Report investment products - J. Safra Sarasin · survived the turbulence created by Brexit...

Report investment products

J. Safra Sarasin Pillar 3a Foundation

J. Safra Sarasin Vested Benefits Foundation

as of 30 June 2016

Summary

Brexit intensifies the hunt for yield 1

LLP Yield Tranche B 3

LLP Income Tranche B 4

LLP Growth Tranche B 5

LLP Future Tranche B 6

LLP Sustainability Income Tranche B 7

LLP Sustainability Tranche B 8

At a glance 9

Important notice 11

Contact 12

1 | Report investment products

While the long-term consequences of the Brexit vote are still unclear,

the short-term reaction of financial markets was unequivocal. Bond

yields fell to record lows, thereby intensifying the hunt for yield in all

asset classes. This trend favours good-quality equities, high-yield

bonds, as well as emerging-market bonds, in which our portfolios are

now overweight. A defensive positioning is still advisable overall, as

the political risks will remain high in the second half of the year.

Brexit fears brushed aside quickly

The news of Britain’s decision to leave the European Union came as a

surprise for financial markets. We did not anticipate this scenario either,

but were at least relatively well prepared for it thanks to the defensive

stance of our portfolios. After a brief turbulent phase, investors quickly

put their concerns to one side and their risk aversion, measured by the

volatility indexes, reverted to normal levels after just a few weeks.

Investors’ concerns about weaker growth and the potential breakup of

Europe were tempered by the hope of further monetary stimulus pro-

grammes from global central banks.

Cyclical data more upbeat before Brexit

The impact of the Brexit vote on the global economy will become clearer

over the next few months. While the leading economic indicators for the

UK were already pointing downwards in the second quarter, things were

looking much brighter in the other regions at the midpoint of 2016. The

European economy, with Germany as its main growth engine, was ex-

panding and the latest data such as the Ifo Business Climate Index even

signalled a slight acceleration in the pace of growth. Although Brexit is

likely to have a negative impact on Europe, it should not smother growth

entirely. We expect Brexit to have very little direct impact outside Europe.

The most recent economic data in the USA were robust enough to come

as a positive surprise.

Exchange rates versus CHF (indexed since 31.12.2015)

Fed will defer interest hikes until next year

The latest labour market statistics for the month of June, which reported

a strong recovery from the disappointing May figures, also suggest that

the US economy will experience moderate growth during the second half

of the year. However, as inflation expectations continue to be low, there

is no need for the US Federal Reserve to raise interest rates for the time

being. In view of the uncertainty created by Brexit, we reckon the Fed will

hold off from raising interest rates until next year. While the Fed contin-

ues its accommodative monetary policy, the other major central banks

are likely to actively increase the money supply. We expect the Bank of

England to cut interest rates significantly in order to counteract the inevi-

table recession. At the same time, the European Central Bank (ECB) is

likely to cut interest-rates once more in an attempt to cushion the defla-

tionary shock created by Brexit.

New record for US Treasuries

The expectation of additional monetary policy measures has put down-

ward pressure on yield curves across a broad front. As a result, US

Treasuries have followed the path of German and Swiss sovereign bonds,

hitting new record lows at the start of July.

As the previous chart shows, US interest rates continue to be significant-

ly higher than EUR and CHF rates, so it is still appealing to increase the

weighting of US fixed income assets. Because of record-low interest

rates, the credit spreads for most asset classes have fallen significantly.

However, in an environment of low interest rates where the top priority is

the hunt for yield, corporate bonds still offer an attractive return premi-

um. We therefore retain our overweight position in US high-yield and

emerging-market bonds. Both asset classes have performed incredibly

well over the past months and still offer upside potential. In view of the

structural improvements in many emerging-market regions, the sovereign

bonds of these countries denominated in local currencies are also an

attractive alternative. Although this asset class is prone to greater fluc-

tuations, this should be compensated in the mid-term by a higher yield.

Equity markets in local currency (indexed since 31.12.2015)

US equity market hits new highs

On the one hand, the Brexit vote has unnerved equity investors in the

short term and triggered sharp price falls in European banking stocks. On

the other hand, US stock indices have climbed to new highs. The trends

that already existed at regional and sectoral level before the EU referen-

dum have become even more pronounced since then. Led by defensive

sectors, US equities have clearly outperformed, while European and

Japanese shares have suffered. Equities in the emerging markets have

survived the turbulence created by Brexit relatively unscathed, and con-

tinue to offer upside potential in the mid-term.

From an investor’s perspective, lower interest rates seem more im-

portant as a positive factor for equities rather than any dip in the pace of

growth with a potentially negative impact on corporate earnings. Due to

the low level of real interest rates, our valuation model for equities is in

fact showing a positive signal again for the first time since 2014. The

high risk premium for equities acts as a cushion against potential correc-

tions in the second half of the year.

80

90

100

110

120

31.12.2015 29.02.2016 30.04.2016 30.06.2016

CHF/EUR CHF/USD CHF/JPY CHF/GBP

70

80

90

100

110

31.12.2015 29.02.2016 30.04.2016 30.06.2016

SMI DJ Eurostoxx DJ Industrial

Nikkei Nasdaq Composite

Brexit intensifies the hunt for yield 30.06.2016


Bond markets in local currency (indexed since 31.12.2015)

The hunt for yield dominates all asset classes

In the short term, Brexit has triggered low interest rates and thus intensi-

fied investors’ hunt for yield. We therefore continue to overweight asset

classes that generate a high income, such as high-yield bonds or emerg-

ing-market bonds, in our portfolios. As the political risks associated with

US presidential elections will remain high in the second half of the year,

further volatility is expected on financial markets. We therefore retain a

neutral weighting in equities and favour defensive themes in our sector

and style allocation.

Philipp Bärtschi, CFA

100

102

104

106

108

110

31.12.2015 29.02.2016 30.04.2016 30.06.2016

CHF EUR USD JPY

30.06.2016


The LLP Yield subfund is suitable for investors with a minimum invest-

ment horizon of one year. Thanks to the low strategic equities quota of

15% and the addition of Swiss Franc Bonds Dynamic Hedge, the portfolio

has a very low risk exposure and therefore offers relatively good capital

security. The tactical equities quota varies between 10% and 20%, de-

pending on the manager’s current view of the market. The portfolio’s

asset allocation is created with the help of the institutional funds of

Bank J. Safra Sarasin (fund-of-funds). The manager strives to outperform

the benchmark index through active management of the investment

strategy and stock selection.

Compared with pure cash deposits, the price of investments in securities

can move up or down, with the degree of fluctuation increasing in propor-

tion to the size of the equities quota. While investors may benefit from a

positive performance, they may also suffer losses if performance is

negative.

Key Figures

Portfolio Management Bank J. Safra Sarasin Ltd

Launch date 02.05.2006

Fund size in millions CHF 29.73

Swiss Sec.-No. 2455713

ISIN CH0024557131

Flatfee in % (excl. VAT) 1.05

TER CAFP (ex post) in % 1.32

Currency CHF

Benchmark Customised Benchmark

Investment horizon min. 1 year

Risk low

The 10 largest positions bonds in %*

CSIF Umbr.-Bd Corp.USD Idx Blue(CHF)-FAH-Dist CHF 0076 10.29

4.0000% Eidgenossenschaft 1998-2028 1.89



5.7500% Mexico Bonos 2015-2026 MXN 0970 1.09





2.8750% PFBK Schweiz.Hyp.Inst.S.416 2007-2019 0.80

The 10 largest positions equities in %*

Nestlé SA Nam 0.16

ABB Ltd Nam. 0.11

Swiss Re AG Nam. 0.10

Actelion Ltd Nam. 0.10

Givaudan AG Nam. 0.09

S&P500 EMINI FUTURES Put Dec16 1850 CME USD 0085 0.09

Swisscom AG Nam. 0.09

SGS Ltd Nam. 0.09

Geberit AG Nam. 0.09

Novartis AG Nam. 0.09

* All data are variable values and refer to the reporting date.

Asset allocation in %*,**

**Domestic Bonds include 10.8% Swiss Francs Bonds Dynamic Hedge.

Price development in CHF

Offer price

Offer price per: 30.06.2016 1196.00

Highest: 2016 1196.00

Lowest: 2016 1158.00

Performance

Performance since issuance

02.05.2006 - 30.06.2016

1.78%

Performance reinvested

01.01.2016 - 30.06.2016

1.96%

2015 0.26%

2014 5.50%

2013 0.82%

2012 3.68%

2011 1.63%

2010 2.76%

2009 6.61%

2008 -6.39%

2007 -0.68%

2006 2.50%

Source: J. Safra Sarasin Investment Foundation Data as of 30.06.2016

52.3

19.0

8.8

8.1

4.0

3.6

1.4

1.1

1.0

0.7

0.0

0 20 40 60 80 100 120

Bonds domestic in CHF

Bonds foreign in CHF

Equities Switzerland ex Small & Mid Caps

Real estate Switzerland

Equities world

Cash (incl. money market)

Equities Switzerland Small & Mid Caps

Bonds world ex CHF

Equities emerging markets international

Real estate foreign

Equities other Euroland

1'000

1'050

1'100

1'150

1'200

Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Jun 2016

LLP Yield Tranche B 30.06.2016


The LLP Income subfund is suitable for investors with a minimum in-

vestment horizon of five years. The portfolio presents a medium risk in

view of its strategic equities quota of 25%. The tactical equities quota

varies between 20% and 30%, depending on the manager’s current view

of the market. The portfolio’s asset allocation is created with the help of

the institutional funds of Bank J. Safra Sarasin (fund-of-funds). The man-

ager strives to outperform the benchmark index through active manage-

ment of the investment strategy and stock selection.





negative.

Key Figures





ISIN CH0020251143



Currency CHF


Investment horizon min. 5 years

Risk medium




5.7500% Mexico Bonos 2015-2026 MXN 0970 1.09









Nestlé SA Nam 0.24

ABB Ltd Nam. 0.16





SGS Ltd Nam. 0.13



Swiss Life Hold.AG Nam 0.12


Asset allocation in %*


Offer price

Offer price per: 30.06.2016 1292.00

Highest: 2016 1292.00

Lowest: 2016 1238.00

Performance


20.12.1999 - 30.06.2016

1.56%


01.01.2016 - 30.06.2016

1.25%

2015 -0.62%

2014 5.77%

2013 3.41%

2012 5.39%

2011 0.18%

2010 2.49%

2009 7.96%

2008 -8.64%

2007 -0.81%

2006 3.26%


34.5

18.5

13.9

7.9

7.6

7.5

4.2

2.3

2.1

1.5

0.0

0 10 20 30 40 50 60 70 80




Equities world

Bonds world ex CHF



Real estate foreign




1'000

1'100

1'200

1'300

1'400


LLP Income Tranche B 30.06.2016


The LLP Growth subfund is suitable for investors with a minimum invest-

ment horizon of ten years. The portfolio presents a medium to high risk

in view of its strategic equities quota of 35% and therefore provides good

opportunities for returns. The tactical equities quota varies between 30%

and 40%, depending on the manager’s current view of the market. The

portfolio’s asset allocation is created with the help of the institutional

funds of Bank J. Safra Sarasin (fund-of-funds). The manager strives to

outperform the benchmark index through active management of the

investment strategy and stock selection.





negative.

Key Figures





ISIN CH0020251283



Currency CHF



Risk medium-high



5.7500% Mexico Bonos 2015-2026 MXN 0970 1.09










Nestlé SA Nam 0.33

ABB Ltd Nam. 0.21





SGS Ltd Nam. 0.18







Offer price

Offer price per: 30.06.2016 1738.00

Highest: 2016 1746.00

Lowest: 2016 1653.00

Performance


01.11.1991 - 30.06.2016

2.27%


01.01.2016 - 30.06.2016

0.29%

2015 -1.20%

2014 5.98%

2013 5.15%

2012 6.71%

2011 -1.07%

2010 2.33%

2009 11.14%

2008 -13.92%

2007 -0.65%

2006 4.71%


24.4

19.0

16.5

14.5

9.0

7.1

3.4

2.7

1.8

1.5

0.1

0 10 20 30 40 50 60




Equities world


Bonds world ex CHF



Real estate foreign



1'300

1'400

1'500

1'600

1'700

1'800


LLP Growth Tranche B 30.06.2016


The LLP Future subfund is suitable for investors with a minimum invest-

ment horizon of fifteen years. The portfolio presents a high risk in view of

its strategic equities quota of 45% and therefore provides very good

opportunities for returns. The tactical equities quota varies between 40%

and 50%, depending on the manager’s current view of the market. The

portfolio’s asset allocation is created with the help of the institutional

funds of Bank J. Safra Sarasin (fund-of-funds). The manager strives to

outperform the benchmark index through active management of the

investment strategy and stock selection.





negative.

Key Figures





ISIN CH0024557453



Currency CHF



Risk high



5.7500% Mexico Bonos 2015-2026 MXN 0970 1.08










Nestlé SA Nam 0.36

ABB Ltd Nam. 0.23





SGS Ltd Nam. 0.20







Offer price

Offer price per: 30.06.2016 1171.00

Highest: 2016 1182.00

Lowest: 2016 1104.00

Performance


02.05.2006 - 30.06.2016

1.57%


01.01.2016 - 30.06.2016

-0.76%

2015 -1.34%

2014 6.22%

2013 7.85%

2012 8.19%

2011 -2.53%

2010 3.13%

2009 12.81%

2008 -18.33%

2007 -0.67%

2006 4.90%


25.8

21.2

19.2

14.5

7.1

3.8

3.2

2.5

1.5

1.1

0.1

0 10 20 30 40 50 60



Equities world





Real estate foreign


Bonds world ex CHF


800

900

1'000

1'100

1'200

1'300


LLP Future Tranche B 30.06.2016


The LLP Sustainability Income subfund has been launched especially for

pension fund members that are exposed to comparatively minor fluctua-

tion risks, want to achieve a steady income flow and as farsighted inves-

tors are keen to take into consideration both environmental and social

aspects. Asset allocation is based on the economic criteria of Bank J.

Safra Sarasin’s Sustainable Investment team and is implemented with

the help of the other sustainable subfunds in the J. Safra Sarasin In-

vestment Foundation (fund-of-funds). The subfund has a strategic equi-

ties quota of 25% and a bandwidth of 10-30%. When equity markets are

moving upwards, the manager attempts to achieve a higher return than

the benchmark index (equities quota of 25.43%) by overweighting the

proportion of equities up to a maximum of 30%. When equity markets

move downwards, the manager seeks to minimise losses by reducing the

equities quota to as low as 10%. While investors may benefit from a


negative.

Key Figures





ISIN CH0035438008



Currency CHF



Risk medium

Typical positions bonds in %*

1.75% Swisscom AG 2012-2024 0.28

1.375% SGS Ltd 2014-2022 0.16

4% Eidgenossenschaft 1998-2028 1.10


1.5% Province of Quebec Emt-Notes 2014-2024 0.27

4.4% Province of Ontario 2010-2020 0.22

7.625% International Bank for Reconstruction & Development World

Bank IBRD 1993-2023 Global

0.42

3.875% European Financial Stability Facility EFSF Emt-Notes 2012-

2032

0.30

2.375% Nederlandse Waterschapsbank NWB Emt-Notes 2006-2023 0.29

2.25% Bank Nederlandse Gemeenten BNG Emt-Notes 2005-2020 0.27

Typical positions equities in %*


Münchener Rückversicherungs- Gesellschaft AG Nam. -vinkuliert- 0.12

CNP Assurances 0.15

SAP SE 0.08

Boise Cascade Co 0.10

dorma+kaba Holding AG Nam 0.25

Microsoft Corp 0.22

3M Co 0.22

Ecolab Inc 0.17

Roche Holding AG -GS- 2.15




Offer price

Offer price per: 30.06.2016 1210.00

Highest: 2016 1212.00

Lowest: 2016 1161.00

Performance


19.12.2007 - 30.06.2016

2.26%


01.01.2016 - 30.06.2016

1.85%

2015 -0.59%

2014 7.17%

2013 2.95%

2012 5.66%

2011 0.39%

2010 1.19%

2009 10.03%

2008 -8.39%

2007 0.10%


36.5

16.3

11.5

9.0

7.4

5.6

5.3

3.1

3.0

2.0

0.2

0 10 20 30 40 50 60 70 80




Bonds world ex CHF

Equities world



Real estate foreign




900

1'000

1'100

1'200

1'300


LLP Sustainability Income Tranche B 30.06.2016


The LLP Sustainability subfund is suitable for pension fund members

seeking income who are prepared to accept the risk of fluctuations within

a certain bandwidth and as farsighted investors are keen to take into

consideration both environmental and social aspects. Asset allocation is

based on the economic criteria of Bank J. Safra Sarasin’s Sustainable

Investment team. Stock selection takes into account not only financial

also environmental and social criteria. Because of the intended high

equities quota, there may be correspondingly large fluctuations in the

value of the portfolio’s investments. The equities bandwidth is between

25% and 50%, and the strategic equities quota is around 38%. While

investors may benefit from a positive performance, they may also suffer

losses if performance is negative.

Key Figures





ISIN CH0020251382



Currency CHF



Risk medium-high

Typical positions bonds in %*

1.75% Swisscom AG 2012-2024 0.22

1.375% SGS Ltd 2014-2022 0.13

4% Eidgenossenschaft 1998-2028 0.87


1.5% Province of Quebec Emt-Notes 2014-2024 0.22

4.4% Province of Ontario 2010-2020 0.13

7.625% International Bank for Reconstruction & Development World

Bank IBRD 1993-2023 Global

0.26

1.5% Achmea BV Emt-Notes 2013-2019 0.19

2.375% Nederlandse Waterschapsbank NWB Emt-Notes 2006-2023 0.23

2.25% Bank Nederlandse Gemeenten BNG Emt-Notes 2005-2020 0.21

Typical positions equities in %*


Münchener Rückversicherungs- Gesellschaft AG Nam. -vinkuliert- 0.26

CNP Assurances 0.32

SAP SE 0.19

Boise Cascade Co 0.21

Microsoft Corp 0.48

Telus Corp -Non-Canadian- 0.46

3M Co 0.48

Ecolab Inc 0.37

Roche Holding AG -GS- 2.50




Offer price

Offer price per: 30.06.2016 1305.00

Highest: 2016 1313.00

Lowest: 2016 1237.00

Performance


18.12.2000 - 30.06.2016

1.73%


01.01.2016 - 30.06.2016

0.62%

2015 -0.92%

2014 7.74%

2013 6.21%

2012 7.22%

2011 -0.84%

2010 0.94%

2009 12.45%

2008 -15.36%

2007 -0.71%

2006 4.54%


28.8

16.9

13.5

12.9

7.6

7.1

5.4

3.1

3.1

1.5

0 10 20 30 40 50 60


Equities world (ex. EM and Switzerland)

Equities Switzerland ex Small&Mid Caps




Bonds world ex CHF

Equities Switzerland Small&Mid Caps

Equities emerging markets

Real estate foreign

900

1'000

1'100

1'200

1'300

1'400


LLP Sustainability Tranche B 30.06.2016


Overview of the subfunds

Traditional LLP life cycle

Margin of

fluctuation

Strategic

share quota Risk

LLP Yield 10–20% 15% Low

LLP Income 20–30% 25% Medium

LLP Growth 30–40% 35% Medium – high

LLP Future 40–50% 45% High

Sustainability LLP life cycle

LLP Sustainability Income 10–30% 25% Medium

LLP Sustainability 25–50% 38% Medium - high

At a glance 30.06.2016


Important notice

This marketing publication of the Foundations J. Safra Sarasin Vested Benefits Foundation and J. Safra Sarasin Pillar 3a Foundation (herein-

after «Foundations») is intended exclusively for their customers and is for information only. This document does not constitute any investment

advice, offer, or solicitation of an offer to buy or sell investment or other specific financial instruments or other products or services, and

cannot replace an individual consultation and risk disclosure by a qualified financial, legal, or tax advisor.

The document contains selected information and does not purport to be complete. It is based upon publicly accessible information and data

(«information») that is deemed correct, reliable, and complete. However, the foundations have neither verified the correctness and complete-

ness of the information set forth herein nor can they guarantee this information. Erroneous or incomplete information cannot be used as a

basis for contractual or implicit liability of the foundations for any direct or indirect consequential damages. In particular, neither the founda-

tions nor their employees or management are liable for any opinions, plans, and strategies set forth herein. The opinions expressed and

numbers, data, and prognoses stated in this document are subject to change at any time without notice. A positive past performance or

simulation does not guarantee a positive performance in the future. Deviations from the J. Safra Sarasin Group's own financial analyses or

from its other publications relating to the same financial instruments or issuers may occur. It cannot be ruled out that business relations

exist between the mentioned or analyzed company and the companies of the J. Safra Sarasin Group resulting in a conflict of interest. Fur-

thermore, Bank J. Safra Sarasin SA and its group companies have the right to invest in the products mentioned in this document.

The Foundations disclaim any and all liability for losses arising from the further use of the information (or any portion thereof) contained in

this document. As a general rule, financial products and capital investments are always associated with certain risks. In some cases, capital

investments may not be easily convertible to cash. Investments may be subject to positive and negative value fluctuations. Hence, there is

no guarantee that the investor will recover the originally invested amount in full.

Additional important documents and information are available at www.jsafrasarasin.ch/vorsorge or may be requested free of charge from J.

Safra Sarasin Vested Benefits Foundation, J. Safra Sarasin Pillar 3a Foundation, Postfach, 4002 Basel.

Neither the present document nor any copies thereof may be sent or taken to the United States of America or delivered in the United States

of America or to a US Person (within the meaning of Regulation S of the US Securities Act of 1933, as amended). The present document

may not be reproduced in whole or in part without the prior written consent of the Foundations.

© Copyright J. Safra Sarasin Vested Benefits Foundation and J. Safra Sarasin Pillar 3a Foundation. All rights reserved.



Elisabethenstrasse 62

P.O. Box

CH-4002 Basel, Switzerland

Telephone +41 (0) 58 317 49 10

www.jsafrasarasin.com

Contact

Please do not hesitate to contact us if you require further information. Just call.



Elisabethenstrasse 62

P.O. Box

CH-4002 Basel, Switzerland

Information and price quotes can be found on www.jsafrasarasin.ch/vorsorge

Your partners for administrative or legal questions

Anna Rita Peroncini Telephone +41 (0) 58 317 49 48

Sahra Emer Telephone +41 (0) 58 317 49 34

Sandra Zugno Telephone +41 (0) 58 317 45 98

Patrick Studer Telephone +41 (0) 58 317 49 04

Fax +41 (0) 58 317 48 96

Report investment products - J. Safra Sarasin · survived the turbulence created by Brexit...

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