BlackRock Latin American Investment Trust — High degree of confidence in the current portfolio

BlackRock Latin American Inv. Trust (LSE: BRLA)

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BlackRock Latin American Investment Trust — High degree of confidence in the current portfolio

BlackRock Latin American Investment Trust’s (BRLA’s) lead manager Sam Vecht and deputy manager Christoph Brinkmann have a high degree of confidence in the positive prospects for the trust’s portfolio. It has an overweight exposure to Brazil versus its benchmark, the MSCI Emerging Markets Latin America Index. Vecht highlights high real interest rates in the country, providing scope for a lower base rate. Brazil now has a more stable political situation, and the manager anticipates that the economy should turn around in H223, which he believes would be positive for equity performance. Vecht and Brinkmann consider that BRLA’s portfolio has real potential to deliver better absolute and relative performance.

Melanie Jenner

Written by

Mel Jenner

Director, Investment Trusts

Investment Companies

BlackRock Latin American IT

High degree of confidence in the current portfolio

Investment trusts
Latin American equities

18 May 2023

Price

375.5p

Market cap

£111m

AUM

£131m

NAV*

434.7p

Discount to NAV

13.6%

*Including income. At 16 May 2023.

Yield

5.4%

Ordinary shares in issue

29.4m

Code/ISIN

BRLA/GB0005058408

Primary exchange

LSE

AIC sector

Latin America

Financial year end

31 December

52-week high/low

446.0p

334.0p

NAV* high/low

493.2p

359.7p

*Including income

Net gearing*

2.5%

*At 31 March 2023.

Fund objective

BlackRock Latin American Investment Trust seeks long-term capital growth and an attractive total return, primarily through investing in quoted Latin American securities. The trust was launched in 1990 and management was transferred to BlackRock on 31 March 2006 following a tender process. The trust has an indefinite life subject to a two-yearly continuation vote. The benchmark is the MSCI Emerging Markets Latin America Index.

Bull points

Diversified Latin American equity fund with a defined dividend policy and attractive yield.

Latin America is benefiting from geopolitical and economic isolation from global geopolitical conflicts.

Latin America is attractively valued compared with other regions and its own history.

Bear points

Higher political and currency risk in Latin America than in developed economies.

Latin American equity market can be volatile.

Latin America is less well researched compared with developed markets.

Analyst

Mel Jenner

+44 (0)20 3077 5700

BlackRock Latin American Investment Trust is a research client of Edison Investment Research Limited

BlackRock Latin American Investment Trust’s (BRLA’s) lead manager Sam Vecht and deputy manager Christoph Brinkmann have a high degree of confidence in the positive prospects for the trust’s portfolio. It has an overweight exposure to Brazil versus its benchmark, the MSCI Emerging Markets Latin America Index. Vecht highlights high real interest rates in the country, providing scope for a lower base rate. Brazil now has a more stable political situation, and the manager anticipates that the economy should turn around in H223, which he believes would be positive for equity performance. Vecht and Brinkmann consider that BRLA’s portfolio has real potential to deliver better absolute and relative performance.

Higher growth prospects in Latin America versus advanced economies

Source: International Monetary Fund World Economic Outlook April 2023, Edison Investment Research. Note: p is projected.

The analyst’s view

The Latin American market is very attractively valued on both an absolute and relative basis. MSCI indices at the end of April 2023 show the region’s 8.1x forward earnings multiple was a c 50% discount to the world market. As shown in the chart above, Latin America has higher growth prospects than advanced economies. Central banks in the region have followed orthodox monetary policies, unlike developed countries, so as inflation moderates there is potential for lower interest rates, which should stimulate economic activity.

BRLA’s current very low portfolio turnover, versus its historical average, illustrates the managers’ high conviction in the trust’s investee companies and fund structure. They are not constrained by BRLA’s benchmark, which is evidenced by allocations to Argentina and Panama, which are not represented in the index.

Wider-than-average discount

BRLA’s 13.6% discount is wider than the 9.9% to 11.5% range of average discounts over the last one, three, five and 10 years. Over the last 12 months the trust has traded between a 0.6% premium (around the time of a tender offer) and a 19.6% discount. There is scope for a higher valuation if the trust’s performance improves or investors’ risk appetite increases. BRLA has a clearly defined dividend policy; payments are based on 1.25% of its quarterly NAV. The trust currently offers an attractive 5.4% yield.

The fund managers: Sam Vecht & Christoph Brinkmann

The managers’ view: Confident in overweight Brazil position

In this overview, Brinkmann focuses on Brazil, which is by far the largest economy in Latin America, and highlights important political developments. Luiz Inácio Lula da Silva won the November 2022 presidential election, and took office and formed a government in January 2023. He appointed Fernando Haddad, a former São Paulo mayor and member of the left-wing ruling Workers’ Party, as finance minister. Haddad was not well regarded in the market due to concerns that he would pursue loose fiscal policies; however, he has been working to decrease Brazil’s fiscal deficit.

BRLA’s managers maintain their positive view about the prospects for Brazil. With a base interest rate of 13.75% and inflation at 4.18%, the c 9.6% real interest rate looks very competitive compared with the rest of the world. However, in the short term, Brazil’s restrictive monetary policy has led to a sharp decline in economic activity. Domestic retailer Americanas had accounting issues and filed for bankruptcy protection in January 2023, which has negatively affected credit markets in Brazil and made it more difficult for companies to raise debt. The managers believe that the speed of the deterioration in the Brazilian economy will force the Brazilian central bank to lower interest rates by Q323 at the latest; so far, hawkish comments from the bank have kept overall interest rates high.

Brinkmann comments that there is uncertainty about Brazil’s fiscal position, the country had been operating under a spending ceiling that restricted economic activity. A new policy framework was released recently, which links expenditure to revenue growth and is aiming for a budget surplus, starting with a balanced budget in 2024. The manager says that Brazil’s fiscal outlook for 2024 to 2026 is better than expected; however, the lack of detail means the market remains sceptical, although better fiscal targets mean Brazil’s central bank is likely to reduce interest rates. Vecht suggests that there is ‘a disconnect between what will happen, and what is happening today, but lower interest rates are the direction of travel’.

The managers recently visited Brazil, Uruguay and Chile. BRLA has no exposure to Uruguay as there is no real stock market. However, Vecht explains that, interestingly, there is a growing technology hub in the country, with both listed (in the United States) and unlisted companies. He had last visited Santiago in Chile prior to the COVID-19 pandemic, at which time the political situation was very tense. Vecht comments that this tension has dissipated; the first challenge to change the Chilean constitution has failed and things are much calmer now. He adds that the risk of natural resource operations in Chile being nationalised has reduced.

Turning his attention to Mexico, Brinkmann reports that its economy remains stable; both the external and the fiscal accounts in Mexico are balanced, government spending has been prudent, and the central bank has been proactive in raising interest rates. The manager comments that things are in order in Mexico and the economy is doing fine, but this is already reflected in the equity market, which has performed relatively well. Vecht and Brinkmann have been assessing how the Mexican economy could be affected by a potential slowdown in the United States. They comment that further issues in the US banking sector could be problematic, but for now the Mexican economy is defensive and stable.

The Latin American market is relatively attractively valued compared with the rest of the world. Vecht considers that a potential re-rating of Latin American equities is dependent on what happens in Brazil, given its dominance in the region. He now has more confidence in the Brazilian political situation and firmly believes that interest rates in the country will come down.

Vecht highlights what he considers to be an important macroeconomic theme. He suggests that there are three global blocs: the West, the East and the neutral countries. The manager explains that capital is moving into the neutral areas, for example Latin America, which are happy to trade with both the West and the East. Vecht comments that China and Brazil are talking about trading in local currencies rather than the US dollar, which he considers to be an important development.

Current portfolio positioning

At the end of March 2023, BRLA’s top 10 positions made up 52.4% of the fund, which was a higher concentration versus 50.7% a year earlier; seven positions were common to both periods.

Exhibit 1: Top 10 holdings (at 31 March 2023)

Company

Country

Sector

Portfolio weight %

Benchmark weight (%)

Active weight vs benchmark (pp)

31 March 2023

31 March 2022*

Vale - ADS

Brazil

Materials

8.4

8.5

10.9

(2.5)

Petrobras - ADR**

Brazil

Energy

7.3

7.1

7.5

(0.2)

Grupo Financiero Banorte

Mexico

Banks

6.6

4.0

3.9

2.7

Banco Bradesco - ADR**

Brazil

Banks

6.4

5.6

3.2

3.2

FEMSA - ADR

Mexico

Food, beverages & tobacco

5.3

N/A

3.3

2.0

B3

Brazil

Diversified financials

5.0

4.6

2.2

2.8

Ambev - ADR

Brazil

Food, beverages & tobacco

3.7

3.5

2.4

1.3

Itaú Unibanco - ADR

Brazil

Banks

3.4

5.4

4.3

(0.9)

Grupo Aeroportuario del Pacifico

Mexico

Airport operator

3.3

N/A

1.3

2.0

Rumo

Brazil

Railroads

3.0

N/A

0.9

2.1

Top 10 (% of holdings)

52.4

50.7

Source: BRLA, Edison Investment Research. Note: *N/A where not in end-March 2022 top 10. **Equity and preference shares.

Over the 12 months to the end of March 2023, the largest changes in BRLA’s geographic weightings were Brazil (-2.8pp) and the sale of the fund’s Peruvian exposure (-2.8pp), and a higher weighting to Argentina (+1.7pp), along with a new allocation to Colombia (1.7pp). Compared with the benchmark, BRLA’s largest active weights were overweight positions in Argentina (+3.6pp), which is not represented in the index due to the country’s continued capital controls and Brazil (+3.0pp) with an underweight exposure to Mexico (-3.8pp) and a zero weighting to Peru (-3.2pp).

Exhibit 2: Portfolio geographic exposure vs MSCI EM Latin America Index (% unless stated)

Portfolio end- March 2023

Portfolio end- March 2022

Change (pp)

Index weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Brazil

60.8

63.6

(2.8)

57.8

3.0

1.1

Mexico

27.5

25.0

2.5

31.3

(3.8)

0.9

Chile

4.4

5.1

(0.7)

6.6

(2.2)

0.7

Argentina

3.6

1.9

1.7

0.0

3.6

N/A

Panama

2.0

1.6

0.4

0.0

2.0

N/A

Colombia

1.7

0.0

1.7

1.1

0.6

1.5

Peru

0.0

2.8

(2.8)

3.2

(3.2)

0.0

100.0

100.0

100.0

Source: BRLA, Edison Investment Research

Exhibit 3: Portfolio sector exposure vs MSCI EM Latin America Index (% unless stated)

Portfolio end- March 2023

Portfolio end- March 2022

Change (pp)

Index weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Financials

26.3

27.5

(1.2)

23.9

2.4

1.1

Materials

18.4

21.6

(3.2)

22.8

(4.4)

0.8

Consumer staples

15.0

12.7

2.3

16.8

(1.8)

0.9

Industrials

14.5

8.1

6.4

9.0

5.5

1.6

Energy

8.9

7.1

1.8

9.8

(0.9)

0.9

Real estate

4.7

3.0

1.7

0.8

3.9

5.9

Consumer discretionary

4.1

3.0

1.1

1.9

2.2

2.2

Healthcare

3.3

5.6

(2.3)

1.4

1.9

2.4

Communication services

2.8

8.0

(5.2)

7.0

(4.2)

0.4

Information technology

2.0

1.9

0.1

0.5

1.5

4.0

Utilities

0.0

1.5

(1.5)

6.1

(6.1)

0.0

100.0

100.0

100.0

Source: BRLA, Edison Investment Research

BRLA’s sector changes over the 12 months to the end of March 2023 are more notable than its geographic changes. There were higher weightings in industrials (+6.4pp) and consumer staples (+2.3pp), and lower exposures to communication services (-5.2pp), materials (-3.2pp) and healthcare (-2.3pp). There are now no utility companies in the fund. Looking at the trust’s active positioning, the largest overweight exposures were industrials (+5.5pp) and real estate (+3.9pp), while the largest underweight allocations were utilities (-6.1pp), materials (-4.4pp) and communication services (-4.2pp).

Vecht highlights BRLA’s extremely low fund turnover; he says this is due to the managers’ very high conviction and comfort in the structure of the portfolio. He adds that Q123 probably saw the lowest ever turnover in the fund.

The managers have increased BRLA’s Brazilian real assets exposure including adding to rail logistics company Rumo, which is benefiting from strong volumes such as in soya beans, due to high yields, and toll road operator CCR, as Brazilian traffic volumes are generally stable. Vecht explains that these two companies are sensitive to interest rates, so if rates decline their valuations should increase. The manager also highlights that Brazilian high-income consumers are well positioned as they are less affected by higher interest rates. BRLA has a holding in Arezzo Industria e Comercio, a high-end clothing retailer that is reaping the benefits of good brand acquisitions.

Focusing on one of BRLA’s top 10 holdings, Vecht says that stock exchange B3 has a high-quality franchise. However, higher interest rates mean more fixed income volumes rather than equity transactions, which have been detrimental to B3’s business. The manager believes that the company’s share price is discounted, and he expects its earnings to inflect as interest rates decline.

Vecht emphasises that his carefully considered view is unchanged. He believes that the opportunity set available in BRLA’s portfolio is greater than that from potential new holdings. The manager considers that within the whole emerging market region, Brazil offers a standout opportunity; hence, the trust’s overweight position, which is replicated across all of BlackRock’s emerging market funds. He prefers domestic rather than international exposure, suggesting that there is ‘real juice and excitement’ about BRLA’s domestic businesses, including those highlighted above.

Performance: Confidence in improved results

Exhibit 4: Five-year discrete performance data

12 months ending

Share price
(%)

NAV
(%)

MSCI EM Latin America (%)

CBOE UK All Companies (%)

MSCI World
(%)

30/04/19

6.4

(0.1)

0.6

2.5

13.1

30/04/20

(36.9)

(37.4)

(35.0)

(17.2)

(0.2)

30/04/21

37.9

37.2

33.7

25.3

33.0

30/04/22

14.4

8.5

14.8

9.1

6.9

30/04/23

(8.2)

2.1

5.5

7.0

3.6

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

Vecht highlights that over the last few months, BRLA’s performance has been negatively affected by the fund’s Brazilian domestic exposure as these stocks have de-rated in the absence of good news, adding that healthcare, retail and financial stocks have all come under pressure. The manager comments that since the November 2022 Brazilian presidential election, exporters have outperformed. He does not consider that a bias towards these companies is the correct way to position BRLA’s portfolio. Vecht is confident about the structure of the fund and is anticipating an improvement in the trust’s absolute and relative performance.

In recent months, BRLA’s performance has benefited from its Mexican holdings, including retailer and bottler FEMSA, which has undertaken a strategic review and is reducing its holding in Heineken; Corporación Inmobiliaria Vesta, which is a Mexican real estate company that is benefiting from nearshoring (manufacturing companies moving their operations closer to home); and airport operator Grupo Aeroportuario del Pacifico, which has delivered strong results helped by robust tourist volumes.

Exhibit 5: Investment trust performance to 30 April 2023

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

Price, NAV and benchmark total return performance (%)

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

Exhibit 6: Share price and NAV total return performance, relative to index (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to MSCI EM Latin America

(2.4)

(4.6)

(3.8)

(13.0)

(10.6)

(8.2)

(8.1)

NAV relative to MSCI EM Latin America

(0.1)

(1.9)

(3.8)

(3.2)

(6.2)

(10.3)

(7.8)

Source: Refinitiv, Edison Investment Research. Note: Data to end-April 2023. Geometric calculation.

General disclaimer and copyright

This report has been commissioned by BlackRock Latin American Investment Trust and prepared and issued by Edison, in consideration of a fee payable by BlackRock Latin American Investment Trust. Edison Investment Research standard fees are £60,000 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by BlackRock Latin American Investment Trust and prepared and issued by Edison, in consideration of a fee payable by BlackRock Latin American Investment Trust. Edison Investment Research standard fees are £60,000 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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