OUR CONVICTIONS

Completed on 03/04/2021This document is provided for informational purposes and meant exclusively for journalists and press and media professionals. Information is provided for the sole purpose of providing journalists and press and media professionals with a broad overview, regardless of the use they make thereof, which is under their exclusive editorial responsibility and for which CPR Asset Management declines all liability. This document is not to be construed as an advertisement or an offer to buy or sell and does not incur the liability of CPR Asset Management. Past performances are not constant over time and are therefore not a reliable indicator of future performances.

DAFT PUNK GENERATION

With the early 2020s marked by social and physical distancing, listening to the song “Touch” by the famous French electronic music band Daft Punk is like enjoying a Proust madeleine and stirs in us emotions that we went to recover as fast as possible to feel truly “Alive”.

“One More Time”, the financial markets “Get Lucky” in February: the MSCI World rose by 2.65%, driven by US and European markets, which soared by, respectively, 8% and 4.5%. Investors were reassured by the vaccine efficacy in several countries and by progress being made in “Around the World” vaccination campaigns.

Pending approval in early March of Joe Biden’s 1,900 billion dollar stimulus plan, many indicators (manufacturing, services, job creations, etc.) are raising fears of economic overheating in the US, which might trigger a rise in interest rates and inflation.

While figures are also reassuring in Europe, what really got our attention, and the attention of ECB experts, was the statement by Fabio Panetta, a member of the ECB Executive Board, on the trajectory that monetary policy should take to exit the crisis:

“My main message today can be summed up with the title of a song by the electronic music duo Daft Punk: “Harder, better, faster, stronger.” The harder we push to close the output and inflation gaps, the better the outlook for the euro area economy. And the faster we get there, the stronger our growth potential will be.”

Our baseline scenario (to which we have assigned a 60% probability) foresees a gradual normalisation made possible by a receding in the pandemic, stronger growth and a very slight increase in market interest rates. Our first alternative scenario (25%) assumes an economic overheating in the US, an inflationary spiral and a spike in interest rates in the US, then in the rest of the world. Our second alternative scenario (15%) assumes a postponed economic recovery, particularly in services if the pandemic drags on.

investment insights

MONTHLY

NEWS

NIVEAUX D’EXPOSITION en %

FIXEDINCOME

OVER EXPO85 90 95 100 105 110 115UNDER

EXPO

M

M-1

90%

EQUITY OVER EXPO85 90 95 100 105 110 115UNDER

EXPO

M

M-1

100%

EXPOSURE in %

www.cpr-am.com

CPR Asset Management

cpr-asset-management

@CPR_AM

For more information, contact:client.servicing@cpr-am.com

INNOVERPOUR LAPERFORMANCE

RETURNONINNOVATION

IN THIS EDITION

SURGE IN10-YEAR YIELDS

+50 BP IN THE UNITED STATES+80 BP IN AUSTRALIA+150 BP IN BRAZIL

THEMATIC ALLOCATION

THEMATIC ALLOCATION: OUR KEY TURNKEY SOLUTIONS

TRIBUNE

MEGATRENDS, CHOOSING SUSTAINABILITY

MONTHLY NEWSLETTER – MARCH 2021

EDUCATION IMPACT REPORT

MEASURING IMPACT AT CPR AM: NOT JUST SETTING GOALS – MEETING

THEM AS WELL

FIXED INCOME

MONTHLY NEWSLETTER - MARCH 2021investment insights

US FIXED INCOME

EURO FIXED INCOME

RISING INTEREST RATES AND UNDERLYING INFLATION

Rising US bond yields have dragged European yields behind them, with even the 10-year French yield rising above 0% before things calmed down a bit. We also saw a steep 120 bp rebound in core inflation, due, among other things, to normalisation of the VAT in Germany. This is a concern for the European Central Bank. During the period under review, 10-year yields rose by 26 bp in Germany to -0.26%, by 12 bp in Italy to +0.75%, and by 32 bp in Spain to + 0.417%.

2

FEARS OF FUTURE OVERHEATING

Joe Biden’s stimulus plan is raising fears in some quarters of a too sudden economic recovery that would push up inflation. These concerns explain the steep rise in government bond yields, due to potential problems in financing. This is one reason for the recent poorly received government bond auction. This inflationary surge was nonetheless downplayed by the Fed chairman, who noted that full-employment objectives are still far off. During February, 10-year US government bond yields rose by 37 bp to 1.46%.

EUROFIXED INCOME

90% OVER EXPO

85 90 95 100 105 110 115UNDEREXPO

M

M-1

USFIXED INCOME

90% OVER EXPO

85 90 95 100 105 110 115UNDEREXPO

M

M-1

KEY INDICATORSWHAT IS HIGH YIELD’S POTENTIAL IN AMIDST RISING YIELDS?

The recent rise in bond yields was initially driven by an improvement in inflation expectations and, more recently, by expectations of tighter monetary policy. This dragged down several asset classes, and corporate bonds were no exception. That said, a major distinction must be made between the defensive Investment Grade (IG) segment and speculative High Yield (HY). Because of tight credit premiums in IG, its performance is currently closely correlated to interest-rate movements. This is less so for HY, which includes sectors and companies hit hard by Covid-19. The potential for normalisation of risk premiums (i.e., credit spreads) on HY issuers would help offset the increase in nominal yields. This is exactly what has been happening since the year began (see chart). Because of this profile, High Yield offers an attractive investment vehicle in a scenario of stronger economic growth, in which it benefits from the normalisation of risk premiums while cushioning the impact of higher interest rates. The challenge in this environment is that this increase (and especially its volatility) has no material impact on the current economic recovery, and would raise problems in financing certain sectors. Hence the importance of selectiveness in issuers and sectors, which are also benefiting from fiscal stimulus.

Sources Bloomberg / CPR AM -As of 28 February 2021

3

ASIANEQUITIES

ANALYSIS TO FOLLOWHOW ARE INFLATION AND EQUITY MARKET PERFORMANCE CORRELATED?

You might believe – somewhat naively – in a positive correlation between inflation and equity performance – that as inflation is driven up by higher product sale prices (due to the pricing power of the strongest firms), margins improve at constant production costs, hence a positive impact on corporate earnings, which push up profitability and valuations! Actually, no, not at all. The correlation seen in recent decades has been negative and independent of “accounting adjustments”.

In fact, high inflation is often a harbinger of high “real” yields of equities but also weak “real” long-term growth (at constant dividend payout rates). And in the medium term, we will be seeing both phenomena at the same time. Indeed, an empirical analysis has found that market expectations on real earnings growth, in particular long-term growth, are negatively correlated to inflation expectations. Moreover, equity valuations (as expressed in P/E ratios) are correlated negatively to inflation expectations, which suggests that inflation also raises long-term expected dividend yields. In other words, rising inflation reduces the numerator (future cash flow) and raises the denominator (the discount rate rises via long bond yields while the risk premium is often stable) of a conventional future cash flow discounting model.

In conclusion, although higher inflation’s impact on companies’ sales and earnings is debatable, its impact on higher expected yields of an equity investment automatically lowers its future valuation and price. What comes next will therefore be a matter of reallocating flows between less attractive equities and rates that are increasingly “profitable”.

EQUITY MARKET

MONTHLY NEWSLETTER - MARCH 2021

US EQUITIES

ASIAN EQUITIES

EUROPEAN EQUITIES

PENDING THE VOTE ON THE NEW STIMULUS PLAN

US growth is expected to be rather robust, judging by the 10% month-on-month increase in consumer spending in January, driven by the cheques sent out late last year. Manufacturing and service indicators have held at their highs since 2011 and job creations have turned up after dipping in December. In March, senators and representatives are expected to approve the USD 1,900 billion stimulus plan. On the month the S&P 500 gained 2.80%, while the dollar remained unchanged vs. the euro.

WEAKER IN CHINA, RALLY IN JAPAN

The Chinese New Year is expected to have generated a slowdown in economic activity due to social distancing measures, as suggested by the Caixin PMIs, with declines in manufacturing output and services, while remaining in expansion territory. In Japan, GDP expanded by 3% in the fourth quarter, above forecasts, driven by domestic demand and exports. On the month the Topix gained 1.38%, while the MSCI AC Asia-Pacific ex Japan ended up by just 1.45%, undermined by rising US bond yields.

RATHER REASSURING ECONOMIC FIGURES

Economic surveys have been rather reassuring, even as there had been fears of a marked decline in demand, due to new social distancing measures put through in several European countries to combat a resurgence in infections. Retail sales rose, as did industrial output, which explains the rebound in the manufacturing sector, whereas services are still lacklustre. The EuroStoxx gained 4.54% on the month.

EUROPEANEQUITIES OVER

EXPO

85 90 95 100 105 110 115UNDEREXPO

M

M-1

USEQUITIES OVER

EXPO

85 90 95 100 105 110 115UNDEREXPO

M

M-190%

105%

3

OVER EXPO

85 90 95 100 105 110 115UNDEREXPO

M

M-1105%

Reference articles : The Review of Economics and Statistics, November 2002, 84(4): 632–648 © 2002 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

investment insights

MEGATRENDS, CHOOSING SUSTAINABILITY

By Arnaud Faller, Deputy CEO & CIO - CPR AM

More and more retail savers want to take their investments in hand and build their own future. This is especially true for investors who, with an eye to shrinking future pensions, are keen to reduce their reliance on decisions by governments and pension agencies. But this raises the question of how to obtain returns over years or even decades. By generating strong performances over time, managing risk while simultaneously supporting the sectors of the future, investing in themes with long-term potential – aka thematic investing – is a great solution.

TAKING CHARGE OF YOUR OWN INVESTMENTS

This strategy has even greater appeal because it fits with a major stock picking trend, namely appetite among retail savers to take charge of their own investments. As environmental, social, and governance (ESG) criteria gain in prominence, savers’ choices are based on increasingly precise company intelligence. Factors such as having a sustainable business model, complying with best practices, and managing risk are now decisive criteria.

According to a 2020 survey by Insight AM, a consultancy for CPR AM (in partnership with Opinion Way and Spoking Polls), 65% of French retail savers believe that responsible investment products are likely to make them more confident in the management of their savings.

GROWTH FACTORS THAT YOU CAN COUNT ON

An investment strategy designed with a long-term view will benefit by harnessing the main growth drivers over time. This leads to the question of which market themes to focus on if we want to invest in tomorrow’s growth, keeping in mind that any discussion also needs to factor in today’s environment, which features a shrinking workforce and weak investment.

The first growth factor is labor, considered in quantitative but also qualitative terms. Labor efficiency is one of the drivers that can offset population ageing and the decline in the workforce over the long run. We need to leverage knowledge and skills by investing in human capital. As a creator of collective value and a critical factor in vibrant, inclusive growth, lifelong learning is definitely one of the most promising themes.

As a factor that can boost labor and capital efficiency, technical and technological progress should be another focus in the hunt for long-term growth. This theme encompasses all companies that are capable of disruption, understood in the broad sense, i.e., firms that achieve service or technical breakthroughs, but also major steps forward in terms of quality or price.

4

TRIBUNE

MONTHLY NEWSLETTER - MARCH 2021investment insights

TRIBUNE

MONTHLY NEWSLETTER - MARCH 2021

5

All comments and analyses reflect CPR AM’s view of market conditions and its evolution, according to information known at the time. As a result of the simplified nature of the information contained in this document, that information is necessarily partial and incomplete and shall not be considered as having any contractual value.This document has not been drafted in compliance with the regulatory requirements aiming at promoting the independence of financial analysis or investment research. CPR AM is therefore not bound by the prohibition to conclude transactions of the financial instruments mentioned in this document. Any projections, valuations and statistical analyses herein are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events.

RISK FACTORS TO BE CONSIDERED

Yet merely targeting growth sources is not enough: each of these drivers has to be assessed against the main risks to which it is exposed. Global warming is the biggest of these, as it compromises the prosperity generated by our economic model through its effects on agricultural production, population movements, labor productivity, commodity prices, health, and geopolitical conflicts.

Likewise, it is important not to underestimate the impact of inequality, which, as the OECD has clearly shown, inhibits growth1. For large swathes of the population, inequality reduces access to education, jobs, and basic products; it also drives social movements and fuels radical political programs that could disrupt democracies and economies. The US Federal Reserve recently spoke about how a non-inclusive labor market undermines growth.

Other crucial risk factors that need to be considered include food insecurity and management of demographic trends – especially aging – affecting the world’s population. Make no mistake, the ability of companies to meet these challenges will shape the sustainability of growth in the 21st Century.

NEW OPPORTUNITIES

Responding to these issues is the challenge that we must meet. But it is also a source of investment opportunities that we need to explore as we seek to build a portfolio of higher-performing companies that are ready to cope with the demands of sustainable growth. Among these opportunities are renewable energies and smart solutions that will help to meet the goal set by the COP21 Climate Change Conference of keeping global warming to a 1.5°C increase by 2100.

Consider the example of Schneider Electric. The group has refocused its business, moving from installing control and automation systems to providing critical power and smart grid software applications. This innovative switch has enabled customers to save on engineering time and maintenance costs while scaling back their carbon footprint. By end-2020, they had saved 120 million tons in CO2 emissions2. The group has also set itself the ambitious goals of being carbon neutral by 2025 and being a net-zero CO2 emitter by 2030. This is a prime example of how innovative capacities are being harnessed to drive the ecological transition that companies must achieve if they are to adapt to the new challenges and unlock the new opportunities.

A NEW FRAMEWORK OF ANALYSIS

Investing in companies that are capable of taking on the big challenges facing our societies requires a new analytical framework for retail and institutional investors, that goes beyond pure sector-based or geographical assessments. Putting growth factors at the heart of your portfolio – and controlling the risks that could hold them back – is a way to craft a long-term investment strategy while also playing a part in building tomorrow’s world.

Sources:

1- OCDE "Growth and inequality: A close relationship?"

2- Schneider electric "Digital innovations for a SUSTAINABLE world"

investment insights

Since the 2009 launch of our Silver Age strategy on ageing of the population, CPR AM has become a benchmark player in thematic investment. Through ongoing innovations and co-construction with its clients, CPR AM now manages about a dozen thematics totalling 15 billion euros in assets. These include food challenges, education, sustainable urbanisation, climate, reduction of inequalities, disruption, medical technologies and lifestyles, among others. Through its investment solutions, CPR AM aims to address the major shifts and challenges of our century as both a source of long-term opportunities and as factors for managing risk for investors and of sustainability for the planet and people.

Even so, investors may have a hard time choosing thematics to invest in. That’s why we have developed two thematic allocation solutions with different risk profiles:

• For less risk-averse investors seeking potentially higher returns, a 100% equity solution: CPR Invest - Megatrends

• For investors who are more conservative or have a medium-term horizon, a multi-asset class solution: CPR Invest - Smart Trends.

In light of the current market environment, let’s have a closer look at Smart Trends.

THE FUND’S GENESIS

CPR Invest - Smart Trends was created in 2019 to offer thematic exposure to as many investors as possible through a diversified solution that is different from our traditional pure equity funds. It is meant for investors wanting to invest safely on the financial markets and get through an uncertain medium-term macroeconomic environment, while capturing returns generated by long-term thematic funds.

Smart Trends combines two of our house capabilities: asset allocation and our aforementioned thematic equities expertise.

THEMATIC EQUITIES, FLEXIBILITY, MODERATE RISK AND ESG

This multi-asset class fund is original in its equity allocation, which consists exclusively of thematic equity funds managed by CPR AM. The fund is invested at all times in thematic equities. These are selected on the basis of the market environment and the resulting outlook, according to our strategists and managers, in order to tap into long-term thematic alpha at all times.

6

THEMATIC ALLOCATION

MONTHLY NEWSLETTER - MARCH 2021

By Gauthier Saint Olive, Product Specialist - CPR AM

THEMATIC ALLOCATION: OUR KEY TURNKEY SOLUTIONS

investment insights

THEMATIC ALLOCATION

MONTHLY NEWSLETTER - MARCH 2021

7

In addition, given the profile of target clients, risk management is at the core of the investment process, and the fund has been designed to stay within an SRRI of 3. To do so, it takes a flexible approach to allocation between asset classes – equity exposure ranges between 0% and 35% and fixed-income exposure between 65% and 100% within a rate-sensitivity range of [-1; +8]. This makes it possible to adjust the portfolio’s profile deftly to multiple market scenarios.

Some asset classes do not yet possess vehicles integrating ESG criteria, such as emerging fixed-income and currencies. That’s why we have set a gradual target of 100% with a regulatory minimum of 50%. The portfolio currently already includes 80% of vehicles taking a responsible approach.

AN INITIAL CRISIS TEST PASSED WITH FLYING COLOURS

The profound uncertainty and volatility spikes that marked 2020 showed how robust the fund and its management process are. Smart Trends returned a very solid 3.9% in 2020 (I share class in euros), thanks to its conservative allocation early in the year, made more aggressive as the Covid-19 receded worldwide.

Within the equity allocation, thematic funds played their role in full in terms of performance, particularly the CPR Invest - Global Disruptive Opportunities fund. This contribution of thematic alpha integrated into a moderate allocation helped limit losses considerably in March 2020, when most pure equity funds suffered steep underperformances.

Client confidence and the fund’s strong showing paid off in substantial inflows of more than €400m on the year. Momentum spilled over into 2021, as the fund surpassed 500 million euros in assets under management in February, just 18 months after its launch.

HOW WE ARE POSITIONED FOR THE COMING MONTHS

So far this year, we have continued to raise portfolio diversification through the Climate Action and Social Impact funds, both of which have ridden a broad investment universe encompassing all sectors. We are also gradually raising the fund’s weighting in the Future Cities fund, whose theme looks especially attractive amidst rising public investments in infrastructures.

Confident in our baseline scenario of a gradual reopening of economies, we have kept our net equity exposure at around 15% to 20% so far this year. We are also closely monitoring fixed-income market disruptions, which began in the last week of February, especially on the US markets.

GO TO OUR WEBSITE FOR THE RISK PROFILES OF THEMATIC EQUITY FUNDS

Counterparty risk Yes

Risk of capital loss Yes

Equity & Market risks (incl. small capitalizations and emerging markets)

Yes

Liquidity risk Yes

Volatility risk Yes

Currency risk (incl. emerging countries)

Yes

Risk and Reward Profile (SRRI)2

Lower risk,

potentially lower return

Higher risk,

potentially higher return

1 2 3 4 5 6 7

CPR INVEST - SMART TRENDS: Risk Profile1

1 The KIID contains essential information about the fund, and must be given to the investor before subscribing. These information have to be completed by the prospectus available on the company website at www.cpr-am.com or upon demand to CPR AM.2 The SRRI represents the risk and return profile as presented in the Key Investor Information Document (KIID). The lowest category does not imply that there is no risk. The SRRI is not guaranteed and may change over time. Past performance is not a guide to future results. The KIID, prospectus and reports are available from CPR AM on request. It is forbidden to reproduce or communicate any part of this document to any third party without CPR AM’s prior consent.

Investment period > 2 years

investment insights

All comments and analyses reflect CPR AM’s view of market conditions and its evolution, according to information known at the time. As a result of the simplified nature of the information contained in this document, that information is necessarily partial and incomplete and shall not be considered as having any contractual value.This document has not been drafted in compliance with the regulatory requirements aiming at promoting the independence of financial analysis or investment research. CPR AM is therefore not bound by the prohibition to conclude transactions of the financial instruments mentioned in this document. Any projections, valuations and statistical analyses herein are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events.

1

ÉDUCATION RAPPORT ANNUEL D’IMPACT 2020

EDUCATIONRAPPORT ANNUEL D’IMPACT 2020

INVESTIR, C’ESTAUSSI AGIR

PROJET EDUCATION - RAPPORT IMPACT - 2020 -v12.indd 1PROJET EDUCATION - RAPPORT IMPACT - 2020 -v12.indd 1 12/02/2021 13:5312/02/2021 13:53

MEASURING IMPACT AT CPR AM: NOT JUST SETTING GOALS – MEETING THEM AS WELL

Impact investment began at CPR AM in 2017 with the launch of CPR Invest – Food For Generations. Since then, strategies in education and reduction of inequalities have emerged in 2018 and 2019.

FOOD FOR GENERATIONS, THE INDICATORS WITH A MONTHLY COMMUNICATION

This international equity fund aims to meet the global food challenge, with the world facing a growing population amidst scarcer and scarcer resources and climate change. To do so, our responsible approach to the agro-food value chain is integrated at various stages of the investment process: a) defining the thematic universe (e.g., tobacco and alcohol exclusions); b) an ESG analysis of companies in general and a selection of criteria chosen for their materiality regarding the challenges of the thematic; c) follow-up of controversies; and d) introduction of impact targets in portfolio management.

The three impact indicators – water intensity, carbon intensity, and waste recycling rate – have been chosen for their relevance to the fund’s philosophy, their homogeneity with the portfolio as a whole and their satisfactory level of coverage. The portfolio aims to outperform its investment universe before applying the sustainable approach.

The results have been calculated and released monthly since the fund’s launch. Follow-up, improvement and transparency are to us the keys to positive investments' contribution over time.

EDUCATION: RELEASE OF THE 2ND ANNUAL IMPACT INVESTING REPORT IN 2021

In January 2020, CPR AM released its first annual impact report dedicated to its Education strategy. Then came the report on its Climate Action strategy. We are back early this year with the 2nd edition of the Education report, enriched with new data. We urge you to discover it in its entirety on our website. An executive summary is nonetheless provided as an appetiser. Not only is it unique in the thematic, it is also one of the few impact reports on ESG’s social dimension. The major challenge remains access to quality data. To do so, we first defined relevant and homogenous criteria of each type of activity in the investment universe. We then contacted all portfolio companies. When they failed to reply, we supplemented the data by relying on official documentation.

The impact indicators released in the report now cover 77% of the portfolio, with at least one criterion for each of 54 companies. Coverage of each criterion extends to the level of the companies concerned by this criteria. For example, 100% coverage is provided on education and student services (transports, housing, and restaurants) stocks.

The contribution to the Sustainable Development Goals, the ESG profile and the engagement policy have also been released.

Find out more about the methodology by downloading the full report on our website

8

EDUCATION IMPACT REPORT

MONTHLY NEWSLETTER - MARCH 2021investment insights

16 élèves transportés

2 children1,924 h

including 60% in emerging countries

TRADITIONAL EDUCATION

ONLINEEDUCATION

75PUPILS,

STUDENTS

87PUPILS,

STUDENTS

POST-SECONDARY

OCCUPATIONAL INTEGRATION AND LIFELONG LEARNING

1 permanent placement

290 people trained and coached

5 candidates working every day

162PUPILS & STUDENTS

have access to educationin the world

46,668HOURS OF CLASSES

CHILDCARE

28 students29,464 h

K12

AFTER SCHOOL TUTORING

127 students10,200 h

5 pupils5,080 h

SERVICES & TOOLS

16 students transported

1,187 meals served2 beds rented

71 contents delivered

Data as of End of September 2020

1

ÉDUCATION RAPPORT ANNUEL D’IMPACT 2020

EDUCATIONRAPPORT ANNUEL D’IMPACT 2020

INVESTIR, C’ESTAUSSI AGIR

PROJET EDUCATION - RAPPORT IMPACT - 2020 -v12.indd 1PROJET EDUCATION - RAPPORT IMPACT - 2020 -v12.indd 1 12/02/2021 13:5312/02/2021 13:53

The Fund is associated with these impacts through its investments (per €1 million)

9

IMPACT METRICS

EDUCATION IMPACT REPORT

MONTHLY NEWSLETTER - MARCH 2021investment insights

MARKET SCENARIOS

MONTHLY NEWSLETTER - MARCH 2021

10

25%PROBA.

The pandemic recedes and vaccination campaigns move ahead on schedule.

Growth picks up, driven by highly accommodating fiscal and monetary policies.

Bond yields continue to rise very slightly amidst a gradual “normalisation” in correlation with the macro environment.

The sector rotation continues.

FORECASTS AS OF 25 FEBRUARY 2021

GRADUAL NORMALISATION

Fiscal support in the US triggers an acceleration in demand that outstrips supply by far.

An inflationary spiral is priced in even as price indices are driven up by economic factors. With several potential triggers, including a minimum wage hike, new, gasoline taxes, etc..

A spike in bond yields, first in the US, then in the rest of the world.

CENTRAL60%

PROBA.

THE MACHINE TAKES OFF IN THE US

ALTERNATIVE 1

Key rate Bond yields Equities

United States 0.25% 1.55% 5.00%

Japan -0.10% 0.10% 5.00%

Euro zone -0.50% -0.30% 7.50%

Emerging markets Equity Currency

Latin America 5.00% EUR-USD 1.22

Asia 5.00%

15%PROBA.

The pandemic persists, with a resurgence in case numbers and/or the emergence of more variants; vaccination campaigns bog down and/or vaccine-resistant variants emerge.

The recovery in services dependent on social interactions is postponed, particularly in Europe and to a lesser extent in emerging markets.

Bond yields recede, and the markets refocus on “stay at home” baskets.

A POSTPONED REOPENING DRAGS DOWN THE SERVICES SECTOR

ALTERNATIVE 2

Key rate Bond yields Equities

United States 0.25% 2.00% -7.50%

Japan -0.10% 0.20% -2.50%

Euro zone -0.50% -0.20% -5.00%

Emerging markets Equity Currency

Latin America -2.50% EUR-USD 1.18

Asia -7.50%

Key rate Bond yields Equities

United States 0.25% 1.10% -2.50%

Japan -0.10% 0.00% -5.00%

Euro zone -0.50% -0.60% -7.50%

Emerging markets Equity Currency

Latin America -7.50% EUR-USD 1.18

Asia -2.50%

REMINDER TO 22 JANUARY 2021 65%1 › 35%2 ›

investment insights

MARKET SCENARIOS

MONTHLY NEWSLETTER - MARCH 2021

INNOVERPOUR LAPERFORMANCE

RETURNONINNOVATION

The financial markets rallied in February with, on the economic front, rather reassuring indicators and significant advances in vaccination campaigns worldwide. Satisfactory outcomes in Israel, the United States and the United Kingdom on the efficacy of Covid-19 vaccines to prevent serious forms of the illness reassured investors on a gradual and imminent reopening of the world’s economies.

The highlight of this month was the steep rise in long bond yields worldwide, driven by the combination of expectations of accelerating economic growth and inflation driven by the ongoing rise in commodity prices. The equity markets withstood the rise in nominal yields despite the significant correction of the last two days of the month and the sector rotation, which once again took hold.

On the month, the MSCI World gained 2.65%, driven by US market gains (+2.8%) but also by the EuroStoxx, which soared by 4.5%, while emerging markets stalled, weakened by the more than 36 bp rise in US bond yields to 1.46% and the dollar’s appreciation. IG credit also dipped, but was far more affected by the steep rise in bond yields than by the widening in spreads, whereas High Yield held up well.

We accelerated sector rotation in the portfolios in favour of value while keeping exposure unchanged at about 50%, reduced our government and corporate bond sensitivity and maintained our exposures to the inflation thematic.

Source CPR AM

Fund’s equity exposureEquity exposure of the model

PERFORMANCE AS OF 23.02.2021 PAST PERFORMANCE IS NO GUIDE TO FUTURE RETURNS.

SCENARIO FORECASTS in %

Since31.12.20

Over 1 year

Over 5 years

Level from 23.02.21

CENTRAL 60% proba.

ALTERNATIVE 1 25% proba.

ALTERNATIVE 2 15% proba.

United States 0.04%

-3.40%0.76%-0.62%3.34%

0.34%4.33%5.88%

12.05%16.29%

6.60%16.73%51.09%10.30%

102.02%

0.25%1.35%

3031.22

3 881

Key rate 10-year interest rate

High Yield US Euro/dollar

S&P 500

0.25%1.55%

2701.22

5.00%

0.25%2.00%

3251.18

-7.50%

0.25%1.10%

3501.18

-2.50%

Europe -0.07%-2.17%1.57%3.84%

-0.51%-0.87%2.12%-2.93%

-2.15%10.19%30.97%27.77%

-0.50%-0.35%

2823 689

Key rate10-year interest rateHigh Yield Europe DJ

EuroStoxx 50

-0.50%-0.30%

2607.50%

-0.50%-0.20%

300-5.00%

-0.50%-0.60%

330-7.50%

Japan 9.88% 28.94% 87.86% 30 156 Nikkei 225 5.00% -2.50% -5.00%

CHANGES IN ALLOCATIONS OF CPR INVEST - REACTIVE

investment insights

Publication manager: Gilles Cutaya Editor in chief: Arnaud FallerPhoto credit: Shutterstock.comNext edition: April 2021

90 boulevard Pasteur. 75015 Paris France Tel. : +33 1.53.15.70.00 www.cpr-am.com

CPR ASSET MANAGEMENT. limited company with a capital of € 53 445 705 - Portfolio management company authorised by the AMF n° GP 01-056399 392 141 RCS Paris.

All comments and analyses reflect CPR AM’s view of market conditions and its evolution, according to information known at the time. As a result of the simplified nature of the information contained in this document, that information is necessarily partial and incomplete and shall not be considered as having any contractual value.This document has not been drafted in compliance with the regulatory requirements aiming at promoting the independence of financial analysis or investment research. CPR AM is therefore not bound by the prohibition to conclude transactions of the financial instruments mentioned in this document. Any projections, valuations and statistical analyses herein are provided to assist the recipient in the evaluation of the matters described herein. Such projections, valuations and analyses may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different results. Accordingly, such projections, valuations and statistical analyses should not be viewed as facts and should not be relied upon as an accurate prediction of future events.