Tareno AG
www.tareno-waterfund.com Morningstar RatingTM
Class R1 EUR Class W EUR Morningstar Category: Overall Rating per 30/11/15
December 2015 | Basel | EN 0
© [2015] Morningstar Switzerland GmbH. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, completely or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
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Tareno AG
Contents
Chapter 1: Who is Tareno Ltd.
Page 2
Chapter 2: Key data
Page 5
Chapter 3: Why water
Page 8
Chapter 4: Investment process
Page 14
Chapter 5: Investment topics
Page 18
Chapter 6: Fund Management Team and fund details
Page 25
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Tareno AG
Chapter 1
Who is Tareno Ltd.
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Tareno AG
Tareno AG Tareno was established in the year 2000 by five finance experts as an asset management company operating on a partnership basis. The team has now grown to 30 persons. In addition to its Basel office, Tareno set up a subsidiary in Luxembourg in 2005 – Tareno (Luxembourg) S.A. In 2012 Tareno also opened an office in Zurich. Tareno is an asset management company that operates independently of the banks. It holds a license from the Swiss Financial Market Supervisory Authority FINMA, is a member of the Swiss Association of Asset Managers (VSV), and is an associated participant at SWX Swiss Exchange. Tareno manages assets totaling some CHF 2.1 billion. Like Tareno AG itself, Tareno Waterfund is aligned to three underlying principles: individuality, independence, and sustainability.
Tareno AG, Basel
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Tareno AG
The Tareno Waterfund – an investment in the future
Benefit from water as a megatrend – a strategic investment.
The investment universe consists mainly of mid-cap stocks, with a strategic exposure in the emerging markets.
Stock selection takes a bottom-up, value-oriented approach with macro thematic views.
Our industry fund is based sustainably in the areas of infrastructure, utilities, engineering, filter & separation and processing technology.
The "purest" Swiss-registered SICAV Waterfund: We set the requirement of maintaining at least 66.7% of investments in stocks whose income is highly dependent on the topic of water.
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Tareno AG
Tareno Waterfund – Awards
2014
2013 Morningstar Rating
S&P Capital IQ Gold Fund Grading
Citywire Euro Stars «The Guide to Europe’s 250 Top Fund Managers» Rank 15 and 16
2015 Lipper Fund Awards 2015 Germany
Morningstar Rating InvestmentEurope Fund Manager of the Year Awards 2014 InvestmentWeek Sustainable Investment Awards 2014
Citywire Rating + for Fund Manager Josef Bollag and Sybille Wyss
Citywire Rating A for Fund Manager Josef Bollag and Sybille Wyss
Morningstar Rating
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Tareno AG
Chapter 2
Key data
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Tareno AG
Performance per 30.11.2015 Performance R1 in EUR (indexed)
Performance (left scale)
Index
In %
Yearly performance in % (right-hand scale)
Performance R1 EUR
Benchmark: MSCI Daily Net TR World EUR Source: Bank Vontobel AG. Past performance is not a guide to current or future performance. The performance data do not take account of the commissions and costs incurred on issue and redemption. The return of the fund can be a result of currency fluctuations rise or fall.
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Tareno AG
Allocation and key data per 30.11.2015
58% Large Caps
Statistics
36% Mid Caps
Alpha
0.0%
4% Small Caps
Beta
1.0
Correlation MSCI World
0.9
Volatility p.a.
15.9%
Tracking Error
7.6%
39% USA
PTR (per 30.06.14)
68.4%
11% United Kingdom
VaR (95%, monthly)
-8.8%
Number of positions
35
2% Liquidity
8% Hong Kong 6% Italy 6% South Korea 6% Switzerland 5% Cayman Islands
5% Bermuda 13% Others 1% Liquidity 8
Tareno AG
Revenues per Region
28% EMEA
42% AMERICAS
30% APAC (>14% China)
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Chapter 3
Why water
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Facts
75% of Earth’s surface is covered by water, but only 3% of the earth’s total water supply is fresh water
Agriculture is the largest consumer of water (70%) followed by industry (20%) and residential (10%)
Every person uses an average of 2‘700 liters of water per day (incl. sanitation, food and industrial production of consumer goods)
To produce 1 kilogram of bread needs 1‘000 liters of water, 1kilogram of beef needs 16‘000 liters
Water overall: 1.39 Mia km3 (Cube with a lenght of 1‘116 km)
Freshwater overall: 35 Mio. km3, nearly 3% (Cube with a lenght of 327 km)
Useable Freshwater: 9 – 12‘000 km3, 0.0009% (Cube with a lenght of 21.5 km)
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Tareno AG
Poorly managed supply versus growing use
Water lost due to leakage, theft and inadequate billing practices is typically 30 – 50%
1.1 billion people still lack adequate access to reliable water supply and 2.6 billion people lack access to sanitation, mostly in Asia in Africa
5 million people die every year from water-related illness
By 2050, untreated wastewater will contaminate one-third of global annual renewable freshwater
Industrial usage is expected to rise by 55 % by 2025
Source: sxc.hu
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Tareno AG
Globally, water consumption is growing 2 times faster than population growth World’s population has more than tripled in the 20th century – but global water consumption has grown sixfold In 1995, over 400 million people lived in countries experiencing water stress or water scarcity By 2025, that number is expected to rise to 4 billion – over half the world’s population Water stressed regions continue to spread
Demand for water rises constantly Independent of economic growth Source: World Resources Institute, Washington, D.C.
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Tareno AG
The global water industry Global Spending on Water on the Rise
Globale Water Market – USD 500 bn
Forecast Compound Annual Growth Rate 2010 - 2016 10.0%
Data in bn USD
140 120
8.0%
15
15 10 10
100 6.0%
80
4.0%
60
5
60
40 2.0%
20
Growth Rate (left scale) Spending by 2016 (bn USD)
0.0%
0 Infrastructure
Water treatment Desalination for industrial use
Water reuse
382
Quelle: GWI, Money Morning Staff Research
According to estimates, the water industry generates USD 500 billion in revenue.
382 bn - Utilities
60 bn - Bottled Water
Expenditure along the value chain is expected to grow by between 6.5% and 9.4% up to 2016.
15 bn - PoU Equipment
12 bn - Pumps/Pipes
10 bn - Filtration
10 bn - Irrigation
Applications in the area of industrial wastewater treatment offer the most potential for growth.
5 bn - Metering
Quelle: Tareno Estimation 2015
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Tareno AG
Water as a growth driver 1. Water shortages Population growth
Industrialization
The UN estimates the daily water requirement for hygiene and nutrition to be between 20-50 litres.
75% of the water used in industry can be attributed to electricity generation.
Roughly one in six people (894 million in total) have less than 20 litres available per day.
15-18 billion cubic metres of water are contaminated each year by the production of fossil fuels.
By 2015, there will be at least 23 cities with over 10 million inhabitants – 19 of which are in emerging countries
China is aiming to produce 12 million tonnes of biodiesel by 2020. The volume of water required for this is roughly equivalent to the amount of water that flows through the Yellow River in a year.
In 2025, there will be 1.8 billion people living in regions suffering from water scarcity. Only 20% of all agricultural land is farmed using irrigation systems. However, this 20% produces 40% of the world's agricultural raw materials.
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Tareno AG
Water as a growth driver 2. Water quality
3. Infrastructure
Households Less than 35% of all towns in the emerging countries have water treatment plants. 36% of the global population, some 2.5 billion people, do not have access to sanitary facilities. Around 770 million people worldwide do not have access to clean drinking water.
Industry Industrial wastewater contaminates considerably more water than that used in the production process. One litre of wastewater contaminates around 8 litres of fresh water. 22% of water extracted globally is used by industry. The annual volume is expected to rise from 752 million cubic metres in 1995 to 1,170 million m3 in 2025.
Some major cities lose between 250-500 million cubic metres of drinking water each year due to damaged pipes. This equates to the water requirements of around 20 million people.
Leak rates of up to 50% are not uncommon in communal pipe systems. In the US in 2010, actual investment fell short of investment requirements by USD 54 billion. Experts believe that this shortfall will rise to USD 84 billion by 2020, and as much as USD 143 billion by 2040. 25% of the world's population lives by the coast, which means that sea water desalination is a key issue. Hydroelectric power accounts for 30% of the renewable energy market. In the US, 90% of all power stations have been in operation for more than 30 years. It is essential that investments be made to maintain them.
In the US, the market for water treatment products will grow by around 6% per year up to 2017. A key driver here is the strict regulation by the authorities (ballast water). 16
Tareno AG
Chapter 4
Investment process
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Tareno AG
Investment process 1/3
Determining the investment universe
Evaluation process
Portfolio construction
Worldwide investment universe
Investment fundamentals
• Listed companies only
• Companies related to the water industry
• Minimum market capitalisation: USD 100 m
Investment universe 250 «water»-Companies 18
Tareno AG
Investment process 2/3
Determining the investment universe
Evaluation process
Portfolio construction
250 «water» companies
Fundamental analysis
Selection Subindustry
Technical analysis
- quantitative - qualitative Scoring-Model
Economic cycle Tareno Water index
Momentum Scoring-Model
80 «water» companies
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Tareno AG
Investment process 3/3
Determining the investment universe
Evaluation process
Portfolio construction
Tareno Waterfund Portfolio construction Mid Cap Bias High relation to water (we invest at least 66.7% of the portfolio in companies which derive 50% or more of their revenues from directly water-related areas) Emerging market exposure Liquidity requirements 30 to 50 items
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Tareno AG
Chapter 5
Investment topics
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Tareno AG
Who actually uses water – and what for? WATER CONSUMPTION 10%
20%
70%
70% Agriculture
70% AGRICULTURE
53% Livestock farming 16% Crops 9% Fruit 9% Coffee, tea, tobacco 8% Edible oil 5% Sugar
20% Industry
10% Households
20% INDUSTRY
10% HOUSEHOLDS 60% Mining
29% Showers
15% Oil & gas
25% Garden
9% Chemistry 8% Textiles 8% Miscellaneous
14% Washing 12% Toilets 10% NRW 10% Cooking / drinking water
Source: elcowater.org, Peer (Partnership for European Environmental Research), Government of Australia, www.go-green.com
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Tareno AG
Investment topics End markets
• Industry
• Construction industry
Zero liquid discharge Process water Filtration
Sanitary facilities Pipelines Real estate
Separation
Treatment Efficient irrigation
• Agriculture
Supply Transport • Public sector
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Tareno AG
Investment topics – Industry
•Industry
Ballast water is taken on board ships to provide stabilization and guarantee seaworthiness during unladen journeys. The water is loaded into ballast tanks or into the empty space between the two hulls of double-hulled ships. Organisms introduced from foreign ecosystems cause damage amounting to billions of dollars.
As a result of the introduction of new guidelines for the treatment of ballast water, the market is expected to grow from USD 200 million today to around USD 5 billion by 2017. Around 50,000 ships will need to be treated, which represents a major logistical challenge. Ballast water undergoes various filtration steps. The tiniest microorganisms are finally neutralized with UV radiation.
Source: hasenpusch-photo.de
Source: flickr / Gemma Grace
Source: Hyde Marine Inc.
Source: atg UV Technology
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Tareno AG
Investment topics – Construction
•Construction
The US housing market is emerging from its trough. Applications for construction approvals are on the rise (803,000 in August 2012, +25% compared to the previous year). August 2012 saw the start of construction for 730,000 new houses, which is equivalent to a year-onyear increase of 30%. The manufacturers of sanitary facilities are required to design their products efficiently when it comes to water consumption. Particularly sought after in this area are the products of Watts Water, Pentair, A.O. Smith and Geberit. Private houses are increasingly being fitted with "intelligent" electricity, gas and water meters.
Source: Geberit / Medien
Source: A.O. Smith
Source: Itron
Source: Watts Water
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Tareno AG
Investment topics – Public sector Ensuring the water supply involves mastering a number of major challenges. Pipeline infrastructures are frequently outdated and in need of renewal. In large parts of the world, this infrastructure has yet to be put in place.
•Public sector
For regions suffering from water scarcity, alternatives need to be found, such as seawater desalination, for example. The treatment of water is also becoming increasingly important. Investment has been reined in due to squeezed budgets, but the pressure is continually on the rise. Companies active in this sector include American Waterworks, Manila Water, Beijing Enterprises, Sembcorp, Hyflux, Xylem and KSB.
Source: Energy Recovery
Source: US Army Corps of Engineers
Source: Andritz
Source: YSI Inc. / Xylem Inc.
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Tareno AG
Investment topics – Agriculture Agriculture is the largest consumer of water; more than 70% of consumption is accounted for by this sector. The use of gravity-flow irrigation remains the most common method of irrigation – out of some 563 million hectares of irrigated land, only 8% is irrigated with efficient systems.
•Agriculture
Out of some 220,000 sprinkler devices installed in the US, 50% are more than 10 years old and in need of replacement. Persistently high prices for agricultural commodities are driving further investment on the part of producers. The market leaders in the area of sprinkler devices are the US companies Valmont and Lindsay.
Source: Getty Images.ch
Source: Lindsay Corp.
Source: Lindsay Corp.
Source: Lindsay Corp.
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Tareno AG
Chapter 6
Fund Management Team and fund details
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Tareno AG
Fund Management Joseph U. Bollag
Fund Manager since inception
External Research Janney Montgomery Research Group Robert W. Baird Ltd. Research Group
Sybille Wyss
Co-Fund Manager since inception
Boenning & Scattergood Inc. Raiffeisen Centrobank AG Research Group
Stefan Schütz
Analyst since inception
Oddo Securities DBS Vickers Securities (UK) Ltd.
Olivier Schmitt
Fund Trading since May 2012
Tamara Jovanovic
Fund Trading Since July 2013 29
Tareno AG
Tareno Waterfund – Advisory Board Top-class Advisory Board with experts from both research and industry:
Albert M. Baehny
Andrew Seidel
Prof. Dr. Rik Eggen
Chairman of the Board of Geberit, former CEO of Geberit
CEO and Chairman of the Board of Directors of Underground Solutions Inc.; former CEO of US-Filters
Deputy Managing Director of Eawag
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Tareno AG
Tareno Waterfund – fund details per 30.11.2015
Share class
R1 EUR
W EUR
R1 H CHF
W H CHF
R1 USD
W USD
Inception date
10.09.2007
06.01.2008
03.01.2013
03.01.2013
19.12.2014
19.12.2014
Launch price
100.00
94.62
100.00
100.00
100.00
100.00
Currency
EUR
EUR
CHF
CHF
USD
USD
Hedged
No
No
Yes
Yes
No
No
Share class volume
57.0 m
46.2 m
7.7 m
21.5 m
0.6 m
8.2 m
Net asset value
173.56
185.61
148.15
151.61
99.29
100.04
First subscription minimum
EUR 1
EUR 100’000
CHF 1
CHF 100’000
USD 1
USD 100’000
Subsequent subscr. minimum
none
none
none
none
none
none
Management fee
1.8%
1.0%
1.8%
1.0%
1.8%
1.0%
Valor
3381228
3381232
20252456
20252495
26140330
26140338
ISIN
LU0319773478
LU0319773635
LU0866520306
LU0866532574
LU1143080999
LU1143081534
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Tareno AG
Tareno Waterfund – fund details per 30.11.2015
Data Fund type
Luxemburg SICAV – UCIT IV
Categorie
Sector fund
Domicile
Luxemburg
Fund size in EUR
138.3 m
Investment Manager
Tareno AG
Management Company
Vontobel Management S.A.
Auditors
Ernst & Young S.A.
Custodian
RBC Investor & Treasury Services
Administrator
RBC Investor & Treasury Services
Subscription / Redemption
daily at NAV
Performance fee
none
Registration
CH, LUX, AUT, DE, LI, FR & ES
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Tareno AG
Contact Tareno AG Josef Bollag Sybille Wyss
Switzerland St. Jakobs-Strasse 18 CH - 4052 Basel Phone Fax
+41 (0)61 282 28 00 +41 (0)61 282 28 28
EMail
[email protected] [email protected]
Internet
www.tareno.ch www.tareno-waterfund.com
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Tareno AG
Disclaimer Sources: Getty stockfreeimages.com; sxc.hu;Bilder flickr /stammen Gemma Grace; hasenpusch-photo.de; Marine Inc; atg UV Technology; Geberit / Medien; A.O. DieImages.ch; in der Präsentation verwendeten aus folgenden Quellen: Hyde trinkwasser.ch; au-schoppernau.at; Smith; Itron; Watts Water;d-pixx.de; US Army Corps of Engineers; Andritz; YSI Inc. / Xylem Inc;; Lindsay Corp; internetgarden.de; wasser-info.ch; basisches-ionisiertes-wasser.de; e-costinha.ch; foto.germanblogs.de; World Resources Institute, Washington,fotogemeinschaft.de; D.C; elcowater.org, Peersxc.de; (Partnership for European Environmental Research), Government of Australia, www.govitavortex.com; aura-klang.at; readersdigest.ca; fotogemeinschaft.de; april-design.de; wassergreen.com; Environmental Business Journal, Frost &|shakesby.net Sullivan, Global Water Intelligence; World|Bank, Center for Strategic International Studies, UNICEF; hilft.de |acecrc.sipex.aq |tobiaspfau.de |weidner-waser.de fontaene.de | Worldand Bank, Center for Strategic Center Strategic andStudies, International Studies, UNESCO, Aspen Institute, U.S. GAO, World Water Council ; Goldman ITT Industries, McKinsey, and for International UNICEF; Center for Strategic and International Studies, UNESCO, AspenSachs, Institute, U.S. GAO, World Nalco, Stanford Research, US Filter estimates; Company WaterGlobal IndustryWater Equity Intelligence, Bulletin (Stanford Washington Research Group), September WaterWashington Council ; Environmental Business Journal, Frostreports, & Sullivan, Goldman Sachs, ITT Industries, 2005; Bloomberg; McKinsey, Nalco, Stanford Washington Research, US Filter estimates; Company reports, Water Industry Equity Bulletin (Stanford Washington Research Group), September 2005; Bloomberg | Past performance is no guarantee of future trends. The performance data do not take account of the commissions and costs incurred on issue and Die historische Performance stellt keinen Indikator für die laufenden oder zukünftige Performance dar. Die Performancedaten redemption. lassen die bei der Ausgabe und Rücknahme der Anteile erhobenen Kommissionen und Kosten unberücksichtigt | This information has been furnished to you upon request and solely for your information and may not be reproduced or redistributed to any other person. It is not intended as an offer or solicitation with respect to the purchase or sale of shares of the Sicav. Please be aware that investment funds involve investment risks, including the possible loss of the principal amount invested. For a detailed description of the risks in relation to each share in the investment fund, please see the prospectus. Investements of the Luxemburg Variopartner SICAV-Tareno Waterfund should be made due to the fund's latest prospectus, the statutes, the latest annual report and, if applicable, the half-yearly report. These documents are available free of charge from the domicile of the fund at 33, rue Gasperich, L-5826 Hesperange, Luxemburg, or from Vontobel Fonds Services AG, Dianastrasse 9, CH-8022 Zürich, Switzerland and Bank Vontobel AG, Zürich, Switzerland.
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