28/02/2019 - nicheam.com

Performance since inception: -0.39%

28/02/2019

Pharus Asian Niches

February Portfolio Update

Launch date: 15.02.2019

Total Net Asset as of 28.02.19: € 13,357,143

* approx. 70% JPY hedged

95.0

96.0

97.0

98.0

99.0

100.0

101.0

102.0

103.0

104.0

105.0

Portfolio breakdown by asset class Portfolio breakdown by currency *

Net Asset Value per share since inception

2

Isin Security % Portfolio

XS0519942139 Deutsche Bank Ag Float20 1,8% Cash Management

XS0543111768 Macquarie Bank Ltd 20 1,7% Cash Management

FR0011615699 Eramet SA 4.5 1,6% Bond portfolio

XS1706202592 Europcar Mobility Group SA 4.125 1,5% Bond portfolio

XS1619015719 UniCredit 6.625 1,5% Bond portfolio

XS1210352784 Aabar 0.5 1,4% Cash Management

XS1708450561 Wind Tre 3.125 1,4% Bond portfolio

JP3866800000 Panasonic 1,2% Electric Mobility Niche

US48268K1016 KT Corp 1,2% Korea Reunification Niche

US78440P1084 SK Telecom 1,1% 5G Niche

Top holdings

Monthly comment

From the 18th of February to the end of the month we created the first Pharus Asian Niches portfolio. We placed more than 200 orders to buy stocks for 9 equity Niches and bonds for the bond portfolio and the cash management portfolio. The significant number of companies held in the portfolio reflects its nature of incubator for 9 independent and value portfolios, each focusing on one unique, value and promising theme (that we call Niche). This offers the investor exposure to neglected parts of the market and, at the same time, gives him a broader diversification and reach. At the 28th of February we were invested 41% in equity, 13% in bonds, 5% in short term instruments, keeping the rest in cash. While the bond and the cash management portfolios are managed globally, most of the Niches have an Asian bias, concentrated mostly in Korea, Japan and Indonesia, markets we deem extremely attractive. In these three countries alone is concentrated about 50% of our equity allocation at the end of the month. Besides, we have few other unique Niches with a more European or American flair, like Internet Victims or Neglected Luxury. During its first days of life the fund recorded a slightly negative performance. After an ebullient start of the year the Asian market pulled back a bit and many of our Niches were inevitably impacted. And while we write this correction is still going on. That said, we do not pay attention to the short-term vagaries of the market and, on the contrary, we see the volatility as an important tool that brings opportunities to the value investor. We focus on bottom up valuation models to pick the best in class players of each Niche and to offer the investors a broad diversification through value stocks, active in several promising industries and in different geographies.

3

52.8

47.7

20 30 40 50 60 70 80

Pharus Asian Niches

MSCI World

Isin Security % Niche Sub-Niche

JP3866800000 Panasonic Corp 1,2% Electric mobility Lithium cells

US48268K1016 KT Corp 1,2% Korea reunification Telcos

US78440P1084 SK Telecom Co Ltd 1,1% Korea reunification Telcos

US7475251036 Qualcomm Inc 0,9% 5G Telecom Equipment

KR7003551009 LG Corp 0,5% Close the gap Preferred shares

US03965L1008 Arconic Inc 0,5% Steel substitution Alluminium

JP3544000007 Teijin Ltd 0,5% Steel substitution Carbon Fiber

KR7006400006 Samsung SDI Co Ltd 0,4% Electric mobility Lithium cells

KR702826K016 Samsung C&T Corp 0,4% Close the gap Preferred

ID1000108905 Lippo Karawaci Tbk PT 0,4% Small Cap Indonesia Real Estate

GB0022569080 Amdocs Ltd 0,4% 5G Telecom Equipment

JP3616000000 Toyo Tanso Co Ltd 0,4% Electric mobility Anodes

NL0009739416 PostNL NV 0,4% Internet Victims Postal services

KR7006401004 Samsung SDI Co Ltd 0,4% Close the gap Preferred Shares

JP3897700005 Mitsubishi Chemical Holdings Corp 0,4% Electric mobility Electrolytes

US91822M1062 VEON Ltd 0,4% 5G Telecom Services

US9621661043 Weyerhaeuser Co 0,4% Steel substitution Wood

JP3402600005 Sumitomo Metal Mining 0,4% Electric Mobility Cathodes

ID1000103609 Bank Bukopin Tbk PT 0,4% Small Cap Indonesia Banks

DE000TUAG000 Tui AG 0,4% Internet victims Travel Agents

Source: Niche AM

Korea 21%

Other Asia5%

America18%

Europe29%

Japan24%

Indonesia3%

Equity top holdings

Portfolio ESG

4

Electric Mobility ........................................................................................................................................................................... 5

5G ................................................................................................................................................................................................. 7

Internet Victims ........................................................................................................................................................................... 9

Small Cap Indonesia .................................................................................................................................................................. 11

Korea Reunification ................................................................................................................................................................... 13

Close the Gap ............................................................................................................................................................................. 15

Neglected Luxury ....................................................................................................................................................................... 17

Orphan Companies .................................................................................................................................................................... 19

Steel Substitution ...................................................................................................................................................................... 21

Bond Portfolio ............................................................................................................................................................................ 23

5

Electric Mobility

Getting ready for a seismic change

# stocks: 48 Average Market Cap (mln $) 9445 Median Market Cap (mln $): 2019

Electric Mobility – segment breakdown

Asian Niches Fund

EM Niche

Battery makers BM 0,4% 2,4%

Lithium Cells LC 2,2% 14,9%

Cathode makers CM 2,0% 13,1%

Anode makers AM 1,7% 11,5%

Separators makers SM 0,8% 5,4%

Electrolytes and Elecfoils EEM 1,5% 10,1%

Commodities C 1,7% 11,2%

Rech. equip., infrastructures REIF 0,4% 2,7%

Electric engines & BMS EEBMS 1,2% 8,1%

Adas electronics AE 0,7% 4,9%

Traditional carmakers geared for EM TAG 0,5% 3,1%

Cash EMN

1,9% 12,8%

Total

15,0% 100,0%

Source: Niche AM

Valuation Snapshot

Source: Niche AM, Thomson Reuters

Geographical breakdown ESG rating (Thomson Reuters)

Source: Niche AM Source: Niche AM. Thomson Reuters

1.0

5.2

10.8

2.6

1.3

15.1

2.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EV / REVENUE (FWD)

EV / EBITDA (FWD)

P/E (FWD)

DIVIDEND YIELD % (FWD)

NET DEBT TO EBITDA (FWD)

Electric Mobility Niche

MSCI World

Japan57%

Korea14%

Europe16%

Other Asia3%

America10%

53.1

47.7

20 30 40 50 60 70 80

Electric Mobility

MSCI World

6

Electric Mobility

Getting ready for a seismic change

Monthly comment

Chart since inception (21/02-28/02)

Source: Niche AM

We started having 85% of the niche invested (13% over 15% allocated to this portfolio). While the stocks exposed to the electric mobility have rebounded from the lows recorded at the end of 2018, they are still extremely attractive. Despite the booming growth ahead we can easily invest in players exposed to this theme valued between 3x and 7x the EBITDA. While creating the portfolio, we put more weight in the sub-niche of the Lithium Cells (2.2% of the fund and 15% of the niche) followed by the Cathodes (2% and 13%), the Anodes (1.7% and 11.5%) and the Commodities (1.7% and 11.2%). While many are those that assembly batteries, few companies in the world make the lithium cells and we expect the demand to exceed the supply in this area from 2020. Cathodes is where most of the technological advances happen and where most of the value of the battery lies. However, some technologies will be dropped while others will be embraced. Therefore, we need a severe diversification. On Anodes we are mostly focusing on makers of the basic materials that are cheap and, in our opinion, neglected and misunderstood. The last most invested sub-niche is represented by Commodities. Thanks to the China tremors most of this sector has pulled back heavily, leaving some players, in the graphite and nickel space, trading at very attractive levels. The first days of our Electric Mobility portfolio weren’t easy. The Lithium Cells sub-niche pulled heavily back together with the Cathode sub-niche. Anodes, Separators, Commodities, Electric Engines and ADAS did ok while Electrolytes and Recharging Infrastructures fared also badly. We know there is a glut in the sector due to the EVs incentives cut in China. Nonetheless we see this as an opportunity, and we are happy to increase our exposure on further weaknesses.

Niche description

Electric mobility will grow dramatically in the next few years, with a speed still unexpected by most and changing the world for good. The electric mobility will be pervasive, affecting land, air and water transportation. The batteries stocks, just a part of the broader electric mobility sector, will overcome the semiconductor sector by total sales in few years. We deem the sector a great opportunity for those who have a firm understanding of it, and potentially hazardous for those who do not. Niche Asset Management team boasts a long and successful experience in the electric mobility investing. Niche aims to give the investor exposure to this exciting sector through its value approach.

7

5G Moving to the next Internet investment chapter


5G breakdown

Asian Niches Fund

5G Niche

Telecom Equipment 4,4% 44%

Telecom Services 4,1% 41%

Cash 1,5% 15%

10,0% 100%

Source: Niche AM

Valuation Snapshot




Telecom Equipment,

44%

Telecom Services,

41%

Cash, 15%

1.5

6.5

12.4

4.4

1.8

15.1

2.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EV / REVENUE (FWD)

EV / EBITDA (FWD)

P/E (FWD)



5G Niche

MSCI World

Japan13%

Korea18%

Europe31%

America38%

52.2

47.7

20 30 40 50 60 70 80

5G

MSCI World

8

5G

Moving to the next Internet investment chapter

Monthly comment


Source: Niche AM

Also, in the 5G niche we invested most of our allocation (8.5% out of 10%), evenly shared between the sub-niche Telecom Equipment and the sub-niche Telecom Services. We are just at the onset of a significant investments cycle that will enable IoT, VR, AR, AI, Big Data and many other opportunities. Although the Huawei saga has recently reinvigorated the telecom equipment sector, the valuations are still undemanding considering the investments pipeline that will stretch through the next 5/7 years. On the other hand, the telecom services sector could significantly benefit from the 5G. Europe could reap most of those benefits. Here the sector has been over-burdened by multiple factors: fragmentation (450 telecom operators in Europe vs 3 in China and 4 in USA), regulation (Vestager effect) and taxation (frequencies auctions). Once the world leader in telecom innovation, Europe is now the laggard. Investments are at an all-time low and Europe looks doomed in the 5G race. We think that the May European election will bring a new Competition Commissioner, more telecom friendly, allowing the sector to consolidate and improve margins. Today, despite the margins being razor thin, the sector enjoys attractive valuations and healthy dividends. During the last week of February, the sub-niche Telecom Services was almost unchanged while the sub-niche Telecom Equipment performed negatively..

Niche description The 5G is coming

•This starts a 5 to 10 years journey leading to full 5G connectivity

•The 5G will shape this century and will change the way we live for good

•The 5G will open the gates to new business models, will greatly improve the productivity and will make the world smaller and safer

5G will make a broad and disruptive array of new technologies reality. IoT, AI, VR, AU, block chain, self-driving cars, smart living, smart homes, remote healthcare won’t be possible without 5G. Nonetheless the companies that will make 5G possible are still neglected and offer great value.

The niche aims to give the investors an exposure to these 5G players.

9

Internet Victims

Chasing the survivors


Internet Victims breakdown

Asian Niches Fund

Internet Victims Niche

Publishers&TV&Book 1,91% 19%

Postal Services 1,51% 15%

Retailers 1,51% 15%

Post Equipment 0,15% 2%

Advertisement 0,22% 2%

Travel Agents 0,29% 3%

Financials 0,64% 6%

Cash 3,76% 38%

10,0% 100%

Source: Niche AM

Valuation Snapshot




0.6

4.4

9.0

6.4

1.4

15.1

2.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EV / REVENUE (FWD)

EV / EBITDA (FWD)

P/E (FWD)



Internet Victims Niche

MSCI World

Europe80%

America20%

48.4

47.7

20 30 40 50 60 70 80

Internet Victims

MSCI World

10

Internet Victims

Chasing the survivors

Monthly comment


Source: Niche AM

Here we started investing about 60% of our NAV (6,2% vs 10% allocated). Publishers Media takes the lead (19% of the niche and 1.9% of the fund), followed by Postal Services (15% and 1.5%) and Retailers (15% and 1.5%). Most of the resources were allocated to solid companies, able to withstand the impact of internet and eventually to benefit from it. Today is possible buying great iconic names at bombed-out valuations. During the last week of February, the Niche did well, gaining 1.79%. The Publishers Media sub-niche gained more than 2%. The Postal Services sub-niche was on average unchanged. The Retailers sub-niche advanced almost 3% as did the sub-niche Postal Equipment. The sub-niches Advertisement and Travel Agents went down but this was offset by the good performance of the sub-niche Financials.

Niche description

Every technology revolution, and the ongoing huge internet revolution is no exception, makes corporate victims; business models are replaced; many of the old players fail to adapt early, while new players are ushered in, thriving and gaining market share. This slow and cruel process is well known by investors, who, however, normally tend to be late in fully understanding the depth and the breath of the shift. Once the trend is established most of the investors sell the old players and gain exposure to the new ones. The old players have to live through a prolonged period of restructuring and reinvention; valuations are squeezed, failures and consolidation are common. We call them the (internet revolution) VICTIMS At the end of a technology revolution a new class of companies emerges; this class is composed by the old players which have learnt to live through the change, thriving in a less competitive environment and/or through an adapted business model. We call them the (internet revolution) SURVIVORS. Finding survivors can be even more rewarding than finding winners. The niche aims to gain exposure to the survivors of the internet revolution.

11

3% 5%3%

2%2%

84%

Banks

RealEstate&Construction

Telecom

Manufacturers

Conglomerates

Cash

Small Cap Indonesia

A tremendous opportunity


Small Cap Indonesia breakdown

Asian Niches Fund

Small Cap Indonesia

Niche Banks 0,3% 3%

Real Estate&Construction 0,6% 6%

Telecom 0,4% 4%

Manufacturers 0,2% 2%

Conglomerates 0,2% 2%

Cash 8,3% 83%

10,0% 100%

Source: Niche AM

Valuation Snapshot



n.a.


1.6

4.4

7.2

0.5

1.3

15.1

2.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EV / REVENUE (FWD)

EV / EBITDA (FWD)

P/E (FWD)



Small Cap Indonesia

MSCI World

Indonesia, 100%

12

Small Cap Indonesia

A tremendous opportunity

Monthly comment


Source: Niche AM

The Indonesian small caps market is overlooked and offers great opportunities. However, it started the year on an extra positive mood. This drove prices up in a disorderly way. That’s why we preferred to step aside, letting the market settle before investing significantly in the niche. We have invested about 17% of the money allocated to the niche (1.7% vs 10% allocated), focusing on the depressed Real Estate sub-niche and cherry picking in the Banking, Telecom and Manufacturing sub-niches. Although we are positive on the next political elections outcome, there could be volatility-led opportunities ahead of it. During the last week of February, the Niche was slightly positive, boosted by the Financial Sector, Real Estate and Manufacturers sub-niches. The Telecom Services sub-niche was deeply negative, giving back some of the gains recorded since the start of the year.

Niche description Indonesia is a land with incredible potential. Its territory is huge, highly fertile and beautiful. The weather is ideal for agriculture and tourism. There are plenty of natural resources. The population is tame and friendly. Corporate governance is decent by emerging markets standards. The Central Bank is independent and from a political perspective the democracy system is maturing rapidly, while corruption is decreasing. The public debt is very low, inflation under control and growth is healthy. While this is well reflected in the valuation of big caps, it is not in small caps’. The discount of Indonesian small caps vs big caps is stunning, which is a legacy of the low visibility and reliability of those stocks in the past. Things have changed, and we expect a rapid catch up in the next few years, as it has happened in India. Through this niche NAM aims to give the investor exposure to this resourceful country through an actively managed small caps portfolio that offers absolute low valuations and a huge discount versus the Indonesia big caps.

13

Korea Reunification

A free option on an already attractive market


Korea Reunification breakdown

Asian Niches Fund

Korea Reunification

Niche Banks 1,6% 31%

Insurance 0,5% 10%

Constructions 0,3% 5%

Consumer Goods 0,4% 8%

Telecom 1,2% 24%

Cash 1,1% 22%

5,0% 100%

Source: Niche AM

Valuation Snapshot



Banks, 30%

Insurance, 10%

Constructions, 5%Consumer

Goods, 8%

Telecom, 23%

Cash, 24%

0.5

5.1

7.7

3.7

1.0

15.1

2.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EV / REVENUE (FWD)

EV / EBITDA (FWD)

P/E (FWD)



Korea Reunification

MSCI World

Korea; 100%

66.7

47.7

20 30 40 50 60 70 80

Korea Reunif.

MSCI World

14

Korea Reunification

A free option on an already attractive market

Monthly comment


Source: Niche AM

The Korean economy is healthy, and its market is cheap, even without considering a reunification or a rapprochement with North Korea. Today the expectations on these events have come down again while many sectors in the market are trading at multi-year lows. At the same time the corporate governance is improving, and dividends are increasing. We have started investing almost 80% of its NAV (3,9% vs 5% allocated), mostly in the telecom, financial and retail sectors. The Niche was negative for the week. The sub-niche Banks and Insurances fared poorly despite the strong capital ratios and the attractive valuations of the components. Also, the sub-niche Telecoms and Consumers Goods did badly while the sub-niche Constructions was unchanged.

Niche description

South Korea is the ideal market to play through a value approach, as it is cheap, and its economy is growing healthy. Beside this, it has a terrific catalyst, this being a reunification or some form of rapprochement, with its half (North Korea). This event could be able to increase the long-term growth potential of the country and to free the market animal spirits. The Korea reunification is a way to add a free option to an already attractive market. The niche aims to give the investor an exposure to the main beneficiaries of the reunification or of a rapprochement between the South and the North Korea.

15

Close the Gap

As simple as that …


Close the Gap breakdown

Asian Niches Fund

Close the Gap Niche

Preferred shares 1,4% 29%

Holding companies 0,7% 14%

Cash 2,9% 57%

5,0% 100%

Source: Niche AM

Valuation Snapshot




Preferred shares, 29%

Holding companies,

14%

Cash, 57%

0.4

2.9

5.2

4.4

1.5

15.1

2.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EV / REVENUE (FWD)

EV / EBITDA (FWD)

P/E (FWD)



Close the gap

MSCI World

Korea79%

Europe21%

44.5

47.7

20 30 40 50 60 70 80

Close the gap

MSCI World

16

Close the Gap

As simple as that …

Monthly comment


Source: Niche AM

We invested almost 50% of the niche NAV, putting 2/3 of it on Preferred Shares and 1/3 of it on holdings. The average discount vs the ordinary shares (for the preferred shares) or vs their sum of the parts (for the holding) is about 50% and the average dividend yield is about 4.4%. Room to sit and wait. During the week taken into consideration the sub-niche Holding Companies moved up while the sub-niche Preferred Shares drifted slightly down.

Niche description

There are some classes of shares, like saving/preferred, or some companies’ structures, like holdings or conglomerates, that can present huge discounts versus ordinary shares or the sum of the controlled companies. These discounts tend to close over time. Shares conversions, M&A, spin-offs, changes in dividend policies are normally the catalysts. The niche aims to give investors an exposure to these shares’ classes or companies structures.

17

Neglected Luxury

Overlooked rarity


Neglected Luxury breakdown

Asian Niches Fund

Neglected Luxury Niche

Champagne & Wines 0,5% 9%

Motors 0,9% 18%

High-End Furniture 0,3% 6%

Cash 3,3% 66%

5,0% 100%

Source: Niche AM

Valuation Snapshot




Champagne & Wines, 9%

Motors, 19%

High-End Furniture, 6%

Cash, 66%

1.0

6.8

14.6

3.4

1.0

15.1

2.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EV / REVENUE (FWD)

EV / EBITDA (FWD)

P/E (FWD)



Neglected Luxury

MSCI World

Europe 65%

America35%

41.2

47.7

20 30 40 50 60 70 80

Neglected Luxury

MSCI World

18

Neglected Luxury

Overlooked rarity

Monthly comment


Source: Niche AM

We invested 1.7% of the fund in this niche vs 5% allocated (34%), split between prestigious wineries, supercars makers and iconic furniture producers. All trading at depressed valuations. The strong performance in the sub-niche Motors was offset by the slightly negative performance in the sub-niche Furnitures and in the sub-niche Champagne&Wines.

Niche description

The luxury sector has been one of the winners of the last 2 decades. Globalisation, growing inequality, emerging markets and westernisation have been at the root of its growth. Luxury means not just quality, but also exclusivity and recognisability. Selling prices or supply constraints determine and warrant the rarity effect that encompass the concept of luxury. Although the market generously prices these luxury stocks, it sometimes does not recognise some companies as belonging to the luxury sector. There could be many reasons for this: low profitability; being part of a conglomerate; short term imbalance between supply and demand; corporate governance issues, etc. The niche aims to give the patient investor the opportunity to gain exposure to these unique stock at valuations that are extremely attractive.

19

Orphan Companies

Thinking outside the box


Orphan Companies breakdown

Asian Niches Fund

Oprhan Companies

Niche Funerary Services 0,2% 3%

Logistic Services 0,2% 3%

Electric Infrastructure 0,1% 3%

Utility Services 0,1% 3%

Moulding Machines 0,2% 3%

Central Banking 0,3% 6%

Cash 3,9% 79%

5,0% 100%

Source: Niche AM

Valuation Snapshot (historical metrics)



n.a.


3% 3%3%

3%3%

6%

79%

Funerary Services

Logistic Services

Electric Infrastructure

Utility Services

Moulding Machines

Central Banking

Cash

0.2

2.7

12.5

0.5

0,5 (on average 48% of market cap )

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EV/SALES

EV/EBITDA

P/E

P/TBV

NET CASH / MKT CAP

Orphan Companies

Japan71%

Europe29%

20

Orphan Companies

Thinking outside the box

Monthly comment


Source: Niche AM

We are gradually accumulating these companies. We have now invested 20% of the allocated NAV (5%). We have 6 companies in portfolio and our objective is to get to about 15/20 companies. Characteristics: solid and profitable business, low p/e valuations, huge cash balance, depressed p/tbv. All the components of the Niche recorded a positive performance. However, the high level of liquidity kept in the Niche watered down such a result. As mentioned before, we are still creating the portfolio of the Niche.

Niche description Brokers coverage is essential when attracting investors interest, improving liquidity and valuations. However, there are many companies in Asia that don’t have any coverage or are covered just by one local broker, we call them “orphan companies”. Reason being coverage can be expensive, time demanding, brokers have cut the number of analysts and now focus on fewer companies, etc. As the result the uncovered or under-covered companies trade a huge discount versus their peers. Normally this undue discount will be closed by the restart of the broker coverage or by corporate action. Those are deep value opportunities; however, investor has to be patient to reap the reward. The niche aims to give investors an exposure to deeply undervalued orphan companies.

21

Steel Substitution

Anticipating a trend


Steel Substituion breakdown

Asian Niches Fund

Steel Substitution

Niche Carbon Fiber 0,9% 18%

Fiber glass 0,3% 6%

Alluminium 1,0% 21%

Wood (Timber, CLT, Glulam) 1,5% 31%

Cash 1,3% 25%

5,0% 100%

Source: Niche AM

Valuation Snapshot



Carbon Fiber, 18%

Fiber glass, 6%

Alluminium, 21%

Wood (Timber, CLT, Glulam), 31%

Cash, 25%

0.9

6.1

12.9

2.6

1.1

15.1

2.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

EV / REVENUE (FWD)

EV / EBITDA (FWD)

P/E (FWD)



Steel Substitution

MSCI World

Japan19%

America57%

Europe24%

59.7

47.7

20 30 40 50 60 70 80

Steel Substitution

MSCI World

22

Steel Substitution

Anticipating a trend

Monthly comment


Source: Niche AM

We have invested almost 75% of the allocated NAV for this niche. We find the timing pretty good to accumulate aluminium, lumber and carbon fibres makers. Valuations are low due to tariffs and China. Long term outlook is bright. Lumber price came under strong pressure after reaching new highs in 2018. It halved in few months, putting huge pressure on the valuation of the main players in the sector that can now be accumulated at highly attractive levels. For the last week of February the sub-niches Carbon Fibers and Fiberglass pulled back a bit while the sub-niche Wood was harshly down. The sub-niche Aluminium was positive but not enough to reverse the Niche performance.

Niche description

Our infrastructures, our vehicles and our many devices are made partially of iron and its derivatives. Although materials such as plastic and aluminium have partially replaced it in some applications, it still plays a dominant role in our system. Its physical properties, the abundance of iron ores and its labour-intensive characteristic have kept its leadership solid and unchallenged. Up to a point though...Other materials are emerging with better qualities in terms of safety, resistance, weight and sustainability. As their prices will go down, steel will be gradually substituted and many of its mines and producing assets will go stranded. The niche aims to give the investor the opportunity to gain exposure to this growing trend of attractive valuations as the market still doesn’t appreciate it yet.

23

Bond Portfolio

# securities: 14 Average Yield to Maturity 6,5% Duration 3.0

Bond Portfolio breakdown

Rating Breakdown Sector Breakdown

Cash Management

# securities: 3 Average Yield to Maturity 1,1% Duration 1.5

24

DISCLAIMER

This document, any presentation made in conjunction herewith and any accompanying materials are preliminary and for information only. They are not an offering memorandum, do not contain any representations and do not constitute or form part of an offer or invitation to subscribe for any of Niche's funds. Further they do not constitute or form part of any solicitation of any such offer or invitation, nor do they (or any part of them) or the fact of their distribution, form the basis of, or can they be relied on, in connection with any contract therefor. The information contained in this report has been compiled by Niche Asset Management Ltd which is authorised and regulated by the Financial Conduct Authority (RN783048) and is registered in England & Wales 10805355. The information and views contained in this document are not intended to be complete and may be subject to change at any time. No representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information or views in this document and no liability for the accuracy and completeness of information is accepted by Niche Asset Management Ltd and/or its partners. The investment strategy of the Fund is speculative and involves a substantial degree of risk of losing some or all of the capital invested. Market, political, counterparty, liquidity and other risk factors may have a significant impact on the investment objectives of the Fund, while past performance is not a guide or otherwise indicative of future results. The distribution of this document and the offering of the Fund's shares in certain jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions could result in a violation of the laws of such jurisdiction. Any reproduction of this information, in whole or in part, without the prior consent of Niche Asset Management Ltd is also prohibited. This document may only be communicated or passed to persons to whom Niche Asset Management Ltd is permitted to communicate financial promotions pursuant to an exemption available in Chapter 4.12 of the Financial Conduct Authority’s Conduct of Business Sourcebook (“COBS”) (“Permitted Recipients”). In addition, no person who is an authorised person may communicate this document or otherwise promote the Fund or shares therein to any person it the United Kingdom unless such person is both (a) a Permitted Recipient and (b) a person to whom an authorised person is permitted to communicate financial promotions relating to the Fund or otherwise promote the Fund under the rules in COBS 4.12 applicable to such authorised person. The securities referenced in this document have not been registered under the Securities Act of 1933 (the “1933 Act”) or any other securities laws of any other US jurisdiction. Such securities may not be sold or transferred to US persons unless such sale or transfer is registered under the 1933 Act or exemption from such registration.

28/02/2019 - nicheam.com

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