Transcript jf international pooled fund

INTERNATIONAL
EQUITY POOLED
JF INTERNATIONAL
Q1 2015
FUND
PROFILE | MAR. 31, 2016
A Focus of High Quality Global Leaders
Inception Date
April 1, 1995
The international equity portfolio is comprised primarily of large multinational companies that demonstrate global
leadership in their industry and have at least US$1 billion in market capitalization. These companies generally have
steady growth rates, high returns on invested capital, dominant world market positions and strong balance sheets,
reducing their financial risk.
NAV per Unit
C$27.3649
US$21.1566
Semi-Annual
Distribution
C$1.5856 (12/31/15)
Our approach targets international companies that benefit from exposure to economies growing at a rate higher
than global GDP. The emphasis is on non-cyclical companies with a competitive advantage in their industry.
Fund Size ($M)
C$1,494.8
Benchmark
MSCI EAFE Net Index2
PORTFOLIO CHARACTERISTICS
PORTFOLIO CONSTRUCTION
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Market capitalization > US$1 bil; EM market capitalization > US$ 500 mil.
Maximum market value in a single security: 10%.
Non-index emerging market limited to 15% weighting; non-index emerging country limited to 5% weighting.
Each industry group1 is limited to 20%. When the industry group has a market weight higher than 10% of the
index, then weighting is limited to index industry group weight plus 10%.
ANNUALIZED PERFORMANCE (%)
3 mths
1 yr
3 yrs
5 yrs
7 yrs
10 yrs
15 yrs
JF International Pooled Fund
-9.1
-6.6
10.0
10.2
12.1
4.3
3.4
MSCI EAFE Net2
-9.6
-6.3
10.8
8.3
10.3
3.1
3.3
As of Mar. 31, 2016
CALENDAR YEAR PERFORMANCE (%)
To December 31st
2015
2014
2013
2012
2011
2010
2009
JF International Pooled Fund
17.0
3.4
28.2
20.2
-1.0
2.0
15.1
MSCI EAFE Net2
19.0
3.7
31.0
14.7
-10.0
2.6
12.5
Fund
Index
Beta
0.98
1.00
Capitalization
$78.2
$54.3
P/E
15.4
14.4
Yield
3.6%
3.7%
2015 Turnover
15.1%
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TOP 10 HOLDINGS
% of Fund
Danone
Fresenius Medical Care
3.6%
3.5%
Relx Plc
3.4%
GlaxoSmithKline
Bayer AG
Sap SE
Royal Dutch Shell
Roche Holdings
Siemens AG
Kao Corporation
3.3%
2.3%
3.3%
3.3%
3.0%
2.9%
2.9%
30.5%
Total for Top 10
SECTOR WEIGHTINGS
Consumer Staples 20.3%
GEOGRAPHICAL BREAKDOWN
Health Care 18.1%
Financials 16.7%
Consumer Discretionary 10.5%
Europe 53.7%
Industrials 8.9%
U.K. 22.6%
Information Technology 7.7%
Japan 15.2%
Telecom Services 5.9%
Materials 5.5%
Asia-Pacific 7.1%
Energy 5.1%
Non-EAFE 1.4%
Utilities 1.2%
MONTREAL | TORONTO | CALGARY | VANCOUVER | NEW YORK
www.jflglobal.com
JF INTERNATIONAL POOLED FUND – Q1 2016
MARKET & ECONOMIC REVIEW
INVESTMENT STRATEGY
Global markets started the year fearful that China’s economy was facing an immediate hard landing which would
consequently induce a meaningful currency depreciation and massive capital outflows. Most stock markets sold off
globally, save for the most defensive “safe haven” assets. The second half of the quarter, helped by the dovish stance
of many central banks and easing of concerns over China, saw a reversal of the earlier risk-off trades that was led
by a rebound in commodity prices.
We continue to focus on global leaders in less
cyclical industries with sustainable business
models that have the ability to defend their leading
positions.
The Eurozone continues to exhibit moderate recovery, with domestic consumption supported by pent-up demand, low
oil prices, and easy credit. Persistently low-inflation and low business investment are the primary headwinds to
sustained European growth. Brexit, or the exit of the U.K. from the European Union, will have a broad impact on the
UK’s economy and could hurt real GDP growth meaningfully, especially in domestic consumption-related sectors, and
raise the question of the fundamental strength of the EU. Japan continues to see a recovery in corporate profits,
boosted by a weak Japanese yen. However, growth still lacks the strong momentum and sustainability that
“Abenomics” set out to achieve. Growth in industrial production and exports are fragile and continue to be highly
correlated to global trade.
Compared to the steady, albeit unexciting, economic progression in the developed world, emerging markets have
faced many challenges in recent quarters. The slowdown in China’s economy has become more visible in many
segments and the process of transitioning the world’s second largest economy into one that is driven by internal
demand has proven difficult. We are not overly concerned with the financial health of the country itself but remain
cautious on its growth momentum. This warrants a cautious and highly selective approach to capture the potentially
strong long-term growth and returns offered by international equity markets.
Certain less developed markets face some political
and economic challenges, but their growing
populations alone will give them an advantage. We
believe that some exposure to the faster growing
markets of Asia, South America, Africa and Eastern
Europe will also benefit over the long run.
Generally we choose to access these markets
through indirect investments, by purchasing global
leaders with diverse sources of revenue oriented
towards consumption trends in these faster
growing markets.
We continue to emphasize high quality companies
with strong business models, high return on capital
and excellent management focused on long-term
value creation.
PORTFOLIO REVIEW
The portfolio returned -9.1% during the first quarter, outperforming the MSCI EAFE Index return of -9.6% thanks to a
combination of strong stock selection and sector allocation. The quarter saw commodity-related sectors perform
strongly alongside Consumer Staples while Financials and Health Care lagged. Overall, this divergence was positive
for the portfolio thanks to its emphasis on Consumer Staples and overweight in Energy. Of note in this sector, Royal
Dutch Shell Plc closed its deal to acquire BG Group Plc and generated a strong return of +0.9%. The Health Care
sector is facing headwinds going into the U.S. elections. Our higher-quality holdings, such as Fresenius Medical Care
(-2.1%) and GlaxoSmithKline Plc (-3.7%), are diversified and less exposed to pricing pressure. They offer good
growth and visibility and their contribution to returns more than offset the market’s disapproval of less stable and
short-term focused business models. The portfolio’s top performers this quarter were Industrial companies.
Siemens AG (+5.2%), Schneider Electric SE (+3.2%) and ABB Ltd (+1.6%) reported better than expected results due
to their robust business models.
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INVESTMENT TEAM
Jarislowsky Fraser has a team-based approach
that anchors a culture of collaborative decisionmaking. The Investment Strategy Committee (ISC),
our central risk and investment oversight body,
oversees the entire investment process to ensure
that investment decisions follow the firm’s longstanding philosophy and process.
Industry group as defined by Jarislowsky Fraser.
MSCI EAFE: Europe, Australia & Far East. Prior to Dec. 31, 2010 the index was MSCI EAFE gross.
Returns are gross of management fees and in C$. C$ Index returns and NAV values have been calculated using the London 4PM closing FX
rates.
Complete Investment Policy guidelines are available upon request.
JF Pooled Funds are only available to Canadian investors. Past performance is not a guide to future performance. Future returns are not
guaranteed. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares when redeemed may
be worth more or less than their original cost. This document is prepared by Jarislowsky, Fraser Limited (JFL) and is provided for information
purposes only, it is not intended to convey investment, legal, tax or individually tailored investment advice. All opinions and estimates
contained in this report constitute JFL's judgment as of the time of writing and are provided in good faith. All data, facts and opinions
presented in this document may change without notification. No use of the Jarislowsky, Fraser Limited name or any information contained in