Brazil – game-changer or sideshow?

Hansa Investment Company 6 May 2021 Review
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Hansa Investment Company

Brazil – game-changer or sideshow?

Investment companies
Global multi-asset

6 May 2021

Price Ord.

214.0p

Price A-share

211.0p

Market cap

£254.4m

AUM

£385.6m

NAV*

321.3p

A-share discount to NAV

34.3%

Ordinary share discount to NAV

33.4%

*Including income. At 4 May 2021.

Yield (A-shares)

1.5%

Shares in issue

120.0m

Code Ord/A-share

HAN/HANA

Primary exchange

LSE

AIC sector

Flexible Investment

52-week high/low*

217.0p

145.5p

321.3p

239.1p

*A-shares. **Including income.

Gearing

Net gearing at 31 March 2021

0.0%

Fund objective

Hansa Investment Company was created in 2019 through the redomiciliation of Hansa Trust from the UK to Bermuda. It aims to achieve medium- to long-term growth through a diversified, multi-strategy approach, combining a strategic stake in OWHL with a portfolio of global equities and predominantly third-party managed funds, giving access to primarily non-UK equities, along with more thematic and diversifying funds. Hansa IC does not have a benchmark.

Bull points

All parts of the portfolio performed positively in FY21 (ended 31 March).

Flexible silo structure is supportive of future gains and can offer downside protection.

Significant re-rating potential given wide discount.

Bear points

Could be under-exposed to value cyclical areas if market rotation persists into the medium term.

Investors seem unwilling to view the strategic stake in WSON in a positive light.

Given the discount has persisted in a period of strong performance, there is little obvious impetus for a re-rating.

Analysts

Sarah Godfrey

+44 (0)20 3681 2519

Mel Jenner

+44 (0)20 3077 5720

Hansa Investment Company is a research client of Edison Investment Research Limited

Hansa Investment Company (HAN/HANA) fund manager Alec Letchfield argues that investors should not be overly distracted by the fund’s exposure to Brazil through a c 11% position in maritime services company Wilson Sons (WSON). While the holding could prove beneficial as global economic growth and trade continue to recover, the remaining c 90% of the portfolio is much more significant, and Hansa IC’s persistent 30%+ discount to NAV is arguably unwarranted given its healthy mix (via funds and direct equities) of growth, value and defensive/uncorrelated strategies. Recent performance has shown an improving trend versus peers, and a 13.3% local currency increase in WSON’s share price since the start of 2020 (outperforming the main Bovespa Index by 11.5pp) has not been reflected in Hansa IC’s discount to NAV, which moved by just 0.4pp from 33.9% to 34.3% (A shares) from 1 January 2020 to 4 May 2021.

Silo performance from 1 January 2020 to 31 March 2021

Source: Hansa IC, Edison Investment Research. Gross time-weighted performance in sterling.

Why consider Hansa IC now?

Hansa IC performed strongly in its financial year to 31 March 2021, with all its underlying strategies (‘silos’) posting gains. While this is partly the result of base effects (with global markets having sold off significantly in March 2020, just prior to the start of the period), performance from most of the silos was also positive over the period including Q120 (see chart above). The portfolio is positioned to benefit from both a continuation of structural growth trends in areas such as technology, and the recent market rotation into more value and cyclical stocks (mainly through the direct equity allocation, but also via some small changes in the funds portfolio). Meanwhile, positive global GDP and trade trends should support returns from its indirect strategic stake in Brazilian ports operator WSON.

The analyst’s view

Investor perceptions remain key to tackling Hansa IC’s persistently wide discount, which is arguably unwarranted by the quality and breadth of its underlying holdings. The WSON stake, at just under 11% of NAV, arguably should not be ‘the tail that wags the dog’, nor, in our view, seen overwhelmingly as a negative (see page 5), given the pick-up in global trade and commodity prices and strong operational and share price performance. The recently announced 3.2p per share dividend for FY22 (flat y-o-y) puts the A shares on a current and prospective dividend yield of 1.5%.

The manager’s view: Staying focused on quality

Having been dominated by growth and technology, global stock markets are showing signs of rotation into cyclicals and value. Letchfield argues that at this stage it is unclear whether this is purely cyclical, as economies rebound from last year’s lows, or more structural. Regardless of the outcome, he believes Hansa IC offers a good balance between growth (at a reasonable price) and high-quality value and cyclical names, and says it is therefore ‘well positioned for whatever markets throw at us’. Rob Royle, who selects stocks for the global equities portfolio, has a value tilt to his investment approach. Elsewhere, almost half of the fund’s assets (excluding the diversifying portfolio, where short positions in some hedge funds might distort the totals) are invested in North America, with nearly a quarter (c 23% at 31 March 2021) in the information technology sector – an overweight position versus the MSCI AC World Index. ‘In the last seven years, the only two calls [to have made] have been the US and technology’, says Letchfield. ‘We have had a modest bias to growth areas like technology and biotechnology, and while IT stocks may do less well in the near term given the market rotation, we are still in the process of technology changing the way we live, and that story is not over’. However, with Hansa IC’s more growth-orientated holdings having done very well over the fund’s FY21 (ended 31 March) – technology specialist GAM Star Disruptive Growth was up c 75% – the manager has gently top-sliced some of these positions, and initiated new holdings (c 3% in total) in more cyclical areas such as financials and emerging markets. He has done this using passive exchange traded funds (ETFs), as this enabled new positions to be taken quickly as well as providing flexibility.

Exhibit 1: Portfolio breakdown by silo

Exhibit 2: Portfolio breakdown by geography

Source: Hansa IC, Edison Investment Research. Note: Data at 31 March 2021. Geographical breakdown excludes diversifying silo.

Exhibit 1: Portfolio breakdown by silo

Exhibit 2: Portfolio breakdown by geography

Source: Hansa IC, Edison Investment Research. Note: Data at 31 March 2021. Geographical breakdown excludes diversifying silo.

Letchfield says: ‘The question we asked ourselves was do we need to rotate aggressively from growth to cyclicals. We have a long-term quality bias and we are not inclined to chase low-quality cyclical areas. So, while there is a good argument for broadening out, it’s a subtle change, not a big rotation – we aren’t going to start buying financially distressed cyclicals or companies with large pension deficits.’ He notes that he is not the kind of manager who is ever going to join a ‘dash for trash’, when investors chase low-valued stocks at market inflection points. ‘You might buy them well, but you inevitably hold them for too long and end up regretting it’, he explains. Letchfield adds that given part of the Hansa IC investment strategy is to invest in fund managers that share a similar philosophy to Hansa Capital Partners, the underlying holdings tend to have a quality bias too. ‘These managers tend not to buy commodities, low-quality cyclicals or names that are being disrupted by technology’, he says. ‘They might invest in companies like Ryanair – good-quality names with robust balance sheets, that should benefit from the reopening of travel – but they wouldn’t buy a Lufthansa.’

Looking ahead, the manager argues that a key factor in the sustainability of the global economic recovery and the expected uptick in inflation will be the extent to which these can move past the ‘base effect’ of comparisons with 2020. ‘Oil has gone from $0 to $60 over the last 12 months, so this year inflation will pick up, but the big question is whether we are returning to structurally higher inflation’, he says, adding that while he is still ‘on the fence’ about the answer to this question, any evidence of continued inflationary pressure would probably lead him to move further into areas such as Europe, Japan, commodities and financials, which have historically been beneficiaries of higher economic growth and inflation. However, Letchfield warns that an increase in core inflation could eventually force central banks into raising rates, which could lead to ‘quite a nasty taper tantrum’, as was seen in 2013. ‘We may be setting ourselves up for a conventional end-of-cycle bear market’, he says, adding that in such a situation, he would consider increasing the allocation to the fund’s defensive portfolio of diversifying assets, which proved their worth in the Q120 sell-off.

Performance: Firing on all cylinders in FY21

Exhibit 3: Five-year discrete performance data

12 months ending

Total A-share price return (%)

Total NAV return (%)

MSCI AC World (%)

CBOE UK All Companies (%)

UK Gilts TR (%)

UK CPI (%)

31/03/17

19.3

22.0

33.0

22.6

6.6

2.3

31/03/18

17.3

6.3

2.9

1.2

0.5

2.5

31/03/19

1.4

5.6

11.1

6.2

3.7

1.9

31/03/20

(29.0)

(16.9)

(6.2)

(19.1)

9.9

1.5

31/03/21

49.3

34.8

39.6

26.6

(5.5)

1.0

Source: Hansa IC, Refinitiv. Note: All % on a total return basis in pounds sterling.

Hansa IC’s NAV performance in FY21 (Exhibits 3 and 4) reflects a number of factors. The 34.8% NAV total return for the 12 months to end-March 2021 is only c 5pp behind the MSCI AC World index, a reasonable outcome for a resurgent year in global markets. As shown in Exhibit 5, every part of the portfolio performed positively over the period. However, the underlying drivers of performance differ. The core regional and thematic funds are more exposed to quality and growth factors, and benefited from positive performance from areas such as the US, technology stocks and biotech, which led global stock markets for the majority of 2020, both before and after the COVID-19 driven sell-off in February and March of last year. The global equities portfolio – which contains more value and cyclical-type names – bounced back strongly in the market rotation that followed positive news on COVID vaccines in the latter part of 2020, posting a near-50% return. Part of this very positive outturn is due to the base effect of measuring from 31 March 2020; looking at returns over the 15 months from 1 January 2020 (see front page chart), which captures the full impact of the global market falls in February and March 2020, the return is lower but still respectable, at 13.9% for the period.

Exhibit 4: Investment company performance to 31 March 2021

Price, NAV and index total return performance, one-year rebased

Price, NAV and index total return performance (%)

Source: Refinitiv, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised.

The strategic position in Ocean Wilsons Holdings (OWHL) is split roughly equally between OWHL’s majority (58%) stake in WSON, and the Ocean Wilsons Investments (OWIL) funds portfolio, which largely mirrors Hansa IC’s own funds portfolio, with the addition of c 30% in private equity funds. The difference in returns over FY21 (+38.7%) and the 15 months from 1 January 2020 (7.1%) reflects the performance of WSON more than that of the funds portfolio. WSON’s shares sold off heavily in Q120 on fears over the impact of COVID-19 on global trade (around a third of the company’s revenues come from its container shipping terminals) as well as the collapse in the oil price (c 15% of revenues are from offshore supply vessels serving the oil & gas industry). The company acted quickly to shore up its balance sheet, cutting costs and cancelling its dividend. This meant it was well positioned for the subsequent recovery in trading conditions, leading to the declaration of a special dividend in November to replace the earlier missed payment.

Exhibit 5: Silo performance in FY21 (ended 31 March 2021)

Source: Hansa IC, Edison Investment Research

The diversifying silo, made up mainly of defensive hedge funds and absolute return-type credit strategies, did its job in difficult market conditions, with all but one of the funds posting a positive return over both FY21 and the 15 months from 1 January 2020. Since inception of the strategy in 2016, the basket has returned 28.4%, markedly outperforming UK and global government bond indices, with a maximum drawdown of 4.5% (in the period February to April 2020) compared with 7.3% for UK gilts and 15.9% for the MSCI AC World index (based on monthly data).

Exhibit 6: Selected peer group performance as at 4 May 2021*

% unless stated

Market
cap £m

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Ongoing
charge

Perf.
fee

Discount
(cum-fair)

Net
gearing

Dividend
yield

Hansa Inv Co Ltd 'A'

168.8

33.5

18.7

55.0

52.2

1.1

No

(34.3)

100

1.5

Hansa Inv Co Ltd Ord

85.6

33.5

18.7

55.0

52.2

1.1

No

(33.4)

100

1.5

AVI Global Trust

1,028.9

57.6

36.5

116.5

129.2

0.9

No

(5.8)

107

1.7

Caledonia Investments

1,634.1

23.7

29.0

53.9

128.0

0.9

No

(25.3)

100

2.1

Capital Gearing

691.7

14.0

24.0

44.0

87.5

0.7

No

2.3

100

0.9

RIT Capital Partners

3,839.2

39.7

45.8

80.0

139.7

0.7

Yes

(3.7)

115

1.8

Ruffer Investment Company

559.3

17.0

26.9

43.0

62.9

1.1

No

1.1

100

0.7

Witan

1,864.9

48.2

27.7

83.3

169.8

0.8

Yes

(6.0)

110

2.3

Simple average (8 funds)

1,234.1

33.4

28.4

66.3

102.7

0.9

(13.1)

104

1.5

HANA rank in sector

7

4=

7=

4=

7=

1=

8

4=

5

Source: Morningstar, Edison Investment Research. Note: *Performance to 3 May 2021 based on cum-fair NAV. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets (100 = ungeared).

In Exhibit 6 we present Hansa IC alongside a peer group drawn from the AIC Global and AIC Flexible Investment sectors. Clearly, the fund’s strategic stake in OWHL means it is hard to draw direct comparisons with other funds, but the peers also broadly invest globally in a range of underlying strategies. Despite the negative impact on performance over some periods from the holding in Wilson Sons, NAV total returns are comparable to that of the peer group median over one and five years, while the discount is significantly wider than those of the peers. Ongoing charges (using the AIC calculation basis) are somewhat above average, the dividend yield is in line and, in common with the majority of peers, Hansa IC has no gearing at the fund level. What really stands out is the wide discount at which both share classes trade (discussed in more detail below). The only other peer at a double-digit discount is Caledonia Investments, another family office-type vehicle, which has a significant allocation to private equity and as such tends to trade on a discount more in line with those of mainstream private equity funds. It is also notable that the two funds currently trading at a premium to NAV (Capital Gearing and Ruffer Investment Company) are the worst performers over one and five years, the periods in which Hansa IC has seen its best relative returns.

Is Brazil the tail that wags the discount dog?

So, is it fair to say that the reason for Hansa IC’s persistently wide discount is its exposure to Brazil via WSON? We analysed WSON’s performance and that of the Brazilian Bovespa Index versus Hansa IC’s discount over the past 10 years and concluded that while the fund’s discount tends to widen more when Brazil is out of favour, there is little evidence of a similar narrowing in the discount when Brazil and/or WSON are performing well. This suggests that many investors are content to assume WSON will always be a drag rather than a potential source of opportunity, clearly a mistaken assumption given OWHL’s contribution to returns (outperforming the core regional funds portfolio) in FY21. It is perhaps the non-discretionary nature of the stake that causes this poor perception, although at only just over 10% of the portfolio (a similar size to the top holdings of many equity funds), one could argue that the impact of WSON for good or ill is overstated in investors’ minds. Furthermore, Letchfield points out that ‘you could give away WSON for free’ and the fund would still be on a wider-than-average discount compared with its peers of c 26%. Other potential factors affecting the discount may be the high level of ownership by entities associated with the Salomon family, leading to perceptions of illiquidity. In fact, in the non-voting A-shares, the level of trading liquidity (average daily volume of c 0.11% of the share base over the past 12 months) is not dissimilar to that of a core UK equity income fund such as Lowland Investment Company (c 0.15% of shares traded daily), which has a high level of retail investor ownership and trades at a much smaller discount.

Broadening retail ownership may well be one way in which Hansa IC can address its discount. Investment company enthusiasts are often drawn to those funds that are doing something different from the herd, and a quality portfolio of hard-to-access funds with a growth tilt, value-biased global equities, a defensive allocation and an interesting play on Brazilian growth and global trade might prove more attractive in the long term.

General disclaimer and copyright

This report has been commissioned by Hansa Investment Company and prepared and issued by Edison, in consideration of a fee payable by Hansa Investment Company. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Hansa Investment Company and prepared and issued by Edison, in consideration of a fee payable by Hansa Investment Company. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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