1 Fixed Income Emerging Markets - 18/08/2015 AXA WF Responsible Development Bonds February 2008.

1Fixed Income Emerging Markets - 19/04/23

AXA WF Responsible Development Bonds

February 2008

Fixed Income Emerging Markets - 19/04/23 2

Agenda

AXA Investment Managers: company overview

AXA IM Emerging Markets Expertise Why Emerging Markets? Why Responsible Investment in Emerging Markets?

Fund features and performances

Fund’s Investment process

Appendix


AXA IMKey figures

AXA IM global presence

A dedicated and autonomous asset manager with more than 2,900 employees, 81 nationalities

AXA IM is present in 21 countries, across 5 continents

AXA IM assets under management

EUR 548bn total assets under management:

Core expertise in fixed income: EUR 273bn of fixed income assets under management

LONDON■ AXA IM ■ AXA Framlington■ AXA Private Equity■ AXA REIM■ AXA Rosenberg

BRUSSELS■ AXA IM■ AXA REIM

PARIS■ AXA IM■ AXA Private Equity■ AXA REIM

ORINDA■ AXA Rosenberg

NEW YORK / GREENWICH■ AXA IM ■ AXA Private Equity■ AXA Rosenberg

MADRID■ AXA IM■ AXA REIM

HONG KONG■ AXA IM■ AXA Rosenberg

SINGAPORE■ AXA IM ■ AXA Private Equity■ AXA Rosenberg

LISBON■ AXA REIM

MINNEAPOLIS■ AXA IM

SYDNEY■ AXA Rosenberg

UTRECHT■ AXA REIM

AMSTERDAM■ AXA IM

FRANKFURT■ AXA IM■ AXA Private Equity■ AXA REIM

COLOGNE■ AXA REIM

Investment Management Centres& Client Servicing

Client Servicing

ZURICH■ AXA IM ■ AXA PE

LUXEMBOURG■ AXA IM

TORONTO■ AXA Rosenberg

QATAR■ AXA IMMILAN

■ AXA IM ■ AXA REIM■ AXA PE

GENEVA■ AXA IM

ROME■ AXA REIM

BUDAPEST■ AXA REIM

ENDINBURGH■ AXA Framlington

STOCKHOLM■ AXA REIM

LONDON■ AXA IM ■ AXA Framlington■ AXA Private Equity■ AXA REIM■ AXA Rosenberg

BRUSSELS■ AXA IM■ AXA REIM

PARIS■ AXA IM■ AXA Private Equity■ AXA REIM

ORINDA■ AXA Rosenberg

NEW YORK / GREENWICH■ AXA IM ■ AXA Private Equity■ AXA Rosenberg

MADRID■ AXA IM■ AXA REIM

HONG KONG■ AXA IM■ AXA Rosenberg

SINGAPORE■ AXA IM ■ AXA Private Equity■ AXA Rosenberg

LISBON■ AXA REIM

MINNEAPOLIS■ AXA IM

SYDNEY■ AXA Rosenberg

UTRECHT■ AXA REIM

AMSTERDAM■ AXA IM

FRANKFURT■ AXA IM■ AXA Private Equity■ AXA REIM

COLOGNE■ AXA REIM

Investment Management Centres& Client Servicing

Client Servicing

ZURICH■ AXA IM ■ AXA PE

LUXEMBOURG■ AXA IM

TORONTO■ AXA Rosenberg

QATAR■ AXA IMMILAN

■ AXA IM ■ AXA REIM■ AXA PE

GENEVA■ AXA IM

ROME■ AXA REIM

BUDAPEST■ AXA REIM

ENDINBURGH■ AXA Framlington

STOCKHOLM■ AXA REIM

AXA IM AUM Breakdown

Source : AXA IM, as at 30/12/07

Fixed Income; 49,8%

Equity; 30,8%

Alternatives ; 15,1%

Investment Soulutions;

4,3%


AXA IM A large asset base

+ 296 % growth in AUM over 10 years, reaching €548 billion

24,4 % of assets distributed to individual investors

75,6% to institutional investors

Investment Solutions

€24 Billion

Alternatives

€83 Billion

Equities

€169 Billion

Fixed Income

€273 Billion

Source : AXA IM, as at 30/12/07

139

199

238256

277 268292

345

432

485

548

0

100

200

300

400

500

600

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007


AXA IM Fixed IncomeOrganization

Experts investment teams rely on globally shared resources

and contribute to the global information advantage

A large and complex investment universe covered by highly specialized and empowered teams

Source : AXA IM, as at 31/12/07*including Investment Grade and High Yield

*


€273 bn of Assets under management as at 30/12/07*

12 Fixed Income sub expertises

Around 60 Portfolio Managers

Credit & Macro:

Global organisation of 23 credit Analyst specialised by sector

11 Economist/strategist with 3 dedicated to Fixed Income

9 Portfolio Engineers managing risk alongside Fund Managers and developing robust quantitative tool

AXA IM - Fixed IncomeShared Resources

Source : AXA IM, *unaditted figures as at 30/12/07


Agenda





Appendix


Around €458 Mio of AUM in Emerging Markets Debt as end of 30/12/07* Extensive knowledge and experience in Emerging Markets Team:

Benchmarked portfolios Hard Currency management Local Currency management Micro credit

2 specialised fund managers accountable for performance based in Paris 3 strategists covering Emerging Markets Debt 2 Forex dealers and 1 portfolio controller

Sources: AXA IM, 30/06/07

AXA IM in Fixed Income Emerging Markets

A strong expertise in Emerging Markets Debt Source : AXA IM, as at 30/12/07

Head of Fixed Income Emerging Markets teamChandima Mendis

Paris

Global Funds European Convergence

& RI FundsGlobal Funds & CPPI

Chandima Mendis* Matthieu Stanic Chandima Mendis

*and closely monitors European Convergence and RI funds

Investment Strategy

Credit Research

23 people

3 people

Portfolio Engineering Group

9 specialists working alongside portfolio

managers


Why Emerging Markets Debt?

The potential for higher yields than those available on investments like cash or U.S. Treasuries

However, credit differentiation remains key in order to produce excess returns

A tool eventually reducing the volatility of a diversified fixed income portfolio:

The advantage of investing in local-currency bonds in maturing economies: additional diversification and potential currency appreciation

A likely source of portfolio return enhancement in the coming years

48%

100%

US Total Return

11%

17%

10%100%

MBS

86%

-6%

24%

13%

100%

High Yield

40%

11%

Emerging Markets

-5%100%

Investment Grade

100%Investment Grade

Emerging Markets

High Yield

US Total Return

MBS

Global Bond Index

S&P

Global Bond Index

S&P

-1%

17%

2%

21%

-12%

100%

-5%

24%

-5%

-12%

-3%

100%

48%

100%

US Total Return

11%

17%

10%100%

MBS

86%

-6%

24%

13%

100%

High Yield

40%

11%

Emerging Markets

-5%100%

Investment Grade


Emerging Markets

High Yield

US Total Return

MBS

Global Bond Index

S&P

Global Bond Index

S&P

-1%

17%

2%

21%

-12%

100%

-5%

24%

-5%

-12%

-3%

100%

100%

US Total Return

11%

17%

10%100%

MBS

86%

-6%

24%

13%

100%

High Yield

40%

11%

Emerging Markets

-5%100%

Investment Grade


Emerging Markets

High Yield

US Total Return

MBS

Global Bond Index

S&P

Global Bond Index

S&P

-1%

17%

2%

21%

-12%

100%

-5%

24%

-5%

-12%

-3%

100%

US Total Return

11%

17%

10%100%

MBS

86%

-6%

24%

13%

100%

High Yield

40%

11%

Emerging Markets

-5%100%

Investment Grade


Emerging Markets

High Yield

US Total Return

MBS

Global Bond Index

S&P

Global Bond Index

S&P

-1%

17%

2%

21%

-12%

100%

-5%

24%

-5%

-12%

-3%

100%

Source : Bloomberg, historical data since 1991, correlation of index monthly performances


Emerging Markets Debt offers very good performances, despite crisis…

Crisis are less frequent, tighter, and do not affect all the countries of the asset class :Spill over risk is limited

Past results are not necessarily indicative of future performance. No assurances can be made that profits will be achieved or that substantial losses will not be incurred.

EMBI Global Diversified Total Return Index

60

100

140

180

220

260

300

340

380

MexicoTequila Crisis

('94-'95)

First Brady Exchange(Mexico Apr 96)

Asia Crisis(mid '97)

Russia Default(Aug '98)

Brazil Devaluation(Jan '99)

Pakistan Restructuring(Dec '99)

ArgentinaDefault

(Dec '01)

Ecuador Default(Aug '99)

UkraineDefault

(Jan '00)Mexico gets

Investment Grade(Mar '00)

UruguayRestructuring

(Apr '03)

Dom RepRestructuring

(Jun '05)

Argentina Restructuring(Jun '05)


Structural changes gaining momentum

Market friendly policies: improving quality of management in emerging market countries

More sophisticated investors

High level of liquidity: being injected by the central banks in the global economy, supporting riskier assets

Floating exchange rates: allowing countries to adjust their economies through currencies

Positive balance of payments: enabling foreign exchange reserves to cover a larger share of their short term debt

EM countries: from a source of vulnerability to a provider of stability


Bringing together Performance & Sustainable Investment

A Responsible fund*, that invests in internationally diversified bonds, and seeks attractive yields

Investment decisions are based on the selection of projects that contribute to the sustainable development of economies

At a country and corporate level, by investing in government & corporate bonds

On the regional and global level, by supporting regional and supra-national development agencies

On a local level, by investing in microfinance institutions

* AXA WF Responsible Bonds - Name changed from AXA WF Development Debt


Choice of issuers promotes Sustainable Development

Bonds issued by supra-national institutions

Bonds issued by local development agencies in emerging countries

Short term securities issued by microfinance institutions

++

+

+++

Importance of the criteria


The Emerging Growth Cushion


From Debtors to Creditors


Emerging Bonds Difficult to Ignore


Why Responsable investment in EM?

• Higher risk on corruption, on human rights, on social and environment

• Link between good practices and bonds performance

• Reducing the poverty does not mean lower profitability


Best ESG countries outperform

0

20

40

60

80

100

120

140

160

11/05 03/06 07/06 11/06 03/07 07/07

Best in class Worst in class

Spread against US treasury: Best countries versus Worst countries by income category (Nov 2005= 100)

Source EIRIS, Datastream, AXA IM


RI Filter for the country selection

3 issues:

Governance (40%): Policy rights, Liberty rights, Corruption.

Social (40%): Labour Convention, Child Labour, Unemployment rate, Child Mortality, Water Access.

Environmental (20%): Deforest, Waste, CO2 emissions, GHG p/cap, Protected Areas

Our sources are EIRIS and AXA RI TEAM


What is the BOP Approach?

Tier 4

Tiers 2-3

Tier 5

Tier 1

Populations in millionsPurchasing Power Parity in U.S Dollars

75 - 100

1,500 - 1,750

4,000

> $ 20,000

$ 1,500 - $ 20,000

$ 1,500

< $ 1,500


Poor people can be consumers:A market based approach

A bottom-up approach, allowing a local investment in acceptable countries, as far as the companies match certain criteria, as for example: - increase of local employment - working conditions - improvement of life-standards - training, availability of the output to the local population services (micro insurance etc.) - respect of environment

Corporate Bonds: Companies which do business by developing products and Services for the Poor people in emerging Countries

Poverty reduction by taking BOP Approach


The RI filter for corporate bonds

Governance (40%): Audit & control, Executive remuneration, Shareholders’rights, Business Behaviour ( prevention of corruption and impact on the social and economic development )

Social (40%): Promotion of Labour Relations, Respect of working hours, Respect of human rights,Community of involvement.

Corporate Bonds With good practices on Governance, Social and Environmental and citizens issues

Environmental (20%): Pollution prevention & control, Protectionof Biodiversity, Protection of water resources


Example of BOP Strategy

INFORMATION AND COMMUNICATION TECHNOLOGIES (ICT)

Lack of access to communication technologies in rural areas keeps rural households disconnected from markets and broader information sources and reinforces rural isolation and poverty.

Improvement of life-standards: Low income people clearly benefit from access to mobile phones.

Easy access to jobs, to Medical care..

Availability of the output to the local population services

Easy access to market prices, to family members working away from home

The total BOP household ICT market in Africa, Asia, Eastern Europe, Latin America and The Caribbean, including 3.96bn people in all surveyed countries, is estimated to be $51.4bn. And the market is expecting to grow for some time. Indeed in Africa and India, less than 15% of the population has mobile phones.


PLDT (Philippine Long Distance Telephone) – Telecom Services (Philippines)

Its subsidiary Smart Communications, Inc. is the Philippine’s leading wireless services providers, is providing banking services over mobile phones to previously unbanked customers.

Innovation of new services: “Over the Air” (OTA) payment system

has transformed the cell phone market by allowing electronic sales of airtime through short message service (SMS) and by reducing the unit size of such sales to US$0.03.

Increase of local employment

It allows small merchants to resell minutes with a commission on every sale creating business opportunity for 800,000 micro-entrepreneurs

Reducing poverty with profitability

By the end of 2003, just ten months after the launch of its innovative ‘Smart Load’ proposition, Smart Customer numbers had grown to 10 million, representing a 47% on year growth over 2002. In 2004 the company had amongst the highest profit margins in the Asia-Pacific region.


Microfinance in action

Opportunites to provide finance for micro entrepreneurs

Direct investments

Current strategy indirect investments Structured products – growing inimportance

Challenges Accessing market Reputational risk


Microfinance in Arequipa

CMAC Arequipa - One of better managed MFIs in Latin America

Over 70 000 members

Owned by municipality but considering opening the share capital

Due diligence visit by analyst in 2004

Over 71% of loans made to micro entrepreneurs

Benefits from Peru’s robust growth and reforms

Strengths Strong growth and profitability Management of portfolio endures

liquidity Leader in the region

Weaknesses Sole shareolder – Municipality Potential for political interferance Rise in arreas (30 days)


Supranationals and Development

Sources: AXA IM, as at 10/09/07Strategies are here for illustration purpose only, they might not reflect the current strategy.

International Finance Facility for Immunization

Accelerate immunization in 70 low income countries

Financial base constitute grants from donor several EU governments and some emerging countries

AAA Rating reflects sovereign backing ( except Italy)

Anticipates raising $4 bn over 10 years

Spread pick-up of 45 bps


Agenda





Appendix


AXA WF Responsible Development Bonds*

Objective & investment strategy: AXA WF Responsible Development Bonds is for investors whose goal is to participate in sustainable development and solidarity in economies at a local and global level through investments in diversified international bonds and debt instruments with attractive three-year growth outlooks. The funds aims to outperform the European Government Bonds 3-year return + 50bps.

Performance target : Yield of 3-year European Government Bonds + 50 bp

For investors whose goal is to participate in sustainable development and solidarity in economies at a local and global level through investment in diversified international bonds and debt instruments with attractive three-year growth outlooks.

Legal form: Sub-fund of a Luxembourg-based SICAV Agreement date: 02/01/02 Currency: EUR Fees

Maximum Initial Charge: Class F: 2,00% Maximum exit fees: None Minimum initial subscription: Class F: €500 000 Minimum subsequent investment, except in case of regular saving

plans: Class F: €50 000 Operating and management costs, gross of tax: Maximum rate: Class

F: 0,60%

Investment horizon: 3 years Category of investors: All subscribers. Risk profile Volatility target range: 0-5%**

** This figure is a working base for fund management teams. It is subject to change without notice and should not be construed as a firm commitment on the part of AXA Investment Managers

AXA WF Responsible Development Bonds, F Eur

Past results are not necessarily indicative of future performance. No assurances can be made that profits will be achieved or that substantial losses will not be incurred. Fund's performances are calculated net of management fees, dividend reinvested. Index performance is presented gross, dividends non reinvested. Performances are expressed in Euros (except if specified otherwise).* Since 07/01/2008, the name has changed from AXA Development Debt to AXA Responsible Development Bonds* AXA World Funds (AXA WF) is a UCITS III Luxembourg based SICAV Regulated by the CSSF, registered under the number RC Luxembourg B-63.116, on February 18, 1998

Sources: AXA IM, as at 31/01/2008

Performances and Risk 3M YTD 1Y 3Y 5Y

Gross Performance 1,37% 0,93% 4,76% 11,50% 22,48%

Net Performance 1,18% 0,86% 3,95% 8,89% 17,88%

Volatility 0,90% 0,94% 1,13%

96

101

106

111

116

121

126

31/1

0/02

28/0

2/03

30/0

6/03

31/1

0/03

29/0

2/04

30/0

6/04

31/1

0/04

28/0

2/05

30/0

6/05

31/1

0/05

28/0

2/06

30/0

6/06

31/1

0/06

28/0

2/07

30/0

6/07

31/1

0/07

AXA WF Responsible Development Bonds


Share of mutual fund under Luxembourg law

Volatility Range: 0 - 5%

Investment Horizon: 3 years

Exchange Risk Exposure: potential

VL calculation: every 15 days

Open to all informed investors

Management Fees: 0.60% taxes not included (F share)

NAV of the share : 60.85 (12/10/2007, F share)

AUM: €15.8 Mio

Fund identity

AXA WF Development Debt

Source: AXA IM, 31/10/07

The fund will change its name in the current months and will be called AXA WF Responsible Development Bonds; it will also benefit from a weekly NAV.


Risk diversification rules

Diversification and liquidity constraints

MFIs

Local

Agencies

Country

Risk

Currency risk

Maximum per issuer: 3% of assets

10% of total portfolio

Maximum per country: 10% of total portfolio

Max 50% of portfolio assets by regions

(diversification in Latin America, Central and

Eastern Europe, Africa and Asia)

75% covered against currency risk, the other 25% can be exposed to non Euro currencies



Achieving our performance objectives

Alpha sources: Spread duration (sovereign and supranationals) 20% Microfinance 10% Corporates 10% Local currencies 10% Interest rate duration (local and external) 40% CDS Curve Play 10%


Agenda





Appendix


Portfolio managers

Credit & Macro

Research

Strong Resources for this Fund

Responsible Investment Team & CRS partnerships

Shared Resources

CERESIn-house tools

Specialist micro-finance intermediary

2 portfolio managersresponsible

for performance and the respect of the client’s guidelines

11 Macro Analysts &23 Credit Analysts

A disciplined. repeatable and consistent process supported at every stage by three pillars

8 people from RI team + 6 external partnerships

(whom 3 specific partnerships), working

alongside portfolio managers


A Clear and Rigorous Process

1 3 4Global Macro & Sector Outlook

Instrument Selection

Portfolio Construction

Country Selection

2

EMD TeamInvestment Policy

Meeting

Fixed Income Teams

Forecasting & Credit Strategy

Groups

Analysing & Quantifying macro views

RI Criteria / ESG Filter

• Defining duration & asset allocation views

• Defining credit sector views

• External debt

•Local Debt

•Currency

•RI Criteria / ESG Filter

Portfolio ManagerInvestment Policy

Meeting

Implementing & Optimising Strategies within constraints

Portfolio ManagerPEG Meeting

5 Dynamic Portfolio Reviews

EMD Team Portfolio Managers

Revising portfolio consistency

…shared by all Fixed Income Expertises and supported by resources globally (RI team)


Agenda





Appendix


Investment Process – Steps:


Step 1: Market forecasts

The Forecasting Group establishes market forecasts on: interest rates, notably for the US

steepness and shape of yield curve

credit spreads (approached by swap spreads)

EMD sets own duration target using these inputs and Views of global risk aversion

Global FX

Commodity cycle


Step 2: Emerging Country views

Fundamental views and

monthly in-depth analysis

Qualitative factors Institutions Political stability Law & order

Market Technicals

Country Scoring


Step 3: Defining active investment strategies

Selection of tradable bonds, micro-credit securities and financing

projects

Tradable bonds selected on scoring and valuation

Micro-credit: Projects are selected in partnership with local correspondents & external research

Financing projects: direct financing of bodies whose goal is to promote sustainable development. Projects are medium to long term Partnership with supranational bodies in a co-financing context or in co-

operation with in-house teams specialised in financial projects.


Step 4: Portfolio Construction

For compliance with the following diversification rules: micro finance projects: maximum of 10% of total assets and 3% of assets per

issuer

local agencies: maximum per country of 10% of total assets

geographical risk: any geographical zone cannot exceed 50% of total assets

Monitoring of the portfolio’s credit risk


Step 5: Dynamic Portfolio Review

Weekly and Monthly Monitoring of positions

Reconciliation of views, positions and risk budget

Feedback from Management


Current Exposure



Maturity and issuer profile



Disclaimer

This presentation is for information purposes only and does not in anyway constitute an offer, solicitation or specific recommendation with respect to the purchase or sale of securities issued by any fund which is promoted or managed by AXA Investment Managers.

This presentation is not an advertisement and may not be copied or circulated, in whole or in part, to any person without the prior written consent of AXA Investment Managers. It shall not be deemed to constitute investment advice and should not be relied upon as the basis for a decision to enter into a transaction or as the basis for an investment decision. Investments should only be made on the basis of suitable investment, legal and taxation advice. Subscriptions to any fund managed or promoted by AXA Investment Managers are accepted only from eligible investors on the basis of the then current prospectus and related offering documentation.

AXA Investment Managers does not offer legal, investment, tax or other advice on the suitability of these funds or services for investors, who should take appropriate professional advice and make their own assessment of the merits, risks and tax consequences prior to investing. The value of the investments may fall as well as rise. Past performance is not necessarily indicative of future returns. Target returns and volatility are not guaranteed. Investment returns may be subject to foreign currency exchange risks.

The funds presented in this document are governed by French or Luxembourgian law. The investor must read the relevant prospectus (available upon request) prior to any subscription. Fund's performances are calculated net of management fees, dividend reinvested. Index performance is presented gross, dividends non reinvested. Performances are expressed in Euros (except if specified otherwise).

Investors cannot rely solely on this document to make any investment decision, insofar as the information is partial and cannot allow an estimate of the consequences of such potential investment. Any investment decision must be based on the information published in the relevant prospectus and on an independent analysis.

AXA Investment Managers Paris - Coeur Défense - Tour B - La Défense 4 - 100 esplanade du Général de Gaulle - 92932 Paris La Défense Cedex. Société anonyme au capital de 1 384 380 euros - 353 534 506 RCS Nanterre. Société de Gestion de Portefeuille titulaire de l'agrément COB n° GP 92-08 du 7 avril 1992

AXA World Funds (AXA WF) is a Luxembourg SICAV UCITs III approuved by the CSSF ans registered under RC Luxembourg B-63.113, 18 February, 1998.

1 Fixed Income Emerging Markets - 18/08/2015 AXA WF Responsible Development Bonds February 2008.

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Transcript of 1 Fixed Income Emerging Markets - 18/08/2015 AXA WF Responsible Development Bonds February 2008.