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James Luke Fund Manager, Global Commodities
VIII Konferencja Inwestycyjna Schroders Surowce, inflacja i wsparcie fiskalne
Protecting Against Inflation
1
Source: Bloomberg; DataStream; Schroders – January 2017
Why are Central Banks so scared of deflation?
100
120
140
160
180
200
220
240
260
280
0
50
100
150
200
250
300
Mai
196
0M
ai 1
962
Mai
196
4M
ai 1
966
Mai
196
8M
ai 1
970
Mai
197
2M
ai 1
974
Mai
197
6M
ai 1
978
Mai
198
0M
ai 1
982
Mai
198
4M
ai 1
986
Mai
198
8M
ai 1
990
Mai
199
2M
ai 1
994
Mai
199
6M
ai 1
998
Mai
200
0M
ai 2
002
Mai
200
4M
ai 2
006
Mai
200
8M
ai 2
010
Mai
201
2M
ai 2
014
Mai
201
6
% G
DP
$ Tr
illio
ns
Private Credit Financial Debt
Total Market Capitalization of Global Debt Outstanding Total Central Bank Asset $bn
Protecting Against Inflation CBs have (so far) failed to generate inflation.
2
Source: Bloomberg, Google January 2017
07/03/2017 11:03:17
Without an increase in money velocity, CBs have consistently missed their inflation targets
A faster than expected pick up in money velocity could generate rapid inflationary pressures; the ketchup analogy
3
Source: Thomson DataStream; Schroders; Bloomberg, Jan 2017
Oct 1961 – Oct 2016
0%
10%
20%
30%
40%
50%
60%
70%
Jan 00Okt 00Jul 01Apr 02Jan 03Okt 03Jul 04Apr 05Jan 06Okt 06Jul 07Apr 08Jan 09Okt 09Jul 10Apr 11Jan 12Okt 12Jul 13Apr 14Jan 15Okt 15Jul 16
US Excess Reserves of Depositary Institutions % FED Balance Sheet
Excess Reserves
Protecting Against Inflation Is the velocity of money now starting to accelerate?
• US commercial banks are deploying excess reserves, this is impacting commercial lending
“ President Trump has effectively banished the global deflationary mind-set that has dominated global markets for much of the post-financial crisis period. "
How likely is it we have passed a structural turning point in inflation? Czy Twoim zdaniem inflacja osiągnęła punkt zwrotny? • Very likely / Bardzo prawdopodobne
• Likely / Prawdopodobne • Unlikely / Raczej nie
Question 1
4
US credit annual growth – Total Commercial Bank Lending
Protecting Against Inflation
5
Source: Thomson DataStream; Schroders; Bloomberg
Jan 1974 – Nov 2016
Annualized Growth 3M 6M 12M
0.28% 3.54% 5.76%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
1999
2000
2001
2002
2003
2004
2004
2005
2006
2007
2008
2009
2009
2010
2011
2012
2013
2014
2014
2015
2016
Annualized Growth 3M 6M 12M
3.6% 1.8% 1.1%
Eurozone – Bank Loans to the Private Sector Sep 1997 – Nov 2016
Is the velocity of money now starting to accelerate?
-10%
-5%
0%
5%
10%
15%
20%
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Macro Drivers - Inflation
6
A co-incident global “fiscal shift”, could drive inflation harder
Source: IMF, Thomson Datastream, Schroders
What chance a fiscal shift? • In the UK, statements in recent months have implied less
independence for the central bank, and more capital for infrastructure projects.
• The BOJ policy of keeping 10-year yields at zero
effectively allows the government to borrow whatever is required to fund spending.
• The European Central Bank, although more restricted,
may also be in the process of shifting towards supporting more pro-active fiscal expansion.
• In the US, Trump’s plans on infrastructure spending,
likely backed by the Republican-controlled House, clearly signal fiscal expansion.
• As outlined in Xi Jinping’s address to Davos, and
underlined by 2016 government support, China remains committed to protecting economic growth in order to achieve its 2020 targets.
-0,50
-0,25
0,00
0,25
0,50
0,75
1,00
1,25
1,50
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Developed Countries Emerging Markets US
People’s QE?
Primary fiscal contribution to global GDP growth (% points)
7
Source: Thomson DataStream; Schroders; Bloomberg, Jan 2017
Excess Reserves
-10
-5
-
5
10
15
20
25
30
35
40
45
Q4-
1994
Q1-
1996
Q2-
1997
Q3-
1998
Q4-
1999
Q1-
2001
Q2-
2002
Q3-
2003
Q4-
2004
Q1-
2006
Q2-
2007
Q3-
2008
Q4-
2009
Q1-
2011
Q2-
2012
Q3-
2013
Q4-
2014
Q1-
2016
PBOC Total Asset Annual Growth (%)
Protecting Against Inflation In China, the government appears to have doubled down on growth
• 2016 saw a growth orientated policy shift, with rapid credit growth and an expansion of the PBOC balance sheet.
• This action avoided a deflationary shock.
• China remains a risk, but Beijing have clearly re-committed to achieving 2020 growth targets as mandated in the 13th 5YP
Protecting Against Inflation De-globalisation could be structurally inflationary
8
Source: BCA , January 2017
07/03/2017 11:03:17
Imports as a % of GDP (148 countries weighted by population)
20
25
30
35
40
45
50
55
60
65
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
World Exports and Imports of Goods and Services (as a % GDP)
All else equal, in the event of a US/Iranian military confrontation oil prices could rise to? Jaka będzie cena ropy w przypadku konfliktu USA – Iran ? • 60 USD
• 80USD
• 100 USD
• 120USD
Question 2
9
Protecting Against inflation Protectionism: A practical example of the impact on commodity prices
10
Source: CRU, Schroders
-5000
-4500
-4000
-3500
-3000
-2500
-2000
-1500
-1000
-500
0
2009 2010 2011 2012 2013 2014 2015 2016F
USA primary aluminium deficit (k/tons)
1000
1200
1400
1600
1800
2000
2200
2400
2600
Current "All-in" Aluminium Price US "incentive" price
Current vs. US “incentive” aluminium prices
Globalisation had forced US production to close, with production growing in lower cost overseas regions
Much higher prices would be required to bring back US based production
Protecting Against Inflation Geopolitical shocks can cause sharp prises in commodity prices
11
Source: Google images
So what goes up in a rising inflation environment?
Commodities and Inflation
13
The relationship between y-o-y inflation and commodity returns is quite strong
Source: Bloomberg, Deutsche, Schroders
• Interestingly, since
2000, broad commodity indexes and the energy sub-sector have higher correlations with inflation than 10Y Tips.
• Commodity returns
have been consistently stronger through Fed hiking cycles (average 17%) than through rate cut cycles (-2%).
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
1992
1992
1993
1994
1994
1995
1996
1996
1997
1998
1998
1999
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2011
2012
2012
2013
2014
2014
2015
2016
2016
BCOM Index YoY % LHS
US PPI YoY % RHS
US CPI YoY % RHS
Commodity returns vs US inflation
7,70%
10,60%
-13,50%
12,50%
7,30% 4,60% 5,67% 5,84%
20,57%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Stocks Bonds Commodities Stocks Bonds Commodities Stocks Bonds Commodities
Commodities and Inflation Learning from History - Commodities outperform in inflationary environments
14
Source: US CPI 1976 – 2016: Annual Returns; S&P; Barclays; CRB – Bloomberg
Falling inflation Stable inflation Rising inflation
Commodities and Inflation Learning from History: Buy ahead of the acceleration in inflation
Source: Thomson DataStream; Schroders
0
2
4
6
8
10
12
14
16
18
20
0
500
1.000
1.500
2.000
1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983
Wheat Copper S&P500
Gold Oil
Cumulative % Increase
15
CPI YOY Increase %
CPI YOY
But haven’t commodities already recovered?
Macro Commodities are cheap (1970s cheap) relative to both equities and bonds
17
Source: Bloomberg. *Commodities represented by the GSCI total return index, global equities by the MSCI global index. ** Bond represented by the JPM Global Aggregate Bond Index (total return)
0
1
2
3
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8
1970
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1987
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0
5
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30
1987
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2015
2016
Commodities Vs. Global Equities* Commodities Vs. Global Bonds**
Given the scale of global debt, do you believe real interest rates can rise over the next few years? Czy wierzysz że realne stopy procentowe wzrosną przy obecnej skali globalnego zadłużenia ? • Yes / Tak
• No / Nie
Question 3
18
If gold prices rise in the next few years, gold equities will outperform the gold price Akcje spółek związanych ze złotem będą rosły szybciej od ceny złota w ciągu następnych lat • Agree / Zgadzam się
• Disagree / Nie zgadzam się
Question 4
19
Macro
20
Source: Bloomberg; Schroders – 30 December 2016. Past performance is not a guide to future performance and may not be repeated.
0
200
400
600
800
1.000
1.200
1.400
1.600
Sep 85 Sep 87 Sep 89 Sep 91 Sep 93 Sep 95 Sep 97 Sep 99 Sep 01 Sep 03 Sep 05 Sep 07 Sep 09 Sep 11 Sep 13 Sep 15
Commodities are cheap and uncorrelated
S&P GSCI TR Index relative to S&P 500 (rebased to 100)
S&P 500 Index
S&P GSCI TR Index
Gold ETF holdings have increased but gold remains under owned
21
Source: Bloomberg
Troy ounces (m) Gold price (RHS) relative to gold ETF holdings (LHS)
ETF holdings Gold Price
In 2016 gold ETF holdings increased 26%. This remains ~30% below 2011 peaks.
Current gold ETF holdings are ~2% of total global ETF assets vs. 9% at peak.
Gold ETFs as % of all ETF Assets US$/Oz
300
500
700
900
1100
1300
1500
1700
1900
2100
0
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60
70
80
90
100
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
0%
2%
4%
6%
8%
10%
12%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Gold prices plotted against US 5-year TIPS
Gold Interest rates may rise, real interest rates are unlikely to follow
We believe very high global debt mean real interest rates will remain negative in coming years – this will be highly supportive for gold
22
Source: Bloomberg, Schroders
07/03/2017 11:03:17 -3
-2
-1
0
1
2
3
4
50
200
400
600
800
1000
1200
1400
1600
1800
2000
Jan06
Jun06
Nov06
Apr07
Sep07
Feb08
Jul08
Dez08
Mai09
Okt09
Mrz10
Aug10
Jan11
Jun11
Nov11
Apr12
Sep12
Feb13
Jul13
Dez13
Mai14
Okt14
Mrz15
Aug15
Jan16
Jun16
Nov16
TIPS
, %
, sc
ale
inve
rted
Gold
USD
/oz
XAU Curncy
USGGT05Y Index
Gold Equities Global gold equities versus spot gold – Gold equities have underperformed hugely
23
Source: Bloomberg – January 2017
07/03/2017 11:03:17
0
500
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4500
0
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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
XAU curncy FTSE Gold Mines Index (LHS)
Energy – 2017 oil market balances Market tightening accelerates in 2017
US DoE 2017 mnbd
Δ
Global demand 97.0 1.6
OECD demand 46.9 0.2
Non-OECD demand 50.1 1.3
Non-OPEC supply 57.2 0.4
Non-OPEC ex-NA 35.0 -0.1
North America 22.2 0.4
OPEC NGL 7.1 0.3
Non-OPEC + NGL 64.3 0.7
OPEC to balance 32.7 +0.9
IEA 2017 mnbd
Δ
Global demand 97.6 1.3
OECD demand 46.6 0.0
Non-OECD demand 51.0 1.3
Non-OPEC supply 57.0 0.2
Non-OPEC ex-NA 37.5 0.1
North America 19.5 0.1
OPEC NG2 7.0 0.2
Non-OPEC + NGL 64.0 0.4
OPEC to balance 33.6 +0.9
Energy Aspect 2017 mnbd
Δ
Global demand 97.5 1.4
OECD demand 46.8 0.3
Non-OECD demand 50.7 1.2
Non-OPEC supply 56.6 -0.1
Non-OPEC ex-NA 35.8 -0.6
North America 20.8 0.5
OPEC NGL 7.1 0.1
Non-OPEC + NGL 63.7 0.0
OPEC to balance 33.8 +1.4
Consensus sees non-OPEC supply flat to up in 2017, unlikely Consensus yet to reflect reality of OPEC cuts on balances 2017 demand is main wildcard at this stage
24
Source: Schroders, as at 9th January 2017. Subject to rounding errors
OPEC 2017 mnbd
Δ
Global demand 95.6 1.2
OECD demand 46.8 0.1
Non-OECD demand 48.8 1.1
Non-OPEC supply 56.5 0.3
Non-OPEC ex-NA 36.1 0.4
North America 20.4 -0.1
OPEC NGL 6.4 0.1
Non-OPEC + NGL 62.9 0.4
OPEC to balance 32.7 +0.8
Global Oil Market Quarterly Stockbuild (mn bls/day)
Energy – Oil Inventories Global inventories are peaking – We are now entering a destocking period
25
Source: Schroders (forecast), Energy Aspects (actual)
-2,00
-1,50
-1,00
-0,50
0,00
0,50
1,00
1,50
Q1-16a Q2-16a Q3-16a Q4-16f Q1-17f Q2-17f Q3-17f Q4-17f
Global Oil Market Quarterly Stockbuild mnbls Source: Schroders (forecast), Energy Aspects (actual)
US energy sector price/book ratio relative to the broader market
Energy equities – valuation The de-rating relative to the broader market is the largest discount ever
26
Source: Bloomberg, CS, Schroders
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Energy U.S.
-1,1
-0,6
0,0
0,6
1,1
1,7
Spread Current
0
100
200
300
400
500
600
700
1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
27
Source: USDA; Schroders – 12 September 2016. Past performance is not a guide to future performance and may not be repeated. Stock listed is for illustrative purposes only and should not be viewed as a recommendation to buy or sell.
US Wheat: Nominal vs real prices
Index
Agriculture: fundamentals
Nominal
Real prices
0%
20%
40%
60%
80%
100%
120%
140%
010.00020.00030.00040.00050.00060.00070.00080.00090.000
100.000
1960/1961 1969/1970 1978/1979 1987/1988 1996/1997 2005/2006 2014/2015
Agriculture: Fundamentals Supply / Demand dynamics are bullish for sugar, rubber, coffee and oilseeds
28
Source: Schroders; USDA *Soybean, Rapeseed, Sunflower Seed, Peanut and Cottonseed. Past performance is not a guide to future performance and may not be repeated. Stocks shown are for illustrative purposes only should not be viewed as a recommendation to buy or sell.
World sugar surplus / deficit
World coffee (Arabica & Robusta) ending stocks vs. Stock-to-use ratio
World rubber surplus / deficit
World oilseeds* surplus / deficit
-800-600-400-200
0200400600800
1.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F
'000 tonnes
‘000 tonnes
Ending Stocks
Stock-to-use ratio
‘000 tonnes
‘000 Bags
-15.000
-10.000
-5.000
0
5.000
10.000
15.000
20.000
1959/1960 1969/1970 1979/1980 1989/1990 1999/2000 2009/2010
SURPLUS
DEFICIT 2016/2017
-4.9 mln tonnes
-25.000-20.000-15.000-10.000-5.000
05.000
10.00015.00020.00025.000
1964/1965 1974/1975 1984/1985 1994/1995 2004/2005 2014/2015
SURPLUS
DEFICIT
Schroders Commodity Funds Commodity Fund Range 2017
29
Source: Schroders - December 2016 * On 29 June 2016, Schroders AS Gold and Precious Metals Fund merged into Schroder ISF Global Gold
Launch date Vehicles Performance Objective Assets Style
2005 Part II SICAV, US LP Index plus Mainly futures Long only, unconstrained
2006 Part II SICAV Index plus Mainly futures Long only, unconstrained
2006 UCITS SICAV Index plus Equities Long only, unconstrained
2011/16 UCITS SICAV Index plus Equities Long only, unconstrained
2013 UCITS SICAV Real Return Cash, Bonds, Equities, Commodities Long only, diversified
2016 Part II SICAV Total Return Futures, Equities, Options Long / short, leverage
Fund
Schroder AS Commodity
Schroder AS Agriculture
Schroder ISF Global Energy
Schroder ISF Global Gold*
Schroder ISF Wealth Preservation
Schroder AS Commodity Total Return
-17,21%
38,59%
18,18% 18,35%
3,57%
-23,13%
26,56%
0,59%
11,60%
2,06%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Schroder ISF** Global Gold Schroder ISF Global Energy Schroder ISF WealthPreservation
Schroder AS Commodity Fund Schroder AS Agriculture Fund
Schroders Commodity Funds 2016 Performance to 31st December
30
Source: Schroders; Bloomberg – 30 December 2016, gross returns **Schroder International Selection Fund is referred to as Schroder ISF throughout this presentation. *Emerging Markets Debt Absolute Return. Past performance is not a guide to future performance and may not be repeated.
07/03/2017 11:03:23
Benchmark
Fund
FTSE Gold Mines US$ I Acc Shares
MSCI World Energy Sector Index US$ I Shares
Eurozone CPI C NAV Gross
4-Index Benchmark US$ I Shares Rogers Agriculture TR Index
US$ I Shares
Investment process Example: Crude Oil
Fundamentals
Quantitative
Technical
Sentiment
Forecasts
Conclusions
Supply Demand
Commodity Quant Model
Trend, Momentum and Pattern
Consensus Forecasts and Investor Positioning
12 month expected Return:
Investment Decision
Markets
31
Source: Schroders . The securities shown are for illustrative purposes only and should not be viewed as a recommendation to buy or sell.
Global Gold Fund Investment Process - Portfolio Construction
Minimum of 20% of daily volumes over 5 days to fill
Detailed financial models
Live valuations for focus list
Fair value upside ranked
High conviction portfolio
Global reach
Unconstrained approach
No shorting or leverage
Maximum cash 40%
Global Precious Metals Universe ~130 stocks
• 95 Gold • 25 Silver • 14 PGM
Schroder ISF Global Gold 30-40 holdings
Stock ideas
Macro/themes
Focus list ~ 70 stocks
32
Source: Schroders
Best investment ideas are identified by adopting a long-term perspective, and by using proprietary fundamental research to identify the intrinsic value of each company
Gold Market Drivers Investment process – Research & individual company models
33
Source: Schroders
Saracen - NPV of Reserves Reserves Reserve Grade All-in sustaining Gold Price Income Tax Pre Interest Discount Production Unrisked Success Risked2016 (Moz) Life (oz's/ton) costs ($/oz) ($/oz) Rate (%) FCF ($/oz) Rate Start $m $ Per Share NPV/oz Chance $m Per Share NPV/ozProven gold reserves 0.1 0.24 1.3 761.02 1300 30% 377 6% 2016 30 0.04 0.37 100% 30 0.04 0.37
Reserves Reserves Grade All-in sustaining Gold Price Income Tax Pre Interest Discount Production Unrisked Success Risked2016 (Moz) Life (oz's/ton) costs ($/oz) ($/oz) Rate (%) FCF ($/oz) Rate Start $m $ Per Share NPV/oz Chance $m Per Share NPV/ozProbable gold reserves 1.517 4.46 1.3 761.02 1300 30% 377 6% 2016 503 0.62 0.33 90% 452 0.56 0.30Total Proven & Probable Gold Reserves 533 0.66 483 0.60
Resources Resource Grade All-in sustaining Gold Price Income Tax Pre Interest Discount Production Unrisked Success Risked2016 (Moz) Life (oz's/ton) costs ($/oz) ($/oz) Rate (%) FCF ($/oz) Rate Start $m $ Per Share NPV/oz Chance $m Per Share NPV/ozMII Gold Resources 7.866 22.47 1.1 761.02 1300 30% 377 6% 2020 1221 1.51 0.16 50% 611 0.76 0.08Total MI Gold Resources 1221 1.51 611 0.76
Total Reserves & Resources 1754 2.17 1,093 1.35
Number of Shares (m) 807.1 Group Production 2016F 2017F 2018 2019 2020 Total NPV of Reserves & Resources ($m) 1093.3
Net debt per Share ($): -0.05 Gold Production (koz) 198 280 340 350 350 Less: Net Debt -40.00
Proven Reserve NPV/Share 0.60 19% 41% 21% 3% 0% Total NPV of Reserves & Resources (after debt $m) 1133
Booked Reserve NPV/Share (after Debt) 0.65 Interest cost per ounce 0.00 0.00 0.00 0.00 0.00 Shares Outstanding (including dilution) 807
Booked Reserves & Resource NPV/Share (after Deb 1.40 1227 1143 FX (reporting to Share price currency) 0.75
Current Share Price (AUD): 0.99 Company Reserve Estimate Price Assumptions Sum of Parts Value (NPV per share) 1.88
Price / NPV of Reserves 0.53 Company Spot Prem(Disc) Upside/Downside: 90.10%Gold (US$ / Oz) 1200 1188 1%
Currency Exposure (AUD/USD) 0.75
Annual Interest charge @ 0% 0.00
Unrisked Value Risked Value
Unrisked Value Risked Value
Unrisked Value Risked Value
Investment process focuses on companies with: 1) Strong management that are focused on equity holder returns 2) Highest upside to NAV after being heavily risked 3) Balance sheet flexibility and management intent on keeping it 4) Improving free cash generation and return on invested capital
Gold Equities NAV upside and organic growth rates
34
Source: Schroders Estimates & Company Estimates – November 2016
Large industry producers – NAV Upside & Production declines
-40%
-20%
0%
20%
40%
60%
80%
NAV Upside (%) 2 Year production growth (%)
0%
20%
40%
60%
80%
100%
NAV Upside (%) 2 year Production Growth (%)
Selected industry producers – NAV Upside & Production declines
• The fund is structurally underweight the large cap major gold companies (chart on left). NAV upside is limited and gold production is in decline.
• The fund is overweight gold companies with : a) High NAV upside b) Visible & low risk organic production growth c) Strong balance sheet with costs under control d) Strong management team with a focus on shareholder returns
This presentation does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder Alternative Solutions (the “Company”). Nothing in this presentation should be construed as advice and is therefore not a recommendation to buy or sell shares.
The Company qualifies as a Société d’Investissement à Caiptal Variable (“SICAV”) and as an alternative investment fund within the meaning of article 1(39) of the 2013 Law.
Subscriptions for shares of the Company can only be made on the basis of its prospectus together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Luxembourg) S.A.
The distribution and promotion of the Company's units is restricted for the purpose of the 2013 Law, to professional investors who are supposed to have sufficient experience to judge themselves the concept of risk-spreading and the information they need to form their opinion. Accordingly, this material is targeted to institutional; professional; existing investors and newly accepted clients of the Schroder Group where reasonable steps have been taken to ensure that investment in the Company is suitable. This material should not be relied upon by persons of any other description.
Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested.
An investment in the company entails risks, which are fully described in the prospectus.
Schroders has expressed its own views and opinions in this presentation and these may change.
This presentation may not be distributed to any unauthorised persons.
Risk Considerations The capital may be subject to circumstances and periods where returns could be negative. Therefore the capital is not guaranteed and may decrease. Investments in money market instruments and deposits with financial institutions may be subject to price fluctuation or default by the issuer. Some of the amounts deposited may not be returned to the fund. Investments denominated in a currency other than that of the share-class may not be hedged. The market movements between those currencies will impact the share-class. Procedures are in place to ensure that any commodity derivative instruments calling for physical delivery of the underlying commodity will be liquidated prior to delivery. But it may be subject to an operational risk of mismatch. The fund enters into financial derivative transactions. If the counterparty were to default, the unrealised profit on the transaction and the market exposure may be lost.
Forecasts The forecasts stated in the presentation are the result of statistical modelling, based on a number of assumptions. Forecasts are subject to a high level of uncertainty regarding future economic and market factors that may affect actual future performance. The forecasts are provided to you for information purposes as at today’s date. Our assumptions may change materially with changes in underlying assumptions that may occur, among other things, as economic and market conditions change. We assume no obligation to provide you with updates or changes to this data as assumptions, economic and market conditions, models or other matters change.
Important information
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