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JARISLOWSKY FRASER LIMITED INTERNATIONAL EQUITY FUND REPORT 3rd QUARTER 2014 The portfolio outperformed the MSCI EAFE Net Index during the third quarter generating a return of -0.2% vs. -1.3%, mainly thanks to strong performance from individual holdings in the Consumer Discretionary and Consumer Staples sectors. Within Consumer Staples, Unicharm, a relatively recent addition to the portfolio, generated a return of +21.7% this quarter. Details of the Fund Inception Date Net Asset Value per Unit Distribution (06/30/2014) Fund Size ($ Million) April 1, 1995 C$ 28.20 US$ 25.23 C$ 0.47 C$ 1,482.7 JF International Equity Fund ‐ Regional Weightings September 30th, 2014 Non‐EAFE Japan 16% 3% UK 24% World Stock Market Returns (%) in U.S.$ ‐ Q3 2014 5 0 ‐5 ‐10 ‐15 ‐20 Asia‐Pacific 6% Israel 1% India Europe 50% After an encouraging start to the beginning of the year, the Eurozone economy is again showing signs of shortness of breath. Growth slowed in the third quarter and recent economic indicators point to, at best, a stagnant economy burdened with high unemployment. The ECB has launched a series of measures to boost lending and move inflation towards its goal of 2%. As investors anticipate further easing of monetary policy, the euro has tumbled to around 1.25 against the U.S. dollar. This is definitely a positive development for European inflation, but further fiscal stimulus may be needed to bring Europe back to sustainable economic growth. Japan, in a similar fashion, is also facing the challenge of a stalling economy, and economic growth forecasts of 1% for 2014 will have to be revised down. After the deep GDP contraction of 7% in the second quarter due to the increase in VAT in April 2014, the economy has not experienced the rebound in the third quarter that was previously hoped for. The effect of the yen depreciation coupled with the higher tax levy is not encouraging for Japanese domestic consumption. Meanwhile, the Bank of Japan continues its aggressive monetary policy, buying around $60 billion of government bonds every month, and further easing measures will be considered if the economy does not pick up. China, the world’s second largest economy, continues to experience a slowdown despite the mini stimulus measures taken by Chinese authorities. Other emerging economies such as Brazil and Russia, relying on export of commodities, are also experiencing a slowdown, while the Indian economy is faring well after the election of Mr. Modi, the pro-business Prime Minister. Performance Review 3 mths YTD 1 Yr 3 Yrs 5 Yrs 7 Yrs 10 Yrs 15 Yrs Sept. 30th, 2014 (%) (%) (%) (%) (%) (%) (%) (%) JFIEF* ‐0.2 3.3 14.5 17.8 10.6 4.6 5.8 4.0 MSCI EAFE Net* ‐1.2 3.7 13.3 16.3 7.5 1.7 5.3 2.3 JFIEF (U$) ‐4.8 ‐1.8 5.3 15.1 9.8 2.9 7.1 5.9 MSCI EAFE U$ Net ‐5.9 ‐1.4 4.3 13.6 6.6 ‐0.2 6.3 3.9 S&P/TSX ‐0.6 12.2 20.4 12.1 8.7 3.9 8.5 7.7 S&P 500 6.1 14.0 30.2 25.9 16.6 7.8 6.8 3.0 MSCI World 2.8 9.7 22.6 21.4 12.4 5.1 6.4 2.8 Compounded Annualized Returns: September 30th, 2014 (C$ unless otherwise indicated) *JFIEF: JF International Equity Fund. C$ returns have been calculated using the London 4PM FX rates. Performance is gross of management fees. * Prior to Dec. 31, 2010 the index is the MSCI EAFE Index. China U.S. Japan Emg. Canada MSCI Pac ex. Europe Mkts EAFE Japan Index Brazil Russia We initiated two new positions in the portfolio, Japanese Staple Kao Corp and multinational Pharmaceutical Roche and exited Tesco plc. JF International Equity Fund ‐ Sector Allocations September 30th, 2014 Utilities, 1% Telecom, 5% Materials, 7% Cons. Disc., 11% Cons. Staples, 17% Info. Tech., 4% Industrials, 9% Energy, 8% Health Care, 16% Financials, 22% Strategy The relative calm of the summer months was replaced by volatility in September. Developments with ISIS in the Middle East, Ukraine, diverging central bank policies and the Ebola outbreak in West Africa all contributing to market malaise. From an economic standpoint, we remain in the expansionary phase of the business cycle. Leading indicators are still not pointing to an imminent recession, although it is clear that North America and the U.K. are on a better path than continental Europe. Where economic stimulus has been removed (or at least markedly reduced) the debate rages over when it will be time to raise short-term rates. While there are no signs of above-target inflation, this decision is likely to be pushed further into the future. As we get closer to rate increases we will see more volatility than usual. It is in times of uncertainty that a focus on quality often generates the strongest returns. Strength of franchise, sustainability of competitive position, stability of cash flow, depth of management and a fortress balance sheet, amongst other things, will be what the markets reward. We believe the companies we buy possess the majority of these attributes, which is how we manage risk in our portfolios. Representative Holdings Holdings Banco Santander Bayer AG HSBC Nestle Sanofi Country Spain Germany UK Switzerland France Sector Financials Health Care Financials Consumer Staples Health Care This document is provided for information purposes only to clients of Jarislowsky, Fraser Limited (JFL). All opinions and estimates contained in this report constitute JFLʹs judgement as of the time of writing and are provided in good faith. All data, facts and opinions presented in this document may change without notification. This is not a solicitation for business. Past performance is not a guide to future performance. Future returns are not guaranteed. No use of the Jarislowsky, Fraser Limited name or any information contained in this report may be copied or redistributed without the prior written approval of JFL. Sources: Jarislowsky, Fraser Limited, MSCI Inc., S&P Financial Services LLC., TSX Inc., PC Bond Analytics, Global Industry Classification Standard (GICS) by MSCI and Standard and Poor's ,Wilshire Atlas Analytics, Bloomberg.