Emerging Market. Solutions

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1 Solutions Emerging Market This material is solely for the attention of professional investors (for further details please refer to the last page of this document).

2 Yves Perrier Chief Executive Officer Amundi was one of the first investment managers to recognise the long-term potential in emerging markets. We now have over 30 years of experience in these markets. Amundi has also invested significantly in emerging market resources in order to offer you value-added investment solutions tailored to your needs.

3 Emerging Markets, Opportunity and diversity The strong economic growth rates 1 typically associated with emerging economies are creating plenty of attention from international investors. This has helped the regions equity and bond markets to develop quickly too, providing multiple drivers of potential returns across different countries, sectors and asset classes. As developed market debt and equity investors struggle with low interest rates, anaemic economic growth rates and major issues including the Eurozone debt crisis, many investors are understandably drawn to this increasingly large and diverse pool of opportunities. Growth: emerging markets are now the main driver of global economic growth. The IMF predicts emerging economies will grow at over twice the rate of major developed economies for the foreseeable future 2. Opportunity: with growth comes opportunities for businesses and investors. For example, as average wages in emerging nations rise so does consumer spending. There are therefore big opportunities for consumer businesses. Financial strength: growth in developed countries is constrained by high debt levels. In contrast, governments, companies and individuals in emerging markets are generally financially strong. This is good news on many levels for investors in the region s equity and bond markets. Low debt levels support economic and profits growth while reducing the potential for a sharp slowdown. Diversification: emerging markets offer investors major diversification benefits from two sources. First, away from developed markets due to the increasingly self-sustaining nature of emerging market growth drivers; second, within emerging markets due to the low correlation between diverse emerging economies. Pascal Blanqué Head of Institutional Investors and Third Party Distributors, CIO Despite the plethora of opportunities, we adopt a measured approach to emerging market investing, thereby avoiding the herd mentality. We draw on our extensive resources to carefully evaluate the value and merit of any investment. However, there are risks associated with emerging market investing such as: high volatility, risk of capital loss, liquidity risk and political risk. What are emerging countries? Spanning countries in Asia, Africa, Central America, South America and Eastern Europe, emerging markets are typically fast-growing economies with a young and growing population with low to intermediate average income in a global context. Often the economies of these countries are also undergoing significant structural change as they develop reflected in rapid urbanisation, industrialisation, rising average salaries and higher levels of consumption. 1 Emerging market growth: 5.1% in Source: IMF, January Past behaviours do not prejudge future behaviours. 2 Expected growth in 2013: 5.3% for emerging markets compared to 1.2% for advanced economies. Source: IMF, January

4 Amundi, a major player in Emerging Markets Laurent Bertiau Deputy Head of Institutional Investors and Third Party Distributors, Global Head of Sales Our strong expertise and experience enable us to support our clients effectively over the long term. With EUR 17bn 1 in emerging market assets under management, Amundi is a major player in emerging market investing. The guiding principles behind our success are constant product innovation and our ability to anticipate market developments and evolving client needs. We are present across the major emerging economies with investment offices in Hong Kong, Singapore and Kuala Lumpur and representative offices in many other countries. We have also established joint ventures in Korea, China and India. This extensive geographical reach accords us crucial information advantage and allows us to be close to the markets. We offer our clients the benefits of emerging market investing through a broad range of strategies spanning major asset classes. Emerging Market Equities Country Regional Thematic Emerging Market Debt Sovereign Credit Local currency debt Inflation-linked Emerging Market Multi-asset Allocation to both equities and fixed income 1 Source: Amundi, data as end of December

5 Emerging Market Equities, Close to the market The equity opportunity As the regions equity markets develop and grow to reflect the importance of emerging markets to the global economy, investors continue to increase their exposure to this compelling growth story. The economic transformation taking place in emerging markets is providing significant opportunities for companies well-placed to benefit from themes such as infrastructure building, rising consumption and the changing patterns of spending as average incomes rise. Experience that counts With two distinct investment centres in Paris and Hong Kong, Amundi is a global player in emerging market equities with experienced investment teams for this specialist asset class. We are convinced that emerging equity markets will continue to offer attractive investment opportunities for years to come. Patrice Lemonnier Head of Global Emerging Market Equities Our Paris-based Global Emerging Markets Equities team adopts a proven top down approach with an emphasis on country and sector selection, combined with a fundamental stock selection process. Holding a large number of stocks in our portfolios allows us to invest across large, mid and small cap stocks to ensure liquidity and sufficient diversification of risk. Meanwhile our specialist Asian equities team focuses on bottom-up stock selection, backed by in-depth, on-the-ground research and information gathering across the region. Our portfolios are made up of high-conviction stories and are typically more concentrated. Innovative range of emerging equity solutions Our expertise is delivered via a broad range of differentiated strategies: Country approach using our stock selection and sector allocation skills to exploit opportunities in single emerging market country strategies such as Brazil, Korea, Thailand and India. Regional approach covering individual regions within emerging markets that benefit from multiple sources of performance, e.g Latin America, Emerging Europe, Asia ex-japan and ASEAN. 2,700 securities 21 countries Covered by the MSCI Emerging Markets indices. Thematic approach aimed at exploiting specific themes within emerging markets, e.g. internal demand. Emerging internal demand: more than just consumption This strategy is suitable for investors seeking to benefit from the rise of the middle class in emerging markets. Unlike other strategies that focus only on consumption as an investment theme, emerging internal demand seeks multiple sources of return by capitalising on internal demand which encompasses private consumption, corporate investment and government spending. 5

6 Emerging Market Debt, Proven expertise in a fast-growing asset class The investment case for emerging market debt remains intact. Fundamentals remain supportive and the trend towards convergence and ratings upgrades looks set to continue. Sergei Strigo Head of Emerging Market Debt and Currency, Amundi London A diverse universe improving in quality Emerging market debt offers compelling opportunities because of an investment universe that is: Diverse: the universe comprises sovereign, corporate, local currency and USD-denominated debt. Frontier markets are also opening up. Careful research in these economies may offer good return potential as offbenchmark exposures. Improving in credit quality: the share of investment grade bonds has already increased from 2% in 1993 to 60% in 2012 representing improving company fundamentals. Experience that counts Leveraging our global resources and fixed income platform, Amundi has a long history of emerging market credit, government bond and currency investing stretching back to 1999 and a broad expertise across the emerging debt universe. We offer investors a comprehensive range of emerging market debt solutions, reflecting the depth of our investment expertise in this asset class and the breadth of opportunity within it. Local Currency Bonds Corporate Credit Bonds Our approach to emerging local debt investing, although benchmarked, seeks to offer investors a broader and more active approach. We believe that currency management should be part of the value creation. Our proven approach, in an asset class, now comprising over 300 issuers from 36 countries, blends top down factor exposures with bottom up credit fundamentals. The strategy benefits from a team of eight emerging corporate debt specialists. Sovereign Bonds Inflation-linked Bonds We have in-depth knowledge of the fixed income markets of emerging countries and the factors influencing their development. Our track record in identifying opportunities for low-risk returns via currency arbitrage is testament to this fact. We are one of few European institutional investors with a specialist team dedicated to this rapidly growing niche. With inflation risks rising in many emerging markets, this strategy offers attractive yields with a low correlation to other emerging asset classes. One of our distinguishing features is an investment process that combines top down (macro views, country and sector allocation) and bottom up (issuer and bond selection) inputs with a focus on long-term value, particularly the divergence between fundamentals and market prices. Consistency between market views, portfolio risk allocation and performance sources is a hallmark of our approach. 6

7 Multi-asset Emerging Markets, Smoothing returns With proven asset allocation expertise and multiple potential sources of performance through our emerging market equity and debt teams, Amundi combines these skillsets to offer investors pooled and tailored multi-asset emerging market solutions. Designed to overcome the many challenges when investing in emerging markets, these portfolios are designed to exploit the relatively low correlation between emerging equity and fixed income. The aim is to deliver an attractive risk/return profile and reduce the potential volatility of single asset class emerging market investing. Multi-asset portfolios represent a smart, all-in-one solution to accessing the world of emerging markets. Marie-Aude Laurent Multi-Asset Emerging Markets Portfolio Manager A combination of recognised expertise Our Multi-Asset Emerging Markets team brings a wealth of experience and capabilities to asset allocation within a portfolio. The team leverages Amundi s well-recognised expertise in emerging market equities and fixed income. Amundi s know-how in currency management is often used as an additional source of performance. Multi-asset solutions can be provided through open-ended funds as well as dedicated mandates. Amundi s Forex expertise: an additional source of performance An essential component of our ability to deliver consistent returns. Can offer attractive capital gains with low correlation to other asset classes. Effective source of hedging. Trade not only major developed market currencies but also those outside of the G10. Two investment professionals exclusively dedicated to Forex markets and more than 20 portfolio managers involved in currency management. A smarter approach to allocation We apply a flexible and dynamic approach to Multi-Asset Emerging Market portfolios, which are managed to continuously establish the most appropriate asset allocation and to shift the investment focus to maximise returns. Our emphasis on global risk management ensures that we carry out asset allocation within a positive investment environment to seek potentially stable and long-term returns. 7

8 Our expertise pooled together to offer optimal solutions Extensive research capacity Amundi has developed a platform of independent research services organised as a separate business line. This is made up of teams based in Paris, London, Milan, Tokyo, Hong Kong, Singapore and Kuala Lumpur. Taking into account Chinese, South Korean and Indian joint ventures, it has nearly 125 analysts covering all aspects of investment research. Amundi Group and its parent entities have also invested significantly in emerging market resources including specialist macroeconomic, credit, equity, quantitative research and currency research and analysis. This provides a deep pool of expertise as well as providing the resources necessary to consistently uncover opportunities in these markets. Amundi s Research Department provides investment teams with their global economic and market expectations. They play an active role in portfolio management, in particular through sector and portfolio reviews. 125 analysts 40% of research resources based in Asia Independent risk management to safeguard your investments Amundi firmly believes that the quality of risk management has become a key criteria for investors when it comes to making investment decisions, especially in emerging markets. Risk management is therefore at the heart of the investment process in all Amundi investment solutions. At Amundi, risks are monitored on a unified, integrated basis by a central and independent risk management department, ensuring consistency of norms, methods and procedures. Focused on protecting your interests, the Risk Management Department monitors all aspects of risk. Close attention is paid to market risks, notably liquidity and credit risk to ensure successful conclusion of transactions. The Risk Management team also monitors operational risks and ensures that investment management restrictions are observed. 8

9 Close to your needs The Amundi difference While emerging markets represent a diverse and opportunity-rich investment universe with compelling risk and return characteristics, experience and in-depth expertise are essential qualities to maximising the long-term opportunity while minimising the volatility often associated with investment in this region. Dating back to 1982, Amundi s long experience in emerging markets is a significant differentiator. We have also devoted material resources to dedicated emerging market research and portfolio management teams internationally. In total we have more than 40 dedicated emerging market investment professionals with long-standing experience in this markets. Our investors therefore benefit from a unique depth of specialist expertise as well as from the valuable insights and inputs of our group s wider global investment resources. With a history of innovative but practical funds that meets a wide variety of investors needs, Amundi s emerging market solutions range delivers innovative specialist pooled and bespoke strategies in equities, bonds and via multiasset portfolios. Benefiting from proven asset allocation, currency, bond and stock-picking skills these funds have been designed to prosper through differing market conditions. Your dedicated sales contacts Global Head of Institutional Clients Global Head of External Distribution Global Head of State Entities Coverage Global Head of Corporate Clients Jean-François Pinçon jean-francois.pincon@amundi.com Christian Pellis christian.pellis@amundi.com Jean-Michel Bourgoin jean-michel.bourgoin@amundi.com Thierry Ancona thierry.ancona@amundi.com 9

10 This material is a marketing document. It is communicated for information purposes only and constitutes neither investment advice, nor an offer nor a solicitation to buy or sell a product, a fund, a SICAV, a sub-fund etc and should in no case be interpreted as such. This document is only for the attention of Professional investors of the European Union, as defined in Directive 2004/39/EC dated 21 April 2004 on markets in financial instruments ( MIFID ), to investment services providers and any other professional of the financial industry, and as the case may be in each local regulation, and, as far as the offering in Switzerland is concerned, a Qualified Investor within the meaning of the provisions of the Swiss Collective Investment Schemes Act of 23 June 2006 (CISA), the Swiss Collective Investment Schemes Ordinance of 22 November 2006 (CISO) and the FINMA s Circular 08/8 on Public Advertising under the Collective Investment Schemes legislation of 20 November Under no circumstances may this material be distributed in the European Union to non-professional investors as defined in the MIFID or in each local regulation to the general public, private customers or retail investors, or to investors who do not comply with the definition of qualified investors as defined in the applicable legislation and regulation, and nor to US Persons. Investment involves risk. Past performances and simulations based on these, do not guarantee future results, nor are they reliable indicators of future performances. The value of an investment is subject to market fluctuations, and may therefore go down as well as up. It is therefore possible that an investor will not get back the amount it originally invested. Any investor should seek the advice of its legal and/or tax counsel or its financial advisor prior to any investment decision in order to determine the suitability of any investment before making any commitment or investment and should not only consider this material alone to make investment decisions. Amundi shall accept no liability whatsoever, whether direct or indirect, that may arise from the use of information contained in this material. Amundi can in no way be held responsible for any decision or investment made on the basis of information contained in this material. The information contained in this document is disclosed on a confidential basis and shall not be copied, reproduced, modified, translated or distributed without the prior written approval of Amundi, to any third person or entity in any country or jurisdiction which would subject Amundi or any of the Funds, to any registration requirements within these jurisdictions or where it might be considered as unlawful. Accordingly, this material is for distribution solely in jurisdictions where permitted and to persons who may receive it without breaching applicable legal or regulatory requirements. The information contained in this document is deemed accurate as at June Data, opinions and estimates may be changed without notice. In compliance with French applicable laws, Amundi s contacts have the right to receive, rectify or ask for deletion of the personal data Amundi holds on them. To enforce this right, they can contact Amundi at: info@amundi.com

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12 Amundi, is a French joint stock company ( Société Anonyme ) with a registered capital of 584,710,755 and regulated by the French Securities Regulator (Autorité des Marchés Financiers-AMF) under number GP as a portfolio management company. 90 boulevard Pasteur Paris France RCS Paris. Design: Amundi s Communication Department 06/2013. amundi.com