schroders equity lens

Marketing material for professional investors or advisers only.

Q4 2021

Strategic Research Unit

Schroders Equity Lens

2

Table of contents

01 Charts of the month

02 Regional performance

03 Fundamentals

04 Sectors & Styles

05 Income

Summary (1 of 3)

– After several strong quarters of gains, global equities fell -1.0% in Q3.

– The spread of the delta variant, surging inflation and signs that central banks were getting ready to withdraw policy support weighed on investor sentiment.

– Regulatory actions in China and concerns about spillovers from its property market did not help.

– The best performing region was Japan (+5.3%) where earnings momentum strengthened and business conditions improved amid a change in political leadership.

– The worst performing region was emerging markets (-8.0%), which saw a steep sell-off in Chinese stocks (-18.0%) and continued supply-chain disruptions.

3

Summary (2 of 3)

– However, many energy exporters posted strong gains amid rising fuel prices, including Russia (+9.5%), Kuwait (+9.1%) and Saudi Arabia (+8.2%).

– Despite a strong corporate earnings season, US equities only notched a small positive return (+0.4%), as bond yields rose and the Federal Reserve signalled they would start tapering bond purchases.

– As we have written in the past, sharp upward moves in bond yields tend to weigh more on equity returns than more gradual moves that are supported by improving growth prospects.

– The sectors that tend to benefit from rising bond yields include banks and energy. Utilities and telecom services tend to underperform.

– When rates are rising as a result of higher real yields, value stocks tend to beat growth stocks, while US and Japanese equities tend to outperform the rest of the world.

4

https://www.schroders.com/en/sysglobalassets/digital/insights/2021/pdfs/what_do_rising_bond_yields_mean_for_the_us_stock_market.pdf

Summary (3 of 3)

– Q3 sector performance was relatively polarised. Soaring commodity prices and a broad inflationary backdrop meant that global energy stocks were the top performer (+3.1%). Financials also performed well (+2.0).

– However, consumer discretionary stocks were the weakest (-5.0%), weighed down by slowing growth expectations, global inflationary concerns and policy uncertainty in China.

– Earnings revisions momentum appears to have peaked in all major equity regions, except Japan where it has started to accelerate.

5

Charts of the month

Global equities

What sectors, styles and regions are working in 2021?

7

Cyclical sectors such as energy and financials have dominated

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv and Schroders. Data to 30 September 2021. All sectors and styles are global universes.

33

21

15 14 13 13 13 13 1211 10 10 10

8 63 3

1

-1-5

0

5

10

15

20

25

30

35

40Global YTD $ total return, %

China vs Rest of World

8

Most of EM’s underperformance has been down to China (34%~ of MSCI EM index)

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv and Schroders. Data to 30 September 2021.

-30

-20

-10

0

10

20

30

Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 May 21 Jun 21 Jul 21 Aug 21 Sep 21

YTD $ total return %

MSCI EM MSCI EM ex China MSCI China MSCI World

Which equity sectors can combat high inflation?

9

US equity performance in high (+3%) and rising inflation environments

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv and Schroders. Data from March 1973 to December 2020. Notes: based on monthly rolling 12-month returns in excess of US CPI inflation rate. High inflation defined as periods where y/y % change in US CPI is above 3% on average over last 12 months. Rising inflation is defined as the absolute change in the inflation rate over last 12 months. All sectors proxied using US Datastream indices, except real estate which is the FTSE NAREIT All Equity and Mortgage US REITs Index.

For further research on this topic, click here

https://www.schroders.com/en/uk/tp/markets2/markets/which-equity-sectors-can-combat-higher-inflation/

Global energy – the unloved sector no more?

10

Rising commodity prices have turbocharged energy stock prices


-60

-40

-20

0

20

40

60

80

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

YoY $ total return %

Global energy equities Bloomberg Commodity Index

Rising yields aren’t necessarily bad for equity returns

11

US stocks have posted positive total returns in 9 out of the last 11 rising rate cycles

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv, Cleveland Fed and Schroders. Data from 1971 to 2018. Notes: returns calculated using the MSCI USA Index as (1+P/E % chg) x (1+EPS % chg) x (1+income % return). Real yields from 1971 to 1981 are US 10-year Treasury yields minus US CPI inflation rate, 1982 to 2003 are modelled Cleveland Fed 10-year real yields, 2003 to present are US 10-year TIPS yields. All changes are annualised.

Period Chg in 10yr nominal yield Chg in 10yr real yield P/E % chg EPS % chg Total Return %1971-75 0.7 -0.4 -9.6 5.1 -1.61976-81 1.9 0.7 -8.9 10.0 5.71983-84 3.3 1.1 -24.5 20.6 -4.71986-87 2.5 0.6 28.9 -4.3 27.31993-94 2.2 1.4 -20.2 24.7 2.41995-96 2.1 0.9 0.2 10.1 12.91998-20 1.7 0.7 15.1 11.1 29.42003-06 0.6 0.2 -6.8 17.5 11.52008-10 1.1 -0.6 29.3 -4.5 26.22012-13 1.1 1.0 18.9 3.6 26.02016-18 0.8 0.5 -3.9 14.7 12.5

Average 1.7 9.9 13.4Median -3.9 10.1 12.5

# positive 5/11 9/11 9/11

Historical periods of rising bond yields (all changes are annualised)


https://www.schroders.com/en/uk/tp/markets2/markets/what-do-rising-bond-yields-mean-for-the-us-stock-market/

US sector sensitivity to nominal bond yield changes

12

Most industries carry similar sensitivity to both real rates and inflation

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv and Schroders. Data as at 30 September 2021. Notes: all indices are MSCI benchmarks. Yields represented by 10-year US Treasuries.


-15 -10 -5 0 5 10 15

HH & Personal ProductsReal estate

UtilitiesTelecom services

Food & staples retailingFood beverage & tobaccoPharma Biotech & Life Sci

Comm & Prof servicesHealth care Eq & Svcs

RetailingSoftware & ServicesTech hardware & eq

Cons ServicesCons durables & apparel

Semis & semi eqMedia & entertainment

TransporationMaterials

InsuranceCapital goods

EnergyDiversified FinancialsAutos & components

Banks

beta of monthly excess returns vs MSCI USA Index to 10-year US Treasury nominal yield (last 10 years)

Defensive (underperforms as yields rise)

Cyclical (outperforms as yield rises)

Secular (weak relationship with yields)

Financials, automobiles and energy stocks tend to outperform when nominal yields rise

https://www.schroders.com/en/uk/tp/markets2/markets/what-do-rising-bond-yields-mean-for-the-us-stock-market/

Regional sensitivity to real yields and inflation breakevens

13

Value, US, Japan and small caps tend to outperform when real rates are rising

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv and Schroders. Data as at 30 September 2021. Notes: all indices are MSCI benchmarks. Yields represented by 10-year US Treasury breakevens and 10-year US TIPS. Based on 2-factor regression of monthly returns versus the MSCI ACWI and monthly yield changes over the past 10 years. Standardised coefficients adjust betas using the ratio of standard deviations between the dependent variable and independent variable.

US

UK Europe ex UKJapan

Emerging Markets

Global small caps

Global value

Global growth

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

-0.5 -0.4 -0.3 -0.2 -0.1 0.0 0.1 0.2 0.3 0.4

Real

yie

lds

stan

dard

ised

bet

a co

effic

ient

Inflation breakeven standardised beta coefficient

Beta of monthly excess returns vs MSCI ACWI over last 10 years

Outperforms when real yields rise

Outperforms when breakeven inflation rises

Regional performance

Global equities

Global equities: performance leadership table

15

Developed market equities have outperformed their emerging market peers YTD

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021 in US dollars. Europe = Europe ex UK.

Best

Worst

Total $ return, %

EM US Europe US US Japan US EM US US US US19.2% 2.0% 22.5% 32.6% 13.4% 9.9% 11.6% 37.8% -4.5% 30.6% 21.4% 15.3%Japan UK EM Europe EM US EM Europe Japan Europe EM UK15.6% -2.5% 18.6% 28.7% -1.8% 1.3% 11.6% 27.8% -12.6% 25.9% 18.7% 12.2%

US Japan US Japan Japan Japan Japan UK UK Japan Europe15.4% -14.2% 16.1% 27.3% -3.7% 2.7% 24.4% -14.1% 21.1% 14.9% 10.2%

UK Europe UK UK UK UK Europe UK EM Japan Europe Japan8.8% -14.5% 15.3% 20.7% -5.4% -7.5% 0.3% 22.4% -14.2% 20.1% 11.6% 6.2%

Europe EM Japan EM Europe EM UK US Europe EM UK EM2.4% -18.2% 8.4% -2.3% -5.8% -14.6% 0.0% 21.9% -14.4% 18.9% -10.4% -1.0%

YTD

Europe 0.1%

2015 2016 2017 2018 2019 202020142010 2011 2012 2013

-40

-30

-20

-10

0

10

20

30

40

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

US vs Rest of World, 5-year annualised return, %

Income EPS growth P/E change FX return Total return

Performance leadership tends to be cyclical

16

Winners and losers are not constant over time

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021. Notes: Rest of World = MSCI World ex US Index

Non-US equities outperform

US equities outperform


https://www.schroders.com/en/uk/tp/markets2/markets/four-reasons-why-the-odds-are-stacked-against-us-equities/

-200%-180%-160%-140%-120%-100%

-80%-60%-40%-20%

0%20%40%60%80%

100%120%140%160%180%200%220%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

EPS growth P/E chg Income return FX return Total return

Valuation-led return phase giving way to earnings-led phase

17

But equity returns may moderate further as valuations contract…


EPS growth turns positive

Peak in YoY % chg in P/E ratio

Global equities 12m return, %

Drivers of global equity returns

18

Earnings growth, not valuations, has been the primary engine of 2021 performance

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021 in US dollars.

-60

-40

-20

0

20

40

60

80

US UK Europe ex UK Japan EM

YTD return by source, %

Income EPS growth P/E change FX return Total Return

-40

-30

-20

-10

0

10

20

30

40

50

YTD total return, %

Local return FX return Total Return

Headline EM performance can be misleading

19

14 countries (capturing 43% of index market cap) have outperformed YTD

Forecasts included are not guaranteed and should not be relied upon.Source: Datastream Refinitiv, IBES, MSCI and Schroders. Data to 30 September 202.

Outperformed EM Index

Stronger US dollar hurting EM equities

20

EM vs. DM performance tends to be inversely correlated with the US dollar

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021 in US dollars. Notes: EM = MSCI EM index $ and DM = MSCI World Index $.

-20

-15

-10

-5

0

5

10

15

20

25-25

-20

-15

-10

-5

0

5

10

15

20

Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21

YoY total return, %

EM vs DM equities US dollar index (inverted RHS)

Economic surprises

21

Weakening global equity returns in line with fewer economic surprises


-60

-40

-20

0

20

40

60

-150

-100

-50

0

50

100

150

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Citi Economic Surprise Index Global equities 6m % chg (RHS)

Excess liquidity vs S&P 500

22

US equity valuations look vulnerable amid contracting liquidity conditions

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv and Schroders. Data to 30 September 2021. Notes: excess liquidity measures the difference between money supply growth and GDP growth.

-10

-5

0

5

10

15

20

25

30

35

-75

0

75

150

225

300

1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021

S&P 500 P/E YoY % chg (6ma, RHS) Excess liquidity, M2 - US GDP nominal growth (lag 3m)

Fundamentals

Global equities

Corporate earnings

24

2021 EPS forecasts continue to be revised upwards, although momentum slowing

Forecasts included are not guaranteed and should not be relied upon.Source: Datastream Refinitiv, IBES, MSCI and Schroders. Data to 30 September 2021. Notes: % change is the expected growth in EPS for that calendar year

2022e (+7.6%)

2021e (+48.8%)

2020 (-15.5%)

20

25

30

35

40

45


Global equities EPS forecast

2015 2016 2017 2018 2019 2020 2021 2022 2023

2023e (+8.7%)

Analysts forecasting a V-shaped recovery

25

However earnings growth is expected to moderate substantially in 2022

Forecasts included are not guaranteed and should not be relied upon.Source: IBES, Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021. Notes: Japan EPS for 2021/2022 is 4 quarter sum until 31 March of next calendar year, e.g. 2022 = 31/03/2022 – 31/03/2023.

-14

46

8

-33

79

2

-23

47

8

-37

32

7

-19

54

9

-60

-40

-20

0

20

40

60

80

100

2020 2021e 2022e

YoY EPS growth, %


Global profits have finally turned a corner

26

All major equity regions have recorded positive YoY earnings growth

Source: Datastream Refinitiv, IBES, MSCI and Schroders. Data to 30 September 2021.

-50

-40

-30

-20

-10

0

10

20

30

40

50

60


12-month EPS growth, %


-80

-60

-40

-20

0

20

40

60

Jan 16 Jul 16 Jan 17 Jul 17 Jan 18 Jul 18 Jan 19 Jul 19 Jan 20 Jul 20 Jan 21 Jul 21

13-week earnings revisions ratio %, (upgrades – downgrades) / total revisions


Earnings sentiment indicator

27

Revision momentum peaking in US, Europe and UK but accelerating in Japan

Forecasts included are not guaranteed and should not be relied upon.Source: Datastream Refinitiv, IBES, MSCI and Schroders. Data to 30 September 2021. Notes; 13w earnings revisions = sum of 13 week positive minus negative 12m forward EPS revisions / total revisions.

Earnings upgrades > downgrades

Earnings upgrades < downgrades

Nothing looks cheap these days

28

Valuations vs. 15-year median (30 September 2021)

Bargains are difficult to find, but EM and Japanese equities offer relative value

Source: Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021. Figures are shown on a rounded basis. Assessment of cheap/expensive is relative to 15-year median in brackets.

Key: >20% 10-20% 0-10% 0-10% 10-20% +20%Expensive Cheap

Equity market CAPE Forward P/E Trailing P/E P/B Dividend yield

15(15)

13(12)

15(14)

1.9(1.7)

2.2(2.6)

22(22)

15(14)

18(16)

1.5(1.3)

2.0(2.0)

23(16)

16(14)

19(17)

2.2(1.7)

2.2(3.2)

US

UK

Europe ex. UK

Japan

EM

21(16)

26(19)

4.7(2.8)

1.4(2.0)

14(13)

12(12)

18(14)

1.8(1.8)

3.7(3.8)

35(23)

Relative valuations: US vs Rest of World

29

US CAPE stretched versus ROW

Source: Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021.

0

5

10

15

20

25

30

35

40

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Cyclically adjusted price-to-earnings ratio

MSCI USA MSCI AC World ex US

Why you shouldn’t try to time the top of the market

30

The stock market often keeps on rising even when valuations appear expensive

Past performance is not a guide to future performance and may not be repeated.Source: Robert Shiller and Schroders. Data to 31 March 2021.

1

10

100

1,000

10,000

100,000

1,000,000

10,000,000

100,000,000

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

Periods where CAPE more than 50% expensive S&P 500 total return index, log scale

Episode Gains missed out on before peak if sold when >50% expensive

May-1928 0%Sept-1928 to Oct-1929 53%Feb-1930 - May-1930 11%Feb-1937 0%Nov-1961 - Dec-1961 1%Mar-1964 - Apr-1966 125%Jun-1995 - Jun-2002 200%Jun-2003 - Dec-2007 68%Dec-2013 - Jan-2014 1%Mar-2014 0%May-2014 - Aug-2015 14%Oct-2015 - Dec-2015 3%Mar-2016 - Feb-2020 75%Apr-2020 to current 50%Average 43%


https://www.schroders.com/en/uk/tp/markets2/markets/why-you-shouldnt-try-to-time-the-top-of-the-market/

Sectors & Styles

Global equities

Global sector returns

32

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021 in US dollars. Notes:

Energy companies and financials have claimed top spot from Covid-19 winners

5.8

37.0

-5.7

-27.7

-3.2

11.8

21.5

24.1

4.6

8.8

15.4

46.1

2.9

13.3

33.4

21.2

10.4

7.5

12.5

0.6

3.0

10.5

13.4

-3.3

-5.1

9.1

-1.4

-4.6

-7.0

-5.7

-6.2

-3.7

-5.1

-5.7

-40 -30 -20 -10 0 10 20 30 40 50

Cons Disc

Real estate

Energy

Financials

Industrials

Materials

Comm Svs

Utilities

Cons Stap

Health care

IT

Global $ sector return, %

1-month return YTD 2020 return

Small vs Large caps

33

Rotation has stalled as business activity nears peak levels

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021.

-20

-15

-10

-5

0

5

10

15

20

25

-30

-20

-10

0

10

20

30

40

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

US small vs large caps, YoY return % ISM manufacturing index abs YoY chg (RHS)

Value vs Growth rotation losing steam

34

6m relative returns tend to lead 12m returns

Past performance is not a guide to future performance and may not be repeated.Source: Datastream Refinitiv, MSCI and Schroders. Data from 6 November 2020 to 30 September 2021. Notes: momentum is % total return over period specified.

Value outperformance poised to weaken over coming months

0

0

0

0

0

1

1

1

1

1

1

-50

-40

-30

-20

-10

0

10

20

30

40

1976 1981 1986 1991 1996 2001 2006 2011 2016 2021

US Value minus Growth return %

US recession 6-month momentum (4m avg) 12-month momentum (4m avg)

Value vs Growth

35

Relative valuations still remain high by historical standards

Opportunity for further mean-reversion still significant given wide valuation dispersion

Forecasts included are not guaranteed and should not be relied upon. Past performance is not a guide to future performance and may not be repeated. Source: Datastream Refinitiv and Schroders. Data to 30 September 2021 in US dollars. Based on MSCI ACWI World.

Returns no longer tracking near-term fundamentals

Relative P/E

0

2

4

6

8

10

12

14

16

18

-20

-10

0

10

20

30

40

50

2003 2005 2007 2009 2011 2013 2015 2017 2019

Growth vs Value (global)

yoy % total return, Growth minus Value Forward 12m P/E, Growth minus Value (RHS)

80

100

120

140

160

180

200

2008 2010 2012 2014 2016 2018 2020

Growth / Value (global), rebased to 100

Growth/value forward 12M EPS Growth/value total return

Income

Global equities

60

70

80

90

100

110

120

130

2019 2020 2021 2022

Dividends per share, index (100 = FY2019)

US UK Europe ex. UK Japan EM

Income investors recovering from dividend cuts

37

Dividends in all regions except UK to return to pre-recession peak by end-2021

Forecasts included are not guaranteed and should not be relied upon.Source: IBES, Datastream Refinitiv, MSCI and Schroders. Data to 30 September 2021. Notes: Japan DPS for 2021/2022 is 4 quarter sum until 31 March of next calendar year, e.g. 2022 = 31/03/2022 – 31/03/2023.

Forecast

Dividend vs. bond yields by region

38

Stocks vastly trump corporate bonds for income in UK, Europe and Japan

Forecasts included are not guaranteed and should not be relied upon.Source: IBES, Datastream Refinitiv, MSCI, ICE and Schroders. Data to 30 September 2021. Corporate bond yield = unhedged local currency yield, except for EM which is in USD.

1.4

4.3

2.8

2.2

2.9

2.22.0

0.5 0.4

3.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0


Forward 12-month equity dividend vs. bond yield, %

Equities IG corporate bonds

Relative attractiveness of equity income has increased

39

HY bonds offer less of a yield pick-up vs HY equities compared to the past

Forecasts included are not guaranteed and should not be relied upon.Source: IBES, Datastream Refinitiv, MSCI, ICE and Schroders. Data to 30 September 2021.

0

2

4

6

8

10

12

14

16

18

20

22

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Bond yield vs trailing 12M dividend yield, %

MSCI World High Dividend Yield Index Bloomberg Global High Yield Index Difference

Appendix

List of indices (1 of 2)

Large cap equitiesUS – MSCI USA Index , or S&P 500 Index where specifiedUK – MSCI UK Index Europe ex UK – MSCI Europe ex UK Index Japan – MSCI Japan Index Developed markets – MSCI World Index Emerging markets – MSCI EM Index China – MSCI China Index Global – MSCI All Country World Index Rest of world – MSCI All Country World ex US Index

Small cap equities US – MSCI USA Small Cap Index UK – MSCI UK Small Cap IndexEurope ex UK – MSCI Europe ex UK Small Cap Index Japan – MSCI Japan Small Cap Index Emerging Markets – MSCI EM Small Cap Index

Factor and sector indices US Value – MSCI USA Value Index US Growth – MSCI USA Growth Index US Cyclical – MSCI USA materials, industrials, consumer discretionary, energy, financials, IT US Defensive – MSCI USA utilities, consumer staples, health care, communication servicesGlobal Value – MSCI All Country World Value Index Global Growth – MSCI All Country World Growth Index

41

List of indices (2 of 2)

Bond indicesUS Treasuries – ICE BofA US Treasury IndexEuro government bonds – ICE BofA Euro Government IndexUS IG Corps – ICE BofA US Corporate IndexUK IG Corps – ICE BofA Sterling Corporate IndexEurope IG Corps - ICE BofA Euro Corporate IndexJapan IG Corps - ICE BofA Japan Corporate IndexEM IG Corps - ICE BofA Emerging Markets Corporate Plus Index

Currency indicesUS Dollar – DXY US Dollar Currency Index

42

Important information (1 of 3)

Marketing material for professional investors or advisers only. It is not to be provided to retail clients.

The views and opinions contained herein are those of the authors as at the date of publication and are subject to change due to market and other conditions. Such views and opinions may not necessarily represent those expressed or reflected in other Schroders communications, strategies or funds.

This presentation is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or security or to adopt any investment strategy. The information provided is not intended to constitute investment advice, an investment recommendation or investment research and does not take into account specific circumstances of any recipient. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any references to securities, sectors, regions and/or countries are for illustrative purposes only.

Information herein is believed to be reliable but Schroders does not represent or warrant its completeness or accuracy. No responsibility or liability is accepted by Schroders, its officers, employees or agents for errors of fact or opinion or for any loss arising from use of all or any part of the information in this document. No reliance should be placed on the views and information in the document when taking individual investment and/or strategic decisions. Schroders has no obligation to notify any recipient should any information contained herein change or subsequently become inaccurate. Unless otherwise authorised by Schroders, any reproduction of all or part of the information in this document is prohibited.

Any data contained in this document have been obtained from sources we consider to be reliable. Schroders has not independently verified or validated such data and they should be independently verified before further publication or use. Schroders does not represent or warrant the accuracy or completeness of any such data.

All investing involves risk including the possible loss of principal.

This material has not been reviewed by the regulators.

Exchange rate changes may cause the value of any overseas investments to rise or fall. Past Performance is not a guide to future performance and may not be repeated. This document may contain “forward-looking” information, such as forecasts or projections. Please note that any such information is not a guarantee of any future performance and there is no assurance that any forecast or projection will be realised. For your security, communications may be taped or monitored.

Third party data is owned or licensed by the data provider and may not be reproduced or extracted and used for any other purpose without the data provider's consent. Third party data is provided without any warranties of any kind. The data provider and issuer of the document shall have no liability in connection with the third party data. The Prospectus and/or www.schroders.com contains additional disclaimers which apply to the third party data.

The forecasts stated in this presentation are the result of statistical modelling, based on a number of assumptions. Forecasts are subject to a high level of uncertainty regarding future economic and market factors that may affect actual future performance. The forecasts are provided to you for information purposes as at today’s date. Our assumptions may change materially with changes in underlying assumptions that may occur, among other things, as economic and market conditions change. We assume no obligation to provide you with updates or changes to this data as assumptions, economic and market conditions, models or other matters change.

43

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For readers/viewers in Argentina: Schroder Investment Management S.A., Ing. Enrique Butty 220, Piso 12, C1001AFB - Buenos Aires, Argentina. Registered/Company Number 15. Registered as Distributor of Investment Funds with the CNV (Comisión Nacional de Valores). Nota para los lectores en Argentina: Schroder Investment Management S.A., Ing. Enrique Butty 220, Piso 12, C1001AFB - Buenos Aires, Argentina. Inscripto en el Registro de Agentes de Colocación y Distribución de PIC de FCI de la Comisión Nacional de Valores con el número 15.

Note to readers/viewers in Australia: Issued by Schroder Investment Management Australia Limited Level 20, Angel Place, 123 Pitt Street, Sydney NSW 2000 Australia ABN 22 000 443 274, AFSL 226473

For readers/viewers in Brazil: Schroder Investment Management Brasil Ltda., Rua Joaquim Floriano, 100 – cj. 142 Itaim Bibi, São Paulo, 04534-000 Brasil. Registered/Company Number 92.886.662/0001-29. Authorised as an asset manager by the Securities and Exchange Commission of Brazil/Comissão de Valores Mobiliários (“CVM”) according to the Declaratory Act number 6816.

For readers/viewers in the European Union/European Economic Area: Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at www.schroders.com/en/privacy-policy or on request should you not have access to this webpage. Issued by Schroder Investment Management (Europe) S.A., 5, rue Höhenhof, L-1736 Senningerberg, Luxembourg. Registered No. B 37.799

Note to readers/viewers in Hong Kong S.A.R.: Issued by Schroder Investment Management (Hong Kong) Limited. Level 33, Two Pacific Place, 88 Queensway, Hong Kong. This material has not been reviewed by the Securities and Futures Commission.

Note to readers/viewers in Indonesia: Issued by PT Schroder Investment Management Indonesia Indonesia Stock Exchange Building Tower 1, 30th Floor, Jalan Jend. Sudirman Kav 52-53 Jakarta 12190 Indonesia PT Schroder Investment Management Indonesia is licensed as an Investment Manager and regulated by the Indonesian Financial Services Authority (OJK).This material has not been reviewed by the OJK.

For readers/viewers in Israel: Note regarding the Marketing material for Qualified Clients or Sophisticated Investors only. This communication has been prepared by certain personnel of Schroder Investment Management (Europe) S.A (Registered No. B 37.799) or its subsidiaries or affiliates (collectively, “SIM”). Such personnel are not licensed by the Israeli Securities Authority. Such personnel may provide investment marketing, to the extent permitted and in accordance with the Regulation of Investment Advice, Investment Marketing and Investment Portfolio Management Law, 1995 (the “Investment Advice Law”). This communication is directed at persons (i) who are Sophisticated Investors (ii) Qualified Clients (“Lakoach Kashir”) as such term is defined in the Investment Advice Law; and (iii) other persons to whom it may otherwise lawfully be communicated. No other person should act on the contents or access the products or transactions discussed in this communication. In particular, this communication is not intended for retail clients and SIM will not make such products or transactions available to retail clients.

Note to readers/viewers in Japan: Issued by Schroder Investment Management (Japan) Limited 21st Floor, Marunouchi Trust Tower Main, 1-8-3 Marunouchi, Chiyoda-Ku, Tokyo 100-0005, Japan Registered as a Financial Instruments Business Operator regulated by the Financial Services Agency of Japan (“FSA”). Kanto Local Finance Bureau (FIBO) No. 90 This material has not been reviewed by the FSA.

Note to readers/viewers in Singapore: For Accredited and or Institutional Clients only, where appropriate Issued by Schroder Investment Management (Singapore) Ltd (Co. Reg. No. 199201080H) 138 Market Street #23-01 CapitaGreen, Singapore 048946 This advertisement or publication has not been reviewed by the Monetary Authority of Singapore

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Note to readers/viewers in South Korea: Issued by Schroders Korea Limitedn26th Floor, 136, Sejong-daero, (Taepyeongno 1-ga, Seoul Finance Center), Jung-gu, Seoul 100-768, South Korea. Registered and regulated by Financial Supervisory Service of Korea (“FSS”)This material has not been reviewed by the FSS.

For readers/viewers in Switzerland: Issued by Schroder Investment Management (Switzerland) AG, Central 2, CH-8001 Zürich, Postfach 1820, CH-8021 Zürich, Switzerland. Enterprise identification number (UID) CHE101.447.114. Authorised and regulated by the Swiss Financial Market Supervisory Authority (FINMA)

Note to readers/viewers in Taiwan: Issued by Schroder Investment Management (Taiwan) Limited 9F., No. 108, Sec. 5, Xinyi Road, Xinyi District, Taipei 11047, Taiwan. Tel +886 2 2722-1868 Schroder Investment Management (Taiwan) Limited is independently operated. This material has not been reviewed by the regulators.

Note to readers/viewers in Thailand: This presentation has not been approved by the Securities and Exchange Commission which takes no responsibility for its contents. No offer to the public to purchase any fund will be made in Thailand and this presentation is intended to be read for information only and must not be passed to, issued to, or shown to the public generally. Schroder Investment Management (Singapore) Ltd does not have any intention to solicit you for any investment or subscription in any fund and any such solicitation or marketing will be made by an entity permitted by applicable laws and regulations.

Note to readers/viewers in Malaysia: This presentation has not been approved by the Securities Commission Malaysia which takes no responsibility for its contents. No offer to the public to purchase any fund will be made in Malaysia and this presentation is intended to be read for information only and must not be passed to, issued to, or shown to the public generally. Schroder Investment Management (Singapore) Ltd does not have any intention to solicit you for any investment or subscription in any fund and any such solicitation or marketing will be made by an entity permitted by applicable laws and regulations.

For readers/viewers in the People’s Republic of China: Issued by Schroder Investment Management (Shanghai) Co., Ltd. Unit 33T52A, 33F Shanghai World Financial Center, 100 Century Avenue, Pudong New Area, Shanghai, China, AMAC registration NO. P1066560. Regulated by Asset Management Association of China (“AMAC”) This material has not been reviewed by the AMAC

For readers/viewers in the United Arab Emirates: Schroder Investment Management Limited, located on 1st Floor, Gate Village Six, Dubai International Financial Centre, PO Box 506612 Dubai, United Arab Emirates. Regulated by the Dubai Financial Services Authority.This document is not subject to any form of regulation or approval by the DFSA. The DFSA has no responsibility for reviewing or verifying any Prospectus or other documents in connection with this Fund. Accordingly, the DFSA has not approved any associated documents nor taken any steps to verify the information set out in the Prospectus for the fund, and has no responsibility for it. This document is intended to be for information purposes only and it is not intended as promotional material in any respect. This document is intended for professional investors only as defined by the DFSA rules which can be accessed from their website www.dfsa.ae

For readers/viewers in the United Kingdom: Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at www.schroders.com/en/privacy-policy or on request should you not have access to this webpage. Issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered Number 1893220 England. Authorised and regulated by the Financial Conduct Authority.

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