SECTOR ALLOCATION as of 31/03/2018
Financials 27.1%Telecommunication Services 14.6%Energy 13.0%Consumer Staples 9.2%Health Care 8.4%Industrials 7.1%Information Technology 5.7%Consumer Discretionary 5.3%Utilities 5.1%Materials 2.8%Real Estate 1.6%
Ten Largest Holdings as of 28/02/2018
% OF PORTFOLIO | |
---|---|
CME Group, Inc. | 2.9% |
JPMorgan Chase & Co. | 2.9% |
China Mobile Ltd. | 2.8% |
Walgreens Boots Alliance, Inc. | 2.7% |
Electricite de France S.A. | 2.5% |
Roche Holding AG | 2.5% |
Royal Dutch Shell plc | 2.5% |
QUALCOMM, Inc. | 2.5% |
Orange S.A. | 2.4% |
Total S.A. | 2.2% |
CME Group, Inc.
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
JPMorgan
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.
China Mobile Ltd.
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.
Walgreens Boots Alliance, Inc.
Walgreens Boots Alliance, Inc. provides drug store services. In December of 2014 Walgreens and Boots Alliance merged to become Walgreens Boots Alliance. It is the largest retail pharmacy, and health and daily living destination in the USA and Europe. The company is headquartered in Deerfield, IL.
Electricite de France SA
Électricité de France SA produces, markets, and distributes electricity. It provides a wide range of natural gas, electricity and energy eco-efficiency services. It operates through five divisions Engineering, Generation, Optimization & Trading, Transmission and Distribution. The company was founded on April 8, 1946 and is headquartered in Paris, France.
Source: FactSet
Roche Holding AG
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.
Royal Dutch Shell
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
Qualcomm, Inc.
QUALCOMM, Inc. engages in the development, design, manufacture, and marketing of digital telecommunications products and services. It operates through the following segments: Qualcomm CDMA Technologies, Qualcomm Technology Licensing, and Qualcomm Strategic Initiatives. The Qualcomm CDMA Technologies segment develops and supplies integrated circuits and system software based on technologies for the use in voice and data communications, networking, application processing, multimedia, and global positioning system products. The Qualcomm Technology Licensing segment provides rights to use portions of the firm's intellectual property portfolio. The Qualcomm Strategic Initiatives segment invests in the technology, design, and introduction of products and services for voice and data communications. The company was founded by Franklin Antonio, Adelia Coffman, Andrew Cohen, Klein Gilhousen, Irwin Mark Jacobs, Andrew Viterbi, and Harvey White in July 1985 and is headquartered in San Diego, CA.
Source - Factset
Orange SA
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.
Source: FactSet
Total SA
Headquartered in France, Total is an integrated international oil and gas company with key assets in Canada, Russia, Qatar, Angola, Nigeria, and Kazakhstan. Business lines include upstream (oil and gas exploration, development, and production), downstream (refining, marketing, trading, and shipping of crude oil and petroleum products), and chemicals (fertilizers and petrochemicals). Upstream operations have the highest margin, contributing the majority of operating income.
Output from many of the world's existing oilfields is declining, and the rate of developable new resources continues to slow. While developed OECD countries have recently curbed demand for oil, oil demand continues to increase in non-OECD nations. Although the majority of incremental energy supply is expected to come from renewable, nuclear, and gas, oil is expected to remain the largest source of transportation energy for decades.
Compared to other oil majors, Total has potential for an above-average growth profile, with exposure to the LNG (Liquid Natural Gas) market and lower-than-average depletion rates in existing oil fields. Total has approximately 40 years of proved and probable resources. Production setbacks in recent years have been disappointing, however, and the company has been criticized for under-investing in exploration. Total has been focused on improving its yield from producing assets.
Total's dividend appears to be fully covered by cash flow in the oil price ranges we have seen over the last 5 years. The firm's strong balance sheet and operating cash flow have enabled it to increase the dividend at an annual rate of approximately 7% over the last 5 years.
KEY PORTFOLIO ATTRIBUTES as of 31/03/2018
Assets | $16.92 M |
Dividend Yield | 4.4% |
Portfolio P/E Forward 12 Months* | 12.9x |
Portfolio Price to Cash Flow* | 7.0x |
Portfolio Price to Book* | 1.6x |
Median Market Capitalization* | $41.9 B |
Number of Holdings | 77 |
5-Year Beta† (A shares vs. Blended Index) | 1.06 |
5-Year Beta† (A shares vs. MSCI World Index) | 0.80 |
PORTFOLIO COMPOSITION as of 31/03/2018
Non-U.S. Equity 65.2%U.S. Equity 25.6%Cash & Cash Equivalents 9.2%
REGIONAL DIVERSIFICATION as of 31/03/2018
Europe ex UK 48.1%North America 29.2%Asia Pacific ex Japan 11.0%UK 10.3%Other 1.4%
CAPITALIZATION EXPOSURE as of 31/03/2018
Large Cap (> $12 B) 89.8%Mid Cap ($2.5 to $12 B) 8.0%Small Cap (< $2.5 B) 2.2%