hornet infrastructure water fund (eur) - gn group · review hornet infrastructure –water fund...
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Why GN Invest AG as asset manager &AC Partners AG as investment advisor ?
Why to invest in theWater infrastructuresector ?
Why to invest in amutual fund ?
Outperformance of «Hornet Infrastructure Water Fund» over 3 yearsversus «iShares Global Infrastructure Index» also due to a disciplined investment process
Experienced and specialised investment team with a long term track record and a global sector research platform
Transparent and active portfolio construction with listed infrastructureequities
Low volatility asset class with low correlation to equity markets (0.23 versus MSCI World)
Above average grow potential
Real asset class with long duration assets
The fund is regulated by the finnancial market autority
Invest globally at low cost
One transaction leads to a long term successful investment
Investment Case – Key Messages
Investment Case
800mn humans worldwide without clean drinking water
2.5bn humans have no access to sanitation
OECD estimates world population will grow to 9bnpeople in 2050
1 kg beef production takes 15‘000l / 1 kg wheat needs only 1‘500l virtual water
Stable cashflows and solid investmentreturns / high dividend yields
Water sector grows faster thanworldwide GDP & MSCI equity indices
SRI / Social Responsability Investment /«Social Value»
Total market capitalisation only at approx.EUR 500-750bn
* constant average growth rate in % (CAGR %)
Source: BofA/ML / OECD / AC Partners AG
Water Environment
Investments
6 – 7% CAGR*Population growth / «virtual water» /quality improvement / water shortage
Agricultural use / waterdistribution / urbanisation
Industrialisation: energy / chemical in-dustry, electronic industry, metal mines
Performance Drivers
Top Down
«Pricing power» / inflation protectionon invested capital
Regulated capital return & -costs
«Public Private Partnerships» &privatisation of Infrastructure assets
Bottom Up
Water Utility /Infrastructure
Value Chain
Operational water utilities / assetsWater energy / hydropower assets
Environment &Service
Water treatment & service companies
Waste & sewerage management
Installation and constructioncompanies / desalination plants
Technology /Equipment
Infrastructure equipment companies in the field of irrigation,pumps, pipes, valves, filters or meters etc.
Increased demand (OECD)from 2000 to 2050
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Increased demand
Industry/Electronic +406%Energy/Electricity +144%Household +127%Livestock +63%Irrigation/Agriculture -14%
Current consumption
Agricultural economy 70 % Industrial sector 22 % Private consumption 8 %
Hornet Infrastructure Water Fund(EUR)
Investments in Water infrastructure are compliantto European (UCITS IV) law and fund rules
Utility / Infrastructure Environment / ServiceTechnology / Equipment
Depositary Bank / Liechtensteinische Landesbank,Vaduz
Treasures assets in fund account
Regulation FMA / Financial Market AuthorityRegulates und supervises asset manager & investment fund
Asset ManagerGN Invest AG, Vaduz
Investment strategy and asset management
Investment controlling
Investment AdvisorAC Partners AG, Zug/Baar
Investment analysis & valuation
Investment Structure – Value Chain
The Investor
subscribes intothe fund
Fund administration IFM, Vaduz
Set up rules of fund / net asset value calculation (NAV) /monitoring asset manager / investment advisor
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Hornet Infrastructure –Water Fund (EUR)
Investment style
The investment aim of the Hornet Infrastructure - Water Fundis to achieve long-term capital appreciation with lower volatilitycompared to equity markets. The investment strategy pursuesan active, value-oriented investment style without tracking abenchmark. The fund invests worldwide in infrastructure com-panies with stable cash flows. The fund is a "long only" structureand continually realizes and secures capital gains. The currencyexposure is actively managed.
Fund details
Net Asset Value (NAV) Fund volume / shares Security number / ISIN Fund domicileAsset managerInvestment advisor Depositary bank AdministrationRevisionLaunch / StartFund structure / Sales Management fee Depositary bank / Admin. fee DistributionSubscriptions / Redemptions Issue / Redemption price
Largest equity positions
Suez
SABESP Sp ADR
Guangdong Invest Rg
American Sts Wat Rg
American Water Works
Aqua America Rg
ACEA N
SJW Group
Pennon Grp Rg
Middlesex Water
25th October 2018
EUR 987.54EUR 28'810'492 / 29'1743.405.337 / LI0034053376LiechtensteinGN Invest AG, FL-9490 VaduzAC Partners AG, CH-6340 BaarLLB Liechtensteinische Landesbank AG, FL-VaduzIFM Independent Fund Management AG, FL-VaduzErnst & Young AG, CH-3001 Bern11th October 2007OGAW / UCITS IV 1.5% p.a. 0.15% p.a. / 0.175 % p.a.none (dividends are reinvested)weekly, each Thursday (16:00 CET)Asset value per share (NAV + / - any commissions)
GN Invest AG Tel. +423 239 32 33 [email protected] Partners AG Tel. +41 41 711 10 20 [email protected]
Investment focus
The fund invests its assets solely in equity of companies whichare active in the infrastructure sector, such as water utilities,transportation, communication and social infrastructure facili-ties. The focus is on operational, regulated water utilities, whichown the facilities and for example treat and distribute drinkingwater regionally or which are active in energy production(hydro power) or water technology as well as in water environ-ment & service.
Sector allocation
Country allocation
Performance in % YTD 2018 1 year 2 years 3 years 5 years C
Hornet Infrastructure - Water 0.73% -1.66% 0.98% 11.23% 30.34%
Source: IFM / MSCI / Telekurs (fund performance cum. after administrative costs resp. net)
Risk figures YTD 2018 1 year 2 years 3 years ince 2007
Volatility p.a. 8.35% 7.74% 7.32% 9.58% 9.20%Correlation vs. MSCI World -0.26 -0.37 -0.38 0.63 0.79
Risk profile Recommended investment horizon
moderate medium high 3 years 5 years 7 years
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Review
Hornet Infrastructure –Water Fund (EUR)
General market review
Global equity markets have undergone a significant correctionin October. The US stock index S&P 500 lost -9% in the monthunder review, as did the German stock index DAX with -10%or the Eurostoxx with -8%. This comes despite continued goodeconomic data from the US. In Q3 2018, US GDP rose +3.5%,which has been driven by strong consumer spending. The ex-port figures came in at -3.5%, which is significantly lower than inQ2 2018 (+9.3%) and mainly caused by the trade dispute withChina. In the month under review, indices in the emerging mar-kets were able to outperform clearly, such as the Brazilian Bove-spa with +7% or the PSE index in the Philippines, which finishedmore or less unchanged. Consolidated, the MSCI World P Indexlost EUR -5.9%.
GN Invest AG Tel. +423 239 32 33 [email protected] Partners AG Tel. +41 41 711 10 20 [email protected]
Investment Portfolio
The Hornet Infrastructure - Water Fund (EUR) NAV climbs+7.36% to EUR 987.54 in October and YTD 2018 +0.73%. Inaddition to good stock selection, the performance is currentlybeing driven by the market's rotation from growth to value aswell as the attractive valuation of our global portfolio. Our mar-ket hedge has also contributed to the performance togetherwith a strengthening USD. In the month under review, the USDrose by around +2.5% against the EUR. In addition, the emer-ging markets currencies, relevant to us, have recovered. The glo-bal infrastructure portfolio absorbed the political upheavals inItaly and according to the latest numbers is about 8.5% belowthe fair value.
Market review Infrastructure
The infrastructure sector was a significant counterpoint to theoverall market, also in October, and closed the month almostunchanged. This was mainly due to the stable utility sector inthe US, which was able to escape the market trend and gainedmore than +2%. By contrast, the cyclical subindex transport lostaround -15%. The infrastructure sector as a whole is benefitingfrom market rotation as market participants invest in stable andsustainable sectors with inflation protection. In contrast to bondinvestments, well-regulated infrastructure investments also offerinflation protection in countries with higher political risks, asexamples in Brazil or China shows.
This document has been forwarded to you upon request. It is for information purposes only and does not constitute an offer to acquire, any investment advice or recommendation and it is not an independent financial analysis. It does not replace any in-dividual and professional advice from an investment advisor. The information has been compiled with care. However, no guarantee can be given for the correctness and completeness of the information. The prospectus as well as the annual report fromthe HORNET Infrastructure - Water Fund (EUR) are available for free at GN Invest AG, Vaduz or on the homepage of the IFM Independent Fund Management AG (www.ifm.li). For a detailed risk explanation, please see our fund prospectus.
Attractive NAV / price potential for the infra-structure portfolio
Despite the significant outperformance of the portfolio in themonth under review, there is still good upside potential: takingthe current weighted undervaluation of the portfolio againstthe fair value of each company we calculate, we see a short-term undervaluation of around 8.5%. If we compare our port-folio with the investable universe in terms of price / earningsratio (P/E ratio) for 2019, we see a discount of almost 17%.Based on our dynamic asset pricing model, the portfolio has arequired return of 6.7% p.a. and an alpha yield of 3.2% p.a.,which implies a medium-term performance potential of around10% p.a.