Aberdeen's Global Emerging Market Equity Funds - Aberdeen Asset ...

Aberdeen’s Global Emerging Market
Equity Funds
Stock picking in the world’s most dynamic economies
2009
Emerging Markets may be the engine of long-term global growth, but economics alone do not
necessarily generate dynamic returns. Like all regions, Emerging Markets have their fair share of well
and poorly-managed firms. Aberdeen’s skill lies in distinguishing one from the other, both in good
times and bad.
The Funds
ICVC Fund: Aberdeen – Emerging Markets Fund
SICAV Fund: Aberdeen Global – Emerging Markets Equity Fund
SICAV Fund: Aberdeen Global – Emerging Markets Smaller Companies Fund
aberdeen-asset.co.uk/gem
FOR PROFESSIONAL USE ONLY - NOT FOR USE BY PRIVATE INDIVIDUALS

The Case for Global Emerging Markets Equities
Despite a bounce in equity markets around the world, we believe Global
Emerging Markets offer a potentially valuable investment opportunity.
Our Funds
Aberdeen’s Global Emerging Markets equity
funds offer investors access to an experienced
team and portfolios populated by high quality,
well-run companies in Emerging Market
countries - selected for their solid track record
and potential to grow earnings.
Key Fund Information
Aberdeen Emerging Markets Fund
• Benchmark: MSCI Emerging Markets
• Fund Sector: Global Emerging Markets
• Fund size: £794m
• Average number of stocks: 60
• OBSR: rated AA
• S&P: rated AA
• Fund structure: OEIC
• Fund domicile: UK
Aberdeen Global – Emerging Markets Equity Fund
• Benchmark: MSCI Emerging Markets
• Fund Sector: Equity Emerging Markets Global
• Fund size: US$1.7bn
• Average number of stocks: 60
• S&P: rated AA
• Fund structure: SICAV
• Fund domicile: Luxembourg
As at 31 July 2009
Chart 1 – Emerging Markets’ contribution to
global growth
A positive long-term outlook
• Good long term fundamentals
Emerging Markets represent two-thirds of the world’s population, nearly half
of its land-mass, over two-thirds of its foreign exchange reserves and onethird
of its GDP, yet they account for only 12.7% 1 of world equity by market
capitalisation. It’s clear that the potential for growth is exceptional over the
medium to long-term. Global Emerging Markets already contribute 71%
towards global growth (Chart 1).
• An increasing number of well-managed companies
Companies in Emerging Markets have become better managed and more
transparent in order to compete for the increased investor cash flow into the
region. Companies now have stronger balance sheets, are more profitable and
increasingly committed to maximising shareholder value.
• Diversification benefits to your portfolios
While the argument that Emerging Markets have decoupled from developed
markets has been debunked, they do have a demonstrably important role to
play in portfolio diversification.
Short-term growth potential
• Resilience to the economic downturn
While Emerging Markets are not immune from the global economic slowdown
they have less debt than developed nations. Economic reform has been a great
help: the adoption of prudent fiscal and monetary policies by governments has
fostered stability and growth.
• Strong local demand bucks the global trend
Emerging Markets have stronger economic growth potential than their mature
counterparts, supported by a young and growing population, durable consumer
spending and a burgeoning middle class.
Other
4%
Developed
Asia
10%
US
7%
Developed Europe
8%
Source: HSBC, July 2009
Emerging Markets
71%
• Global Emerging Markets will lead, not follow, the recovery
Global Emerging Markets have a much-reduced dependence on developed
economies. Exports to other emerging economies are growing and these
economies are also seeing increased spending and investment at home. While
developed markets need to save more, resulting in muted growth, Emerging
Markets have saved in the past and can now move to boost demand.
Attractive valuations
While markets have rebounded, the long term outlook is positive. Global Emerging
Markets are still 40% lower than their peak in October 2007 2 . Emerging Market
equities are still good value.
1 Source: HSBC, July 2009
2 Source: Bloomberg, MSCI, 29 May 2009

A Team-Based Approach
We have a team approach where decisions are made collectively – we don’t
believe in star fund managers. We believe cross-coverage of securities increases our
objectivity and lessens our reliance on a single view.
Our Emerging Markets Equity Team comprises over 30 investment professionals
around the world, with an average of nine years’ experience researching and
picking stocks. Together, the team conducts ongoing research, making around 1,400
company visits each year while continually monitoring stocks and evaluating them
against market movements.
Investment Process
• Our house rule is always to meet company management before we invest –
and to keep meeting them afterwards. We pay scant attention to benchmarks,
if we don’t like a company, we won’t invest.
• When we look for good quality management, we mean people we can trust,
who have a good track record of managing businesses and of maximising
shareholder value.
• We prefer companies with strong, prudent and easy to understand
balance sheets.
• We seek out companies that are consistent generators of free cash flow. Free
cash flow is what determines the share price, because it supports share buybacks
and dividends.
• We view buying a stock as the start of the process, not the end. We visit the
companies we hold at least twice a year. And once we find a good company we
invest for the long term.
Our Investment Process
Company visit note
Quality
Pass or fail
Potential
revisit
Aberdeen
universe
Price
Cheap or
expensive
Watchlist/
review
Risk
controls
1 STEP 2 STEP 3 STEP
Portfolio
construction
Monitor
The Key Advantages
Aberdeen Offers
• Proprietary, face-to-face research –
we meet every company before we invest.
Buying is the beginning, not the end of
our research.
• Buy and hold – we disregard short-term
market noise and hold our investments for
the long term. Our portfolio turnover is
typically less than 20% each year.
• We are not driven by benchmarks –
to us, risk is investing in poorly managed
companies that do not deliver or,
alternatively, over-paying for a good
company. If we don’t like a company, we
don’t invest in it.
• A wealth of experience – we’ve been
investing in Emerging Markets since 1985.
• We are owners of companies rather
than buyers of stocks – we spread risk
not by buying more stocks but by
constructing a portfolio that invests in
many different businesses.
• Our fund managers do their own
research – third party research can often
be biased and unreliable, so we do our own.
Our fund managers do not have sector
or country responsibilities - this ensures
they remain objective and can compare
companies across both borders and sectors.
• Performance tells - we are top decile
performers over all major time 3 periods.
Our process has delivered performance
through the good times and the bad.
3 Source: Lipper. Basis: total return, NAV to NAV, UK net
income reinvested. As at 31 July 2009. These figures do
not include an initial charge; if this is paid, it will reduce
performance from that shown. Long term performance
is based on Aberdeen Emerging Markets Unit Trust that
was launched on 16/03/1987. Performance data: Share
Class A Acc.
Past performance is not a guide to future performance.
The value of shares may go down as well as up and may
be impacted by exchange rate movements. An investor
may not get back the amount invested. Investments in
emerging markets may involve a higher element of risk
and volatility due to political and economic instability
and underdeveloped markets and systems. The views
expressed herein should not be relied upon when
making investment decisions; you should read the funds’
prospectuses before investing.

Taking Stock - Aberdeen’s Investment Process in Action
Massmart
10000
• Massmart is a South African general merchandise retailer with
operations across the wider African continent.
Share Price in rand
8000
6000
4000
• It is well positioned to benefit from growing domestic demand
for home appliances, entertainment, DIY, leisure equipment and
branded food.
• The company’s key attributes are efficiency, scale, a strong
balance sheet and best practice corporate governance.
2000
‘06
‘07
‘08
Aug-08
• We first bought a position in September 2004, at 1.0%.
Massmart is now one of the largest positions in the fund,
at 3.2%.
0
‘03 ‘04 ‘05
Source: Bloomberg, 31 July 2009
About Aberdeen Asset Management
At Aberdeen, asset management is our skill set. Many other asset
managers are part of investment banking or life assurance groups;
we are not. We are independently owned and managed and have
the freedom to focus on managing assets for third parties. In fact,
this is all we do. We believe this allows our investment teams to
work at what they do best, across the world, rather than being
distracted by a myriad of conflicting business interests.
How to Invest
Aberdeen’s Global Emerging Market Equity funds are available
through the leading fund platforms and supermarkets.
• ICVC Fund: Aberdeen – Emerging Markets Fund
• SICAV Fund: Aberdeen Global – Emerging Markets Equity Fund
• SICAV Fund: Aberdeen Global – Emerging Markets Smaller
Companies Fund
Further Information
For more information please contact:
Aberdeen Asset Managers Limited
One Bow Churchyard, Cheapside, London
EC4M 9HH
Telephone: +44 (0)20 7463 6000
Global Emerging
Markets Website:
Group Website:
aberdeen-asset.co.uk/gem
aberdeen-asset.com
Visit aberdeen.tv to watch the latest interviews and presentations
from our fund managers and business experts.
To receive monthly manager factsheets on our Global Emerging
Market equity funds, as well as weekly and monthly manager
reports on the region, make sure you register at
aberdeen-asset.com
Important Information
The above is strictly for information purposes only and should not be considered as an offer, or solicitation, to deal in any of the investments mentioned herein. Aberdeen Asset Managers
Limited (‘the Manager’) does not warrant the accuracy, adequacy or completeness of the information and materials contained in this document and expressly disclaims liability for errors or
omissions in such information and materials. Any research or analysis used in the preparation of this document has been procured by the Manager for its own use and may have been acted
on for its own purpose. The results thus obtained are made available only coincidentally and the information is not guaranteed as to its accuracy. Some of the information in this document
may contain projections or other forward looking statements regarding future events or future financial performance of countries, markets or companies. These statements are only predictions
and actual events or results may differ materially. Readers must make their own assessment of the relevance, accuracy and adequacy of the information contained in this document and make
such independent investigations, as they may consider necessary or appropriate for the purpose of such assessment. Any opinion or estimate contained in this document is made on a general
basis and is not to be relied on by the reader as advice. Neither the Manager nor any of its agents have given any consideration to nor have they or any of them made any investigation of the
investment objectives, financial situation or particular need of the reader, any specific person or group of persons. Accordingly, no warranty whatsoever is given
and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of the reader, any person or group of persons acting on any
information, opinion or estimate contained in this document. The Manager reserves the right to make changes and corrections to its opinions expressed in this
document at any time, without notice. Issued and approved by Aberdeen Asset Managers Limited which is authorised and regulated in the United Kingdom
by the Financial Services Authority.
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