multi-thematic sustainable dragons
TRANSCRIPT
EXPERTISE IN GLOBAL EQUITIES
Multi-thematic SustainableDRAGONS
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FUNDAMENTAL EQUITY
FIXED INCOME
QUANTITATIVE EQUITY
MULTIASSETS
SUSTAINABLE INVESTMENT
dpamfunds.com
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Why Asian multi-thematic equities?
WHY?STRATEGY
HIGHLIGHTSAPPENDIX
Why sustainable?
Why Asian multi-thematic sustainable at DPAM?
Investment philosophy
Investment objectives
Investment process
Investment team
Head and Local offices
WHY?Why Asian multi-thematic equities?
Why sustainable?
Why Asian multi-thematic sustainable at DPAM?
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▪ A thematic approach enables to concentrate investments in a business
segment attractive potential. In order to contain potential volatility, a multi-
thematic strategy can diversify risk across a greater number of sectors,
while also giving access to a larger set of opportunities.
▪ Increasing importance of Asia in a global context and in benchmark
composition makes this market an interesting hunting ground for innovative
& disruptive companies.
▪ To capture growth opportunities in the under-researched Asian market
WHY ASIAN MULTI-THEMATIC EQUITIES?
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STRATEGYHIGHLIGHTS
APPENDIXWHY?
▪ A greater focus on environmental, social and governance factors benefits
the whole society
▪ In the long run, a greater focus on environmental, social and governance can
mitigate future financial risks
▪ ESG challenges create business opportunities
WHY SUSTAINABLE?
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STRATEGYHIGHLIGHTS
APPENDIXWHY?
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WHY ASIAN MULTI-THEMATIC SUSTAINABLE AT DPAM?
DPAM is an independent active asset manager part of a family owned GROUP WITH ITS ORIGINS IN 1871
DPAM is a PIONEER IN SUSTAINABLE INVESTING since 2002. Active ownership and ESG across asset classes and themes
CLIENT-DRIVEN, creating long-term partnerships with our customers with an international network of 8 local offices across Europe
PERFORMANCE-DRIVEN, centralized asset management in Brussels and Paris
PROPRIETARY fundamental and quantitative research provided by in-house Credit, Equity and SRI analyst teams
Unique ASIAN-focused strategy with a midcap bias. Leverage our in-house Asia RESEARCH TEAM of sector analysts.
ACTIVELY SUSTAINABLE. We bring our two decades of sustainable expertise to the Asian market
EXPERIENCED MANAGEMENT TEAM supported by in-house Buy Side Research Team
LITTLE OVERLAP with existing DPAM strategies
STRATEGYHIGHLIGHTS
APPENDIXWHY?
SUSTAINABLEINVESTOR
ACTIVE ASSET MANAGER
RESEARCHDRIVEN
STRATEGY HIGHLIGHTSInvestment philosophy
Investment objectives
Investment process
Investment team
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INVESTMENT PHILOSOPHY
ACTIVELYSUSTAINABLE
ASIANMARKETS
ACTIVELY MANAGED
MULTI-THEMATIC APPROACH
MID-CAPBIAS
Fundamental screen, FCF based
Future winners Innovative & Disruptive
Capitalising on the growth of sustainable and innovating sectors
and companies
Increasing importance of Asia in a global context
and in benchmark composition
Initial Exclusion + Proprietary subsector KPIs
- An actively managed, Asia-Pacific, multi-thematic equity strategy focused on innovative & disruptive future winners -
STRATEGYHIGHLIGHTS
APPENDIXWHY?
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DIVERSIFIED SUBTHEMES: DRAGONS
INVESTMENT OBJECTIVES
To deliver compelling returns over the medium term by capitalising on the innovating companies in Asia Pacific that will shape our future society in a sustainable fashion.
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STRATEGYHIGHLIGHTS
APPENDIXWHY?
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BOTTOM-UPANALYSIS
PORTFOLIO CONSTRUCTION
INVESTMENT PROCESS OVERVIEW
Qualitative assessmentIdentification of the value chain
TOP-DOWN ANALYSIS
ESG ASSESSMENT
STRATEGYHIGHLIGHTS
APPENDIXWHY?
TOP-DOWNANALYSIS
OUR ESG SCREENING
Based on 3 pillars
Normative ESG screening
Exclusion of defence, tobacco, gambling and pornography
Exclusion of companies with level 5 controversies
Level 4 controversies are discussed in the Responsible Investment Steering Group
Quantitative sector exclusion
UN Global Standards
Exclusion of non compliant companies
Controversies and exclusions
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ESG assessment: Screening
STRATEGYHIGHLIGHTS
APPENDIXWHY?
BOTTOM-UPANALYSIS
ESG assessment: Proprietary ESG scorecards
OUR PROPRIETARY ESG SCORECARDS
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▪ We develop our own proprietary sub-sector-based Key Performance Indicators (KPIs), taking into account all ESG components that are relevant for that subsector.
▪ We will not invest in a company with relatively weak KPIs.
▪ The objective is to build a diversified portfolio of companies whose ESG reputation is solid or improving, and whose activity is linked to the long-term growth themes defined by the portfolio managers.
STRATEGYHIGHLIGHTS
APPENDIXWHY?
EXAMPLE SCORECARD
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* Score is equally-weightedSource: DPAM, update: June 2020
KPI FrameworkChinese Video Gaming
Tencent Netease Perfect World BILIBILI Youzu Century Huatong
Fundamental KPIs
Portfolio of franchises & Ips 5 5 5 4 4 4
Distribution advantage 5 3.5 3.5 3.5 3 3
Quality of external partnership 5 5 5 5 3.5 4
R&D capacity/In-house development capability 5 5 5 3 3 3.5
Overseas Expansion 5 5 5 3 4 4
New games pipeline 5 5 4 4 3 2
Profitability & FCF 4 4 4 2.5 3 3
Sustainable growth potential 4 4 3.5 5 2.5 2.5
Valuation 2 4 4 3.5 5 4
Total* 4.4 4.5 4.3 3.7 3.4 3.3
Sustainable KPIs
(Corporate) Governance (25%) 4.0 4.0 4.0 3.5 2.5 2.5
Impact (25%) 2.0 1.0 1.0 1.0 1.0 0.0
Key ESG Risks (50%) 4.5 4.5 4.3 3.5 3.2 3.3
1. Business Ethics 4.7 4.2 4.8 3.2 2.3 3.5
2. Human Capital Management 4.2 4.5 4.0 3.7 3.3 3.3
3. Data Privacy & Security 4.5 4.8 4.2 3.5 4.0 3.0
Total 3.7 3.5 3.4 2.9 2.5 2.3
STRATEGYHIGHLIGHTS
APPENDIXWHY?
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TOP-DOWNANALYSIS
Following macro-economic trends to have a better view on the outlook of various countries and regions.
Identified long-term investment themes, related sub-sectors and companies that should heavily influence our future society thanks to their innovations. Summed up as ‘DRAGONS’
Continuously monitoring of these themes in case of new developments, actors, etc.
STRATEGYHIGHLIGHTS
APPENDIXWHY?
VIDEO GAMES VALUE CHAIN
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CLOUD PROVIDERS▪ Amazon▪ Microsoft▪ Alphabet▪ IBM▪ Alibaba▪ Huawei▪ Tencent▪ Kingsoft Cloud
DATA CENTERS▪ Equinix▪ Coresite▪ Digital Realty▪ InterXion▪ GDS▪ Sinnet▪ 21Vianet
PERIPHERALS▪ Razer▪ Logitech▪ Turtle Beach▪ Corsair Gaming
CONSOLES▪ Nintendo▪ Sony▪ Microsoft
GPUs▪ Nvidia▪ AMD
GAME ENGINE▪ Unity Software▪ Unreal (Epic)
TECHNICAL /CREATIVE SERVICES▪ Keyword Studios▪ Sumo Group
US▪ Activision▪ Electronic Arts▪ Take Two▪ Roblox▪ Valve▪ Glu Mobile
CHINA▪ Tencent▪ Netease▪ Perfect World▪ NetDragon
KOREA▪ Netmarble▪ NCsoft▪ PearlAbyss▪ Kakao Games
JAPAN▪ Square Enix▪ Konami▪ Nexon▪ Capcom▪ Sony▪ Nintendo
EUROPE▪ Ubisoft▪ CD Projekt▪ Embracer▪ Paradox▪ Frontier▪ Focus Home▪ Stillfront
SOUTH EAST ASIA▪ Sea
LIVE STREAMING▪ Twitch▪ Youtube▪ Garena Live▪ Douyu▪ Huya▪ Bilibili▪ Facebook Gaming
EVENTS/TEAMS▪ Modern Times
Group▪ Enthusiast
Gaming
Source: DPAM
CLOUDENABLERS
GAME PUBLISHERS/DEVELOPERSHARDWARE ESPORTS
- Identification of the value chain - STRATEGYHIGHLIGHTS
APPENDIXWHY?
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At the same level, individual companies (minimum market cap of EUR 300 million)
QUALITATIVE
▪ Competitive advantage
▪ Clear business model
▪ Focus on forward looking free cash flow
BOTTOM-UPANALYSIS
Qualitative assessment
STRATEGYHIGHLIGHTS
APPENDIXWHY?
PORTFOLIO CONSTRUCTION
▪ Active stock picking: 70-80 stocks, no equal weighting
▪ Diversified across market caps with a mid-cap bias
▪ Diversified across investment themes, with target range of min 5 – max 25%
▪ Fully invested (max 5% cash)
▪ No hedging
▪ Benchmark: MSCI AC ASIA PACIFIC Index
▪ Max Overlap NEWGEMS and World Sustainable: 20%
▪ Target valuation deviation vs benchmark: limited
PORTFOLIOCONSTRUCTION
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STRATEGYHIGHLIGHTS
APPENDIXWHY?
Years of Experience
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JOHAN VAN GEETERUYENCIO Fundamental Equity
2021DPAM: CIO Fundamental EquityMember of the Management Board (since 2017)
2012DPAM (Previously PIAM): Head of Institutional Mandates
1998DPAM (Previously PIAM): Portfolio Manager
1986AXA Bank (previously Anhyp): Teamleader Asset Management
EducationCertified Financial Analyst – ABAF| BVFA (Belgian Association of Financial Analyst)VLEKHO Business School, Brussels (Belgium): Master in Commercial & Financial Sciences
2016DPAM: Head of Conviction & Global Balanced Member of the Management Board (since 2017)
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STRATEGY HIGHLIGHTS
APPENDIXWHY?
Years of Experience
DRIES DURY, CFAFund Manager15
2016DPAM: Fund Manager International & Sustainable Equities
2013DPAM (Previously DFMC): Fund Manager EMU High Dividend Yield Equity
2011Bank Degroof: Sell side real estate equity analyst
2006National Bank of Belgium: Research analyst
EducationUniversity of Ghent, Belgium: Master in Economic Sciences
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STRATEGY HIGHLIGHTS
APPENDIXWHY?
Years of Experience
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XIAORONG LIFund Manager01
2020DPAM: Equity Fund Manager
EducationEDHEC Business School Grand Ecole Finance Master in Finance and Management Nankai University: Bachelor in Mathematics and Statistics
STRATEGYHIGHLIGHTS
APPENDIXWHY?
Years of Experience
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OPHÉLIE MORTIERResponsible Investment Strategist19
2016DPAM: Responsible Investment Strategist
2012DPAM (Previously PIAM): Responsible Investment Coordinator
2009DPAM (Previously PIAM): Fixed Income Macro-coordinator
2002Pragma Consulting: Consultant Institutional Portfolio Managers
2005DPAM (Previously PIAM): Institutional Sales and Account Manager
EducationICHEC Brussels (Belgium): Master in Commercial and Financial Sciences
STRATEGYHIGHLIGHTS
APPENDIXWHY?
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APPENDIX
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