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Pictet-Asian Local Currency Debt Fund For professional investors only 2 STRONG REGIONAL FOCUS SOURCES OF RETURN * * Interest rates Currencies Typically 16 Highly experienced invests across 10+ investment Asian countries professionals Share in the potential for sustainable returns from Asia’s growing economies 7.6 % Annualised return Asian local currency debt asset class* Pictet Asset Management Diversification BENEFITS* *Source: JP Morgan/HSBC/Bloomberg. Annualised historical data in USD: 31 Dec 2001 - 30 June 2014. Pictet-Asian Local Currency Debt Fund REASONS TO INVEST Potential for growth Objective Asian local currency bonds have generated good returns over the last 12 years*. The fund is actively managed and aims to capture the market return and further add positive incremental returns in all market conditions, while minimizing volatility. Two sources of return Aims to capture growth from bonds and increases in currency values. Strong opportunities with lower volatility Proven track record The team has a strong track record in delivering good returns regardless of market conditions. The low-debt, fast-growing economies of Asia offer investors sustainable, long-term returns, at lower risk than local currency debt in other emerging markets*. *Source: JP Morgan/HSBC/Bloomberg. Annualised historical data in USD: 31 Dec 2001 - 30 June 2014. WHY NOW? The developed economies of Europe, North America and Japan face low prospects for growth and have high levels of debt. Current low interest rates also offer poor returns for investors. By contrast, Asian countries, have undergone a radical transformation over the last decade to achieve increasing growth and economic stability. Rising demand has allowed Asian countries to increase the range of bonds available, offering a wide choice of exciting opportunities. WHAT IS IT? HOW CAN IT HELP? WHO IS IT FOR? The fund offers exposure to an asset class which has a low to moderate correlation with other asset classes. The fund invests primarily in Asian local currency bonds and currencies. At a time of low returns from developed markets, it allows investors to access the high yields available from Asian debt, as well as the potential to benefit from growth in the value of these nations’ currencies. This fund could be suitable for investors who are prepared to invest for the long-term and are willing to take a potentially higher risk with their investment. Pictet Asset Management 2 Asian debt has been one of the most significant investment themes of the last twelve years. Against a background of slowing global growth, it has delivered annualised returns of 7.6% with lower volatility than comparable strategies such as Latin American and global local currency debt. SIMON LUE-FONG Head of Pictet Emerging Debt team POSITIVE RETURNS WITH LOW VOLATILITY FROM ASIAN DEBT Annualised returns and volatility in USD for local currency Asian debt vs other asset classes* RETURNS US Government Bonds Asia Local Bonds Investment Grade USD Bonds Emerging USD Bonds Global High Yield USD Bonds 10.0% Latin American Local Bonds 7.6 Emerging Local Currencies Commodities Emerging Equities 13.4% 11.2% 10.6% 12.2% % 7.1% Emerging Local Bonds 7.7% 7.1% 5.0% Volatility % 0 5 10 15 20 LOW VOLATILITY 25 HIGH VOLATILITY *Source: JP Morgan/HSBC/Bloomberg. Annualised historical data: 31 Dec 2001 - 30 June 2014. ASIA LOCAL CURRENCY DEBT INDEX COUNTRY WEIGHTS** WHAT ARE THE RISKS? By investing across Asia, the fund offers exposure to a wide range of bonds and currencies from some of the world’s most dynamic economies. •Past performance is not a guide to future performance. The value and income of an investment can fall as well as rise and you may not get back the amount originally invested. CHINA 11.6% INDIA 6.1% KOREA 20.0% HONG KONG 11.1% TAIWAN 2.1% THAILAND 7.6% MALAYSIA SINGAPORE 10.7% 15.0% PHILIPPINES 6.2% INDONESIA 9.6% •Investments in emerging markets can potentially be of higher risk and volatility than those in developed markets. •Investments are made in assets that are denominated in foreign currency and are not hedged back to the base currency of the fund. Changes in exchange rates may therefore affect the value of the investments. **HSBC Asia Local Bond Index. Source: Pictet Asset Management/Bloomberg/HSBC, typical index country weights Pictet-Asian Local Currency Debt Fund3 HOW WE INVEST REGIONAL OVERVIEW COUNTRY ANALYSIS INTEREST RATES CURRENCIES RISK MANAGEMENT First, we assess the regional risk outlook. This helps us see how attractive conditions are for taking risk, considering factors such as monetary policy, geopolitical tensions and the economic cycle. We examine the economic fundamentals of each country, meeting key government figures and other policy makers. Our regional country views are formed by our own research as well as inputs from other investment professionals and external research. We see interest rates and currencies as separate sources of return, so we examine them independently. Here, some of the factors that we consider are monetary policy, politics and the prospects for inflation and growth. A powerful source of additional returns, alongside interest rates. Some of the factors we look at are currency policy and growth differential to assess which currencies are likely to rise or fall in value. Risk is monitored daily by our investment team and independently by a dedicated emerging markets risk manager, as well as by our firm-wide Risk Control Unit. We also have a disciplined process in place that helps us to lock-in gains and limit potential losses. KEY FUND FACTS ABOUT PICTET ASSET MANAGEMENT LAUNCH DATE INVESTMENT TEAM Pictet was founded in Geneva in 1805. Pictet is a partnership of eight owner managers that encourages us to focus on the group’s long-term success. 26/06/2006 Simon Lue-Fong Pictet Asset Management is the division responsible for asset management for institutional investors and investment funds. With over 730 employees, including 280 investment professionals, we operate from 17 centres worldwide. Orlena Yee BENCHMARK Mary-Thérèse Barton HSBC Asia Local Bond Index Philippe Petit Wee-Ming Ting LEGAL STATUS Sub-fund of the Luxembourg-registered Pictet SICAV We offer a full range of active and quantitative investment solutions including equity, fixed income and alternative strategies for leading institutions globally. Our clients include some of the world’s largest pension funds, mutual funds, sovereign wealth funds and financial institutions. We are dedicated to building lasting partnerships with our clients by exceeding their expectations for investment performance and service. We manage USD 158 billion (CHF 140 billion / EUR 115 billion / GBP 92 billion) in assets as at the end of June 2014. WANT TO FIND OUT MORE? www.pictetfunds.com www.pictet.com Disclaimer For professional investors only. This marketing material is issued by Pictet Funds (Europe) S.A, an entity belonging to the Pictet Asset Management business line. It is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Only the latest version of the fund’s prospectus, regulations, annual and semi-annual reports may be relied upon as the basis for investment decisions. These documents are available on www.pictetfunds.com or at Pictet Funds (Europe) S.A., 15, avenue J. F. Kennedy L-1855 Luxembourg. The information and data presented in this document are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments. Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. Pictet Funds (Europe) S.A. has not taken any steps to ensure that the securities referred to in this document are suitable for any particular investor and this document is not to be relied upon in substitution for the exercise of independent judgment. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Before making any investment decision, investors are recommended to ascertain if this investment is suitable for them in light of their financial knowledge and experience, investment goals and financial situation, or to obtain specific advice from an industry professional. The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested. Risk factors are listed in the fund’s prospectus and are not intended to be reproduced in full in this document. Past performance is neither a guarantee nor a reliable indicator of future results. Performance data does not include the commissions and fees charged at the time of subscribing for or redeeming shares. This marketing material is not intended to be a substitute for the fund’s full documentation or for any information which investors should obtain from their financial intermediaries acting in relation to their investment in the fund or funds mentioned in this document. © Copyright 2014 Pictet – Issued in August 2014. Pictet-Asian Local Currency Debt Fund 4