FondsAnbieter- GAM: Weekly Manager Views.

20. August 2013 von um 11:00 Uhr
Wie beurteilen FondsAnbieter ihre Anlagerreigionen ? Wie fällt die Analyse der Kapitalanlagegesellschaften (KAG) über Fundamentaldaten, Währungen und Kapitalflüsse aus? Informationen direkt aus dem Research Centern der FondsBranche finden SJB FondsBlogger in der Kategorie "Anbieter. Berichten."

Bei der FondsAuswahl zählt die Unabhängigkeit vom Anbieter!FondsAnbieter-GAM: We recently produced an in-depth update on the long-term outlook for Japanese equities. Our conclusion was that ‘Abenomics’ is working and that earnings-based valuations of Japanese companies are in line with global markets. Looking at enterprise value and other balance sheet measures, Japanese equities are extremely cheap and there is still a lot of upside potential.

In the short term, the market has hit the summer doldrums, with quite a high degree of volatility at low trading volumes, while there is little news forthcoming from the government. In contrast, for the first five months of the year, we saw a massive amount of policy announcements. For the moment we can say that the monetary and fiscal boosts have worked, but both were announced earlier in the year. The government’s third ‘arrow’, structural reforms, will eventually work in our view, but these need more time. This leaves us currently in an information vacuum.

When the government released its growth plan a few months ago, it was very encouraging for us to see that it had identified a major problem: idle assets in the private sector. From our own experience we can confirm that it is not at all clear to the management teams of individual companies what negative effects the hoarding of idle assets, such as cash, has on the economy. While companies’ managements are universally in favour of Prime Minister Abe’s plans and policies, they have simply not really thought of their hoarding of cash as a macroeconomic problem that needs tackling.

This official acknowledgement by the government gives investors huge leverage over companies to pressure them into increasing shareholder returns. This has been quite an exciting new development over the past few months, and this theme could provide share prices with another big leg up over the next year, in our view. This is because corporate earnings have gone up, so putting that money to work is the next step. We have seen in the past that when companies announced share buybacks their shares did very well subsequently.

The reason why corporate Japan has been so eager to hold on to its cash reserves is that over the past few years earnings fell significantly due to external factors. Companies had started to behave in the interest of shareholders in 2006 and 2007. However, what followed was the Lehman crisis, the currency shock with the yen moving from 120 to 80, the earthquake / tsunami in 2011, the Thai floods and another currency shock

when the yen went to 75. All these factors depressed earnings, and we are now starting to see that unwind as the yen has weakened.

ToyotaMotor, which is our largest fund holding, is a case in point for this development. The company has around USD 50 billion in cash sitting on its balance sheet. The earthquake and the yen rally meant that Toyota’s earnings plummeted, which scared its management into hoarding cash to protect the carmaker. Now that they have built this ‘fortress of cash’, we are hopeful that management will start returning future earnings to shareholders and investing for growth. Our expectation is that once Toyota starts paying out, other companies will follow its lead.

In terms of portfolio construction, we are continuing with our proven strategy of investing in quality companies with solid balance sheets and a track record of delivering earnings. The reason for our focus on very strong balance sheets, in particular a high equity-to-assets ratio, lies in our thesis that returning capital to shareholders will be the next big theme for investors in Japan. And the companies that we own have the ability to increase their shareholders’ returns via share buybacks or higher dividend pay-outs. Furthermore, Japanese companies have little need to invest in capex as there is still plenty of spare capacity in the industrial sector.

To give a bit more detail on the current earnings season in Japan, revenues are up around 9.5%, operating profits are up 35% and net income increased by 67%. This means that companies are delivering on their earnings, as the weaker yen has helped them regain competitiveness. Combined with reasonable valuations, further expected policy announcements, and the fact that Japanese corporates are rebuilding their market shares, this should leave plenty of upside potential for Japanese equities over the longer term, notwithstanding some short-term bumps.

The valuation of GAM Star Japan Equity is 12x March 2014 earnings, which is very reasonable versus both the Japanese market and global markets. The Topix is trading at around 14x P/E ratio, which is broadly in line with the S&P 500 index.

We have previously mentioned that anecdotal evidence suggests investors should favour convertible bonds in an environment of rising rates. Recent data releases now make it possible to back up this statement with hard facts. The cost of five-year funding rates are climbing, and extrapolating this out using forward rates, issuance looks to remain on an upward trajectory and therefore very positive for the asset class.

We have known for some time that rates will begin to rise, reflecting the slow return of growth to the global economy. In the European market, asset allocators, who are often bound to invest high proportions of their portfolios into fixed income products, have been increasingly investing cash reserves into convertible bonds, particularly during the latter half of 2012, with the pace gathering during 2013. We are pleased to witness this savvy trend within the investment community, but take the opportunity to reiterate that liquidity levels within the convertible bond asset class are, in our view, as good, if not better, than that of the high yield and investment grade markets. Both of these asset classes are impacted by the decline of secondary market business and a lack of committed capital – neither of these issues have affected the convertibles markets over the past four years. Consequentially, inflow volumes are higher.

We remain wary regarding US issuance, which tends to be issued at the high-yield end of the spectrum. Our concern is that if such products, which have done well as rates have contracted, do not continue to perform going into a growth environment if the trading model of the company does not actually provide the revenue and income necessary to drive the equity higher, then the bonds will underperform. Such underperformance could have a significant impact on investors of convertible index tracking funds.

Convertible bond issuance has always had a reasonably tight correlation to rates, so it is unsurprising to see that senior company management teams around the world are favouring the issue of convertibles, over equity or straight bonds as the economic cycle rotates towards a rising rate environment. Charting issuance levels over the past 15 years, the market’s predictable and fairly steady undulation between decline and rise indicates that we are heading into a period of increased issuance. We would expect to see a significant pick-up by the end of 2013, reflecting the products’ current appeal to CFOs. While some paper may weaken in absolute terms in reaction to increased inflows, the corresponding equity uplift should preserve the value of the investment.

Looking historically at high yield versus convertible debt, performance is reasonably correlated but not perfectly matched. Over the past few years we have seen high yield outperform as investors flooded into the asset class to capitalise on declining rates and the carry trade. But when plotting the BoA Merrill Lynch US High Yield index against the UBS US Convertible Bond index and focusing on the data points only when rates are rising, you can see that convertibles have outperformed high yield. Hence we would expect the asset class to deliver return percentages in the high teens over the next 18 months as rate increases come to fruition.

Looking at convertibles against equities, there is a strong correlation between the MSCI World index and the UBS Global CB index (US dollar hedged). Outlying data points largely feature in the 20%-plus range for convertibles, highlighting the asset class’s ability to protect on the downside as well as capture equity market uplift.

Within GAM Convertible Bond Hedge Fund and GAM Star Global Convertible Bond, we are running high delta exposures, therefore reducing the negative impact of rising rates on the fixed income portions of the portfolios. We retain our put positions in order to protect the portfolios should there be a sharp downward move in markets, but overall we are positioned to capture equity uplift.







Über GAM

GAM wurde 1983 als FondsTochter der UBS gegründet. Von 1999 bis 2005 gehörte die Gesellschaft zum Bankhaus Julius Bär. Seit September 2009 ist GAM selbständig. Fonds: 450. Verwaltetes Vermögen: 36,9 Mrd. Euro. Anzahl der Mitarbeiter: 760. Geschäftsführer: David M. Solo.


Kategorien: Anbieter. Berichten.

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