MUNRO GLOBAL GROWTH FUND MARCH QUARTER 2017 · GLOBAL MARKET OUTLOOK ... Apr-15 Jun-15 Aug-15...

MUNROGLOBALGROWTHFUNDMARCHQUARTER2017

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DisclaimerNeither Munro Asset Management Limited, Munro Investment Holdings Pty Ltd, Munro Partners (together “Munro”) nor Grant Samuel Funds Management Pty Ltd (GSFM) AFSL 321517 are providing any generaladvice or personal advice regarding any potential investment in any financial products within the meaning of section 766B of the Corporations Act.

• Munro Asset Management Limited is the holder of an Australian Financial Services Licence (AFSL) number 480509. Our Financial Services Guide can be located on our website: www.munropartners.com.au. Thispresentation is not an advertisement and is not intended for public use or distribution. As such, it is not to be released or made available to any other party, excepting Grant Samuel Funds Management Pty Ltd(GSFM) AFSL 321517 or used for any other purpose.

• Munro has issued a product disclosure statement (PDS) on 1 March 2017 offering investors an opportunity to subscribe for units in the Munro Global Growth Fund (Fund). If you would like to receive a copy ofthe PDS, then please contact Munro on (03) 9290 0900 or [email protected] and Munro will arrange for a copy of the PDS to be forwarded to you. Alternatively, a copy of the PDS for the Fund isavailable on our website www.munropartners.com.au/access. All prospective investors should consider the contents of the PDS in full prior to making a decision regarding an investment in the Fund.

• No consideration has been made of any specific person’s investment objectives, financial situation or needs. The provision of this presentation is not and should not be considered as a recommendation inrelation to an investment in any entity or that an investment in any entity is a suitable investment for any specific person. Recipients should make their own enquiries and evaluations they consider appropriateto determine the suitability of any investment (including regarding their investment objectives, financial situation, and particular needs) and should seek all necessary financial, legal, tax and investment advice.

• Munro, GSFM, its directors, related parties, representatives and employees do not accept any liability for results of any actions taken or not taken on the basis of information in this presentation, or for anynegligent misstatements, errors or omissions of any of its contents and no legal or other commitments or obligations shall arise by reason of the provision of this Presentation or its contents, except as requiredby law.

• It contains selected information and does not purport to be all-inclusive or to contain all of the information that may be relevant. The information contained in the Presentation has not been independentlyverified, nor have they conducted any due diligence in respect of the information provided. It should be noted that any projections or past performance are provided for general reference purposes and arebased on assumptions relating to the general economy and other factors beyond the control of Munro. Returns of the Munro Global Growth Fund are net of applicable fees, costs and taxes. Returns have notbeen annualised. Past performance is not a reliable indicator of future performance. The MSCI AC World TR Index (AUD) refers to the MSCI All Country World Net Index in Australian dollars. The Top 5 Holdingsdepict end of month figures and may have changed materially from holdings during the month or not disclosed due to confidentiality reasons. Numbers may not sum due to rounding. Please also see ourFinancial Services Guide, Privacy Policy and Terms of Use via www.munropartners.com.au/legals/.

• The recipient represents to Munro that it is capable of making its own independent assessment as to the validity and accuracy of the financial assumptions, data, results, calculations and forecasts contained,presented or referred to in the Presentation, and the economic, financial, regulatory, legal, taxation and accounting implications of such. The recipient further represents to the Munro that it is not relying on anyrecommendation or statement by Munro. The recipient acknowledges that no independent third-party audit or review has been obtained by Munro or has been undertaken by an such an independent thirdparty of the financial assumptions, data, results, calculations and forecasts contained, presented or referred to in the Presentation.

• This Presentation may contain forward-looking statements, forecasts, historical performance, estimates, projections and opinions ("Forward Statements"). No representation is made or will be made that anyForward Statements will be achieved or is correct. Actual future results and operations could vary materially from the Forward Statements. Similarly no representation is given that the assumptions disclosed inthis Presentation upon which Forward Statements may be based are reasonable. The recipient acknowledges that circumstances may change and the contents of this Presentation may become outdated as aresult.

CONTENTSGLOBALMARKETOUTLOOK 4

MGGFPERFORMANCEANALYSIS 11

KEYINVESTMENTTHEME:BIGDATA(LONG) 15

3

4

GLOBALMARKETOUTLOOK

5

GLOBALMARKETOUTLOOKGrowthisimprovinginmostglobaleconomies...withstimulusstilltocome.

Source:BloombergConsensusData

51.5

52.6

50.4 50.4

46.0

51.9

53.5

51.4 51.2

46.3

53.253.7

51.351.7

46.2

54.7 54.9

52.4

51.4

45.2

56.055.2

52.7

51.3

44.0

57.7

55.4

53.3

51.6

46.9

42.0

44.0

46.0

48.0

50.0

52.0

54.0

56.0

58.0

60.0

US Eurozone Japan China Brazil

GlobalPurchasingManagersIndices(PMI's)

Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17

0

0.5

1

1.5

2

2.5

3

3.5

4

Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16

(%)

USRealGDPConsensusForecasts

6

GLOBALMARKETOUTLOOKUSGDPconsensusforecastshaveconsistentlyreviseddown...canTrumpchangetheplaybook?


2011

2012

2013

2014

2015

2016

2017

7

GLOBALMARKETOUTLOOKThetransitionfrommonetaryaccommodationtopotentialfiscalaccommodationhasledtosomelargetrendreversals.


-20

0

20

40

60

80

100

120

KeySovereignBondYields(10yr%)

US Italy Germany France

405060708090

100110120130

Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17

GlobalCommodities(%)

Gold Copper BrentCrudeOil CRBCommodityIndex

70

80

90

100

110

120

130

140

GlobalCurrencies(%)

DXY JapaneseYen Euro AustralianDollar

10

15

20

25

30

35

40

45CBOEVolatilityIndex

8

GLOBALMARKETOUTLOOKS&P500Indexvaluationishigh,howeverearningsgrowthhasnowinflectedpositivelyandlookslikelytocontinue.


0

5

10

15

20

25

30

0

20

40

60

80

100

120

140

160

Mar-90 Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18

S&P500IndexForwardValuation(RHS)andEPS(LHS)

S&P500FwdEPS(LHS) S&P500FwdP/E(RHS)

9

GLOBALMARKETOUTLOOKYieldcarryforequitieshasshrunk,butimportantlyremainspositive.


-8

-6

-4

-2

0

2

4

6

8

Jan-62 Jan-66 Jan-70 Jan-74 Jan-78 Jan-82 Jan-86 Jan-90 Jan-94 Jan-98 Jan-02 Jan-06 Jan-10 Jan-14

S&P500EarningsYield- US10yrBondYield(%)

10

GLOBALMARKETOUTLOOKSelectedmarketvaluations….Stilllookokprovidedearningsgrowthcomesthrough.


P/ERatio DividendYield(%)

2016 2017 2018 2016 2017 2018

S&P500Index 21.1 18.4 16.4 2.1% 2.1% 2.2%

EuropeanStoxx 600Index 25.8 15.6 14.3 3.5% 3.5% 3.7%

UKFTSE100Index 62.4 14.9 13.8 4.0% 4.2% 4.4%

HangSengIndex 11.9 12.1 11.1 3.7% 3.4% 3.6%

HangSengChinaEnterprisesIndex 7.7 8.3 7.6 3.9% 3.6% 3.9%

BrazilIbovespa Index 20.2 12.3 11.0 2.7% 3.5% 4.3%

Nikkei225Index 24.6 18.0 16.4 1.7% 1.8% 1.9%

S&P/ASX200Index 25.3 16.3 15.8 4.1% 4.3% 4.4%

11

FUNDPERFORMANCE

12

MUNROGLOBALGROWTHFUNDMonthlyreturnsoftheMunroGlobalGrowthFundcomparedtotheACWITRNetAUDsinceinception(1August2016).

1MTH 2MTHS 3MTHS 6MTHS 9MTHS 12MTHS SinceInception

LocalCurrencyReturn 2.0% 2.4% 6.2% 5.0% 8.4%

+/- CurrencyImpact 0.1% -0.4% -2.2% -1.2% -2.0%

MUNROGLOBALGROWTHFUND(AUD) 2.1% 2.0% 4.0% 3.7% 6.3%

MSCIACWorldTRIndex(LocalCurrency) 1.1% 4.0% 5.7% 10.0% 11.0%

+/- CurrencyImpact 1.0% -0.5% -4.1% -1.3% -2.0%

MSCIACWorldTRIndex(NetAUD) 2.0% 3.6% 1.5% 8.5% 8.8%

PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaanncceeInception date is 1 August 2016. Returns of the Munro Global Growth Fund are net of management costs and assumes distributions have been reinvestedThe MSCI AC World TR Index (AUD) refers to the MSCI All Country World Net Index in Australian dollars

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

HANGSENGINDEX HANGSENGCHINAENTINDX

S&P500INDEX STXE600€Pr DOWJONESINDUS.AVG

SHANGHAISECOMPOSITE

FTSE100INDEX NIKKEI225 MSCIAWCINetAUD MGGF

1Januaryto31March2017(%)

13

MUNROGLOBALGROWTHFUNDLocalcurrencyreturnsofvariousglobalmarketsandthereturnoftheMSCIWorldACIndexinAUDnexttothereturnoftheMGGF inAUD.

=FXContribution

IndexReturn+1.5%

FundReturn+4.0%

PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaannccee

14

MUNROGLOBALGROWTHFUNDJanuary1toMarch31basispointsattributionoftheMGGFbyinvestmentcategory.

-300 -200 -100 0 100 200 300 400 500 600 700

FX

Long

Short

Hedging

MGGFAttribution(bps)

PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaannccee

15

MUNROGLOBALGROWTHFUNDJanuary1toMarch31basispointattributionoftheMGGFbystockandbyregion.

Top5Performers Region Bps

MicronTechnologies US 87

Siltronic GY 86

Facebook US 84

ActivisionBlizzard US 76

ASML NA 57

Bottom5Performers Region Bps

AnadarkoPetroleum US -30

AngloAmerican UK -29

RPCGroup UK -19

CirrusLogic US -19

ThorIndustries US -16

-50

0

50

100

150

200

250

300

350

400

UnitedStates EuroRegion Japan HongKong Korea Sweden UnitedKingdom

Australia

RegionalPerformance(bps)

PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaanncceeThe Regional Performance and Top 5 Performers / Bottom 5 Performers depict end of quarter figures and may have changed materially from holdings during the quarter or not disclosed due to confidentiality reasons.

16

CASESTUDY:BIGDATA

BIGDATA

CREDITAGENCIES

INFORMATIONSERVICES

ADVERTISERS

MEASUREMENT&ANALYTICS

17

CASESTUDY:BIGDATA

AoI WinnersSub- Trends

InaArtificialIntelligenceworldtheabilitytocapturerelevantandaccurateinformationandthencorrectlyanalyseandinterpretthisdataiscriticalforcompanies,socialagenciesandgovernments.BigDataanddataprovidersassistsorganisationstomakebetterdecisionsandultimatelyhelpsthemtodriveproductivity.

EXCHANGES

18

Creditagencieshavebeencollectingdataonindividualsfrombeforetheinternetevenexisted.Themajorcreditagencies(Equifax,ExperianandTransunion)havebeenpivotaltoenablingmortgage,creditcardandautofinancingforyears.Todaytheirdatasetsextenttootherverticalsincludingemployment,healthcare,insurance,utilitiesandultimatelyhavebecomerelevanttosiliconvalleyandtheAIrevolution.

CREDITREPORTINGAGENCIES:UNIQUEDATASETSANDPRODUCTS

Example:EmployeeDataExchangeandnetworkeffects

Source:MunroPartnersestimates&EquifaxcompanydataSource:MunroPartners(asimplificationofEquifaxTALXpresentation,Feb2007)

Buildthedataset,technologyandplatformonceand“sellitmanytimesover”

0

500

1000

1500

2000

2500

3000

3500

4000

31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 31/12/2016 31/12/2017e 31/12/2018e

EquifaxRevenueGrowth(US$millions)

MortgageSolutions EmployerServices FinancialMarketingServices

OnlineInformationSolutions International GlobalConsumer

VerificationServices

9.6%CAGR

19

KEYSTOCKIDEA:EQUIFAX(LONG)Equifaxisaglobalinformationsolutionscompanythatusesuniquedata,analytics,technologyandindustryexpertisetoprovide insightstoorganisationsandindividualstohelpthemmakemoreinformeddecisions.Thecompanyorganises,assimilatesandanalysesdataonmorethan820millionconsumersandmorethan91millionbusinessesworldwide.

KeyStock EquifaxKeyDetails Market Cap:USD16.4billion

Listed:UnitedStatesRevenue2016:USD3.1billion

Qualitative Tests Growth:Forecastingtop-linegrowthof9.6%CAGRfrom2010-2018,ascompanycontinuestodevelop newproductsanddatasets,andexpandsacrossverticalsandgeographies.Alsomovedintohigher-value,complimentaryanalyticssolutions.EconomicLeverage: ExpectEBITDAmarginstoexpandto38%by2018(from31.8%in2010).Leveragingdatasets,platformsandtechnologyspendacrossnewverticalsandgeographicregionsdrivesmarginupside.Sustainability:Thecombinationofproprietarydatafrommultiplesourcesononeplatformallowsforsustainablesalesacrossmanyverticals.Networkeffectsgetstrongerwithscale.Control:CEOowns~US$35mnofstock,CFO~US$12mn.Divisionalchiefshavebetween$1mnand$10mnworthofstock.CustomerPerception:Missioncriticalinformation,deeplyembeddedinclientprocesses.Newproductinnovationhistoricallygetsgoodtakeupbytheclientbase.

Quantitative Tests Earnings upside:Sell-sideearningsestimateslikelyconservative.StreetunderestimatesEFX’sstructuralorganicgrowthprofile.Highincrementalmarginsnotproperlyreflectedinconsensusmarginassumptions.Multipleupside:NTMP/Eof21.9xisattractiveforacompanyofEFX'squalityandgrowthcharacteristics.Catalysts/Sizing:1Q17earnings26Apr,AGM4May

Outcome Investmentmade:Feb2017

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5

10

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0

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Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16

Forw

ardPE

Multip

le

SharePrice

StockPrice ForwardP/EMultiple

0

1

2

3

4

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7

0

20

40

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Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16

Forw

ardEP

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SharePrice

StockPrice ForwardEPS

20

MUNROGLOBALGROWTHFUNDConclusion

• Positivereturnsforthequarter,withtheMunroGlobalGrowthFundreturning4.0%comparedtotheMSCIACWorldTRIndex(AUD)returning1.5%.

• Sentimentindicatorscontinuetoimprovepointingtobettereconomicgrowthahead,whileinterestratesremainsupportiveoffurthereconomicgrowth.

• Assuminggrowthimproves,earningshaveroomtoinflecthigher.Higherearningscontrastedagainstfull,butnotexpensive,valuationsshouldbemildlysupportiveofequitymarketsoverthemediumterm.

• OurinvestmentprocessatMunrocontinuestoidentifybeneficiariesfromevolvingstructuralforcesintheeconomy.Ourworkoninvestmentwinnersofthe‘ArtificialIntelligence’revolutionhasyieldedsomegoodwinnersaround‘compute’yeartodateandwehaverecentlyexpandedourworkinthisareatofocusonthe‘data’sideoftheequation.

PPaasstt ppeerrffoorrmmaannccee iiss pprroovviiddeedd ffoorr iilllluussttrraattiivvee ppuurrppoosseess oonnllyy aanndd iiss nnoott aa gguuiiddee ttoo ffuuttuurree ppeerrffoorrmmaanncceeThe Regional Performance and Top 5 Performers / Bottom 5 Performers depict end of month figures and may have changed materially from holdings during the quarter or not disclosed due to confidentiality reasons.

THANKYOU

MunroPartners(Australia)Level19

80CollinsStreetMelbourneVIC3000

+61392900900www.munropartners.com.au

[email protected]

MUNRO GLOBAL GROWTH FUND MARCH QUARTER 2017 · GLOBAL MARKET OUTLOOK ... Apr-15 Jun-15 Aug-15...

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