ICBC competes primarily with other commercial banks in China. The company may face increasing competition from foreign commercial banks as restrictions on geographical presence, customer base and operating licenses in China have been removed pursuant to China's WTO commitments.
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.
Reliance Industries Ltd. engages in exploration and production of oil and gas, petroleum refining and marketing textiles, retail and special economic zones. The company also markets petrochemicals, polyester, fiber intermediates, plastics and chemicals. It has three reportable segments: petrochemicals, refining and oil & gas. The petrochemicals segment includes production and marketing operations of petrochemical products, including high and low density polyethylene, polypropylene, polyvinyl chloride, poly butadiene rubber, polyester yarn, polyester fibre, purified terephthalic acid, paraxylene, ethylene glycol, olefins, aromatics, linear alkyl benzene, butadiene, acrylonitrile, caustic soda and polyethylene terephthalate. The refining segment includes production and marketing operations of the petroleum products. The oil & gas segment includes exploration, development and production of crude oil and natural gas. Reliance Industries was founded by Dhirubhai Hirachand Ambani in 1966 and is headquartered in Mumbai, India.
|Portfolio P/E Forward 12 Months*||14.8x|
|Portfolio Price to Cash Flow*||9.0x|
|Portfolio Price to Book*||2.2x|
|Median Market Capitalization*||$39.7 B|
|Number of Holdings||42|
|3-Year Beta† (I shares vs. MSCI Emerging Markets Index)||0.90|Asia Pacific ex Japan59.6% Latin America15.3% Europe ex UK10.5% UK7.2% North America3.9% Other3.4% Large Cap (> $12 B)85.4% Mid Cap ($2.5 to $12 B)14.6% Small Cap (< $2.5 B)0.0%