May 2011
Perspectives
China: looser grip on the renminbi? //////// Macro Analysis Interest rates rising in the eurozone //////// Sector Analysis Volatility: what are the opportunities in 2011? //////// Expertise Focus
www.am.natixis.com CORPORATE AND INVESTMENT BANKING / INVESTMENT SOLUTIONS / SPECIALIZED FINANCIAL SERVICES
Summary Macroeconomic analysis
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Asset allocation market data
expertise focus
our international product range news
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Legal information The funds mentioned in this material are not registered or authorized in all jurisdictions and may not be available to all investors in a jurisdiction. Natixis International Funds (Lux) I is organized as an investment company with variable capital under the laws of the Grand-Duchy of Luxembourg and is authorized by the financial regulator (the CSSF) as a UCITS. Natixis Global Associates S.A. is the management company of the Fund. The provision of this material does not constitute an offer of services, nor an offer or recommendation to purchase or sell shares in any financial instrument. Investors should consider the investment objectives, risks and expenses of any investment carefully before investing. In the case of a fund, these can be found in the fund’s prospectus or offering memorandum, which should be read carefully before investing. If you would like further information about any of the funds, including charges, expenses and risk considerations, contact the sender of this document or your financial advisor for a free prospectus, simplified prospectus, copy of the Articles of Incorporation, the semi and annual reports, and/ or other materials and translations that are relevant to your jurisdiction. Any reference to a ranking, a rating or an award provides no guarantee for future performance results and is not constant over time. Performance data shown represents past performance and is not a guarantee of future results. More recent performance may be lower or higher. Principal value and returns fluctuate over time (including as a result of currency fluctuations) so that shares, when redeemed, will be worth more or less than their original cost. Performance shown is net of all fund expenses, but does not include the effect of sales charges or correspondent bank charges, and assumes reinvestment of distributions. If such charges were included, returns would have been lower. The analyses, opinions, and certain of the investment themes and processes referenced herein represent the views of the author(s) referenced as of the date indicated. These, as well as the portfolio holdings and characteristics shown, are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material.
Kingdom; and (2) who are authorised under the Financial Services and Markets Act 2000; or are high net worth businesses with called up share capital or net assets of at least £5 million or in the case of a trust assets of at least £10 million; or any other person to whom the material may otherwise lawfully be distributed in accordance with the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or the (Promotion of Collective Investment Schemes) (Exemption) Order 2001 (the "Intended Recipients"). To the extent that this material is issued by Natixis Global Associates UK Limited, the fund, services or opinions referred to in this material are only available to the Intended Recipients and this material must not be relied nor acted upon by any other persons. Registered Address: Cannon Bridge House, 25 Dowgate Hill, London, EC4R 2YA.
In certain cases, this material is provided by one of the Natixis Global Associates entities listed below, each of which is a subsidiary of Natixis Global Asset Management, the holding company of a diverse line-up of specialised investment management and distribution entities worldwide, each of which conduct any regulated activities only in and from the jurisdictions in which they are licensed or authorized. Their services and the products they manage are not available to all investors in all jurisdictions. Although Natixis Global Associates believes that the information provided in this material to be reliable, it does not guarantee the accuracy, adequacy, or completeness of such information.
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• In the DIFC: This material is provided in and from the DIFC financial district by Natixis Global Associates Middle East, a branch of Natixis Global Associates UK Limited, which is regulated by the DFSA. Related financial products or services are only available to persons who have sufficient financial experience and understanding to participate in financial markets within the DIFC, and qualify as Professional Clients as defined by the DFSA. Registered office: PO Box. 118257, 5th Floor, Building 8, Gate Village, DIFC, Dubai, United Arab Emirates. Under Natixis Asset Management’s social responsibility policy, and in accordance with the treaties signed by the French government, the funds directly managed by Natixis Asset Management do not invest in any company that manufactures sells or stocks anti-personnel mines and cluster bombs.
Contacts
This document is strictly intended for professional clients.
Prospectus and sales documents required for subscription are available on demand: n Natixis Global Associates (Operations): offshoreops@ga.natixis.com n or CACEIS Luxembourg (Prime Transfer Agent): fb-reg-european-ta@eu.fasnetgroup.com - Tel.: (352) 47 67 70 78 n or Natixis Asset Management (Clients servicing): nam-service-clients@am.natixis.com This material has been prepared by Natixis Asset Management, a subsidiary of Natixis Global Asset Management. Natixis Asset Management is a French asset manager authorized by the Autorité des Marchés Financiers (Code 1200009, Agreement No. GP 90-009) and licensed to provide investment management services in the EU.
Publishing Director: F. Lenoir /// Editorial Committee: Th. Benoist, B. BoulayMégard, H. Henriques, Ch. Lacoste, K. Massicot, Ph. Le Mée, R. Monclar, F. Nicolas, Ch. Point, S. de Quelen, ML. Rouy, JP. Snel, B. Thiery, Ph. Waechter
/// Coordination - Writing: C. Boutou, N. Clémot /// Graphic Design: G. Cosquéric, F. Dupertuys /// Contributors: A. Demode, P. Garnier, D. Levadoux, D. Passot, J-B. Roux.
PAGE 3
Editorial
Rising commodity prices are the main source of global inflation and are forcing monetary authorities to consider the most effective means of countering the pressures involved. For example, the European Central Bank decided on an initial rate increase. Is this the beginning of a long process? According to Franck Nicolas, head of global asset allocation and ALM, it is still too early to say. China, which is experiencing stronger-than-expected growth and inflation, is also contemplating ways of curbing inflation and slowing the economic cycle. The People’s Bank of China has thus decided to implement a more restrictive monetary policy, as Philippe Waechter, chief economic, explains. Beyond the usual measures, the Bank is also moving towards greater flexibility in managing the exchange rate of its national currency, the renminbi, with the possibility of an appreciation to limit imported inflation. Global economic activity seems to be holding up. However, major economic imbalances persist, causing volatility peaks. In the circumstances, we decided to devote this edition’s Expertise Focus to four funds that rely on management likely to benefit from volatility and market shocks: Natixis Convertibles Europe, managed by Natixis Asset Management, and H2O Tempo, a new diversified fund from H2O Asset Management*, which is based on innovative skills and which considers volatility to be an asset class in its own right. As usual, you can also find the summary of Natixis Asset Management’s international offer (pages 12 to 15 of this issue).
Philippe zaouati Deputy CEO, Head of Business Development
Enjoy reading it
* Specializing in multi-strategy global macro management, H2O Asset Management is a London-based company founded by Bruno Crastes, CEO, and Vincent Chailley, CIO, last July, and with which Natixis Asset Management has forged a partnership.
Natixis Asset Management
Perspectives /// may 2011
PAGE 4
macroeconomic analysis
China: looser grip on the renminbi? In mid-April, the Deputy Governor of the People’s Bank of China, Hu Xiaolian, indicated that the exchange rate of the national currency – the renminbi – would be managed more flexibly. Combined with other probable changes in monetary policy, this move is aimed at slowing inflation and the economic cycle. Indeed, inflation has reached an excessive level of 5.4%, well above the Chinese central bank’s 4% target. Economic growth also tops the expected 8%. The Bank is therefore taking short-term measures to correct a trajectory deemed inappropriate.
Philippe waechter Chief Economist
The context Pressure is heavy within the Chinese economy. Growth will be robust and inflation above expectations. The People’s Bank of China is implementing a more restrictive monetary policy. Beyond the usual measures, allowing the currency to appreciate would limit imported inflation, offsetting the rise in agricultural commodity prices.
The key point China has been giving its currency a more international status since 2008. The use of the renminbi as a billing currency in foreign trade is progressing. The People’s Bank of China has agreed swaps to provide liquidity. Hong Kong is the entry point for financial transactions in renminbi (bond issues, deposits, etc.). Amounts remain modest but are rising fast.
The stakes By having a firmer currency, China could have greater autonomy. Rebalancing growth on the country's internal market would be easier. With a strong currency, China could have a stronger political and economic influence in a tripolar world.
Perspectives /// may 2011
The renminbi: a source of tension
with prices surging internationally. It is in China’s best interest to make its currency more flexible – and more expensive.
This comment about flexibility is important as the Chinese currency’s status has long been a source of tension, especially in Chinese-US relations. Chinese currency reserves are massive and the United States believes the renminbi is moving too little, even if it has been rising at an – albeit limited – pace since 19 June 2010. This is a cause of lasting imbalances for the global economy.
Since 2008, China has been looking to rebalance its growth, refocusing this on the internal market rather than being overly dependent on export growth. Meanwhile, it has started to take a more open approach to its currency. This has led to the – albeit limited – use of the renminbi as a billing currency and in foreign exchange swaps with other central banks. Indeed, During the liquidity crisis, the People’s Bank of China was quick to provide cash to several Asian countries. A finance market has also been developed through Hong Kong with bonds issued in renminbi.
With the Japanese example in mind, the Chinese have been very cautious in the face of this US pressure. Indeed, during the 1970s and 1980s, pressure to increase the value of the Japanese currency pushed the yen up to an excessive level, often viewed as one of the reasons why Japanese growth dried up, following a loss of competitiveness and greater need for very quick adjustments. So even under pressure, China wants to avoid finding itself in such a situation, especially as its development is still behind Japan’s and will remain so for some time.
Are we heading for a controlled appreciation of the currency? In the short term, a revaluation of the renminbi would limit imported inflation and therefore reduce any subsequent imbalances. Such a move is probably more effective than using interest rates to soften domestic demand,
These amounts, if reduced further, will reflect China’s intention of using its currency as an asset in dealings with the outside world.
Maintaining its independence Through the rebalancing of growth and the currency’s more international dimension, China’s development is consistent with the country’s search for autonomy from the US dollar. Controlling and increasing the value of the renminbi will force Chinese entrepreneurs to innovate and make significant productivity gains. So from an economy based on the manufacturing sector, China will move to one more focused on services. Highly autonomous growth would allow China to be less dependent on specific
Natixis Asset Management
PAGE 5
macroeconomic analysis
outside events such as the turmoil of 2008. It would also give China more freedom in its choices, being less correlated with a few leading nations or geographic areas, and allow it to build on its relations with developing countries.
A new benchmark currency? Through revaluation, and given the Chinese economy’s increased importance in Asia over the past decade, Chine will make the renminbi the region’s benchmark currency. This will consolidate the country’s position and power over the region, making its global political and economic influence more sustainable. Indeed, the world is entering a transition period in which economic dominance will not be what is was. Since the second world war, the United States and the dollar have had a strong grip over global business management, with massive stature. Europe was alongside the Americans in consolidating western countries’ influence. However, the appearance of powerful emerging countries such as China has shaken up this hierarchy. So it seems reasonable to believe there will be no dominant countries or regions for years to come. If this is the case, the monetary system may no longer depend solely on the dollar but on three benchmark currencies. The renminbi could be a serious contender for the Asian benchmark currency alongside the dollar and euro.
Natixis Asset Management
Conclusion This move towards a tripartite world structured around three benchmark currencies is underway but will take time. First it will be necessary to develop a more diversified and more robust financial process, create institutions that will help rebalance growth, and facilitate the emergence of a financial market that could support Chinese savings and the gradual convertibility of the renminbi. Hurrying would doubtless cause instability, and trying to make the currency convertible too quickly would mean taking an excessive risk.
towards making economic adjustments easier. Other institutions are being set up gradually. As such, Hong Kong will hold a special position: the means of adjusting the Chinese economy in line with the rest of the world. However, China is clearly taking the first steps towards rebalancing its growth, making it more centered on the internal market and with a financial dimension that gives the country more autonomy, as well as stronger international political influence.
The Chinese authorities are prudent. The revaluation of their currency is a step
Written on 21/04/2011
RENMINBI VS. DOLLAR (1 dollar = x Rmb) 8.5
8
7.5
7
6.5 The renminbi has risen moderately, always under the control of the Chinese central bank
6 2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Sources: Datastream – Natixis Asset Management
Perspectives /// may 2011
PAGE 6
Asset allocation
Interest rates rising in the eurozone The European Central Bank has just decided on an initial rate increase. Is this the beginning of a long process? It is still too early to say. However, through this hike in refinancing rates the ECB is hoping to bring real interest rates back towards zero over the coming months. The move comes at a time when some eurozone member states are still affected by financing problems. This monetary tightening is unlikely to prevent Frankfurt from continuing its efforts to keep peripheral countries’ debt relatively liquid and provide these regions with suitable refinancing. Meanwhile, rising commodity prices are the main source of global inflation and are forcing monetary authorities to consider the most effective means of countering the pressures involved.
franck nicolas
Fixed income
Head of Global Asset Allocation & ALM Risk categories
Risk subcategories
Tactical allocation* 03/11(1) 04/11(2)
Fixed income Equities Fixed income United States Euro zone UK Emerging markets Japan
=
+ -=
Euro issuers
Corporate Invest. Grade
+
+
Equities
United States Euro zone UK Japan Emerging markets
+ = = = -
+ + = -
Currencies
Dollar Yen Sterling
= = -
-
=
=
=
+
++
++
(against the euro)
Commodities Oil Gold Industrial materials
(1) Investment committee as of 16/03/2011. (2) Investment committee as of 12/04/2011.
Scale from - - to ++ * weighting gap vs. strategic allocation of investor.
Perspectives /// may 2011
The markets had been expecting the ECB’s change of direction for several weeks and the rate increase came as no surprise. Yet the bond market remains under pressure as peripheral countries’ solvency and energy price trends continue to make long-term yields highly volatile. Natixis Asset Management therefore decided to underweight government bonds, which are unlikely to turn in a notable performance this year.
profitability remains more than reasonable. On emerging markets, growth is firm and risk aversion gradually easing. The macro-financial environment remains healthy despite the numerous risks described above (including some non-economic risks). Within Natixis Asset Management portfolios, exposure to eurozone/US equities has been increased in preference to emerging markets.
Currencies Equities For equities, the Fed’s comments are often more decisive than the ECB’s. With the threat from the Japanese crisis apparently receding, Natixis Asset Management overweighted equities again. However, several sources of uncertainty remain for this asset class: sovereign risk remains significant in the eurozone, the future geopolitical situation is highly uncertain in the Middle East, inflation imported with energy and food prices is threatening various parts of the globe, and banks are undergoing new stress tests. Moreover, the policy mix is less favorable as things stand (fiscal austerity combined with less accommodative monetary policies). To protect ourselves from these risks, we added out-of-the-money hedging – which becomes less expensive as volatility falls – to our equities. There are encouraging factors, however: unemployment continues to fall in the United States, capacity utilization is slowly approaching 80% and private sector
Logically, the euro should benefit from this rate increase against the dollar, at a time when the Fed is talking only of ending its second round of quantitative easing (endJune) but not of any rate rise. The markets have already priced in this difference in attitudes each side of the Atlantic. Natixis Asset Management is therefore expecting the exchange rate to remain stable over the coming days. Emerging currencies are alone in showing a clear uptrend at the moment.
Commodities Gold is also regaining ground with inflation expectations and real interest rates very low. The rise in oil prices seems under control as long as the situation does not spread to Gulf states.
Written on 20/04/2011
Natixis Asset Management
PAGE 7
Market data
France
Value
CAC 40 CAC Mid 60 SBF 120 CAC All Tradable
3 989.18 7 595.29 2 990.73 2 928.12
Europe
Value
MSCI Europe EuroStoxx 50 DAX Footsie
95.47 2 910.91 4 114.03 5 908.78
United States
Value
Dow Jones S&P 500 Nasdaq Brent Crude Future
12 319.73 1 325.83 2 781.07 117.36
Asia
Value
Nikkeï Hong Kong Singapore Shanghaï
9 755.10 23 527.52 3 105.85 317.45
World
Value
MSCI World
1 334.93
1 year 0.38% 15.16% 2.45% 2.73%
2011 4.85% 4.99% 4.53% 4.55%
1 year 4.42% -0.69% 10.83% 4.03%
2011 0.10% 4.23% 1.49% 0.15%
1 year 13.48% 13.37% 15.98% 41.91%
1 year
2011 -4.63% 2.14% -2.64% 4.30%
1 year 11.19%
Rate Eonia 3 months Euribor 6 months Euribor 1 year Euribor Fed Funds
2011 4.29%
Money market 1 year
0.902% 1.239% 1.546% 1.996% 0.130%
0.501 0.605 0.602 0.784 0.040
2011 6.41% 5.42% 4.83% 23.86%
-12.04% 10.77% 7.56% 22.76%
As of 31/03/2011
Rate 5 years French Treasury Bond 5 years USTN 10 years French Treasury Bond 10 years USTN 30 years French Treasury Bond 30 years USTN
Fixed income 1 year
2.941% 2.224% 3.713% 3.451% 4.192% 4.508%
0.673 -0.337 0.293 -0.382 0.17 -0.207
Value Euro/Dollar Euro/Yen (100) Euro/Sterling Dollar/Yen
1.419 117.615 0.885 82.880
2011 0.085 0.233 0.319 0.489 0.000
2011 0.804 0.216 0.351 0.164 0.311 0.169
Currencies 1 year 4.88% -6.97% 0.76% -11.30%
2011 5.78% 8.10% 3.32% 2.19%
Monthly index United States: contribution from the “housing excluding energy” component to inflation
A look at inflation suggests - quite rightly - that we should focus on components linked to commodity prices:
(as %)
n energy: prices have surged, accounting for more than half of inflation in the United States and eurozone at the end of March;
1.40
n food commodities: prices are also rising, albeit with a more staggered real-term impact;
1.20 1.00
n inflation excluding energy and food: this third underlying component of inflation must be taken into account. It reflects pressures within the economy. Right now, these pressures have eased and core inflation remains close to 1%.
0.80 0.60 0.40 0.20 0.00 -0.20 -0.40 jan 08
jul 08
jan 09
jul 09
jan 10
jul 10
jan 11
However, the rate did increase from 0.65% to 1.2% in the United States between December 2010 and March 2011: a resurgence that can only be explained by excessive pressure on the labor market.
Contribution from the “housing excluding energy” component
A detailed analysis reveals that fluctuations in the “housing excluding energy” component caused this turnaround. As we can see in the chart, this “housing excluding energy” component dropped below zero before moving back into positive territory, explained by the real estate market’s slowness in adjusting. Indeed, sales have fallen and demand for housing has switched to rentals, pushing up rents. In the short term, it is precisely this component that is nudging core inflation upwards and its contribution could even be a little greater over the months ahead. Contribution from other components
Sources: Datastream - Natixis Asset Management
Natixis Asset Management
Perspectives /// may 2011
PAGE 8
Expertise FOCUS
Initial signs this year suggest that global activity remains firm.
Volatility: what are the opportunities in 2011?
Growth should continue to support equities in 2011 with the markets also benefiting from technical factors such as:
The Natixis Asset Management teams identified three main themes for seizing market opportunities in 2011: the return of equities, selectivity on bond markets and volatility management. After covering equity and then bond themes in previous months, this edition’s of Expertise Focus deals with expectations of volatility peaks and looks at how to manage these profitably.
2011
outlook
n s hare buyback programs, n c orporate restructurations. In terms of risks, however, certain macroeconomic imbalances persist, visible in: n h igh public deficits and divergent monetary policies, causing major fluctuations on the foreign exchange market, n c ommodit y price inflation: although the component relating to economic activit y (core inflation index) is hardly moving at the moment, others concerning food mainly are trending upwards.
With volatility peaks expected, use of less traditional asset classes that, by construction, suffer less and may even profit from market shocks, should be considered.
1. Convertible bonds 2. Volatility as an asset class Drawing strength from rising equity markets while benefiting from the more limited risk to bond markets, convertible bonds offer a profitable alternative in times of reduced visibility. Convertibles are also special in that they are more resilient to equity market shocks. This results partly from the bond parachute and partly from the option component, which benefits from the rise in volatility often associated with periods of shock. Volatility can also be considered an asset class in its own right. Accordingly, H2O Asset Management* offers innovative skills aimed at benefiting from equity market volatility through active management. The company also applies this expertise to fixed income and foreign exchange markets.
So after quite a turbulent start to the year, PMS are still expecting volatility peaks in 2011. These circumstances offer conditions requiring skilled management and which benefit less traditional asset classes that could profit from market shocks or at least limit their negative effects.
Perspectives /// may 2011
*Specializing in multi-strategy global macro management, H2O Asset Management is a London-based company founded by Bruno Crastes, CEO, and Vincent Chailley, CIO, and with which Natixis Asset Management forged a partnership last July.
Natixis Asset Management
PAGE 9
Expertise FOCUS
1. Convertible bonds In buoyant market conditions, convertible bonds present an interesting alternative for any investor looking to benefit from equity markets’ upside potential while limiting risk.
Focus on Natixis Convertibles Europe
The fund in brief Why invest in convertible bonds now? In 2011, convertible bonds should profit from a bright outlook for: n equities: high expectations (especially for companies exposed to emerging market growth) and a pick-up in M&A;
Philippe Garnier
Denis Passot
Portfolio managers - Natixis Asset Management
n credit: expectations of narrower spreads modest for investment grade but more significant for high yield, which is part of the convertible universe.
Convertible bonds could also benefit from renewed volatility linked to geopolitical and macroeconomic uncertainty around the world. When volatility increases, the option to convert the bond into equity becomes more expensive, thereby raising the price of the convertible bond.
After a strong rally by the asset class, mainly in 2009, is this market still attractive? In the last two years, the strength of the primary market and performance of equity markets have restored the convertible universe and its profile. This investment universe, which was previously more sensitive to changes in corporate bonds (bond profile), is now more sensitive to changes in equities (mixed profile). This environment means convertible bond holders should benefit more from the probable improvement in equity markets this year.
What investment profiles for convertible bonds? Hybrid by nature (a cross between the worlds of bonds and equities), convertibles attract several types of investors: n asset managers who will use convertibles to improve the risk/return profile of a diversified portfolio; n bond investors looking to profit from equity markets’ rise while benefiting from carry on the bond; n equity investors wanting to remain exposed to equity markets while reducing volatility; Also, for an insurance company(1), convertible bonds are an alternative to equity investments and require less capital.
Natixis Convertibles Europe: to benefit from the upside potential on equities and more limited volatility on bonds.
Fund specifics n A “pure" convertible bond fund covering all eurozone and non-eurozone countries (Norway, United Kingdom, Switzerland, etc.) n Conviction-based management seeking the best risk/return profile by selecting securities to diversify risks n An experienced team of two fund managers with over 15 years of experience and with access to substantial dedicated resources (equity and credit research teams)
Fund features Management company: Natixis Asset Management Legal form: French mutual fund (FCP) Minimum recommended investment horizon: 4 years Benchmark: Exane Convertible Index Europe Inception date: 27/05/2005 Net assets: EUR 160.55 milllion at 31/03/2011 ISIN Code: FR0010171678 (I/C EUR)
Fees Maximum operating and management fees including taxes(2): 1 % (I/C EUR) Maximum subscription fee: none Minimum initial subscription: EUR 100 000 (I/C EUR)
Portfolio managers n Philippe Garnier n Denis Passot
(1) In line with Solvency II rules. (2) as % of NAV.
Natixis Asset Management
Perspectives /// may 2011
PAGE 10
Expertise FOCUS
2. Volatility as an asset class H2O Tempo's investment
Volatility can also be considered an asset class in its own right. Focus on H2O Tempo, a diversified fund from H2O Asset Management(1) that relies on innovative skills to draw strength from periods of volatility not only on equity markets but also on fixed income and foreign exchange markets.
philosophy is based on the
Focus on H2O Tempo
conviction that diversification
H2O Tempo was launched recently. How is it different from other funds that speculate on volatility?
is a stable,
H2O Tempo looks to benefit from volatility not only on equity markets but also on fixed income and foreign exchange markets: a real innovation!
sustainable
Common to all H2O funds, the fund’s investment philosophy is based on the conviction that diversification is a stable, sustainable source of alpha. For example, the fund benefits from different levels of volatility between each asset class to try to generate a steadier performance with better diversification of risks.
source of alpha. The fund therefore looks
Jean-Baptiste Roux
to benefit from
Portfolio manager H2O Asset Management
volatility not only on equity markets but also on fixed income and foreign
H2O Tempo also differs in its use of highly liquid vanilla options to gain exposure to market volatility. Although more expensive, these derivatives present a lower risk than more complex products due to their high liquidity.
And as well as a directional strategy on volatility, the fund takes arbitrage positions to finance the cost of options used. n In the event of a market shock (characterized by an increase in volatility), H2O Tempo will try to benefit greatly from the rise in volatility. n Conversely, in periods of low volatility (usually characteristic of bullish markets), H2O Tempo will try to copy the performance of the Eonia capitalized.
exchange markets: a real innovation!
Perspectives /// may 2011
Natixis Asset Management
PAGE 11
Expertise FOCUS
The fund in brief How to position the fund within a portfolio? As volatility is particularly high when the markets receive a shock, the fund will tend to have the opposite profile to a traditional diversified portfolio during periods of downward pressure. Used over the same horizon, H2O Tempo will therefore try to offset the potential losses of a diversified portfolio in the event of turmoil. H2O Tempo’s inclusion in portfolios therefore makes it a relatively cheap means of hedging against sharp falls in the markets.
H 2 O Tempo: looking to benefit from market shocks, exploiting volatility on equity, fixed income and foreign exchange markets.
Fund specifics n A fund that can be used, over the same horizon, to offset potential losses on a diversified portfolio in the event of market shocks n Strategies based on alternative management within a UCITS, liquid and transparent n An arbitrage strategy to finance exposure to volatility
The Japanese crisis caused a new wave of volatility on the markets. How could the fund have benefited from this(2)? The H2O Tempo approach is particularly suited to this type of environment as we are structurally long on volatility and our investment universe is global.
Fund features Management company: Natixis Asset Management Subadviser: H2O Asset Management, LLP.
With tension in Japan affecting all asset classes, our direct exposure to the volatility of the Nikkei and dollar/yen exchange rate would have fully benefited from the turmoil.
Legal form: French mutual fund (FCP)
As the volatility spread to other regions, all of the portfolio’s long volatility positions would have benefited from the situation, especially on bond markets.
Benchmark: Eonia capitalized
And given the lack of liquidity, which heightened pressures on Japanese markets, H2O Tempo would also have benefited from the presence of highly liquid vanilla options in the portfolio.
ISIN Code: FR0011007459
Minimum recommended investment horizon: 6 years (indicative only) Inception date: 15/04/2005 Net assets: EUR 20 million at 15/04/2011
Fees Maximum operating and management fees inclusive of tax: 0.5% (I/A EUR) Maximum subscription fees: 1% Performance fee: 20% of the performance above that of the Eonia capitalized (I/A EUR) Minimum initial subscription: 10 units (I/A EUR)
Portfolio manager (1) Specializing in multi-strategy global macro management, H2O Asset Management is a Londonbased company founded by Bruno Crastes, CEO, and Vincent Chailley, CIO, and with which Natixis Asset Management forged a partnership last July.
n Jean-Baptiste Roux
(2) The fund was launched on April 15, 2011, one month after the outbreak of the Japanese crisis.
Natixis Asset Management
Perspectives /// may 2011
PAGE 12
our international Product range
Brief overview of our international product range The key expertise of Natixis Asset Management dedicated to international clients are gathered in n 8 sub-funds of the Natixis International Funds (Lux) I SICAV and the Impact Funds SICAV (pages 14 to 16), n and in a selection of 27 complementary funds covering all asset classes (listed on page 17).
Sub-funds of the Natixis International Funds SICAV
Matthieu Belondrade & François Théret
Natixis Emerging Europe Fund Get the most out of the growth in the emerging European zone as part of a conviction management strategy n Investment universe: Emerging Europe Equities n Benchmark: MSCI Emerging Europe Index (indicative only) n Minimum recommended investment period: 5 years n Risk Indicator: Target tracking-error ex ante between 6 and 10
I, A I, A I, D R, A R, A R, D
EUR USD USD EUR USD USD
LU0147917792 LU0095830922 LU0095831060 LU0147918923 LU0084288595 LU0084288678
Thierry Cuypers
Natixis Europe Smaller Companies Fund Make the most of attractive European small and mid caps in a conviction investment style n I nvestment universe: European Equities nB enchmark: MSCI Europe Small Caps NDR (indicative only) nM inimum recommended investment period: 5 years nR isk Indicator: Target tracking-error ex ante between 2 and 7
(indicative, barring crisis context)
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0095827381 LU0095828272 LU0064070138 LU0064070211
Christine Lebreton
Natixis Impact Europe Equities Fund Benefit from the growth potential of socially responsible European companies through conviction-based management n Investment universe: European equities n Benchmark: MSCI Europe (indicative only) n Minimum recommended investment period: 5 years
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0095828512 LU0095828785 LU0066549592 LU0066549832
See the full prospectus which is the only legally binding document. See the Legal Information on page 2 for important information about the funds.
Perspectives /// may 2011
Natixis Asset Management
PAGE 13
our international Product range
Sub-funds of the Natixis International Funds SICAV
Clothilde Malaussene
Natixis Euro Aggregate Plus Fund Benefit from a broad range of fixed income investment opportunities n Investment universe: Mainly Euro denominated government or private
issuers rated Investment / Diversifying fixed income assets n Benchmark: Barclays Capital Euro Aggregate n Minimum recommended investment period: 3 years
I, A I, D R, A R, D
EUR EUR EUR EUR
LU0161120547 LU0391146155 LU0161121271 LU0390502184
Sophie Potard
Natixis Global Inflation Fund Get the most out of diversification in inflation-indexed bonds in a global universe
n Investment universe: International inflation-linked bonds n Benchmark: Barclays World Government Inflation linked all maturities
Index hedged in euro n Minimum recommended investment period: 2 years
H-I, A H-I, D I, A I, D R, A R, D
USD USD EUR EUR EUR EUR
LU0390502267 LU0390502341 LU0255251166 LU0255251596 LU0255251679 LU0255251752
Hanna Stekelorom
Natixis Impact Euro Corporate Bond Fund Combining responsability and conviction-based strategies in the eurocredit universe n Investment universe: Mainly Euro-denominated investment grade debt
I, A
EUR
LU0155376477
securities n Benchmark: Barclays Euro Aggregate Corporate Index n Minimum recommended investment period: 3 years
I, D R, A R, D
EUR EUR EUR
LU0391146072 LU0155380156 LU0390502770
See the full prospectus which is the only legally binding document. See the Legal Information on page 2 for important information about the funds.
Natixis Asset Management
Perspectives /// may 2011
PAGE 14
our international Product range
Sub-funds of the Natixis International Funds SICAV
Philippe Berthelot & Vincent Marioni
Natixis Euro High Income Fund High total investment return through a combination of high current income and capital appreciation
n Investment universe: The fund invests primarily in sub-investment-grade
euro-denominated debt securities n Benchmark: BofA Merrill Lynch Euro High Yield, BB-B Rated
Constrained Index n Minimum recommended investment period: 3 years
R, C I, C S, C RE, C Y, C I, D R, D S, D
EUR EUR EUR EUR EUR EUR EUR EUR
LU0556617156 LU0556616935 LU0556617313 LU0556617586 LU0556617743 LU0593537219 LU0593537482 LU0593537565
Sub-funds of the Impact Funds SICAV
Clotilde Basselier & Suzanne Senellart
Impact Funds Climate Change Reconciling climate change with a performance oriented strategy in a global equity fund n Investment universe: Global equities n Benchmark: The MSCI World index (indicative only). n Minimum recommended investment period: 5 years
I, C I, C J, C
USD EUR EUR
LU0448199025 LU0448199371 LU0448199454
See the full prospectus which is the only legally binding document. See the Legal Information on page 2 for important information about the funds.
Perspectives /// may 2011
Natixis Asset Management
PAGE 15
our international Product range
A selection of 27 complementary funds This quarterly reviewed list of funds aims to highlight Natixis Asset Management's most innovative products and its wide range of expertise.
Asset Class
Money market
Fixed income
Fund name Natixis Cash Première
IA: FR0010157834
Natixis Cash A1P1
IA: FR0010322438
Natixis Cash Eonia
IA: FR0010298943
Natixis Tréso Euribor 3 mois
IA: FR0010831693
Natixis Tréso Plus 3 mois
IA: FR0007075122
Natixis Court Terme 6 mois
IA: FR0010885236
Natixis Souverains Euro 1-3
IA: FR0010208421
Natixis Souverains Euro 3-5
IA: FR0010036400
Natixis Souverains Euro 5-7
A: FR0010201699
Natixis Souverains Euro 7-10
A: FR0000449092
Natixis Souverains Euro
IA: FR0010655456
Natixis Inflation Euro Natixis Obli Opportunités 12 mois Natixis Crédit Euro
Equity
I: FR0010680223 IA: FR0010796391 I: FR0010171108
Natixis Convertibles Euro
IA: FR0010658963
Natixis Convertibles Europe
IA: FR0010171678
H2O Multibonds
IA: FR0010930438
Natixis Actions Euro Value
IA: FR0010270025
Natixis Actions US Growth
IA: FR0010256404
Sonic Monde Natixis Actions Global émergents Impact Funds Climate Change
Alternative investment
Share and ISIN code
Natixis Performance Active Allocation
IA €: FR0010555797 IA: FR0010711051 IA $: LU0448199025 IA: FR0010688812 IA €: LU0161071237
Natixis Constellation European Event
IA $: LU0161073951
H2O Adagio
IA: FR0010929794
H2O Moderato
IA: FR0010929836
H2O Patrimoine
IA: FR0010930446
These funds are authorized for sale in France and possibly in other country(ies) where their sale is not contrary to local legislation. Please refer to legal information of this material.
Natixis Asset Management
Perspectives /// may 2011
PAGE 16
news
markets news Gain access to all news on Natixis Asset Management’s markets, products and expertise in just a few clicks...
Climate Change: 4th meeting of the Scientific Committee
Natixis Asset Management website
Find all the news on Natixis Asset Management’s markets, products and expertise. Visit
www.am.natixis.com
The 4th meeting of the Climate Change Scientific Committee was held on 5 April, chaired by Carlos Joly. Expert members sat alongside Natixis Asset Management’s Impact Funds Climate Change management team and extrafinancial research team.
Scientific Committee in brief
Natixis Asset Management WebTV
Relating to the issues involved in climate change, Natixis Asset Management’s Climate Change Scientific Committee of independent experts fulfills three tasks: n Enlighten Natixis Asset Management on climate change and its impacts, n Identify and deepen areas of knowledge about climate change, n Contribute to investment ideas generation.
A new member on the Committee There has been a new arrival to extend the Climate Change Scientific Committee’s areas of expertise: Matthieu Wemaëre.
Watch "Flash Marchés" videos and "Les Marchés en direct" podcasts for a recap. Visit
www.webtv.am.natixis.com
Perspectives /// may 2011
Matthieu Wemaëre
International environmental law
A specialist in international environmental legislation, Matthieu specializes in the implementation of the Kyoto protocol and the UN framework agreement on climate change, and the application of European directives on the greenhouse gas emission quota exchange system. Further information:
www.am.natixis.com/climatechange
Natixis Asset Management
active. O P EN IN G UP N E W O P P O R TU NI T IE S FOR IN V E S T OR S Natixis Asset Management places research and innovation at the heart of its strategy to best respond to the new challenges facing financial markets. Majoring on its team’s expertise, Natixis Asset Management creates optimized investment solutions for its clients.
With €298bn of assets under management as of 31st March 2011, Natixis Asset Management offers its clients new value generating solutions. European expert of Natixis Global Asset Management
www.am.natixis.com CORPORATE AND INVESTMENT BANKING / INVESTMENT SOLUTIONS / SPECIALIZED FINANCIAL SERVICES
Natixis Asset Management - Limited Company with a capital of 50 434 604.76 euros - RCS Paris 329 450 738 - AMF approval no. GP 90-009 - 21, quai d’Austerlitz -75634 Paris Cedex 13 - Tel: +33 1 78 40 80 00
pro
Perspectives is a Natixis Asset Management's publication - Natixis Asset Management - Communications Department - Business Development communication-nam@am.natixis.fr - May 2011. Cover picture: © Hadi Djunaedi / Shutterstock
Natixis Asset Management Limited Liability Company Share Capital 50 434 604,76 € RCS Number 329 450 738 Paris Regulated by AMF under n°GP 90-009 Registered Office: 21 quai d’Austerlitz 75 634 Paris, Cedex 13 - Tel. +33 1 78 40 80 00 www.am.natixis.com Natixis Multimanager Subsidiary of Natixis Asset Management A French simplified joint-stock company Share Capital of 7 536 452 € RCS Number 438 284 192 Paris Regulated by AMF under n°GP 01-054 Registered Office: 21 quai d’Austerlitz 75 634 Paris, Cedex 13 - Tel. +33 1 78 40 32 00 www.multimanager.natixis.com