Heathcote Meet the Manager Roadshow
March 2020 FOR PROFESSIONAL INVESTORS ONLYCapital Group is represented in Australia by its memberCapital Group Investment Management Limited (ACN 164 174 501)
Defining the future: Trends transforming the way we’ll live by2030.
Capital GroupCapital Group
Market perspective
Capital Group
US economic expansion has gone on for longer than usual
3
Data as at 31 December 2019. Sources: Capital Group, Bureau of Economic Analysis and Thomson ReutersBased on GDP growth. Prior expansion include all cycles from 1949-2007. Current expansion uses actual data through 31 December 2019. Expansion is the period after a recession is declared officially over by the National Bureau of Economic Research. The average duration of expansion is the average number of months of expansions between recession periods.
(1949 – 2007) (2019)
Capital Group
But the US economic expansion has been slow
4
Data as at 31 December 2019. Sources: Capital Group, Bureau of Economic Analysis and Thomson ReutersBased on GDP growth. Prior expansion include all cycles from 1949-2007. Current expansion uses actual data through 31 December 2019. Expansion is the period after a recession is declared officially over by the National Bureau of Economic Research. The average duration of expansion is the average number of months of expansions between recession periods. The average magnitude of expansion is derived from averaging the total cumulative GDP growth from peak to peak of each GDP cycle between 1949 and 2007.
(1949 – 2007) (2019) (1949 – 2007) (2019)
Capital Group
US equities have typically peaked several months before a recession
5
Past results are not a guarantee of future results.Data reflects the average of all cycles from 1950 to March 2019, indexed to 100 at each cycle peak. Sources: Capital Group, Federal Reserve Board, Haver Analytics, National Bureau of Economic Research, Standard & Poor’s
Capital Group
Late economic cycle positioning: what are some ideas?
6
Consider reducing:
CYCLICALS
HIGH DEBT
The information provided is not intended to be comprehensive or to provide advice.
Capital Group
US corporate debt levels are high
7
Data available through September 2018. GDP: gross domestic product. Sources: Bank for International Settlements (BIS), National Bureau of Economic Research, BbgBarc US Corporate Investment Grade Index via Refinitiv
Corporate debt % of US GDP
Capital Group
Late economic cycle positioning: what are some ideas?
8
Consider reducing:
CYCLICALS
HIGH DEBT
Consider adding to:
DIVIDEND PAYERS
SECULAR GROWTH
The information provided is not intended to be comprehensive or to provide advice.
Capital Group
Business model of the future – Cloud
Computing
Capital Group New Perspective Fund (AU)
Millennial impact
Internetof Things
Efficiency technology
Premiumisation
Cash digitalisation
Experience economy –
Global air travelMonetising
5G
DNAscience
Medical Research & Medtech
Tech-powered businesses
$
Artificial intelligence
New consumer Digital disruption Innovative health careNew defensives
Capturing secular opportunities through bottom-up research
9Capital Group
Capital Group
Business model of the future – Cloud
Computing
Capital Group New Perspective Fund (AU)
Experience economy –
Global air travelMedical Research &
Medtech
New consumer Innovative health careNew defensives
Capturing secular opportunities through bottom-up research
10Capital Group
Capital GroupCapital Group
Global air travel
Capital Group
Rapid expansion of the middle class
For illustrative purposes only.Data as at 28 February 2017. Population numbers in the graphic are estimates of where the next billion entrants into the middle class are expected to come from. Source: Brookings Institution
88%of the next
billion entrants
into the middle
class will likely
be in Asia
350M380M
210M
rest of Asia
130M
rest of the
world
12
Capital Group
Global air travel
13
Accessing growth – company by company
Equipment
supply
Airbus
Safran
Boeing
Destination
services
Hilton
Ryan Air
Marriott
Infrastructure and bookingsTrip.com
Booking Holdings
For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein.Holdings in Capital Group New Perspective Fund (AU) as at 31 December 2019, shown for illustrative purposes only.
Capital Group
Airbus: Covered by our research teams for over 50 years
14
Decades of deep research insights
Airbus orderbook with a
nine-year backlog2
Airbus aircraft are
operated by Chinese
airlines today1
1,800
Factors driving Airbus secular growthBottom-up research
Years of coverage,
since Airbus was
founded in 1970
Research notes
produced over the
last decade
36550
For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or a solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein. All data as at 30 June 2019, unless specified otherwise.
1.As at 30 September 2019. Source: Airbus
2.As at 31 August 2019, in USD terms. Source: Capital Group
500 US$billion
Capital Group
Business model of the future – Cloud
Computing
Capital Group New Perspective Fund (AU)
Experience economy –
Global air travelMedical Research &
Medtech
New consumer Innovative health careNew defensives
Capturing secular opportunities through bottom-up research
15Capital Group
Capital GroupCapital Group
Cloud Computing
Capital Group
We think data makes cloud computing essential
17
Annual Volume of the Global Datasphere (in zettabytes)175.0
129.5
101.0
79.564.5
50.541.0
33.026.0
18.015.512.59.06.55.02.0
2025*2024*2023*2022*2021*2020*2019*2018*20172016201520142013201220112010
For illustrative purposes only.Data as at November 2018. Sources: Seagate, IDC, Statista estimates *Forecasts
Capital Group
Market potential
18
Cloud Revenue (in US$ billions)
$357$314
$272$231
$191$155
$123$94
$70$51
$35$9$5$4$2$1
2025*2024*2023*2022*2021*2020*201920182017201620152014201320122011
For illustrative purposes only.Data as at February 2020. Source: Capital Group estimates*Forecasts
$15 $23
2026* 2027* 2028*
$400
$442
Capital Group
Cloud computing
19
Accessing growth – company by company
ProvidersRevenue growth
Amazon
Microsoft
Alphabet
UsersLower costs
ServiceNow
Netflix
SuppliersIncreased demand
TSMC
ASML
Broadcom
For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein.Holdings in Capital Group New Perspective Fund (AU) as at 31 December 2019, shown for illustrative purposes only.
Capital Group
Microsoft: Forming an early view, backed up by deep research
For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or a solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein. All data as at 30 September 2019.
122Research analystsproviding input
2,085Research notes
since 1982
Deep research insights
Multiple interactions
with management including Bill Gates, Steve Ballmer and Satya
Nadella spanning decades
30 years of covering the stock
Capital Group 20
Different perspectives and decades of experience helped us uncover an opportunity early on
Capital Group
Business model of the future – Cloud
Computing
Capital Group New Perspective Fund (AU)
Experience economy –
Global air travelMedical Research &
Medtech
New consumer Innovative health careNew defensives
Capturing secular opportunities through bottom-up research
21Capital Group
Capital GroupCapital Group
Medical research
Capital Group
Medical research spending is on the rise
23
R&D spending as a percentage of pharmaceutical sales*
Data as at 31 December 2018. Source: Pharmaceutical Research and Manufacturers of America (PhRMA)*For PhRMA member companies.
10%
15%
20%
25%
1980 1985 1990 1995 2000 2005 2010 2015
Capital Group
Median age of the population in China
24
For illustrative purposes only.Data as at September 2019. Source: United Nations*Forecasts
25
35
45
1950 1975 2000 2025* 2050* 2075* 2100*
1970Age 19
2020*Age 38
2040*AGE 47
55 Years
An aging population could lead to higher medical needs
Capital Group
Medical research
25
Accessing growth – company by company
Pharmaceuticals &
biopharmaceuticals
Vertex
AstraZeneca
Pfizer
Novartis
Novo Nordisk
Equipment suppliers
Intuitive Surgical
Thermo Fisher
Boston Scientific
Abbott Labs
For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein.Holdings in Capital Group New Perspective Fund (AU) as at 31 December 2019, shown for illustrative purposes only.
Capital Group
AstraZeneca: turnaround with attractive growth potential After years in transition, AstraZeneca appears to be entering a new era of growth
Lynparza
Treats relapsed breast cancer patients and newly-diagnosed ovarian cancer.
Imfinzi
A medicine that treats inoperable cancer in the bladder, urinary tract or
lungs.
Tagrisso
Treats newly-diagnosed lung cancer patients with tumours that
harbour certain mutations.
AstraZeneca: Triple threat
For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein.
26
Capital Group
A robust investment process is at the heart of our philosophy
27
Designed to capture and continually evaluate the best ideas from our research
Integrated
research
Portfolio
construction
Implementation
and risk control
Eligibility
criteria
Capital Group
We develop investment convictions through extensive
in-house assessment of long-term risks and
opportunities. We incorporate internal and external
data inputs and forward-looking information
We identify the key factors of success behind every
investment case, which becomes the foundation for
subsequent engagement and ongoing dialogue with
management
Active stewardship is a cornerstone of our
commitment to foster strong corporate governance
We voted in more than 2,600 AGMs in last
12 months
We focus on engagement to resolve ESG-related challenges,
conducting more than 250 ESG-specific engagements with
companies in the past year
We meet with decision makers who impact the outcome
of our investments
More than 12,000 face-to-face meetings
conducted during the last year
UN Principles for Responsible Investment signatory (PRI)
International Corporate Governance Network (ICGN)
Industry engagementWe take an active role in key organisations which advance and protect the interests of our clients, among which are:
Member of Sustainability Accounting Standards Board (SASB)
Asian Corporate Governance Association (ACGA)
MADE – Our investment process integrates ESG in each of the four key phases
Environmental, Social and Governance (ESG)
AGM: annual general meeting. As at 31 December 2018.
28
Capital Group
A strategy that continues to stay relevant over the long term
29
46 years of identifying companies that have driven and benefitted from changing global trade
Early 70s
Basic
resources
dominate
2010s
The age
of digital disruption
80s & 90s
Rise of
home computing and mobile
communications
2000s
The rise of emerging
markets & rapid urbanisation
of China
Electronics
and computers
E-commerce
and internet platforms
Consumer products
and mining
Oil
and metals
Capital Group
Capital Group New Perspective strategy
30
A strong track record of global investment success for decades
Focus on
strongmultinationals Lifetime return
for the strategy1
13.7%per annum
A strategy that has been identifying companies from
the bottom up for
45 years
Past results are not a guarantee of future results.Data as at 31 December 2019. Returns are in A$ terms. Source: Capital Group1. Results prior to Capital Group New Perspective Fund (AU) (CGNPAU) launch on 20 November 2015 are derived from the American Funds New Perspective Fund (AF NPF) in A$ from 31 March 1973. CGNPAU and AF NPF are
managed by the same team of managers and has the same investment strategy, restrictions and risk profile. The returns are aft er fees and are based on the total management cost of 1.05% p.a. that was applicable to CGNPAU up until 30 April 2017, 0.95% p.a. with effect from 1 May 2017. American Funds are not registered for sale outside of the Unite d States.
ExperiencedAdapt to change Proven track record
+
Capital Group
The value of a long-term perspective
31
The power of compounding excess returns
Past results are not a guarantee of future results. Data as at 31 December 2019.1. Results prior to CGNPAU’s launch on 20 November 2015 are derived from the American Funds New Perspective Fund in A$ from 31 March 1973. The returns are after fees and are based on the total management cost of 1.05% p.a. that was
applicable to CGNPAU up until 30 April 2017 and 0.95% with effect from 1 May 2017. American Funds are not registered for sale outside of the United States. Source: Capital Group2. MSCI ACWI ex Australia (with net dividends reinvested) from 20 November 2015; previously MSCI ACWI (with net dividends reinvested) from 30 September 2011 and MSCI World Index (with net dividends reinvested) prior to that. Source:
MSCI
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Mar 73 Mar 78 Mar 83 Mar 88 Mar 93 Mar 98 Mar 03 Mar 08 Mar 13 Mar 18
more wealth
in $ terms
4.3x
New Perspective strategy1
Benchmark2
$3,963,600
$924,500
Annualised growthsince launch
Rebased to A$ 10,000
Mar 73
13.7%
10.2%
higher than the
market return
3.5%
Capital Group New Perspective Strategy : The value of a hypothetical A$10,000 invested at launch
NewPerspective¹
MSCIACWI²
Capital Group
Capital Group New Perspective Fund (AU)
32
Investment results as at 31 December 2019 in A$ terms (after fees and expenses)
% Fund1 Index2 Excess return3
2015 (1 month 10 days) -2.6 -3.2 0.6
2016 2.2 8.3 -6.1
2017 18.4 14.9 3.5
2018 3.8 0.7 3.1
Annualised lifetime return(4 years 1 month 10 days) 11.9 11.1 0.8
1 year 30.0 26.9 3.1
© 2019 Morningstar. All rights reserved.
Morningstar Analyst RatingTM as at 26 September 2019.
Morningstar World Large Blend category.
3 years p.a. 16.9 13.6 3.3
2019 30.0 26.9 3.1
Total value A$ 518 million
The index shown is MSCI ACWI ex Australia (with net dividends reinvested). Source: MSCIThe excess return is calculated arithmetically.3.
2. After management fees and Total Expense Ratio (TER). Fund results are based on close of market returns (T+1). Source: Capital Group1.
Past results are not a guarantee of future results.Lifetime: 20 November 2015 - 31 December 2019.
©2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘class service’ have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement (Australian products) or Investment Statement (New Zealand products) before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 (“ASXO”). For disclosure and detailed information about this fund, please refer to the full Morningstar Global Fund Report, which is available on request from Capital Group.
Capital Group
Platforms & ratings
33
For full ratings disclaimers, please see slide 31.
RatingsPlatforms
• FNZ
• Aegis
Zenith
Lonsec
“Recommended”
“Recommended”
Morningstar Analyst
RatingTM
Contact Us
email: [email protected]
website: capitalgroup.com/au
Follow us
Capital Group
Ratings disclaimer
34
Morningstar data: © 2020 Morningstar. All rights reserved. Morningstar Analyst RatingTM as at 28 October 2019. Morningstar Equity World Large Blend category. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘class service’ have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). For disclosure and detailed information about this fund, please refer to the full Morningstar Global Fund Report, which is available on request from Capital Group.
The Lonsec Rating (assigned as follows: CIM0006AU — March 2019; CIM0008AU — March 2019) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445. The Rating is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial products. Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold Capital Group’s product(s), and you should seek independent financial advice before investing in this product(s). The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings methodology, please refer to our website at: http://www.lonsecresearch.com.au/research-solutions/our-ratings
The Zenith Investment Partners (“Zenith”) Australian Financial Services License No. 226872 rating (assigned 27 November 2019) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines
Capital Group
Disclaimer
35
FOR PROFESSIONAL INVESTORS AND INFORMATION PURPOSES ONLY
This communication contains sensitive and confidential information. It is strictly for the confidential use of the recipient, solely for the purpose for which it is provided, may not be disclosed or circulated, and should not be relied upon by third parties. Any use for any other purpose, and disclosure, dissemination, copying, reproduction or distribution of the information is prohibited.
Past results are not a guarantee of future results. This communication does not constitute or form part of an offer, invitation or recommendation to purchase or subscribe for any securities under the relevant regulations of any country and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto. It is neither an offer nor a solicitation to provide any investment service. It has not been reviewed by any regulator. While Capital Group uses reasonable efforts to obtain information from third-party sources which it believes to be reliable, Capital Group makes no representation or warranty as to the accuracy, reliability or completeness of the information.
This communication is not intended to be comprehensive or to provide investment, tax or other advice. It has been prepared for multiple distributions and may not be appropriate in all circumstances. It is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on the information you should consider its appropriateness, having regard to your own investment objectives, financial situation and needs.
The value of investments and income from them can go down as well as up, and you may lose some or all of your initial investment. Risk factors that may influence the value of an investment in this Fund may include, but are not limited to, (i) increased risks of emerging markets, (ii) risk of decline in the price of equities and bonds in response to certain events directly affecting the companies whose securities are owned by the Fund as well as general economic conditions; overall market changes; political, social or economic instability; and currency fluctuations, (iii) interest rate risk as the market value of bonds generally vary inversely with the level of interest rates, (iv) credit risk as the creditworthiness of the Fund'sinvestment can impact the investment's ability to meet its obligations, and (v) derivatives risks.
This communication has been prepared by Capital International, Inc., a member of Capital Group, a company incorporated in California, United States of America. The liability of members is limited.
In Australia, this communication and Capital Group New Perspective Fund (AU) (ARSN: 608 698 746) are issued by Capital Group Investment Management Limited (ACN 164 174 501 AFSL No. 443 118), a member of Capital Group, located at Level 18, 56 Pitt Street, Sydney NSW 2000 Australia. The said fund is offered only by Product Disclosure Statement (PDS), please read the PDS which is available upon request or at capitalgroup.com/au/en in its entirety before making an investment decision.
All Capital Group trademarks are owned by The Capital Group Companies, Inc. or an affiliated company in the U.S., Australia and other countries. All other company and product names mentioned are the trademarks or registered trademarks of their respective companies. © 2020 Capital Group. All rights reserved.
Capital Group CR-342845