Download - 2511 scv eur opps_cdf_0613
Jupiter European Opportunities SICAV
Cédric de Fonclare
June 2013
FOR PROFESSIONAL AUDIENCES ONLY. NOT FOR RETAIL INVESTORS.
Agenda
The team
Our philosophy and process
Current positioning
Stock examples
Portfolio data
Outlook
1
The team
Fund Manager:
Cédric de Fonclare
2
Fund Manager:
Gregory Herbert
14 years at Jupiter
€1.4bn AUM, of which 59% in Europe ex-UK mandates, 41% pan-European
Winner, Morningstar European Equities Fund Manager of the Year 2011
Source: Jupiter, AUM as at 31.03.13. Past performance is no guide to the future. Note: Years at Jupiter as at 04.06.13.
8 years at Jupiter, of which 6 on European equities team
Assistant to Cédric since 2007
Manager, European portion of Jupiter Global Managed, Jupiter European Income and Jupiter Global Equity Income and Co-manager Jupiter Global Equities (SICAV)
Jupiter’s investment team 3
Equity-focused culture (€34bn AUM, 58.2% equities; 39.5% FI, mixed assets & cash; 2.3% alternatives)
Common stock picking approach
Experienced team, all based in one location
High staff retention rate (average >8 years for fund management team)
European team (7 members)
UK team (8 members)
Fixed income (8 members)
Financials (3 members)
US (1 member)
EMs (9 members)
Japan (2 members)
SRI (3 members)
Successful formula, tried and tested over many years Source: Jupiter, AUM as at 31.03.13. Past performance is no guide to the future.
Agenda
The team
Our philosophy and process
Current positioning
Stock examples
Portfolio data
Outlook
4
Investment philosophy
Bottom-up stock picking
Majority of portfolio targeting quality companies with visible growth
Strict valuation discipline
Pragmatic allocation of portfolio targeting mean reversion in valuation over the cycle
Broad diversification, with rigorous risk controls
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Investment process 6
Filtering our investment universe
Stock selection
Portfolio construction
Risk control
Our investment universe
Addressable universe of European stocks narrowed down by market cap
Our addressable universe: c.1300 stocks > EUR1bn market cap
Average market cap of portfolio: EUR 23bn*
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*Source: Jupiter as of 31.01.13. Total Western European universe = c.9900 companies .
Stock selection – filtering our investment universe
Investment universe Diversified exposure across European markets and sectors
Focus on large and mid caps
Quantitative screening for: Sustainable economic profit
Low implied expectations
Intra-sector value
Qualitative Direct contact with senior company management
Jupiter’s internal expertise across different specialities
External input
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Stock selection – process
Qualitative assessment Industry dynamics, barriers to entry
Business model sustainability
Strategy for growth
Financial characteristics Organic growth development
Margin stability: gross margin development, operating leverage
Cash flow generation
Valuation Historical valuation (Cyclically-adjusted P/E, Price/book, EV/EBITDA)
Peer comparison
Reverse DCF
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No substitute for direct company contact!
Portfolio construction
Structure: Typically 45-60 stocks held
1%-4% positions, all large active positions vs. benchmark
Weighting defined by upside potential and risk diversification benefits
Style Core of portfolio: visible defensive growth (exposure to structural growth,
consistent historical returns, typically multi-year holdings)
Tactical allocation: pragmatic approach through economic cycle; mean reversion in valuation
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Visible defensive growth – investment themes 11
Unique assets ASML
Market leaders Swatch
Demographics Syngenta
Outsourcing SGS
Globalisation Zodiac
Energy demand Schneider Electric
Emerging Markets Linde
Core portfolio
Risk management
Formal Jupiter risk management Trading: central dealing desk, managed via Charles River
Independent risk analytical team: measure active risk ex ante analytics through Barra, liquidity risk via FactSet
Compliance guidelines: independent portfolio monitoring
Independent risk committee: monthly and quarterly performance review
Dynamic Understand what you are investing in! Business risk paramount – regular
meetings with companies and competitors
Manage active risk by sector, growth drivers
Focus on liquid stocks
Selling discipline: No more upside; structural change in investment case; errors of judgment…
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Agenda
The team
Our philosophy and process
Current positioning
Portfolio data
Outlook
13
Portfolio information
Top 20 holdings Portfolio features
Source: Jupiter as at 30.04.13. *Small: below €1bn, Mid: €1bn-5bn, Large: €5bn+. Excludes cash.
Investable market cap split*
Fund size €161m
Number of holdings 56
Equities 98.5%
Cash 1.5%
% UBS 3.0 Sanofi 2.8 Adidas 2.7 Linde 2.6 SAP 2.6 Bayer 2.5 Inmarsat 2.4 Ryanair 2.4 Safran 2.4 Prudential 2.4 SES Global 2.3 Syngenta 2.3 The Swatch Group 2.2 SCA-B 2.2 Zodiac 2.2 Givaudan 2.2 GlaxoSmithKline 2.2 Fresenius Medical Care 2.1 Experian 2.0 Neopost 2.0
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Diversified and liquid portfolio
Large, 81.9%
Mid, 18.1%
Top 10 active positions 15
Diversified active exposure
Name Active weight (%)
Ryanair IR Consumer Services 2.6
Adidas AG DE Consumer Goods 2.5
Safran FR Industrials 2.3
Linde DE Basic Materials 2.2
Inmarsat GB Telecommunications 2.2
Zodiac Aerospace FR Consumer Services 2.2
UBS CH Financials 2.1
SES LU Consumer Services 2.1
Givaudan GB Consumer Goods 2.1
Swatch CH Consumer Goods 2.0
Source: FactSet, average over 1 month period, as at 31.05.13.
0% 5% 10% 15% 20% 25%
Oil & Gas
Telecommunications
Technology
Consumer Services
Health Care
Basic Materials
Consumer Goods
Financials
Industrials
Portfolio information
Geographical breakdown Sector breakdown
Source: Jupiter as at 31.05.13.
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0% 10% 20% 30% 40%
Netherlands
Italy
Luxembourg
Finland
Ireland
Denmark
Norway
Sweden
France
Switzerland
Germany
UnitedKingdom
Portfolio information
Sector weightings relative to FTSE World Europe
Source: Jupiter, FactSet 31.05.13.
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International reach with reduced political risk
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Industrials BasicMaterials
Technology ConsumerServices
Health Care Telecoms Utilities Financials ConsumerGoods
Oil & Gas
Portfolio information
Country weightings relative to FTSE World Europe
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Overweight Northern Europe Source: Jupiter, FactSet 31.05.13. *Other = countries valued between 0.5 to -0.5 this includes: Austria, Czech Republic, France, Greece, Hungary, Kazakhstan, Mexico, Portugal and US.
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
Ger
man
y
Irela
nd
Nor
way
Switz
erla
nd
Luxe
mbo
urg
Den
mar
k
Finl
and
Uni
ted
Kin
gdom
Pola
nd
Oth
er*
Turk
ey
Swed
en
Bel
gium Ita
ly
Net
herla
nds
Spai
n
Agenda
The team
Our philosophy and process
Current positioning
Stock examples
Portfolio data
Outlook
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Structural growth in air passenger traffic 20
Global financial crisis
Gulf war, economic slowdown
Passenger traffic growth 4.9% per annum Source: Zodiac Aerospace, ID Aero, 2011.
Asian crisis
9/11, SARS, Iraq war economic slowdown
Zodiac Aerospace: Beneficiary of fleet growth and refurbishment 21
Note: Permission obtained for image rights from Zodiac Aerospace, 28.11.12.
Old A320 interior Refurbished A320 interior
Dufry: Growth in airport retail 22
Note: Permission obtained for image rights from Dufry, 26.11.12.
Mexico City 2006 Mexico City 2012
Agenda
The team
Our philosophy and process
Current positioning
Stock examples
Portfolio data
Outlook
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Premium for quality remains low
Portfolio financial analysis
Jupiter European Opportunities SICAV
Source: Credit Suisse HOLT May 2013. *CFROI = Cash flow return on investment. **Leverage = Debt / (Debt + Equity). ***Mean unweighted. Past performance is no guide to the future.
Euro Opps SICAV FTSE World Europe Difference
Sales growth 5yr (%) 8.0 6.0 2.0
CFROI* (5yr median) (%) 15.1 11.1 4.0
EPS growth 5yr (%) 11.0 0 11.0
CFROI* 2013E (%) 15.3 10.9 4.4
CFROI* 2014E (%) 15.7 11.1 4.6
Leverage** (%) 21.6 31.0 -9.4
P/E 2013E 16.4 14.9 1.5
P/B LFY 3.8 2.8 1.0
Jupiter European Opportunities SICAV
Source: FE, bid to bid, net income reinvested as at 31.05.13. Index = FTSE World Europe. Past performance is no guide to the future.
Risk data 25
3 year 5 year
Beta 1.0 0.9
Information ratio 0.3 0.4
Sharpe ratio 0.9 0.2
Tracking error 5.8% 5.8%
Fund volatility 13.4% 17.0%
Index volatility 12.4% 17.8%
Jupiter European Opportunities SICAV
Performance – cumulative
Source: FE, tax gross, fees net, bid – bid, EUR, Total Return to 17.08.01 to 31.05.13. Sector: FO Equity – Europe Inc. UK. On 10.10.05 the benchmark for this Fund was changed from the FTSE Actuaries World (Euro) to FTSE World Europe Index (Euro), all benchmark figures are using the new benchmark. Past performance is no guide to the future.
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YTD % 1 year %
3 years %
5 years %
Since inception (17.08.01) %
European Opportunities SICAV 12.3 27.2 43.0 23.3 70.4
FTSE World Europe 9.7 30.0 35.4 10.8 47.4
Position in sector 35 / 208 120 / 206 48 / 178 35 / 159 8 / 73
Jupiter European Opportunities SICAV
Performance over five years
Source: FE, bid to bid, gross income reinvested, net of fees in Euros 31.05.08 to 31.05.13. Past performance is no guide to the future.
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-60
-50
-40
-30
-20
-10
0
10
20
30
40
May 08 May 09 May 10 May 11 May 12 May 13
% G
row
th
Jupiter - European Opportunities L Acc EUR in EU 23.30 FTSE World Europe Index TR in EU 10.75
FO Equity - Europe inc UK TR in EU 7.97
Jupiter European Opportunities SICAV
Performance over ten years
Source: FE, bid to bid, gross income reinvested, net of fees in Euros 31.05.03 to 31.05.13. Past performance is no guide to the future.
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-20
0
20
40
60
80
100
120
140
160
180
200
May 03 May 04 May 05 May 06 May 07 May 08 May 09 May 10 May 11 May 12 May 13
% G
row
th
Jupiter - European Opportunities L Acc EUR in EU 167.08 FTSE World Europe Index TR in EU 111.98FO Equity - Europe inc UK TR in EU 93.66
Jupiter European Opportunities SICAV
Performance – discrete years
Source: FE, in EUR, bid to bid, net income reinvested as at 31.05.13. Past performance is no guide to the future.
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YTD % 2012 % 2011 % 2010 % 2009 % 2008 % 2007 % 2006 % 2005 % 2004 %
Jupiter European Opps 12.3 22.9 -10.3 16.4 27.7 -38.7 1.3 32.2 29.7 18.4
FTSE World Europe Index 9.7 18.8 -8.5 11.7 33.1 -43.2 3.6 20.7 26.8 12.6
Position in sector 35 / 208 44 / 202 107 / 189 55 / 173 116 / 168 33 / 154 74 / 138 3 / 121 28 / 114 9 / 102
Fund ranked 35 / 159 in sector over past 5 years
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Jupiter European Opportunities SICAV vs. benchmark
Source: FE, tax gross, fees net, bid – bid, EUR, Total Return to 31.05.13. Sector: FO Equity – Europe Inc. UK. On 10.10.05 the benchmark for this Fund was changed from the FTSE Actuaries World (Euro) to FTSE World Europe Index (Euro), all benchmark figures are using the new benchmark. Past performance is no guide to the future.
Relative returns
5.8
2.9
11.5
-2.3
4.5
-5.5
4.7
-1.8
4.2
2.6
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD
Stock attribution to return – 1 year to 31.05.13 31
Company Contribution to return %
Skandinaviska Enskilda Banken 0.88
DNB 0.47
Prudential 0.46
Nestle 0.43
Ryanair 0.41
Bayer 0.38
SAFRAN 0.38
UBS 0.37
Vodafone 0.36
Royal Dutch Shell 0.35
Top 10 Total 4.47
Source: Jupiter / FactSet, 31.05.12 to 31.05.13. Highlighted stocks no longer held. Italic stocks were not held. Buy and hold basis and excluding cash. Past performance is no guide to the future.
Top 10 contributors to return
Top 10 companies
Bottom 10 contributors to return
Company Contribution to return %
Fresenius Medical Care -0.79
Aggreko -0.57
AZ Electronic Materials -0.50
Roche Holding -0.40
AMEC -0.38
Nokian Tyres -0.38
Pearson -0.33
Fugro -0.33
Dufry -0.32
Croda International -0.28
Bottom 10 Total -4.28
Contribution by sector
Jupiter European Opportunities FTSE World Europe
Industry Average
Weight Total
Return Contribution
To Return Average
Weight Total
Return Contribution
To Return Total
Effect
Telecommunications 3.73 41.72 1.64 5.24 11.26 0.72 1.45
Oil & Gas 3.62 0.11 0.02 10.54 11.38 1.46 0.70
Utilities -- -- -- 4.40 16.57 0.83 0.56
Consumer Goods 10.15 30.17 2.96 18.19 27.42 5.01 0.50
Technology 6.47 39.91 2.42 2.70 37.91 0.97 0.39
Basic Materials 14.45 23.19 3.36 9.33 16.69 1.73 0.13
Consumer Services 8.56 29.27 2.60 6.46 34.59 2.17 -0.20
Industrials 21.47 30.86 6.44 11.62 33.46 3.73 -0.44
Cash 1.91 20.30 0.12 -- -- -- -0.46
Financials 15.57 49.52 7.18 20.45 52.76 9.68 -1.28
Health Care 14.08 21.74 3.16 11.05 34.08 3.64 -1.42
Total 100.00 29.89 29.89 100.00 29.94 29.94 -0.05
Source: Jupiter / FactSet, 31.05.12 to 31.05.13. Past performance is no guide to the future.
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Jupiter European Opportunities SICAV
Contribution by country
Jupiter European Opportunities FTSE World Europe
Total Effect Country of Domicile
Average Weight
Total Return
Contribution to Return
Average Weight
Total Return
Contribution to Return
Sweden 3.20 86.23 2.15 4.82 36.93 1.71 1.01
Norway 2.98 60.48 1.63 1.50 24.66 0.40 0.82
Ireland 0.83 24.75 0.57 0.45 23.75 0.10 0.46
France 12.64 40.16 4.88 14.21 35.70 4.96 0.41
Luxembourg 2.58 30.89 0.82 0.49 11.29 0.08 0.14
Netherlands 1.93 47.22 0.59 4.05 35.48 1.39 -0.22
United Kingdom 34.29 20.01 7.51 33.37 21.21 7.52 -0.24
Italy 1.22 12.24 0.16 3.41 33.28 1.14 -0.30
Finland 3.19 17.15 0.70 1.13 35.36 0.38 -0.31
Spain -- -- -- 4.32 42.94 1.79 -0.54
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Top and Bottom 5
Source: Jupiter / FactSet, 31.05.12 to 31.05.13. Past performance is no guide to the future.
Jupiter European Opportunities SICAV
Agenda
The team
Our philosophy and process
Current positioning
Portfolio data
Outlook
34
Outlook I
Debt deleveraging is a headwind that will take years to subside
Have margins peaked?
Are companies underinvesting in their businesses?
European companies continue to grow internationally
Valuations in Europe are at historical lows
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Represents the views of the fund manager at the time of the presentation and may change in the future.
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Ongoing deleveraging will continue to affect growth
*Source: Eurostat, March 2013. **Source: Eurostat, OECD, European Commission, IMF, SG Cross Asset Research / Economics. 1) Ireland: 2002 vs. 2011. Fund manager views at the time of writing and will change in the future.
GDP forecasts *
Deleveraging is a long-term process
-6
-4
-2
0
2
4
6
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Euro area Germany Spain France Italy
It took 30 years to reach current debt levels
How long will it take to unwind?
Eurozone in recession in 2012
Forecasts keep being revised lower
1980 debt vs. 2011**
Outlook II
Debt deleveraging is a headwind that will take years to subside
Have margins peaked?
Are companies underinvesting in their businesses?
European companies continue to grow internationally
Valuations in Europe are at historical lows
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Represents the views of the fund manager at the time of the presentation and may change in the future.
Is mean reversion in margins inevitable?
Have companies been underinvesting?
Is pricing pressure inevitable?
BUT…
Operating costs as % of sales has steadily decreased
Capital intensity has decreased
Globalisation impact
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0
2
4
6
8
10
12
14
16
18
0
5
10
15
20
25
30
35
40
45
Dec 93 Dec 96 Dec 99 Dec 02 Dec 05 Dec 08 Dec 11
Gross Margin SG&A margin EBIT margin (RHS)
Source: FactSet, 28.02.13. Index used is MSCI Europe.
Breakdown of EBIT margins MSCI Europe
Outlook III
Debt deleveraging is a headwind that will take years to subside
Have margins peaked?
Are companies underinvesting in their businesses?
European companies continue to grow internationally
Valuations in Europe are at historical lows
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Represents the views of the fund manager at the time of the presentation and may change in the future.
Are companies underinvesting in their businesses? 40
European sales, capex and nominal GDP (1980 = 100)
Source: UBS European Equity Strategy, Worldscope, DataStream; UBS European Market Map 13.02.13. Fund manager views at the time of writing and will change in the future.
Europe (ex financials) net debt / EBITDA
Capex has not kept pace with record sales and profitability
Weak demand? Sweating assets? Lack of finance? Change in industrial mix?
Will this allow competitors to gain ground?
Balance sheets are thus strong
Strong get stronger; cash gives optionality: M&A
Dividend growth
Outlook IV
Debt deleveraging is a headwind that will take years to subside
Have margins peaked?
Are companies underinvesting in their businesses?
European companies continue to grow internationally
Valuations in Europe are at historical lows
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Represents the views of the fund manager at the time of the presentation and may change in the future.
Average international sales exposure by region (2011)
Europe is one of the most export-focused regions Source: Goldman Sachs Research October 2011.
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Outlook V
Debt deleveraging is a headwind that will take years to subside
Have margins peaked?
Are companies underinvesting in their businesses?
European companies continue to grow internationally
Valuations in Europe are at historical lows
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Represents the views of the fund manager at the time of the presentation and may change in the future.
Price/book ratios for selected markets
Source: Bloomberg in EUR, 31.05.03 - 31.05.13.
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0
0.5
1
1.5
2
2.5
3
3.5
Jun 03 Sep 04 Dec 05 Mar 07 Jun 08 Sep 09 Dec 10 Feb 12 May 13
DJ Eurostoxx 600 S&P 500 FTSE 100 Nikkei 225 Hang Seng
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Cyclically adjusted P/E
Source: Citigroup 18.01.13.
Valuations are at long-term lows
5
10
15
20
25
30
35
40
45
50
55
83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13
European CAPE European average US CAPE US average
Outlook 46
What we know…
What we are focusing on…
What we believe…
…Eurozone crisis is not going to be resolved quickly
…Debt deleveraging will take a long time and has already increased risks in a number of sectors
…Capturing international growth …Avoiding politically sensitive industries
In a low growth environment strong companies will get stronger
That growth is often available at a surprisingly small premium
Fund manager views at the time of writing and will change in the future –October 2012. They may be subject to change and should not be interpreted as investment advice.
Disclosure
Jupiter Asset Management Limited (‘JAM’) is registered in England and Wales (nos. 2036243). The registered office is 1 Grosvenor Place, London SW1X 7JJ. JAM is authorised and regulated by the Financial Conducts Authority whose address is 25 The North Colonnade, Canary Wharf, London E14 5HS.
This presentation is intended for investment professionals and not for the benefit of private retail investors. However any one attending the presentation or who has the opportunity to view the accompanying slides should bear in mind that the value of an investment in a unit trust and the income from it can go down as well as up. It may be affected by exchange rate variations and you may not get back the amount invested. Initial charges are likely to have a greater proportionate effect on returns if investments are liquidated in the shorter term. Quoted yields are not guaranteed. Past performance should not be seen as a guide to future performance.
The investment returns are denominated in EUR. Non-Euro investors will be exposed to exchange rate fluctuations. This Fund can invest more than 35% of its value in securities issued or guaranteed by an EEA state. the KIID and Fund Prospectus are available from Jupiter on request. The KIID is available from Jupiter in the following languages: English, Dutch, Finnish, Swedish, Portuguese, French and German
This document contains information based on the FTSE World Europe Index and FTSE 100. ‘FTSE®’ is a trade mark owned by the London Stock Exchange Plc. and is used by FTSE International Limited (‘FTSE’) under license. The FTSE the FTSE World Europe Index and FTSE 100 are calculated by FTSE. FTSE does not sponsor, endorse or promote the product referred to in this document and is not in any way connected to it and does not accept any liability in relation to its issue, operation and trading. All copyright and database rights in the index values and constituent list vest in FTSE.
For your security we may record or randomly monitor all telephone calls. If you are unsure of the suitability of an investment please contact your financial advisor. Any data or views given should not be construed as investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given.
This document contains information based on the MSCI Europe Index. Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.
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2511_SCV_EUR OPPS_CDF.