heathcote meet the manager roadshow...heathcote meet the manager roadshow march 2020 for...

Heathcote Meet the Manager Roadshow

March 2020 FOR PROFESSIONAL INVESTORS ONLYCapital Group is represented in Australia by its memberCapital Group Investment Management Limited (ACN 164 174 501)

Defining the future: Trends transforming the way we’ll live by2030.

Capital GroupCapital Group

Market perspective

Capital Group

US economic expansion has gone on for longer than usual

3

Data as at 31 December 2019. Sources: Capital Group, Bureau of Economic Analysis and Thomson ReutersBased on GDP growth. Prior expansion include all cycles from 1949-2007. Current expansion uses actual data through 31 December 2019. Expansion is the period after a recession is declared officially over by the National Bureau of Economic Research. The average duration of expansion is the average number of months of expansions between recession periods.

(1949 – 2007) (2019)

Capital Group

But the US economic expansion has been slow

4

Data as at 31 December 2019. Sources: Capital Group, Bureau of Economic Analysis and Thomson ReutersBased on GDP growth. Prior expansion include all cycles from 1949-2007. Current expansion uses actual data through 31 December 2019. Expansion is the period after a recession is declared officially over by the National Bureau of Economic Research. The average duration of expansion is the average number of months of expansions between recession periods. The average magnitude of expansion is derived from averaging the total cumulative GDP growth from peak to peak of each GDP cycle between 1949 and 2007.

(1949 – 2007) (2019) (1949 – 2007) (2019)

Capital Group

US equities have typically peaked several months before a recession

5

Past results are not a guarantee of future results.Data reflects the average of all cycles from 1950 to March 2019, indexed to 100 at each cycle peak. Sources: Capital Group, Federal Reserve Board, Haver Analytics, National Bureau of Economic Research, Standard & Poor’s

Capital Group

Late economic cycle positioning: what are some ideas?

6

Consider reducing:

CYCLICALS

HIGH DEBT

The information provided is not intended to be comprehensive or to provide advice.

Capital Group

US corporate debt levels are high

7

Data available through September 2018. GDP: gross domestic product. Sources: Bank for International Settlements (BIS), National Bureau of Economic Research, BbgBarc US Corporate Investment Grade Index via Refinitiv

Corporate debt % of US GDP

Capital Group

Late economic cycle positioning: what are some ideas?

8

Consider reducing:

CYCLICALS

HIGH DEBT

Consider adding to:

DIVIDEND PAYERS

SECULAR GROWTH

The information provided is not intended to be comprehensive or to provide advice.

Capital Group

Business model of the future – Cloud

Computing

Capital Group New Perspective Fund (AU)

Millennial impact

Internetof Things

Efficiency technology

Premiumisation

Cash digitalisation

Experience economy –

Global air travelMonetising

5G

DNAscience

Medical Research & Medtech

Tech-powered businesses

$

Artificial intelligence

New consumer Digital disruption Innovative health careNew defensives

Capturing secular opportunities through bottom-up research

9Capital Group

Capital Group


Computing



Global air travelMedical Research &

Medtech

New consumer Innovative health careNew defensives


10Capital Group


Global air travel

Capital Group

Rapid expansion of the middle class

For illustrative purposes only.Data as at 28 February 2017. Population numbers in the graphic are estimates of where the next billion entrants into the middle class are expected to come from. Source: Brookings Institution

88%of the next

billion entrants

into the middle

class will likely

be in Asia

350M380M

210M

rest of Asia

130M

rest of the

world

12

Capital Group

Global air travel

13

Accessing growth – company by company

Equipment

supply

Airbus

Safran

Boeing

Destination

services

Hilton

Ryan Air

Marriott

Infrastructure and bookingsTrip.com

Booking Holdings

For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein.Holdings in Capital Group New Perspective Fund (AU) as at 31 December 2019, shown for illustrative purposes only.

Capital Group

Airbus: Covered by our research teams for over 50 years

14

Decades of deep research insights

Airbus orderbook with a

nine-year backlog2

Airbus aircraft are

operated by Chinese

airlines today1

1,800

Factors driving Airbus secular growthBottom-up research

Years of coverage,

since Airbus was

founded in 1970

Research notes

produced over the

last decade

36550

For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or a solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein. All data as at 30 June 2019, unless specified otherwise.

1.As at 30 September 2019. Source: Airbus

2.As at 31 August 2019, in USD terms. Source: Capital Group

500 US$billion

Capital Group


Computing




Medtech



15Capital Group


Cloud Computing

Capital Group

We think data makes cloud computing essential

17

Annual Volume of the Global Datasphere (in zettabytes)175.0

129.5

101.0

79.564.5

50.541.0

33.026.0

18.015.512.59.06.55.02.0

2025*2024*2023*2022*2021*2020*2019*2018*20172016201520142013201220112010

For illustrative purposes only.Data as at November 2018. Sources: Seagate, IDC, Statista estimates *Forecasts

Capital Group

Market potential

18

Cloud Revenue (in US$ billions)

$357$314

$272$231

$191$155

$123$94

$70$51

$35$9$5$4$2$1

2025*2024*2023*2022*2021*2020*201920182017201620152014201320122011

For illustrative purposes only.Data as at February 2020. Source: Capital Group estimates*Forecasts

$15 $23

2026* 2027* 2028*

$400

$442

Capital Group

Cloud computing

19


ProvidersRevenue growth

Amazon

Microsoft

Alphabet

UsersLower costs

Facebook

ServiceNow

Netflix

SuppliersIncreased demand

TSMC

ASML

Broadcom


Capital Group

Microsoft: Forming an early view, backed up by deep research

For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or a solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein. All data as at 30 September 2019.

122Research analystsproviding input

2,085Research notes

since 1982

Deep research insights

Multiple interactions

with management including Bill Gates, Steve Ballmer and Satya

Nadella spanning decades

30 years of covering the stock

Capital Group 20

Different perspectives and decades of experience helped us uncover an opportunity early on

Capital Group


Computing




Medtech



21Capital Group


Medical research

Capital Group

Medical research spending is on the rise

23

R&D spending as a percentage of pharmaceutical sales*

Data as at 31 December 2018. Source: Pharmaceutical Research and Manufacturers of America (PhRMA)*For PhRMA member companies.

10%

15%

20%

25%

1980 1985 1990 1995 2000 2005 2010 2015

Capital Group

Median age of the population in China

24

For illustrative purposes only.Data as at September 2019. Source: United Nations*Forecasts

25

35

45

1950 1975 2000 2025* 2050* 2075* 2100*

1970Age 19

2020*Age 38

2040*AGE 47

55 Years

An aging population could lead to higher medical needs

Capital Group

Medical research

25


Pharmaceuticals &

biopharmaceuticals

Vertex

AstraZeneca

Pfizer

Novartis

Novo Nordisk

Equipment suppliers

Intuitive Surgical

Thermo Fisher

Boston Scientific

Abbott Labs


Capital Group

AstraZeneca: turnaround with attractive growth potential After years in transition, AstraZeneca appears to be entering a new era of growth

Lynparza

Treats relapsed breast cancer patients and newly-diagnosed ovarian cancer.

Imfinzi

A medicine that treats inoperable cancer in the bladder, urinary tract or

lungs.

Tagrisso

Treats newly-diagnosed lung cancer patients with tumours that

harbour certain mutations.

AstraZeneca: Triple threat

For illustrative purposes only. This information has been provided solely for informational purposes and is not an offer, or solicitation of an offer, or a recommendation to buy or sell any security or instrument listed herein.

26

Capital Group

A robust investment process is at the heart of our philosophy

27

Designed to capture and continually evaluate the best ideas from our research

Integrated

research

Portfolio

construction

Implementation

and risk control

Eligibility

criteria

Capital Group

We develop investment convictions through extensive

in-house assessment of long-term risks and

opportunities. We incorporate internal and external

data inputs and forward-looking information

We identify the key factors of success behind every

investment case, which becomes the foundation for

subsequent engagement and ongoing dialogue with

management

Active stewardship is a cornerstone of our

commitment to foster strong corporate governance

We voted in more than 2,600 AGMs in last

12 months

We focus on engagement to resolve ESG-related challenges,

conducting more than 250 ESG-specific engagements with

companies in the past year

We meet with decision makers who impact the outcome

of our investments

More than 12,000 face-to-face meetings

conducted during the last year

UN Principles for Responsible Investment signatory (PRI)

International Corporate Governance Network (ICGN)

Industry engagementWe take an active role in key organisations which advance and protect the interests of our clients, among which are:

Member of Sustainability Accounting Standards Board (SASB)

Asian Corporate Governance Association (ACGA)

MADE – Our investment process integrates ESG in each of the four key phases

Environmental, Social and Governance (ESG)

AGM: annual general meeting. As at 31 December 2018.

28

Capital Group

A strategy that continues to stay relevant over the long term

29

46 years of identifying companies that have driven and benefitted from changing global trade

Early 70s

Basic

resources

dominate

2010s

The age

of digital disruption

80s & 90s

Rise of

home computing and mobile

communications

2000s

The rise of emerging

markets & rapid urbanisation

of China

Electronics

and computers

E-commerce

and internet platforms

Consumer products

and mining

Oil

and metals

Capital Group

Capital Group New Perspective strategy

30

A strong track record of global investment success for decades

Focus on

strongmultinationals Lifetime return

for the strategy1

13.7%per annum

A strategy that has been identifying companies from

the bottom up for

45 years

Past results are not a guarantee of future results.Data as at 31 December 2019. Returns are in A$ terms. Source: Capital Group1. Results prior to Capital Group New Perspective Fund (AU) (CGNPAU) launch on 20 November 2015 are derived from the American Funds New Perspective Fund (AF NPF) in A$ from 31 March 1973. CGNPAU and AF NPF are

managed by the same team of managers and has the same investment strategy, restrictions and risk profile. The returns are aft er fees and are based on the total management cost of 1.05% p.a. that was applicable to CGNPAU up until 30 April 2017, 0.95% p.a. with effect from 1 May 2017. American Funds are not registered for sale outside of the Unite d States.

ExperiencedAdapt to change Proven track record

+

Capital Group

The value of a long-term perspective

31

The power of compounding excess returns

Past results are not a guarantee of future results. Data as at 31 December 2019.1. Results prior to CGNPAU’s launch on 20 November 2015 are derived from the American Funds New Perspective Fund in A$ from 31 March 1973. The returns are after fees and are based on the total management cost of 1.05% p.a. that was

applicable to CGNPAU up until 30 April 2017 and 0.95% with effect from 1 May 2017. American Funds are not registered for sale outside of the United States. Source: Capital Group2. MSCI ACWI ex Australia (with net dividends reinvested) from 20 November 2015; previously MSCI ACWI (with net dividends reinvested) from 30 September 2011 and MSCI World Index (with net dividends reinvested) prior to that. Source:

MSCI

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

Mar 73 Mar 78 Mar 83 Mar 88 Mar 93 Mar 98 Mar 03 Mar 08 Mar 13 Mar 18

more wealth

in $ terms

4.3x

New Perspective strategy1

Benchmark2

$3,963,600

$924,500

Annualised growthsince launch

Rebased to A$ 10,000

Mar 73

13.7%

10.2%

higher than the

market return

3.5%

Capital Group New Perspective Strategy : The value of a hypothetical A$10,000 invested at launch

NewPerspective¹

MSCIACWI²

Capital Group


32

Investment results as at 31 December 2019 in A$ terms (after fees and expenses)

% Fund1 Index2 Excess return3

2015 (1 month 10 days) -2.6 -3.2 0.6

2016 2.2 8.3 -6.1

2017 18.4 14.9 3.5

2018 3.8 0.7 3.1

Annualised lifetime return(4 years 1 month 10 days) 11.9 11.1 0.8

1 year 30.0 26.9 3.1

© 2019 Morningstar. All rights reserved.

Morningstar Analyst RatingTM as at 26 September 2019.

Morningstar World Large Blend category.

3 years p.a. 16.9 13.6 3.3

2019 30.0 26.9 3.1

Total value A$ 518 million

The index shown is MSCI ACWI ex Australia (with net dividends reinvested). Source: MSCIThe excess return is calculated arithmetically.3.

2. After management fees and Total Expense Ratio (TER). Fund results are based on close of market returns (T+1). Source: Capital Group1.

Past results are not a guarantee of future results.Lifetime: 20 November 2015 - 31 December 2019.

©2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘class service’ have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement (Australian products) or Investment Statement (New Zealand products) before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 (“ASXO”). For disclosure and detailed information about this fund, please refer to the full Morningstar Global Fund Report, which is available on request from Capital Group.

Capital Group

Platforms & ratings

33

For full ratings disclaimers, please see slide 31.

RatingsPlatforms

• FNZ

• Aegis

Zenith

Lonsec

“Recommended”

“Recommended”

Morningstar Analyst

RatingTM

Contact Us

email: [email protected]

website: capitalgroup.com/au

Follow us

Capital Group

Ratings disclaimer

34

Morningstar data: © 2020 Morningstar. All rights reserved. Morningstar Analyst RatingTM as at 28 October 2019. Morningstar Equity World Large Blend category. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice or ‘class service’ have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). For disclosure and detailed information about this fund, please refer to the full Morningstar Global Fund Report, which is available on request from Capital Group.

The Lonsec Rating (assigned as follows: CIM0006AU — March 2019; CIM0008AU — March 2019) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445. The Rating is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial products. Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold Capital Group’s product(s), and you should seek independent financial advice before investing in this product(s). The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings methodology, please refer to our website at: http://www.lonsecresearch.com.au/research-solutions/our-ratings

The Zenith Investment Partners (“Zenith”) Australian Financial Services License No. 226872 rating (assigned 27 November 2019) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines

Capital Group

Disclaimer

35

FOR PROFESSIONAL INVESTORS AND INFORMATION PURPOSES ONLY

This communication contains sensitive and confidential information. It is strictly for the confidential use of the recipient, solely for the purpose for which it is provided, may not be disclosed or circulated, and should not be relied upon by third parties. Any use for any other purpose, and disclosure, dissemination, copying, reproduction or distribution of the information is prohibited.

Past results are not a guarantee of future results. This communication does not constitute or form part of an offer, invitation or recommendation to purchase or subscribe for any securities under the relevant regulations of any country and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto. It is neither an offer nor a solicitation to provide any investment service. It has not been reviewed by any regulator. While Capital Group uses reasonable efforts to obtain information from third-party sources which it believes to be reliable, Capital Group makes no representation or warranty as to the accuracy, reliability or completeness of the information.

This communication is not intended to be comprehensive or to provide investment, tax or other advice. It has been prepared for multiple distributions and may not be appropriate in all circumstances. It is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on the information you should consider its appropriateness, having regard to your own investment objectives, financial situation and needs.

The value of investments and income from them can go down as well as up, and you may lose some or all of your initial investment. Risk factors that may influence the value of an investment in this Fund may include, but are not limited to, (i) increased risks of emerging markets, (ii) risk of decline in the price of equities and bonds in response to certain events directly affecting the companies whose securities are owned by the Fund as well as general economic conditions; overall market changes; political, social or economic instability; and currency fluctuations, (iii) interest rate risk as the market value of bonds generally vary inversely with the level of interest rates, (iv) credit risk as the creditworthiness of the Fund'sinvestment can impact the investment's ability to meet its obligations, and (v) derivatives risks.

This communication has been prepared by Capital International, Inc., a member of Capital Group, a company incorporated in California, United States of America. The liability of members is limited.

In Australia, this communication and Capital Group New Perspective Fund (AU) (ARSN: 608 698 746) are issued by Capital Group Investment Management Limited (ACN 164 174 501 AFSL No. 443 118), a member of Capital Group, located at Level 18, 56 Pitt Street, Sydney NSW 2000 Australia. The said fund is offered only by Product Disclosure Statement (PDS), please read the PDS which is available upon request or at capitalgroup.com/au/en in its entirety before making an investment decision.

All Capital Group trademarks are owned by The Capital Group Companies, Inc. or an affiliated company in the U.S., Australia and other countries. All other company and product names mentioned are the trademarks or registered trademarks of their respective companies. © 2020 Capital Group. All rights reserved.

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heathcote meet the manager roadshow...heathcote meet the manager roadshow march 2020 for...

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