Sundaram Asset Management - August 2021 - Sundaram Asset Management Singapore Pte ...
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Sundaram Asset Management
August 2021
Sundaram Asset Management
Key milestones
▪ Headquartered in Chennai (India) with offices across India Journey of Sundaram Asset Management:
and in Singapore and Dubai
▪ Wholly owned by the well renowned Sundaram Finance
Limited
▪ 25 years of experience in fund management and is among
the pioneers in the Indian Fund Management industry with
Assets Under Management of USD 6.0 billion ( 31 July 2021)
▪ Expertise in equities, fixed income and alternatives in India
Retail Investor Base: Over 1.8 million folios
with flagship funds ranked in top quartile
▪ In-depth proprietary research comprising of an experienced Manages offshore investments into India
team of 20 investment professionals spread over Chennai, through its Singapore subsidiary, which has
set up a unit trust investment platform in
Mumbai and Singapore Singapore
2
Sundaram Asset Management
– Group Structure
Sundaram Finance Limited
Listed in India on the BSE and NSE
Reserve Bank of India regulated entity
67 year old company
Owns 100% of
Sundaram Asset Management Company Limited
SEBI regulated entity
25 year track record in the Indian fund management business
Owns 100% of
Sundaram Asset Management Singapore Pte Ltd
10 year old MAS regulated Fund Management entity
3SUNDARAM FINANCE LIMITED - PARENT
Sundaram Finance Limited, incorporated in 1954, has grown today into one of the most trusted
financial services groups in India .
Evolved from the legendary
TVS group (Established in 1911),
a diversified conglomerate and one SUNDARAM FINANCE SUBSIDIARIES
of the largest manufacturer and distributor
of auto components
Sundaram Asset
Royal Sundaram Management Company
General Insurance Mutual Funds,
Portfolio Management, AIF
Sundaram Finance, the flagship company
of the Sundaram group
Sundaram BNP Paribas
is driving the financial services business
Home Finance
of the group Home loans
Built significant reputation & goodwill over the decades
4SUNDARAM FINANCE LIMITED -PARENT
Pioneer in the Leasing First NBFC Over 600 Offices;
and Hire Purchase Business to be Listed – in 1972 Over 4000 Employees
Rated AAA (for Deposits) Market Cap ~USD 4.0 billion Market cap has Grown at
by CRISIL and ICRA as on 30 July 2021 CAGR
of 25.1% Since Listing
Business roots & core competency in credit
5SUNDARAM AMC - INVESTMENT MANAGER
TRACK RECORD & CAPABILITIES CUSTOMERS
• One of the earliest entrants in the Industry with 24+ years of • Managed over 5.6 million customer folios
track history since inception
• First in the industry to launch a fund in the midcap space • 1.8 million active customer folios
• Flagship Fund - Sundaram Midcap Fund had been a
consistent outperformer with a CAGR of 21.9% in USD DISTRIBUTION FOOTPRINT
terms, since its inception 19 years ago
• Strong in-house Research Team • Over 35,500 empaneled distributors
• 92 customer care centers spread across 21
• Investment Philosophy – Bottom up, research driven stock
selection with a focus on long term growth prospects. States, with offices in Singapore and Dubai
AUM ~ USD 6.0 billion AUM has grown at a CAGR Ranked 14th in the
as on 31 July 2021 of 12/% over last 10 years Asset Management Industry
Established fund manager
6SUNDARAM AMC - INVESTMENT MANAGER
AUM Composition
AUM Growth
In Rs. Bn
Data as of 31 July 2021
7Sundaram Global Brand Fund
Sundaram Global Brand Fund - Highlights
Morningstar Direct Rating
Morningstar ESG Sustainability Rating : Average three Globes*
AN OPPORTUNITY FOR INVESTORS TO OWN A
HIGH QUALITY PORTFOLIO OF INTERNATIONAL
EQUITIES
9Global Brand Fund - Highlights
• Unique portfolio investing in listed equities of 30 leading global brands
– Global household names
– Leaders in their sphere of business
– Business spanning the globe and categories
– Ability to sustain pricing power across economic cycles
– Generate durable cash flows
– Beneficiary of the global aspiration to buy more branded goods as disposable
income rises
• Fund Portfolio Available at reasonable valuations
– 2022 weighted estimated PER of 23.0x
– 31.0% average annual earnings growth over the next two years
– 31.6% 2022 estimated average RoE
– 1.5% 2022 estimated dividend yield
• Strong performance
– Fund has generated an annualized return of 12.5% in USD terms and has
outperformed the MSCI ACWI TR index by 1.3%* annualized since inception.
*Morningstar assigns Sustainability Ratings by ranking all scored funds within a Morningstar Global Category by their Historical Sustainability
Scores. The ranked funds are then divided into five groups, based on a normal distribution, and each receives a rating from "High" to "Low.
Percent Rank Rating Depiction -Top 10%- High 5 globes ; Next 22.5%- Above Average 4 globes, ‘Next 35%- Average 3 globes, Next 22.5%- Below
Average 2 globes, Bottom 10%- Low 1 globe
* Performance is as of the Cornerstone Class and has been annualized since inception. Data as of July 31, 2021
10Global brand Fund
Value of $ 100,000 invested at launch
Global Brand Fund– USD 204,139 MSCI ACWI TR– USD 190,552
Data is as of the Cornerstone Class and includes dividends paid out
Source: Bloomberg Analysis: In house as of 31 July 2021
Past performance may or may not be sustained in future
11Global Brand Fund
– Performance in USD
MSCI ACWI-TR
Fund Excess return
Index
1 Month 1.1 0.7 +0.4
Year to Date 14.5 13.1 +1.4
1 Year 35.7 33.2 +2.6
3 years 15.2 13.7 +1.5
5 years 13.5 13.8 -0.3
Since Inception 11.6 11.2 +0.4
Returns in per cent, using NAV of Classic option and includes dividends paid out
Returns as of 30 July 2021. Returns in USD
Inception – 2 Jul 2015
Performance greater than one year on a compounded annualized basis
Data Source: Bloomberg Analysis: In house
12Performance of Sundaram Global Brand Fund-Classic Class
1 Year to 3 Years To 5 years to
YTD
2016 2017 2018 2019 2020 end July end July end July
2021
2021 2021 2021
Sundaram Global
3.2% 16.0% -7.7% 25.9% 18.7% 14.3% 35.7% 15.1% 13.4%
Brand Fund
Morning Star
3.4% 23.1% -12.3% 23.8% 13.9% 12.8% 31.1% 11.3% 11.5%
category average
Outperformance -0.2% -7.1% +4.6% +2.1% +4.8% +1.5% +4.8% +3.8% +1.9%
Number of
Funds in MS 3434 3942 4577 4374 4614 5092 4776 3507 2702
Category
Peer Group
59 95 18 42 20 44 22 16 36
Percentile
• Source : Morning Star Direct
• Calendar,1 and 3 year returns in USD & includes dividends paid out
• * YTD as of end July 2021
• Morningstar Direct Rating :
13Distribution History of Sundaram Global Brand Fund
Ex-Date Distribution
2021 USD 12 cents per unit
2020 USD 6 cents per unit
2019 USD 20 cents per unit
2018 USD 17 cents per unit
2017 USD 6 cents per unit
2016 USD 3 cents per unit
14Why are brands important
Great brands:
Develop a competitive moat through brand loyalty which enable them to:
▪ span categories
▪ span borders
▪ sustain pricing power across economic cycles
▪ resulting in durable Cash Flows and strong Balance sheet
15Long queues at Apple’s stores during new product launch
16Why are brands important from an investment
standpoint?
Premium
Strong Competitive Superior
sustainable
brand advantage earnings
valuation
17Why are brands important
Strong competitive positioning leads to exceptional returns for stakeholders
Net Income Market Cap
Sales (USD Bn) RoE
Name Growth (USD Bn) Growth (USD Bn) Growth
2020
2015 2020 2015 2020 Dec-15 Dec-20
APPLE INC 235.2 296.2 26% 53.7 64.4 20% 586.9 2256.0 284% 73.7%
ALPHABET INC-CL A 75.0 182.5 143% 16.3 40.3 146% 528.0 1185.3 124% 19.0%
AMAZON.COM INC 107.0 386.1 261% 0.6 21.3 3479% 316.8 1634.2 416% 27.4%
HERMES INTERNATIONAL 39.6 51.0 29% 4.0 5.4 35% 80.0 315.3 294% 12.7%
LVMH MOET HENNESSY LOUIS VUI 5.4 7.3 36% 1.1 1.6 47% 35.8 113.5 217% 19.9%
MSCI All Country World Index 78%
Sales and Net Income data as of CY 2015 and CY 2020
Market Cap data as of 31-Dec-2015 and 31-Dec-2020
Source: Bloomberg and in-house analysis
18Apple as an example
Apple started with Mac and pivoted away over the years to durable product categories which
benefitted from brand loyalty towards Mac
*includes sales of AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and Apple-branded and third-party accessories
Source: Bloomberg and in-house analysis
19Why Sundaram Global Brand Fund ?
• Well diversified spread of business across geographies
20Why Sundaram Global Brand Fund ?
• Well diversified spread of business across geographies
21Strong cash reserves
Net Cash reserves Net Cash as a % of
Company
in USD Bn Market cap
Daimler AG 23.1 30%
Samsung Electronics 95.9 22%
Alphabet Inc 109.9 9%
Cisco Systems 14.8 8%
Facebook Inc 50.8 7%
Apple Inc 83.5 4%
Data as on 31 Dec 2020
Source: Bloomberg and in-house analysis
22Cash creates shareholder value – Strategic
Acquisitions
Anheuser
Facebook Louis Vuitton
Busch
• Facebook has been on a spree • LVMH acquired Tiffany, the global • Mergers and acquisitions have
of acquisitions in the last decade luxury jeweler, in 2021 at $15.8 been a part of Anheuser ever
which includes Bn since its formation in 1987
• Instagram - $1 Bn in 2012 • AB InBev’s >$100bn acquisition
• Whatsapp - $19 Bn in 2014 of SABMiller in 2016 created the
• Oculus VR - $2 Bn in 2014 world’s first truly global brewer,
• Onavo - $200 Mn in 2013 with operations in almost every
major beer market
• Beluga–undisclosed sum in 2011
23Cash creates shareholder value – Consistent Share
Buybacks
Share Buybacks in the recent past
Apple Alphabet
$81.5 Bn $31.1 Bn
in 2020 in 2020
Microsoft Cisco
$26.1 Bn $20.9 Bn
in 2020 In 2019
Toyota Motor
$2.1 Bn
in 2019
24When the going gets tough, the tough get going
P&G Weighted Average Total Value Share YoY (bps) Change LVMH’s share of the personal luxury goods market
(excluding Selective Retailing Division)
Source: Company data, Morgan Stanley Research Source: Bain & Company, Morgan Stanley Research
25Portfolio Construction overview
• Extensive back testing of data from 2002 has led to the development of a
proprietary portfolio allocation and re-balancing methodology
• A list of 50 leading brands will be created using publicly available annual
rankings of leading brand rating agencies such as
Methodologies Adopted
Brand Strength Brand Loyalty
Agencies Financial Analysis
Analysis Analysis
Interbrand ✓ ✓ ✓
BrandZ ✓ ✓ ✓
Forbes ✓ At industry level X
26Brand Rating process
• Measure economic profits
• Forecast future values over 5 years and arrive at terminal value
Financial • Capital charge – Reference to Industry weighted average cost of capital
Analysis
• Role of Brand Index (RBI)
• Determined by:
• Primary research
Demand • Review of historical roles of brand for companies in that industry
Analysis
• Expert panel assessment
• Brand strength Score (measures the ability of the brand to create loyalty )
• Score from 1-100
• Evaluation across 10 key factors
Competitive
• Performance on these factors is judged relative to other brands in the industry
Analysis
• Proprietary formula used to connect the Brand Strength Score to a brand-specific
discount rate
• Rate is used to discount brand earnings back to a present value
27An example of Brand Valuation Methodology
1. Financial Analysis 2. Demand Analysis 3. Competitive Analysis
Role of Brand Index Brand Strength Score
Economic Profit
(RBI) (BSS)
Brand Brand Risk (Discount
Earnings Rate)
4. Brand Value: Net present value of brand earnings
28Investment Process
• Portfolio will consist of listed equities of 30 leading global brands
• Preference for brands with geographically diversified revenues in order to reduce portfolio risk
• The chosen 30 brands split into 3 bands
– Band 1 consists of the top 10 brands
– Band 2 consists of the next 10 brands
– Band 3 consists of the residual 10 brands
• Individual stock weighting to depend on the band the stock belongs to
– Band 1 stocks will have a weighting allocation of 5% each
– Band 2 stocks will have a weighting allocation of 3% each
– Band 3 stocks will have a weighting allocation of 2% each
29
• Portfolio changes triggered by
– Movement of brands within the 3 bands
– Exit or entry of a brand from the top 30 list
• Risk control
– Single stock limit of 10%
– Single sector limit of 50%
– Intervention in instances of significant corporate governance issues
29Current Portfolio
Well diversified & reasonable valuations
Portfolio Characteristics
2022 weighted estimated PER 23.0x
Average Earnings Growth over next 2 years 31.0%
2022 estimated Dividend Yield 1.5%
Average 2022 RoE 31.6%
Cost of buying 100 shares of each
company in the Global Brand Fund
Portfolio as of end July 2021
USD 1,496,693
30Top Ten Holdings
S.No Name Weight (%)
1 Alphabet Inc 6.3
2 Apple Inc 5.7
3 Microsoft Corp 5.6
4 Amazon.com Inc 5.2
5 Daimler AG 5.0
6 Walt Disney Co 4.6
7 LVMH Moet Hennessy Louis Vuitton 4.0
8 Facebook Inc 3.9
9 Nike Inc 3.8
10 Bayerische Moteren Werke AG 3.7
TOTAL 47.8
Portfolio as of 30 July 2021
31Sundaram Global Brand Fund
- Ratios and Valuations
Parameter Fund MSCI ACWI- Parameter Fund
Parameter Fund
TR
Alpha 0.8 Standard FY 21 P/E (x) 31.3
14.3 14.7
Deviation
Correlation 0.9 FY 22 P/E(x) 23.0
Beta 0.9 -
Tracking FY 21 EPS
4.2 34.5
Error Growth (%)
Sharpe Ratio 0.7 0.7
Information FY 22 EPS
0.03 27.5
Ratio Growth (%)
Turnover Sortino Ratio 1.0 0.8
27.7 FY22 RoE (%) 31.6
(%)
Risk-Return Metrics are based on month end NAVs; since launch and have been annualised.
Returns in USD used in calculation of risk ratios. Annualised turnover in % as of 31 December 2020,,all other
data as of 30 July, 2021
Source : Bloomberg and in house analysis
Past Performance may or may not be sustained in future.
32Fund Overview
Name Sundaram Global Brand Fund
Fund Domicile Singapore
Fund Structure Open ended Unit Trust
Investor Eligibility Accredited Investors and Institutional Investors
Dealing Frequency Daily
Investment Manager Sundaram Asset Management Singapore Pte Ltd
Trustee HSBC Institutional Trust Services (Singapore) Limited
Global Custodian HSBC Banking Group
India Custodian HSBC India
Fund Administrator HSBC Singapore
Fund Auditor KPMG Singapore
Please refer to the Information Memorandum of the Fund for details and risk factors.
33Thank You
34Contacts
Vijayendiran R
Chief Executive Officer
Sundaram Alternate Assets Limited
M: +91 9841049635
E: vijayendiran@sundaramalternates.com
Ramesh Krishnamurthy
Anish Mathew
Chief Representative- Middle East & Africa Region
Chief Executive Officer & Chief Investment Officer
Sundaram Asset Management Company Limited
Sundaram Asset Management Singapore Pte Ltd
(Dubai Representative Office)
D: +65 65577086
M: +971 55 5123639
E: anishm@sundarammutual.sg
E: ramesh.krishnamurthy@sundarammutual.com
Karthick Narayanan
Edmund Teo
AVP-International Business
Head-Business Development
Sundaram Asset Management Company Limited
Sundaram Asset Management Singapore Pte Ltd
(Dubai Representative Office)
D: +65 65577085
M: +971 55 6095049
E: edmundt@sundarammutual.sg
E: karthick@sundarammutual.com
Address
Sundaram Asset Management Singapore Pte. Ltd.
50 Armenian Street, #02-02,Wilmer Place Singapore 179938
Sundaram Asset Management Company Limited
Sundaram Towers, 46 Whites Road, Chennai, India
www.sundarammutual.com
35Disclaimer
General Disclaimer: This document is issued by Sundaram Asset Management for your exclusive and confidential reference. This
document is produced for information purposes only. It does not constitute a prospectus or offer document or an offer or solicitation to buy any
securities or other investment. Information and opinion contained in this document are published for the assistance of the recipient only; they
are not to be relied upon as authoritative or taken as a substitution for exercise of judgment by any recipient. They are subject to change
without any notice and not intended to provide the sole basis of any evaluation of the instrument discussed or offer to buy. It is neither a
solicitation to sell nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or be taken as
investment advice. The information and opinions contained in this communication have been obtained from sources that Sundaram Asset
Management believes to be reliable; no representation or warranty, express or implied, is made that such information is accurate or complete
and it should not be relied upon as such. Sundaram Asset Management neither guarantees its accuracy and/or completeness nor does it
guarantee to update the information from time to time. This communication is for private circulation only and for the exclusive and confidential
use of the intended recipient(s). Any other distribution, use or reproduction of this communication in its entirety or any part thereof is
unauthorized and strictly prohibited. By accepting this document you agree to be bound by the foregoing limitations. This communication is
for general information only without regard to specific objectives, financial situations and needs of any particular person who may receive it
and Sundaram Asset Management is not soliciting any action based on this document. In the discharge of its functions, Sundaram Asset
Management may use any of the data presented in this document for its decision-making purpose and is not bound to disclose the same. For
details about fund management services and performance, please refer to the Disclosure Documents available at the offices of the AMC.
Securities investments are subject to market risks and there is no assurance or guarantee that the objectives of portfolios will be
achieved. As with any securities investment, the value of a portfolio can go up or down depending on the factors and forces affecting the
capital markets. Past performance of the Fund Manager or AMC may not be indicative of the performance in the future. Sundaram Asset
Management is not responsible or liable for losses resulting form the operations of any portfolio. The value of any portfolio illustrated in this
document may be affected by changes in the general market conditions, factors and forces affecting capital markets in particular, level of
interest rates, various market related factors and trading volumes, settlement periods and transfer procedures. The liquidity of investments
are inherently restricted by trading volumes in the securities in which it invests. Investors in portfolios are not offered any guaranteed returns.
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