April 2020

Live Ninety One webinar Insights & outlook from our portfolio managers

Equity Fund

Hannes Van Den Berg

16 April 2020

SA equities –opportunity or risk?

3

ZAR Investec Equity Fund F000002D0N

Ninety One Equity Fund

Performance

Past performance is not a reliable indicator of future results, losses may be made.Source: Morningstar, dates to 31 March 2020, performance figures above are based on lump sum investment, NAV based, inclusive of all annual management fees but excluding any initial charges, gross income reinvested, fees are not applicable to market indices, where funds have an international allocation this is subject to dividend withholding tax, in South African Rand. Highest and Lowest returns are those achieved during any rolling 12 months over the period specified. Since inception (3 November 1987): Apr-06: 66.6% and Feb-09: -33.7% | ** Comparison index: At Inception = 87.5% ALSI + 12.5% MSCI ACWI pre 1/11/2017 and ALSI; Current since 15 Jun 2016 = 87.5% FTSE/JSE Capped Shareholder Weighted All Share Index TR ZAR (SWIX CAPI) + 12.5% MSCI AC World NR (ACWI). Annualised performance is the average return per year over the period. Individual investor's performance may vary depending on actual investment dates.

Quartile ranking 1st 1st 1st 1st

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

1 year 3 years p.a. 5 years p.a. 10 years p.a.

Equity R Inc Comparison Index** (ASISA) South African EQ General

Equity R Inc -15.4% -2.0% -0.2% 8.5%Comparison Index** -20.7% -3.7% -1.1% 7.2%Active return 5.3% 1.7% 0.9% 1.4%(ASISA) South African EQ General -21.4% -5.9% -3.3% 5.1%Active return (sector) 6.0% 4.0% 3.1% 3.5%

Annualised performance in ZAR

4

ZAR Investec Equity Fund F000002D0N

Ninety One Equity Fund

Performance

Past performance is not a reliable indicator of future results, losses may be made.Source: Morningstar, dates to 31 March 2020, performance figures above are based on lump sum investment, NAV based, inclusive of all annual management fees but excluding any initial charges, gross income reinvested, fees are not applicable to market indices, where funds have an international allocation this is subject to dividend withholding tax, in South African Rand. Highest and Lowest returns are those achieved during any rolling 12 months over the period specified. Since inception (3 November 1987): Apr-06: 65.8% and Feb-09: -34.8% | ** Comparison index: At Inception = 87.5% ALSI + 12.5% MSCI ACWI pre 1/11/2017 and ALSI; Current since 15 Jun 2016 = 87.5% FTSE/JSE Capped Shareholder Weighted All Share Index TR ZAR (SWIX CAPI) + 12.5% MSCI AC World NR (ACWI). Annualised performance is the average return per year over the period. Individual investor's performance may vary depending on actual investment dates.

Quartile ranking 1st 1st 1st 1st

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

1 year 3 years p.a. 5 years p.a. 10 years p.a.

Equity A Inc Comparison Index** (ASISA) South African EQ General

Equity A Inc -15.8% -2.1% -0.7% 8.3%Comparison Index** -20.7% -3.7% -1.1% 7.2%Active return 4.9% 1.6% 0.4% 1.1%(ASISA) South African EQ General -21.4% -5.9% -3.3% 5.1%Active return (sector) 5.6% 3.8% 2.6% 3.2%

Annualised performance in ZAR

5

Mapping the coronavirus outbreak

From global synchronized growth to lockdown

Source: MinackAdvisors, 27 March 2020

We can divide all countries in four categories:

‒ Under control: Rate of infection in China has fallen rapidly, pointing to stabilization and recovery in the region. Hong Kong with daily cases less than 5 for the past three days.

‒ First wave peaked: Italy, Spain and Germany

‒ First wave not peaked yet: US, UK, France and most of other EM countries

‒ Facing second wave: Asia, Japan and Singapore, is starting to see a second wave of Infections. This highlights the broad risks around re-opening.

Coronavirus cases per million people

Coronavirus new infections per million people

Material economic weakness likely in Q1 and Q2, with some spill-over into Q3

6

Structural impact of the virus

Similar to 9/11, it will change the way we think and live

Source: BofA Global Investment Strategy, Morgan Stanley, JPMorgan

2010s 2020s

Wealth Health

WorkersCapitalists

Low taxes High taxes

Leverage Savings

Buybacks Capex

Longer-term thoughts post Covid-19:

‒ Social distancing will largely fade, people are social animals. Expect more online everything, greater aversion to crowded places

‒ Personal vs. public transportation

‒ The speed, breadth, and depth of the COVID-19 crash should further raise investor caution, increasing savings rates and risk premia

‒ Companies will focus on building resilience, diversifying supply chains, reducing leverage and improving liquidity

7

4

6

8

10

12

14

16

18

20

Sep-

05

Jun-

06

Mar

-07

Dec

-07

Sep-

08

Jun-

09

Mar

-10

Dec

-10

Sep-

11

Jun-

12

Mar

-13

Dec

-13

Sep-

14

Jun-

15

Mar

-16

Dec

-16

Sep-

17

Jun-

18

Mar

-19

Dec

-19

Looks like a buying opportunity?

Source: Bloomberg to 31 March 2020

The FTSE/JSE All Share Index

20000

25000

30000

35000

40000

45000

50000

55000

60000

65000

Ma

r-10

Ma

r-11

Ma

r-12

Ma

r-13

Ma

r-14

Ma

r-15

Ma

r-16

Ma

r-17

Ma

r-18

Ma

r-19

Ma

r-2

0

JSE All Share 12-month forward PE multiple in single digits!

7 year low

Repricing of assets greatly improves long-term expected returns on equities and credit, while worsening returns on government debt

8

But be careful – significant uncertainty remains

9

Expect deep negative growth in the first half of the year

Source: Gavekal Research, March 2020

Eurozone PMI indicates an economic crash Expect a plunge in US GDP in Q1 & Q2

10

2020: Global data is going to look very bad

A war between tough macro, weak company results and global stimulus

Source: IMF, April 2020

11

Shock or recession?

Growth will recover to trend toward the fourth quarter

Source: WilmotML Soucre: JPMorgan research, April 2020

Global real GDP growth expectations resettingGlobal industrial production versus trend

The unknown pathway in terms of infections and deaths has stymied economic activity and, with it, longer-term investment decisions

12

A much more rapid monetary response than the GFC experience

Pace of Federal Reserve balance sheet expansion

Source: Bloomberg, NY Fed Statement issued Monday 21 March.

$1,001,065

$2,767,367

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

GFC. Week 0 = 10 Sep 08 Covid19. Week 0 = 11 Mar 20

33.1%

40.5%

15.2%

4.7% (total)

17.2% 8.2%

21.2%

3.1% (total)

Eurozone US UK Japan China

Monetary

Fiscal

Summary of key stimulus measures to date (% of GDP)

13

18.0124

1011

1213141516171819

Jan-

18

Mar

-18

May

-18

Jul-1

8

Sep-

18

Nov

-18

Jan-

19

Mar

-19

May

-19

Jul-1

9

Sep-

19

Nov

-19

Jan-

20

Mar

-20

0

20

40

60

80

100

120

0

5

10

15

20

25

30

35

Dec

-08

Jul-0

9

Feb-

10

Sep-

10

Apr-

11

Nov

-11

Jun-

12

Jan-

13

Aug-

13

Mar

-14

Oct

-14

May

-15

Dec

-15

Jul-1

6

Feb-

17

Sep-

17

Apr-

18

Nov

-18

Jun-

19

Jan-

20

Trad

e w

eigh

ted

nom

inal

exc

hang

e ra

te

Term

s of

trad

eTerms of Trade Trade Weighted Nominal Exchange Rate

USD-ZAR exchange rate Trade weighted ZAR vs terms of trade

The rand has behaved as one would expect under such circumstances

This is not a buy or sell recommendation of any particular security. The portfolio may change significantly over a short space of time. Source: Ninety One as at 1 April 2020

Although volatile…

14

South Africa key Macroeconomic Drivers

We were vulnerable going into the crisis and lockdown

Source: StatsSA, Bloomberg, Ninety One, data as at April 2020

GDP growth year on year – production side Household consumption breakdown

Phase 1: Lockdown, “flatten the curve”Phase 2: Gradual unlock of the economy and schoolsPhase 3: How does the landscape look post the crisis…

15

Oil price overview – YTD, impact and outlook

Not all crude created equal

Source: Ninety One, Bloomberg, 3 April 2020

16

Earnings revisions profile across industries

Resources have a robust profile, while defensives and banks offer opportunities

Source: Bloomberg, Ninety One, data as at 14 April 2020

Average earnings revisions by sector (Jan 2019 = 100)

Average earnings revisions of the general and platinum miners (Jan 2019 = 100)

70

75

80

85

90

95

100

105

110

Jan-

19

Feb-

19

Mar

-19

Apr-

19

May

-19

Jun-

19

Jul-1

9

Aug-

19

Sep-

19

Oct

-19

Nov

-19

Dec

-19

Jan-

20

Feb-

20

Mar

-20

Apr-

20

Food retailers General Retailers Food producersHospitals BTI BanksInsurance

50

150

250

350

450

550

650

750

Jan-

19

Feb-

19

Mar

-19

Apr-

19

May

-19

Jun-

19

Jul-1

9

Aug-

19

Sep-

19

Oct

-19

Nov

-19

Dec

-19

Jan-

20

Feb-

20

Mar

-20

Apr-

20

General miners Platinum Gold miners

Avoid those that might fall over, reset earnings base and growth expectations – what’s in the price…?

17

There are investment opportunities even in these conditions

Source: Bloomberg and Ninety One, data as at 1 April 2020

40

50

60

70

80

90

100

110

120

31-D

ec-1

9

07-

Jan-

20

14-J

an-2

0

21-J

an-2

0

28-J

an-2

0

04-

Feb-

20

11-Fe

b-20

18-F

eb-2

0

25-F

eb-2

0

03-

Mar

-20

10-M

ar-2

0

17-M

ar-2

0

24-M

ar-2

0

31-M

ar-2

0

Shoprite Pick n Pay Spar Woolworths

Truworths Foschini Mr Price Pepkor

President declares national state of disaster

40

50

60

70

80

90

100

110

120

31-D

ec-1

9

07-

Jan-

20

14-J

an-2

0

21-J

an-2

0

28-J

an-2

0

04-

Feb-

20

11-Fe

b-20

18-F

eb-2

0

25-F

eb-2

0

03-

Mar

-20

10-M

ar-2

0

17-M

ar-2

0

24-M

ar-2

0

31-M

ar-2

0

British American Tobacco Naspers Capped SWIX

SA retailer performance year to date Defensive & foreign earners vs Capped SWIX

18

There are investment opportunities even in these conditions

Tencent: China Entertainment industry

Source: MorganStanley

Weekly time spent on Tencent games within top 50 Music subs revenue YoY accelerating

19

Ninety One Equity Fund

Top ten holdings as at 31 March 2020

Source: Ninety One

SA holdings % of fund

Naspers 12.1

Prosus 4.9

British American Tobacco 4.2

BHP 3.7

Anglo American 3.3

FirstRand Bank 3.0

Sanlam 2.6

Impala Platinum 2.4

Sibanye Stillwater 2.0

Gold Fields 1.8

Total 40.0%

Offshore equities 29.2%

69.2%

Foreign holdings % of fund

Microsoft 1.7

Amazon 1.2

Alphabet 1.1

Samsung 1.0

Telepresence 0.9

Chemed 0.7

UnitedHealth 0.7

Facebook 0.6

Sany Heavy Industry 0.6

Keysight Technologies 0.6

Total 9.1%

20

Risk management of macroeconomic sensitivities

Ensure no large unintended embedded macro risks

Source: Ninety One, EMA as at 31 March 2020

Active returns vs Capped SWIX for various macro outcomes

Implicit risks reflected in our bottom up stock selection

0.4%

0.9%

0.4%

0.8%

-1.4%

0.5%

0.8%

-1.2%

-0.5%

-2.1%

-1.5%

0.1%

0.2%

0.1%

0.0%

-0.5%

0.2%

0.3%

-1.2%

0.0%

-1.1%

-0.4%

-3% -2% -1% 0% 1% 2% 3%

ALSI up 10%

Emerging markets up 10%

World equity Market up 10%

Rand Strengthens 10% vs USD

Dollar strengthens 10% vs EUR

SA short term rates down 1%

SA 10-year bond yield down 1%

US 10-year Treasury yield up 0.5%

$ Base Metals down 10%

$ Gold spot down 10%

$ PGM down 10%

General Equity: portfolio response relative to Capped SWIX

31-Dec-19

31-Mar-20

21

Stress testing palladium and Rhodium deficit outlook

There remains an underpin to the commodity prices in this new world outlook

Source: IHS Markit, Morgan Stanley research, April 2020 Source: Morgan Stanley research, April 2020

Palladium surplus/(deficit) in 2020X-axis: Change in SA supply (% growth YoY)Y-axis: Change in global auto sales (% growth YoY)

3E PGM surplus/(deficit) in 2020X-axis: Change in SA supply (% growth YoY)Y-axis: Change in global auto sales (% growth YoY)

22

Outlook

Market looks attractive on anything more than a 12-month view

‒ Global monetary policy is maximum stimulus “all in.” No liquidity crisis, markets functioning

‒ How long will the coming severe 2020 recession be?

‒ US is a big worry: peak virus cases only expected mid/late April 2020

‒ Global fiscal policy still needed to partially mitigate the profits crisis coming

‒ SA equity valuations very attractive on medium-term view

Thank you

www.ninetyone.com

24

Important information

All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such information or opinion without appropriate professional advice after a thorough examination of a particular situation. This is not a recommendation to buy, sell or hold any particular security.

Collective investment scheme funds are generally medium to long term investments and the manager, Ninety One Fund Managers SA (RF) (Pty) Ltd, gives no guarantee with respect to the capital or the return of the fund. Past performance is not necessarily a guide to future performance. The value of participatory interests (units) may go down as well as up. Funds are traded at ruling prices and can engage in borrowing and scrip lending. The fund may borrow up to 10% of its market value to bridge insufficient liquidity. A schedule of charges, fees and advisor fees is available on request from the manager which is registered under the Collective Investment Schemes Control Act. Additional advisor fees may be paid and if so, are subject to the relevant FAIS disclosure requirements. Performance shown is that of the fund and individual investor performance may differ as a result of initial fees, actual investment date, date of any subsequent reinvestment and any dividend withholding tax. There are different fee classes of units on the fund and the information presented is for the most expensive class. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. Where the fund invests in the units of foreign collective investment schemes, these may levy additional charges which are included in the relevant TER. Additional information on the funds may be obtained, free of charge, at www.ninetyone.com. Ninety One SA (Pty) Ltd (“Ninety One SA”) is an authorised financial services provider and a member of the Association for Savings and Investment SA (ASISA).

Investment Team: There is no assurance that the persons referenced herein will continue to be involved with investing for this Fund, or that other persons not identified herein will become involved with investing assets for the Manager or assets of the Fund at any time without notice.

Investment Process: Any description or information regarding investment process or strategies is provided for illustrative purposes only, may not be fully indicative of any present or future investments and may be changed at the discretion of the manager without notice. References to specific investments, strategies or investment vehicles are for illustrative purposes only and should not be relied upon as a recommendation to purchase or sell such investments or to engage in any particular strategy. Portfolio data is expected to change and there is no assurance that the actual portfolio will remain as described herein. There is no assurance that the investments presented will be available in the future at the levels presented, with the same characteristics or be available at all. Past performance is no guarantee of future results and has no bearing upon the ability of Manager to construct the illustrative portfolio and implement its investment strategy or investment objective.

In the event that specific funds are mentioned please refer to the relevant minimum disclosure document in order to obtain all the necessary information in regard to that fund.

This presentation is the copyright of Ninety One SA and its contents may not be re-used without Ninety One SA’s prior permission.

GENERIC ADVISOR DISCLAIMER SA ONLY