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GLOBAL INVESTORAsset Management Newsletter from ADCB

April 2014

Global Market

Performance

Macro

Themes

Product

Spotlight

Performance

Review

adcb.com


APRIL 2014

Global Market

Performance

Macro

Themes

Product

Spotlight

adcb.com

Global Market PerformanceFollowing their stronger performance in February,

global equity markets turned lower in March, as most

of the indices in our coverage declined. Investors

worldwide focused on the escalating crisis between

Ukraine and Russia and concerns regarding China’s

economic slowdown. US markets such as Nasdaq

declined 2.53% in March as continuous selloff in the

biotechnology and technology sector weighed on

the overall market. However, the Dow Jones and S&P

500 gained 0.83% and 0.69%, respectively, on

positive domestic macro data, including GDP, jobless

claims, and consumer confidence. Further, the FTSE

lost 3.10% as political relationships between the West

and Russia deteriorated. The Hang Seng fell 3.0%

after the country reported its first ever domestic

corporate bond default (a situation that the

authorities exacerbated by signaling they may allow

other struggling companies to suffer the same fate)

and concerns mounted over China’s economy. The

Nikkei closed 0.09% lower after US Federal Reserve

Chair Janet Yellen raised the prospect of interest rate

hikes starting earlier than markets had previously

expected. However, the Sensex jumped 5.99% as

wholesale price inflation fell to a nine-month low, the

current account deficit improved, and markets

reported strong foreign institutional buying.

The GCC ended the month bearishly, with five

indices finishing lower and two higher. The MSM 30

and KSE underperformed other regional markets,

declining 3.61% and 1.56%, respectively. The MSM 30

fell back, mainly due to losses in the Industrial and

Services sectors, while the KSE decreased on

negative sentiment in the Consumer Services and

Real Estate sectors.

Further, copper prices dropped 7.05% on geopolitical

tensions and growing default risks in China, its largest

importer, as global supplies continue to increase.

Meanwhile, Natural Gas fell 5.16% amid concerns that

the arrival of spring will bring warmer temperatures

throughout the US and cut into demand for heating.

Wheat prices rose 16.39% as traders worried that

Ukraine's escalating crisis may hurt the country’s grain

exports. Meanwhile, corn prices rose 9.75% to a five-

month high, also due to unrest in Ukraine.

Performance

Review

Global Market

Performance

Macro

Themes

Product

Spotlight

Performance

Review

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Global Market Performance

Index Snapshot (World Indices) Commodities, Yields and Currencies

Index Latest 1M Change 1Yr Change YTD Commodity Latest 1M Change 1Yr Change YTD

S&P 500 1,872.34 0.69% 19.32% 1.30% NYMEX Crude 101.58 (0.98%) 4.47% 3.21%

Dow Jones 16,457.66 0.83% 12.89% (0.72%) OPEC 104.27 (1.72%) (2.36%) (3.96%)

NASDAQ 4,198.99 (2.53%) 28.51% 0.54% Natural Gas 4.37 (5.16%) 8.62% 3.33%

Hang Seng 22,151.06 (3.00%) (0.67%) (4.96%) Gold 1,283.40 (2.88%) (19.53%) 6.78%

Nikkei 14,827.83 (0.09%) 19.60% (8.98%) Platinum 1,418.50 (1.92%) (9.72%) 3.46%

FTSE-100 6,598.37 (3.10%) 2.91% (2.23%) Copper 6,645.00 (7.05%) (12.36%) (10.14%)

Sensex 30 22,386.27 5.99% 18.85% 5.74% Sugar 17.77 0.62% 0.62% 8.29%

MSCI World 1,673.87 (0.09%) 16.69% 0.77% Soybean 1,464.00 3.52% 4.23% 11.55%

MSCI EM 994.65 2.92% (3.89%) (0.80%) Corn 502.00 9.75% (27.79%) 18.96%

TASI 9,473.71 4.03% 32.95% 10.99% Wheat 697.20 16.39% 1.40% 15.20%

DFM 4,451.00 5.46% 143.33% 32.08% Rice 15.60 1.46% 1.56% 0.58%

ADX 4,894.42 (1.30%) 61.78% 14.08% Yields and Currencies 101.58 (0.98%) 4.47% 3.21%

KSE 7,572.81 (1.56%) 12.67% 0.31% 2Y Treasury 0.44 0.11 0.19 0.06

BSE 1,356.91 (1.15%) 24.31% 8.65% 10Y Treasury 2.73 0.07 0.86 (0.31)

MSM 30 6,856.89 (3.61%) 14.48% 0.33% EUR 1.3775 0.67% 7.44% 0.05%

DSM 11,639.79 (1.12%) 35.70% 12.14% GBP 1.6662 (0.02%) 9.55% 1.04%

JPY 102.80 0.60% 9.18% (2.30%)


APRIL 2014

Indian Markets rally in 2014

So far this year, major global equity markets have

performed poorly, yielding negative investment

returns. Expected slower economic growth in China,

rising tension between the West and Russia over the

annexation of the Crimean peninsula, and a liquidity

squeeze caused by US Fed tapering have all

contributed to the downturn. Nevertheless, Indian

equity markets have shown greater resilience in 2014,

largely due to the country’s improved macro-

economic fundamentals. Its major economic

indicators including GDP growth, inflation and the

current account deficit (CAD) are either improving or

have bottomed out. All are expected to recover both

this year and next. As a result, many foreign funds

have increased their exposure to India. Politically,

they also expect improved governance once the

country’s national elections are over in April-May.

Since the end of 2013, foreign institutional investors

(FII) have invested USD 2.84bn in Indian stock

markets.

During the first few months of this year, the Sensex

rose 4.0% (as of March 25), while the MSCI World and

Emerging Market indices lost 0.8% and 5.0%,

respectively. Indeed, the Sensex has outperformed

most major global equity markets in 2014, including

the NASDAQ (up 1.19%) and S&P 500 (up 0.49%),

while the Nikkei, Hang Seng, FTSE and Dow Jones

indices have posted negative returns of 11.15%, 6.26%,

3.39% and 1.81%, respectively.

Source: Reuters

Indeed, India (as measured by the Sensex) has

outperformed all other BRIC states, including South

Africa (up 1.3%), while China, Russia and Brazil have all

reported negative returns.

Weak performances by equity markets in developed

countries so far this year are, as already stated,

Source: Reuters

attributable to a possible slowdown in China and the

Crimea crisis. Both could impede or derail the global

economic recovery in 2014 and 2015.

Global Market

Performance

Macro

Themes

Product

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Performance

Review

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Macro Themes


APRIL 2014

90

95

100

105

1-Jan

-14

14-J

an

-14

28

-Jan

-14

11-F

eb

-14

25-F

eb

-14

11-M

ar-

14

25-M

ar-

14

(Index to 100)

Sensex v/s MSCI Emerging v/s MSCI World

Sensex MSCI Emerging markets MSCI World

+4.0%

-5.0%

-0.8%

80

85

90

95

100

105

1-Jan

-14

14-J

an

-14

28

-Jan

-14

11-F

eb

-14

25-F

eb

-14

11-M

ar-

14

25-M

ar-

14

(Index to 100)

BRICS YTD stock market performance

Sensex MCX10 BOVESPA

SSEC JSE SA

+4.0%

-12.7%

-6.8%

-2.4%

+1.3%

GLOBAL INVESTOR

Global Market

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Macro ThemesAs a result, funds have switched from equity markets

to other safe haven assets such as gold, the price of

which has risen 9% as of March 25 this year, after

falling 28% in 2013.

Additionally, performances by emerging equity

markets have also been adversely affected by a

liquidity squeeze, due to the Fed’s tapering program,

Source: Reuters

which began in January 2014. Since then, the bank

has reduced its bond buying program to USD 55bn

monthly from USD 85bn previously to reflect the

continuing recovery in the US economy. As a result,

many emerging markets have suffered outflows of

capital, which have caused sharp declines in both

their currencies and equity markets.

Meanwhile, Indian equity markets have outperformed

their counterparts worldwide, as investors returned to

the market, impressed by the country’s improving

macro-economic fundamentals and potential for

greater political stability. Sectors such as Capital

Goods, Banking and Consumer Durables which will

directly benefit from the improved economic growth

have gained 16.7%, 10.9% and 8.5%, respectively, so

far this year and have outperformed other sectors

such as IT, Technology and Metal which declined

4.0%, 3.8% and 4.3%, respectively. IT and Technology

will be negatively impacted by the Rupee

appreciation as majority of their revenues comes

from exports, while expected slowdown in China is

likely to impact earnings for the companies in the

Metal sector.

Note: As of March 27, 2014

Source: BSE

After comparatively modest increases in FY13 and

FY14, the IMF forecasts Indian GDP growth will

accelerate from 3.8% in FY14 to 5.1% in FY15 and 6.3%

in FY16. Moreover, recently decreased inflation has

provided further support, with many economists

believing lower inflation will enable the Reserve Bank

of India (RBI) either to lower interest rates or at least

ensure they rise no further, helping boost GDP

growth both this year and in FY15.

Asset Management Newsletter from ADCB

APRIL 2014

88

92

96

100

104

1-Jan

-14

14-J

an

-14

28

-Jan

-14

11-F

eb

-14

25-F

eb

-14

11-M

ar-

14

25-M

ar-

14(Index to

100)

BRICS YTD currency performance

INR RUB BRL CNY ZAR

+2.3%

-8.4%

+1.7%

-2.2%

-3.4%

16.7

10.9

8.5

-3.8 -4.0 -4.3

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

CAP.GOODS

BANKEX CONSUMERDUR.

TECK IT METAL

(Per cent)

Sensex YTD sectoral performance

Global Market

Performance

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Macro Themes

Source: IMF

Source: Trading Economics

Currently, most emerging markets suffer from high

CAD, due to lower economic growth and high

inflation. To prevent further deterioration, the

Government of India raised the import duty on gold

from 6% in January 2013 to 10% in August 2013,

resulting in a significant decline in its importation in

2013. Gold is the country’s second largest import

after crude oil.

Source: IMF

Moreover, stronger economic activity in high income

regions such as the US and Europe is also boosting

Indian exports. All these factors have helped decrease

India’s CAD. As a result, the IMF now expects the

country’s CAD to improve from a negative 4.8% of

GDP in FY13 to negative 4.4% in FY14 and negative

3.8% in FY15, while local rating agency CRISIL

forecasts India’s CAD will narrow to a six-year low of

negative 2.0% in FY14, before increasing to negative

2.7% in FY15 as imports pick up.

Given the turnaround in India’s macro-economic

fundamentals and the expected positive outcome of

the upcoming general election due in April-May,

many global fund managers have increased their

exposure to India. So far this year, a total of USD

2.84bn have flooded into the country’s equity

markets, compared to only USD 0.57bn in South

Africa and USD 0.47bn in Brazil. Meanwhile, Japan

has suffered an outflow of USD 19.50bn and South

Korea around USD 3.41bn.


APRIL 2014

10.5

6.3

3.2 3.85.1

6.3

0.0

5.0

10.0

15.0

FY 2011 FY 2012 FY 2013 FY 2014E FY 2015E FY 2016E

(Per cent)

India's GDP growth rate

GDP % chg (Constant price)

10.8

10.9

10.4

9.4

9.3 9.9

9.6

9.5 9.8 10

.2 11.2

9.9

8.8

8.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Jan

-13

Feb

-13

Mar-

13

Ap

r-13

May-1

3

Ju

n-1

3

Ju

l-13

Au

g-1

3

Sep

-13

Oct-

13

No

v-1

3

Dec-1

3

Jan

-14

Feb

-14

(Per cent)

India's inflation rate - CPI

-2.7

-4.2

-4.8-4.4

-3.8-3.4

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

FY 2011 FY 2012 FY 2013 FY 2014E FY 2015E FY 2016E

(Per cent)

India's current account balance

Current account balance (% of GDP)

Global Market

Performance

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Macro Themes

Note: As of March 26, 2014

Source: Bloomberg

In conclusion, we expect India to continue to

outperform other emerging and developed markets

in 2014 based on its improving macro-economic

indicators such as GDP, inflation and CAD. Moreover,

returns from Indian equity markets may improve

substantially later this year if any major political party

secures an absolute majority at the forthcoming

elections in April-May.


APRIL 2014

2.84

-3.41

0.57 0.47

-19.50-20

-15

-10

-5

0

5

India S.Korea S.Africa Brazil Japan

(USDbn)

Net foreign equity flows

Foreign equity flows net (YTD 2014)

Global Market

Performance

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Themes

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Macro ThemesUAE aviation sector continues to scale new heights

The UAE aviation industry has been the catalyst for

transforming and rapidly expanding the UAE into an

International Hub. The government’s determination

to ensure the country possesses global connections

and substantial investments in UAE airports and

airlines to promote a world class aviation industry in

the UAE are both progressing well. Regional

passenger and cargo traffic is forecast to increase,

due to UAE’s strategic location, its popularity for

business and leisure travel, and Dubai’s recent

successful bid to host World Expo 2020. Moreover,

the UAE aviation industry is also set to benefit from

inorganic growth as major domestic airlines diversify

into related businesses. The country’s aviation

industry is now a core component of the UAE

economy. According to the UAE General Civil

Aviation Authority (GCAA), it is forecast to contribute

approximately 15% of regional GDP by 2016,

compared with an estimated 12% in 2013.

In the development of the UAE aviation sector, the

government has played a key role in creating a

business-friendly environment for air transport by

introducing low taxes and world-class infrastructure.

The GCAA has always focused on opening new

markets to UAE carriers. Today, the UAE is signatory

to 160 air service agreements (ASA) with 160

countries, permitting the country’s carriers to land at

foreign airports. In addition, Dubai’s aviation industry

has also benefited from the emirate’s strategic

location. The region is within eight hours flying time

of most of the world’s important destinations and

two-thirds of its population, making Dubai

International Airport (DXB) one of the busiest in the

world. In 1972, the airport serviced only nine airlines,

connecting around 20 destinations. Currently,

passengers can choose from more than 260

destinations offered by over 145 carriers. As a result,

the total number of passengers using DXB exceeded

66.4 million in 2013 compared with 57.6 million in

2012. With increasing demand for flight slots and

rapidly growing passenger numbers DXB was

previously projected to overtake London’s Heathrow

as the world’s most popular international airport by

2015. However according to the latest data published

by airport authorities, DXB is already the busiest

airport for international passengers globally, with

more than 12.1 million in January and February this

year, compared with 10.3 million at Heathrow. Even

on an annual basis DXB’s passenger volume will

probably exceed London Heathrow’s if the low single

digit growth expected by Heathrow airport authorities

in 2014 proves accurate.

Source: Airport authority, Press release


APRIL 2014

57.6

66.4

12.1

69.8 72.3

10.3

0

10

20

30

40

50

60

70

80

2012 2013 Jan-Feb 2014

(Mn)

International passenger traffic

Dubai International London Heathrow

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Macro ThemesSupported by steady, almost inexorable growth in

passenger traffic, government and airport authorities

have increased investments in airport infrastructure

across the UAE. To accommodate future expansion,

Dubai has built the Al Maktoum International Airport

(AMIA), located on the outskirts of Dubai in Jebel Ali.

The airport currently operates as an aviation cargo

center. In time, it is expected to become the largest

airport in the world at a budgeted cost of AED 36bn

(USD 10bn). It will occupy an area of 140 square

kilometers and be capable of serving 160 million

passengers and 12 million tons of freight annually.

Moreover, DXB is investing further in airport and

airspace expansion, which it expects will raise the

airport’s passenger handling capacity to 90 million

annually by 2018 from 60 million in 2011, at a cost of

AED 28.8bn (USD 7.8bn).

Similarly, Abu Dhabi International Airport is building

the new Midfield Terminal, which is expected initially

to increase annual passenger handling capacity to 30

million by 2017 from 17.5 million currently.

Source: Airport authority

Despite the enormously significant roles played by

the UAE government and regional airport authorities

in helping develop its aviation industry, substantial

expansion of operations by major local carriers such

as Emirates Airline, Etihad Airways and Flydubai has

enabled much of the industry’s recent growth.

Source: Company website

Supported by continued enlargement of the UAE

aviation industry, these carriers have placed

multibillion-dollar orders for new aircraft to drive the

next stage of their expansion. At the recent Dubai

Airshow in November 2013, Emirates ordered 150

Boeing 777s in a deal worth USD 76bn at list prices, as

well as 50 Airbus A380s costing USD 23bn.


APRIL 2014

74

214

34 36

0

50

100

150

200

250

Etihad Emirates Air Arabia Fly Dubai

(Carriers)

UAE- Airlines fleet size

50.9

57.6

66.4

6.4

12.414.7

16.5

1.6

6.6 7.5 8.5

0.8

0

10

20

30

40

50

60

70

2011 2012 2013 Jan-14

(Mn)

UAE airports passenger traffic

Dubai International Abu Dhabi InternationalSharjah International

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Macro ThemesMeanwhile, Etihad bought 30 Boeing 787-10

Dreamliners, 25 777Xs, 50 Airbus A350 XWBs and 36

A320neos, as well as two freighters, one each from

Boeing and Airbus. In addition, smaller airlines such as

FlyDubai, Emirates’ low-fare subsidiary, also ordered

111 Boeing 737s and 738s worth USD 11.4bn.

Source: Company press release

With further exceptionally strong growth likely in

Dubai and Abu Dhabi, the region’s global connectivity

will increase as more airlines, routes and flights are

added, boosting the UAE’s passenger and cargo

volumes. Moreover, Dubai has won the right to host

World Expo 2020, further expanding likely regional

passenger and cargo volumes between now and the

event. Authorities expect ~25 million visitors to the

exhibition, of which ~70% are forecast to arrive from

outside the UAE.

In addition to organic growth in airport infrastructure

and carriers, the UAE’s aviation sector has also

developed in other ways. For example, Etihad has

extended its coverage by acquiring equity stakes in

several international airlines, including Air Seychelles,

Air Berlin, Virgin Australia, Air Serbia, Aer Lingus, and

Switzerland-based regional carrier Darwin Airline. It is

also expected to buy a 24% interest in India’s Jet

Airways.

Further, the UAE has already launched initiatives to

expand and diversify itself into the aerospace

manufacturing supply chain. It has established Strata,

an advanced composite, aero-structures

manufacturing facility based in Al Ain producing high

quality aircraft components through partnerships with

major aircraft manufacturers, including EADS/Airbus

and Boeing. At the Dubai Airshow, the facility signed

deals valued at USD 5bn to provide composite

materials and metallic aerostructure parts to Airbus

and Boeing aircraft. Agreements were also

announced with Rolls-Royce and GE Aviation to

service and maintain engines made by the two

companies. Officials hope to create 20,000 jobs

within the aerospace manufacturing sector by 2030.

In conclusion, the UAE aviation sector is now

established as one of the most important

components of regional economic growth. It

continues to progress rapidly through investments in

infrastructure, capacity building and diversification,

and by creating a business friendly environment, to

further increase the region’s growing importance to

the global aviation industry.


APRIL 2014

150

5056

87

111

0

20

40

60

80

100

120

140

160

Boeing Airbus

(Carriers)

New orders from UAE airlines

Emirates Etihad FlyDubai

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GLOBAL INVESTOR

Henderson Horizon Global Property Equities

Fund

Global property equities – an introduction

Global property equities offer exposure to all types of

real estate ranging from shops and offices to

industrial units, hospitals, hotels, storage units and

residential property. As the pie charts demonstrate, a

global listed equity fund can offer significant

geographic and sector diversification whilst

identifying opportunities across the world.

Real estate markets are not homogenous and returns

can vary widely from one location to another,

affected by economic cycles as well as local legal,

taxation, and demand and supply factors. Significant

variations can be found even within the same area,

reflecting the location and quality of an individual

property. What all property has in common, however,

is its tangible asset class status together with its

strong potential for income generation.

Strong historical returns

Global property equities have delivered strong returns

historically. This can be explained by the

compounding effects of underlying income from

tenants, together with the potential capital gain on

properties. Listed real estate companies invest in

direct property offering liquid and cost-effective

exposure to this attractive asset class. Although

property equities can be more volatile than direct

property, this volatility has been more than offset by

superior long-term returns, diversification and

liquidity. Global property equities have outperformed

both bonds and general equities over the last ten

years.


APRIL 2014

Composition of the global listed market

France 3% UK

7%Germany

2%

Sweden 1%

United States 48%

Canada 4%

Hong Kong/China 8%

Japan 13%

Singapore 4%

Australasia 7%

Other Europe 3%

Source: FTSE EPRA NAREIT, Bloomberg, Henderson Global Investors, as at 28 February 2014

Index: FTSE EPRA/NAREIT Developed Real Estate Total Return Index

Retail32%

Office25%

Industrial9%

Residential15%

Healthcare7%

Storage3%

Hotel3%

Other6%

Source: DataStream, MSCI, S&P Citigroup, Henderson Global Investors, total return indices in USD,

Bonds= Citigroup Global Govt Bond (7-10 yrs), Equities = MSCI World, Property equities

=FTSE EPRA/NAREIT Developed

5.2

7.38.3

0

2

4

6

8

10

Global Govt. Bonds Global Equities Global PropertyEquities

%

Past performance is not a guide to future performance.

Annualised total returns (10 years to 28 February 2014)

Source: Henderson Global Investors

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GLOBAL INVESTOR

Why invest in a global property equity fund?

• Strong returns: In the current low growth, low

interest rate environment, rental yields remain

attractive, helping to underpin total returns. The

return from global property equities has

outperformed global equities and global

government bonds over the past ten years. Past

performance is not a guide to future performance.

• Diversification: A global property equity fund can

invest in several property companies, which in turn

hold multiple properties, providing exposure to a

broad tenant base across numerous geographies.

• Quality of assets: Prime properties are very

expensive, costing tens or even hundreds of

millions of US dollars. Listed property companies

have the financial firepower and borrowing

facilities to be able to develop and purchase prime

properties. A global property equity fund can

select the best of these companies to build a

geographically diverse portfolio.

• Cost effective: A global property equity fund buys

listed property companies and therefore avoids

the high transaction costs of direct property

ownership.

• Liquidity: Property equities are listed on stock

exchanges, allowing positions to be altered rapidly.

In contrast, a ‘physical’ property fund faces the

additional and often time-consuming challenge of

finding a buyer or seller for a property, with all its

accompanying legal and transaction hurdles.

Henderson’s competitive advantage

• Established team with strong track record:

Henderson has been managing global property

equities since 1997 and the property equities team

manages US$2.7 billion across several property

equity funds and mandates. (Figures correct at 31

December 2013).

• Global reach: Our property equity team is located

in offices in Europe, Asia and the US. Since 2007,

within North America, Henderson has worked with

Harrison Street Securities, a North American sub-

advisory property team that shares Henderson’s

bottom-up research approach.

• Local expertise: Our multi-local model means that

individual investment processes, which are distinct

to each market, can capitalise on regional

idiosyncrasies.

• Wider Henderson expertise: The fund enjoys

access to the expertise and support of

Henderson’s investment management and

research capabilities across all the key asset

classes including equities, fixed income and

alternatives.

Investment philosophy and process

In the long run, the performance of real estate

securities is determined by real estate markets

and the quality of assets and management in

individual companies. In the short run, however,

local economic factors and fluctuations in

exchange rates and the prices of other asset

classes can influence property equity prices. The

investment philosophy is based on the following

beliefs:

• Regional flexibility. The characteristics of

property equity markets vary across the

world. Our regional specialists, therefore,

adapt their investment process to local

markets in seeking to optimise returns.


APRIL 2014


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GLOBAL INVESTOR

• Research is key. Companies listed in the same

space will have different assets, different

management and different financing

arrangements. We therefore emphasise bottom-

up knowledge of their property portfolios and

management.

Top down regional asset allocation is determined by

reference to macroeconomic considerations, market

expectations and risk appetite. As the diagram shows,

property markets can be at different stages in a cycle.

Geographic weightings in the fund tend to be similar

to the benchmark weightings (FTSE EPRA/NAREIT

Developed Index), with excess returns generated

from stock selection.

The portfolio typically comprises 60-70 positions, of

which typically 30-35 are in North America, 15-20 in

Asia-Pacific and 15-20 in Europe. Stock selection

involves careful fundamental research of property

companies incorporating a scoring system that takes

into account quantitative and qualitative components

such as valuations, dividend growth, liquidity and

quality of management. This establishes a forecast of

re-pricing within defined groups of stocks allowing

the fund to invest in those companies with the

strongest relative value. Constant risk monitoring is

undertaken at desk (pre-trade) and by central systems

(pre- and post-trade).


APRIL 2014


Source:CBRE Research Q4 2013

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Product Spotlight

GLOBAL INVESTOR

Where do you see the main opportunities and

risks?

The fund is overweight North America, given

expectations of 7% cash flow yields and 8-10%

dividend growth from key companies in the region.

The development pipeline is still small at only 1% of

existing stock, which merely keeps pace with

depreciation of existing stock.

Within Europe, the UK and Sweden remain attractive.

Again, office supply and demand looks favourable as

reflected in the City of London supply chart where

very little speculative space (space without a tenant) is

under construction.

The fund is underweight eurozone retail because low

eurozone inflation means upward indexation of rents

will be low. It is also underweight Asia because of a

slowdown in residential markets and rich Japanese

valuations.

The fund remains vigilant towards changes in interest

rates and rising bond yields. Many property

companies have locked in financing for the medium

term, so the reduction in earnings from rising interest

rates is expected to be contained. The additional yield

(transaction cap rate spread) provided by property

over the yield on 10-year US Treasuries also remains

at or above average levels, suggesting property is far

from being overvalued.


APRIL 2014

City speculative space under construction,

millions of square feet


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

199

6

199

7

199

8

199

9

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

<400k sqft >400k sqft

Source: IPD, Henderson Global Investors, as at February 2014

Spread: Transaction cap rates vs 10yr Treasuries

0

1

2

3

4

5

6

199

1

199

3

199

5

199

7

199

9

20

01

20

03

20

05

20

07

20

09

20

11

20

13

Transaction caprate spread

Average spread

Source: NCREIF, Raymond James. Henderson

Global Investors, at 31 December 2013

Global Market

Performance

Macro

Themes

Product

Spotlight

Performance

Review

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Product Spotlight

GLOBAL INVESTOR

Disclaimer

The Henderson Horizon Fund (the “Fund”) is a

Luxembourg SICAV incorporated on 30 May 1985,

managed by Henderson Management S.A. This

document is intended solely for the use of

professionals and is not for general public

distribution. Any investment application will be made

solely on the basis of the information contained in

the Fund’s prospectus (including all relevant covering

documents), which will contain investment

restrictions. This document is intended as a summary

only and potential investors must read the Fund’s

prospectus and key investor information document

before investing. A copy of the Fund’s prospectus

and key investor information document can be

obtained from Henderson Global Investors Limited in

its capacity as Investment Manager and Distributor. A

copy of the Fund’s prospectus, key investor

information document, articles of incorporation,

annual and semi-annual reports can be obtained free

of cost from the local offices of Henderson Global

Investors: 201 Bishopsgate, London, EC2M 3AE.

Issued in the UK by Henderson Global

Investors. Henderson Global Investors is the name

under which Henderson Global Investors Limited

(reg. no. 906355) (incorporated and registered in

England and Wales with registered office at 201

Bishopsgate, London EC2M 3AE and authorised and

regulated by the Financial Conduct Authority) provide

investment products and services.

Past performance is not a guide to future

performance. The performance data does not take

into account the commissions and costs incurred on

the issue and redemption of units. The value of an

investment and the income from it can fall as well as

rise and you may not get back the amount originally

invested. Tax assumptions and reliefs depend upon

an investor’s particular circumstances and may

change if those circumstances or the law change. If

you invest through a third party provider you are

advised to consult them directly as charges,

performance and terms and conditions may differ

materially.

The securities included in this document are not

registered in the Foreign Securities Registry of the

Superintendencia de Valores y Seguros for public

offering and, therefore, the use of this document is

only for general information purposes.

Nothing in this document is intended to or should be

construed as advice. This document is not a

recommendation to sell or purchase any investment.

It does not form part of any contract for the sale or

purchase of any investment.

FOR UNITED ARAB EMIRATES RESIDENTS ONLY

This document, and the information contained

herein, does not constitute, and is not intended to

constitute, a public offer of securities in the United

Arab Emirates and accordingly should not be

construed as such. The Units are only being offered

to a limited number of sophisticated investors in the

UAE who (a) are willing and able to conduct an

independent investigation of the risks involved in an

investment in such Units, and (b) upon their specific

request. The Units have not been approved by or

licensed or registered with the UAE Central Bank, the

Securities and Commodities Authority or any other

relevant licensing authorities or governmental

agencies in the UAE. The document is for the use of

the addressee only.



APRIL 2014

Global Market

Performance

Macro

Themes

Product

Spotlight

Performance

Review

adcb.com

WealthDesignTM: Funds Performance Review


APRIL 2014

Fund House Performances

Fund Asset Class / Target Market ISIN CNY 3M YTD 12M 36M 60M

Equity Funds

Developed

M&G GLOBAL LEADERS FUND "A" Global Equities GB00B1RXYW84 USD (0.1%) (0.1%) 17.1% 21.0% 117.3%

M&G GLOBAL DIVIDEND FUND "A" Global Equities GB00B39R2V77 USD 0.4% 0.4% 15.1% 36.4% 173.5%

AB GLOBAL THEMATIC REASEARCH PORTFOLIO "A" Global Equities (Thematic) LU0069063385 USD 1.3% 1.3% 19.8% 2.1% 99.9%

FIRST EAGLE AMUNDI INTERNATIONAL FUND "A" Gobal Equities LU0068578508 USD 2.2% 2.2% 10.1% 20.7% 86.1%

OASIS CRESCENT GLOBAL EQUITY FUND "A" Islamic Global Equities IE00BCV7MP24 USD 2.7% 2.7% NA NA NA

M&G AMERICAN FUND "A" US Equities GB00B1RXYR32 USD 0.1% 0.1% 16.0% 29.3% 130.6%

SCHRODER ISF EURO EQUITY FUND "A" European Equities LU0106235293 EUR 3.4% 3.4% 23.2% 32.1% 106.5%

JPMORGAN FUNDS- PACIFIC EQUITY FUND "A" Asia Pacific Equities LU0210528096 USD (6.1%) (6.1%) 4.2% 7.3% 86.1%

FTIF FRANKLIN TECHNOLOGY FUND "A" Global Tech Equities LU0109392836 USD 3.9% 3.9% 23.9% 28.0% 160.7%

JPMORGAN FUNDS- HIGHBRIDGE US STEEP FUND "A" US Equities LU0325075496 USD 2.1% 2.1% 18.6% 44.7% 164.0%

JPMORGAN FUNDS- HIGHBRIDGE EUROPE STEEP FUND "A" European Equities LU0325073954 EUR 5.7% 5.7% 18.4% 23.3% 115.3%

Emerging

SCHRODER ISF EMERGING MARKETS FUND "A" Global Emerging Markets Equities LU0106252389 USD (3.1%) (3.1%) (3.1%) (9.3%) 79.8%

SCHRODER ISF BRIC FUND "A" BRIC Equities LU0228659784 USD (3.9%) (3.9%) (2.1%) (18.5%) 55.5%

AMUNDI ISLAMIC- BRIC QUANT "A" Islamic BRIC Equities LU0399639573 USD (3.2%) (3.2%) 4.2% (26.9%) 63.6%

FTIF FRANKLIN INDIA FUND "A" India Equities LU0231203729 USD 9.0% 9.0% 7.6% (10.6%) 106.0%

FIDELITY FUNDS -LATIN AMERICA FUND "D" Latin America Equities LU0050427557 USD (1.6%) (1.6%) (17.0%) (22.0%) 90.4%

FTIF -TEMPLETON EMERGING MARKETS SMALLER COMPANIES FUND "A" Emerging Markets Small Cap Equities LU0300738514 USD 1.0% 1.0% 4.1% 2.5% 153.6%

EASTSPRING INVSTMENTS- DRGAON PEACOCK FUND "A" China & India Equities LU0259732245 USD (2.6%) (2.6%) 1.6% (19.2%) 73.6%

BLACKROCK GF EMERGING EUROPE FUND "A" Emerging Europe LU0011850392 EUR (9.9%) (9.9%) (13.5%) (25.3%) 85.0%

JPMORGAN FUNDS-ASEAN EQUITY FUND "A" South East Asian Equities LU0441851309 USD 3.8% 3.8% (8.4%) 18.0% NA

Frontier

AL NOKHITHA FUND UAE Equities (Active) ADCBANF UH AED 21.5% 21.5% 73.6% 119.4% 144.2%

ADCB MSCI UAE INDEX FUND UAE Equities (Passive) ADCBMSC UH AED 23.5% 23.5% 81.2% 144.4% 222.5%

ADCB ARABIAN INDEX FUND Arabian Markets Equities (Passive) ADCARAB UH USD 10.7% 10.7% 31.9% 35.2% 88.7%

FTIF-TEMPLETON FRONTIER MARKETS FUND "A" Frontier Markets Equities LU0390136736 USD 0.0% 0.0% 9.7% 12.8% 118.5%

Global Market

Performance

Macro

Themes

Product

Spotlight

Performance

Review

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GLOBAL INVESTOR

WealthDesignTM: Funds Performance Review


APRIL 2014

Fund House Performances

Fund Asset Class / Target Market ISIN CNY 3M YTD 12M 36M 60M

Fixed Income

Developed

BNY MELLON GLOBAL BOND FUND "A" Global Bond IE0003924739 USD 2.2% 2.2% (0.5%) 4.0% 22.3%

SCHRODER ISF GLOBAL CORPORATE BOND FUND "A" Global Corporate High Yield Bond LU0106258311 USD 2.2% 2.2% 2.8% 14.6% 46.1%

AMUNDI FUNDS- BOND GLOBAL AGGREGATE "A" Global Aggregate LU0319688361 USD 0.6% 0.6% 3.6% 15.2% 78.2%

Emerging

PICTET-EMERGING LOCAL CURRENCY DEBT FUND "A" Emerging Markets Bond LU0255798364 USD 1.7% 1.7% (9.3%) (2.8%) 46.7%

FTIF-TEMPLETON GLOBAL BOND FUND "A" Global Bond LU0252652382 USD 0.6% 0.6% 0.5% 12.6% 52.6%

High Yield/Sukuk

GOLDMAN SACHS GLOBAL HIGH YIELD PORTFOLIO "A" Global High Yield LU0234573771 USD 2.9% 2.9% 7.5% 25.1% 118.0%

Alternatives

Real Estate

HENDERSON HORIZON FUND- GLOBAL PROPERTY EQUITIES FUND "A" Global Real Estate Companies Equities LU0209137388 USD 2.2% 2.2% (2.9%) 17.3% 160.3%

NEUBERGER BBERMAN US REAL ESTATE SECURITIES FUND "A" US Real Estate Securities IE00B0T0GQ85 USD 6.7% 6.7% 1.1% 22.4% 215.5%

Commodities

JPMORGAN FUNDS GLOBAL NATURAL RESOURCES FUND "A" Natural Recources Companies Equities LU0266512127 USD 2.0% 2.0% (7.2%) (46.8%) 38.0%

BLACKROCK GF WORLD GOLD FUND "A" Gold Mining Companies Equities LU0055631609 USD 13.8% 13.8% (28.4%) (53.5%) (18.6%)

SCHRODERS ISF GLOBAL ENERGY FUND "A" World Energy Companies Equities LU0256331488 USD 2.2% 2.2% 15.0% (27.6%) 50.0%

BLACKROCK GF WORLD MINING FUND "A" Global Mining Companies Equities LU0075056555 USD (0.8%) (0.8%) (11.2%) (47.2%) 23.4%

AMUNDI ISLAMIC -GLOBAL RESOURCES "A" Islamic Global Resources Equities LU0399640407 USD 2.6% 2.6% 9.7% 3.5% NA

Multi Asset/ Balanced

RUSSELL GLOBAL 35 MULTI MANAGER "A" Multi Asset-Moderate IE00B02WN480 USD 0.9% 0.9% 2.6% 13.3% 60.6%

RUSSELL GLOBAL 50 MULTI MANAGER "A" Multi Asset-Moderate IE00B02WN597 USD 0.7% 0.7% 5.2% 15.3% 72.8%

RUSSELL GLOBAL 70 MULTI MANAGER "A" Multi Asset-Moderetly Aggressive IE00B02WN712 USD 0.5% 0.5% 8.6% 17.8% 89.4%

RUSSELL GLOBAL 90 MULTI MANAGER "A" Multi Asset- Aggressive IE00B02WN829 USD 0.3% 0.3% 11.9% 19.1% 103.9%

adcb.com

Sources

All information in this report has been obtained from Bloomberg sources except where indicated otherwise. All data in this report is as of the last

international business day of the preceding calendar month except where indicated otherwise.

Disclaimer

This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”,

“intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be

achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are

subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements.

Readers are cautioned not to place undue relevance on these forward looking statements. ADCB expressly disclaims any obligation to update or revise any

such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of

unanticipated events

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This report is for information and illustrative purposes only; it is in no way a recommendation, or an offer or solicitation to buy or sell any investment

products, but only factual information being provided. ADCB will not be held liable for any information provided in this document which is stated to have

been obtained from third party sources, this information may be based on assumptions or market conditions and may change without notice.

The information in this report was prepared by employees of ADCB and is current as of the date of the report. The information contained herein has been

obtained from sources that ADCB believes to be reliable, but ADCB does not guarantee its accuracy, adequacy, completeness, reliability, or timeliness, and

will not be held liable for any investment decisions made based on this information. Moreover, ADCB is not responsible for any errors or omissions or for

the results obtained from the use of such information. All information and estimates included in this report are subject to change without notice. This

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investment risks, including possible loss of principal amount invested. Please refer to ADCB Terms and Conditions for Investment Services.

You may not redistribute this report without explicit permission from ADCB.

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