Colonial First State Wholesale Global Emerging Markets Select Fund

Colonial First State Wholesale
Global Emerging Markets Select
Monthly performance report - September 2013
APIR: FSF1085AU
FUND PERFORMANCE
1
month
3
months
6
months
1
year
3
years
5
years
10
years
Since
inception¹
Fund² 1.18% 2.64% 9.46% 14.20% 9.94% 9.97%
Benchmark³ 1.45% 3.54% 8.40% 12.30% 0.84% 1.91%
Excess -0.27% -0.90% 1.06% 1.90% 9.11% 8.06%
Tracking error 3.93% 7.84%
Information
ratio
0.88 1.35
MONTH BY MONTH PERFORMANCE 4
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
2011 2012 2013
Fund
Benchmark
ROLLING 1 YEAR RETURNS 4
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
2012 2013
Fund
Benchmark
Market Review
Emerging markets rose in September, bouncing back
after a period of weakness.
The MSCI Emerging Markets Index climbed by 1.5% in
Australian dollar terms over the month.
Latin America benefitted from very strong
performance by Brazil, while EMEA was helped by
rebounding markets in Russia and Turkey.
Emerging Asia rose over the month but lagged as
Malaysia and Taiwan were less buoyant than other
markets.
Fund Activity
China Telecom (Telecom Services) declined on
concerns about intensifying competitive pressures.
Taiwan Semiconductor (Information Technology) fell
on worries about potential competition from wellcapitalised
Western companies.
On the positive side, Banco Bradesco (Brazil:
Financials) rose with the Brazilian market.
REGIONAL BREAKDOWN
Asia
Europe
South America
UK
Japan
North America
Other
Middle East
Africa
NTPC (India: Utilities) bounced strongly with the
Indian market.
We did not establish any new positions during the
month.
We sold Bharti Airtel (India: Telecom Services) as
currency risks outweigh the long-term potential.
1. Fund inception: 11 March 2010
2. All returns are calculated on an annualised basis using exit price to exit price with distributions reinvested, net of management costs, transaction costs. All return
calculations exclude any individual taxes payable by the investor and all other fees and rebates disclosed in the relevant product disclosure statements available on our
website or by calling us. The ‘distribution’ component is the amount paid by the way of distribution, which may include net realised capital gains.
3. Benchmark: MSCI Emerging Markets Net Index
4. Performance charts are limited to five years
Adviser use only
WSEM/FS4721

Outlook and Strategy
We have little doubt that more people in the
developing world will be pulled out of poverty in the
coming decade and that others will become wealthier
still.
The underlying problem with investing in emerging
markets is that many of the companies listed there
(arguably the majority of them) simply are not set up
to be good long-term structures for minority
shareholders to take advantage of the hugely positive
underlying trend.
What we do not own for clients will therefore be as
important in the long-term as what we do.
A position in Westfield Group was reduced over the
course of the month. Westfield Group owns high
quality assets and has a strong development pipeline.
However it is now trading at a full valuation and has a
modest near-term growth outlook.
Market Outlook and Fund Positioning
A substantial component of the Fund is invested within
the Americas. Commercial real estate sales activity in
the U.S. totalled $24 billion in August, up 12% from a
year earlier. Shorter lease-term, more economically
sensitive sectors such as hotel, self-storage,
apartment and industrial REITs are better positioned
than more defensive, longer lease-term sectors such
as health care REITs in a rising rate but improving
economic growth scenario. As we believe this is the
most likely economic scenario, we have continued to
position the portfolio accordingly.
The Fund retains its underweight position in Europe,
with exposure consisting primarily of selected retailfocussed
REITs. However, the economic situation in
the UK is improving, with broad-based GDP growth of
1.3% forecast for 2013. Rising UK house prices may
translate to higher consumer confidence, which would
be positive for the retail sector. The Fund’s UK
weighting has been increased, through higher
weightings in current holdings.
We have a positive view on Hong Kong property
developers and Australian REITs, which have healthy
balance sheets, investment grade property portfolios
and defensive business models.
We are also positive on the Japanese property sector,
which should continue to benefit from that country’s
program of macroeconomic stimulus measures.
FUND FACTS
Investments objective: To achieve long-term
capital growth through investing in companies in
emerging economies, including those listed on
developed market exchanges whose activities
predominantly take place in emerging market
countries. The option aims to outperform the MSCI
Emerging Markets Index over rolling five year
periods before fees and taxes.
Inception date: March 2010
Management cost: 1.39%
APIR: FSF1085AU
Benchmark index:MSCI Emerging Markets Net
Index
Suggested minimum investment period: At
least 7 years
Top 5 contributors to monthly return
NTPC Ltd 0.45%
Banco Bradesco SA 0.23%
Aspen Pharmacare Holdings Ltd 0.20%
Naver Corp 0.20%
Siam Commercial Bank Pub Co - Local 0.19%
Top 5 detractors from monthly return
China Telecom Corp Ltd-H -0.23%
Tata Consultancy Svcs Ltd -0.19%
Taiwan Semiconductor -0.14%
Samsung Fire & Marine Ins -0.11%
Anadolu Efes Biracilik Ve -0.09%
Top 5 overweight holdings
Active
Top 5 underweight holdings
Active
Unilever PLC 7.14%
SABMiller Plc 6.47%
Tiger Brands Ltd 3.71%
Bank Pekao SA 3.65%
China Telecom Corp Ltd-H 3.44%
Samsung Electronics Co Ltd -2.55%
Industries Qatar - Deferred 0.34%
Infosys Ltd 0.54%
Naver Corp 0.65%
LG Electronics Inc 0.68%
Want more information
To find out more about this Fund, please contact your local Business Development Manager, Adviser Services on
13 18 36 (8am to 7pm Sydney time) or visit colonialfirststate.com.au/investfocus
This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding
of current regulatory requirements mentioned or referenced or and laws as at the date of the report. While all care has been taken in the preparation of this document
(using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State or any member of the
Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information. This document provides
information for the adviser only and is not to be handed on to any investor. It does not take into account any person’s individual objectives, financial situation or needs.
You should read the relevant Product Disclosure Statement (PDS) before making any recommendations. Clients should read the PDS before making an investment
decision and consider talking to a financial adviser. PDSs can be obtained from colonialfirststate.com.au or by calling 13 18 36. Stocks mentioned are for illustrative
purposes only and are not recommendations to you to buy sell or hold these stocks. Past performance is no indication of future performance.
Adviser use only
WSEM/FS4721