Solactive US Quality Dividend Low Volatility Index

Transcription

1 Vontobel Investment Banking Solactive US Quality Dividend Low Volatility Index US dividend strategy: it's all about the selection Financial Products, Advisory & Distribution April 2016 Performance creates trust

2 US stocks with considerable potential 40% of global dividend payments Global dividends Dividends by region North American companies are the driving force behind global dividends. North American companies account for 40% of dividend payments worldwide. Reported dividends increased by 21.1% in 2015 to around USD 440 billion. 11% 10% 5% 43% 14% 20% Dividend income was an important component of total shareholder return in ( North America Europe ex UK UK Asia-Pacific ex Japan Emerging markets Japan 1: Source: Henderson Global Investors Henderson Global Dividend Index, Edition 9, February 2016 Historical data do not provide any indication of future developments. Slide 2

3 Stable dividend payments also possible in current market environment Two reasons in favour of US stocks Two reasons for US-Titel Ratio of dividends paid to P/E 1 1. Scope for further dividend increases in the US: The ratio of dividends paid to earnings per share is currently a modest 38% in the US, while Europe is back at pre-crisis levels with a figure around 60% (see chart on the right). 1. US corporate net cash flows near record highs: Companies in the US currently have net cash flows of around USD 1,960 billion. This corresponds to more than 12% of US gross domestic product (GDP) and is close to the record set in : Price/earnings ratio Source: Allianz Global Investors, Dividends instead of low interest rates, January 2016 Historical data do not provide any indication of future developments. Slide 3

4 Dividend stocks delivering more stability in portfolios Inflation real value growth with dividend strategy Outperforming the US equity market despite inflation US dividend strategy vs US stock market Equities with good prospects and strong dividend payments can a) make a greater contribution to returns than equities without dividend payments b) ensure greater stability in a portfolio with regard to income Equities making dividend payments have lower volatility than those that do not distribute income. US dividend strategies have outperformed the US stock market in periods of both rising inflation (up to 10%) and deflation (see chart on the right). Source: Allianz Global Investors, Dividends instead of low interest rates, January 2016 Historical data do not provide any indication of future developments. Slide 4

5 Theme investment Solactive US Quality Dividend Low Volatility Index Selection process Key criteria: Selection pool 500 companies In the current selection of the Solactive US Large & Mid Cap Index Listed on a recognized and regulated US exchange. Market capitalization of at least USD 750 million Average daily share trading volume of at least USD 1 million (in the past three months) No sales restrictions for investors and freely traded No negative earnings per share (EPS) in the past 12 months Criterion: Selection of 40 companies Highest expected dividend yield Criterion: Highest average dividend growth over five years Criterion: Selection of 30 companies Final selection of 20 companies Lowest volatility Source: Solactive.com Index Guidelines Slide 5

6 Solactive US Quality Dividend Low Volatility Index Initial index composition Initial basket composition 2 stocks Stock Sector Weighting Expected dividend yield ø Hist. Dividend growth (5 years) Volatility 260 Days Alliant Energy Corporation UTILITIES 5% 4.11% 6.34% 18.58% Altria Group, Inc. CONSUMER GOODS 5% 4.20% 8.67% 17.78% CBL & Associates Properties, Inc. FINANCIALS 5% 7.37% 11.51% 22.06% CenterPoint Energy, Inc. UTILITIES 5% 5.71% 4.56% 22.28% Digital Realty Trust, Inc. FINANCIALS 5% 5.57% 17.70% 19.57% Eaton Corp. Plc INDUSTRIE 5% 4.17% 14.41% 24.13% Emerson Electric Co. INDUSTRIE 5% 4.21% 7.01% 21.84% HCP, Inc. FINANCIALS 5% 6.14% 3.45% 20.38% International Paper Company INDUSTRIE 5% 4.16% 34.86% 22.55% LaSalle Hotel Properties FINANCIALS 5% 5.82% % 25.99% OGE Energy Corp. UTILITIES 5% 4.05% 5.89% 20.13% Omega Healthcare Investors, Inc. FINANCIALS 5% 6.76% 10.98% 21.21% Philip Morris International Inc. CONSUMER GOODS 5% 5.10% 11.61% 19.11% Questar Corporation UTILITIES 5% 4.57% 8.23% 20.48% Realty Income Corporation FINANCIALS 5% 5.06% 5.13% 19.12% Southern Company UTILITIES 5% 5.16% 3.75% 16.80% Ventas, Inc. FINANCIALS 5% 5.55% 7.66% 20.18% Waddell & Reed Financial, Inc. Class A FINANCIALS 5% 4.68% 13.79% 26.21% Welltower, Inc. FINANCIALS 5% 5.30% 3.17% 19.43% W.P. Carey Inc. FINANCIALS 5% 6.80% 13.05% 17.09% All information is indicative and subject to change. 1: Source: Solactive 2: At initial fixing (indicative) Source: Bloomberg, % 15% 25% FINANCIAL INDUSTRY 50% UTILITIES CONSUMER GOODS Slide 6

7 Backtest: Solactive US Quality Dividend Low Volatility Index Over 12% outperformance Backtesting: 20 October 2010 to 25 January 2016 Backtesting shows an excess return of more than 12% versus the benchmark. Slide 7

8 VONCERT Open End SSPA product type Tracker certificate (1300) Underlying Solactive US Quality Dividend Low Volatility Index Initial fixing / payment date 22 April 2016 / 23 April 2016 Term Management fee Issuer Key product data Solactive US Quality Dividend Low Volatility Index Key product data VONCERT Open End Open end 1.00% p.a. Guarantor Vontobel Holding AG, Zurich (Moody's A3) Vontobel Financial Products Ltd., DIFC Dubai (is not subject to any prudential supervision and has no rating) Currencies CHF USD Valor / symbol / ZSLAFV / ZSLAEV Issue price CHF (CHF 1.50 front-load fee included) USD (USD 1.50 front-load fee included) VONCERT reference price CHF USD Termsheets with the legally binding information and other details can be downloaded at any time from All information is indicative and subject to change. Slide 8

9 Summary & risks Solactive US Quality Dividend Low Volatility Performance Index Overview of key points The Solactive US Quality Dividend Low Volatility Performance Index represents a rules-based and thus transparent benchmark for US companies with high dividend yields, a stable dividend track record and low volatility. With its innovative and systematic approach, the index certificate makes it possible to tap into the potential of high dividends geared towards sustainability. The index provides access to a source of returns that is both traditional and important. Net dividends are reinvested The Solactive US Quality Dividend Low Volatility Performance Index is adjusted annually and has 20 members No term restriction Management fee: 1.0% p.a.. Significant risks for investors Economic crises and changes could have a detrimental impact on the shares underlying the participation certificate. Political and regulatory risks that influence dividend payout policy could have a negative impact on performance. New competitors could engage the established firms in the index in a fight for market share, thus jeopardizing their sustainable dividend policy. Issuer risk Currency risk No capital protection Slide 9

10 January 2016 Legal Note This publication is for information purposes only and does not represent an investment recommendation or advice and contains neither an offer nor an invitation to make an offer. It does not replace the qualified advice necessary before any purchase decision, in particular as regards all associated risks. If reference is made in this publication to analysts' opinions provided by Vontobel Research / Sell-Side Analysis, please note that any conflicts of interest of the analysts are disclosed and may be viewed at any time at the following link: derinet.ch/researchdisclaimer This publication was drawn up by our Financial Products & Distribution organizational unit, and is not the result of financial analysis. The Directives on the Independence of Financial Research issued by the Swiss Bankers Association do not apply to this publication. Any content in this publication originating from other organizational units at Vontobel or third parties are marked as such with reference to the source. The legally applicable product documentation (listing prospectus) consists of the definitive term sheet with the final terms and the issue programme registered with SIX Swiss Exchange. These documents and the brochure Special Risks in Securities Trading may be obtained free of charge at or from Bank Vontobel AG, Financial Products, CH-8022 Zurich (Tel. +41 (0) ). Past performance must not be taken as an indication or guarantee of future performance. Structured products are not regarded as collective investment schemes within the meaning of the Federal Act on Collective Investment Schemes (CISA), and are therefore not subject to the approval or supervision of the Swiss Financial Market Supervisory Authority FINMA. The value of structured products may depend not only on the performance of the underlying, but also on the creditworthiness of the issuer. The investor is exposed to the risk of the issuer / guarantor defaulting. This publication and the financial products outlined therein are not intended for persons subject to a jurisdiction which limits or prohibits the sale of financial products or the dissemination of this publication and/or the information contained therein. All information is provided without a guarantee. April 2016 Bank Vontobel AG. All rights reserved. Folie 10