Well established and methodical investment Process
PIMCO’s investment process entails three main buckets: (1) the economic forum (top down analysis), which meets four times a year to debate the state of play on short and long – term basis. (2) the investment committee develops the strategic parameters for portfolios and set the risk parameters such as interest rate exposure, yield curve positioning and sector positioning. (3) Portfolio management (bottom-up analysis) consists of PIMCO’s rigorous analysis and research of securities.
Downside Risk
- Interest rate risk – (bond price and yields are inversely related)
- Credit risk (the risk of downgrade and default) & Inflation risk
- Personnel risk – significant turnover among the 3 lead PMs
Fund Performance
| (%) | Fund (net) | Benchmark | Out-performance | |
| 1-month | -0.15 | -0.22 | +0.07 | |
| 3-months | 1.08 | 1.53 | -0.45 | |
| FYTD | 0.87 | 1.03 | -0.16 | |
| 1-year | 1.69 | 0.55 | +1.14 | |
| 2-years (p.a.) | 2.54 | 1.53 | +1.01 | |
| 3-years (p.a.) | 4.38 | 4.28 | +0.10 | |
| Since inception (%p.a.) | 3.86 | 3.84 | +0.02 |
Source: PIMCO
Sector Exposure
Source: PIMCO
About the fund
The ESG Global Bond Fund is an actively managed portfolio of global fixed-interest investment which incorporates PIMCO’s ESG screening. The portfolio predominantly invests in governments, corporate, mortgage and other global fixed interest securities.
- The ESGGlobal
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
The biggest differentiators for the firm are its scale, ability to offer both passive and active products, greater focus on institutional investors, strong brands, and reasonable fees. The iShares ETF platform as well as technology that provides risk management and product/portfolio construction tools directly to end users, which makes them stickier in the long run, should allow BlackRock to generate higher and more stable levels of organic growth than its publicly traded peers the next five years.
Although the secular and cyclical headwinds to make AUM growth difficult for the U.S.-based asset managers over the next five to 10 years, still BlackRock will generate 3%-5% average annual organic AUM growth, driven by its commitment to passive investing, ESG strategies, and geographic expansion, with slightly higher levels of revenue growth on average and stable adjusted operating margins during 2021-25.
Solid Organic Growth From Both its Active and Passive Platforms Continue to Lift BlackRock’s AUM
With $9.464 trillion in total assets under management, or AUM, at the end of September 2021, BlackRock is the largest asset manager in the world. Unlike many of its competitors, the firm is currently generating solid organic growth with its operations, with its iShares platform, which is the leading domestic and global provider of ETFs, riding a secular trend toward passively managed products that began more than two decades ago. This has helped the company maintain above average levels of annual organic growth despite the increased size and scale of its operations.
Financial Strength
BlackRock has been prudent with its use of debt, with debt/total capital averaging just over 15% annually the past 10 calendar years. The company entered 2021 with $7.3 billion in long-term debt, The company also has a $4.4 billion revolving credit facility (which expires in March 2026) but had no outstanding balances at the end of June 2021.BlackRock has historically returned the bulk of its free cash flow to shareholders via share repurchases and dividends.The firm did spend $693 million on two acquisitions in 2018, $1.3 billion on eFront in 2020, and $1.1 billion for Aperio Group in early 2021, so bolt-on deals look to be part of the mix in the near term. As for share repurchases, BlackRock expects to spend $300 million per quarter on share repurchases but will increase its allocation to buybacks if shares trade at a significant discount to intrinsic value. The company spent close to $1.8 billion on share repurchases during 2020.BlackRock increased its quarterly dividend 14% to $4.13 per share early in 2021. We expect the dividend to increase at a mid- to high-single-digit rate the next five years, leaving the payout ratio (based on our forward earnings estimates) at around 45% on average annually.
Bulls Say
- BlackRock is the largest asset manager in the world, with $9.464 trillion in AUM at the end of September 2021 and clients in more than 100 countries.
- Product diversity and a heavier concentration in the institutional channel have traditionally provided BlackRock with a much more stable set of assets than its peers.
- BlackRock’s well-diversified product mix makes it fairly agnostic to shifts among asset classes and investment strategies, limiting the impact that market swings or withdrawals from individual asset classes or investment styles can have on its AUM.
Company Profile
BlackRock is the largest asset manager in the world, with $9.464 trillion in AUM at the end of September 2021. Product mix is fairly diverse, with 53% of the firm’s managed assets in equity strategies, 29% in fixed income, 8% in multi-asset class, 7% in money market funds, and 3% in alternatives. Passive strategies account for around two thirds of long-term AUM, with the company’s iShares ETF platform maintaining a leading market share domestically and on a global basis. Product distribution is weighted more toward institutional clients, which by our calculations account for around 80% of AUM. BlackRock is also geographically diverse, with clients in more than 100 countries and more than one third of managed assets coming from investors domiciled outside the U.S. and Canada.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
We see small/medium businesses and the midmarket as being underserved by enterprise software providers, as the smaller deal sizes make it harder to serve efficiently. Therefore, we believe that HubSpot’s robust and expanding suite has helped carve out a meaningful niche.
HubSpot provides a suite of software solutions that helps companies grow better. The five hubs (marketing, sales, service, operations, and CMS) combine to create the growth platform. HubSpot operates a “freemium” model that has allowed it to gather hundreds of thousands of free users, with approximately 15% of these moving into paid solutions. From the free version, a three-tier system emerges: starter, professional, and enterprise. HubSpot’s goal is to create as wide a funnel as possible for customer gathering, and then move users up the pricing tier as they evolve, upselling them to additional hubs as their needs change.
Company’s Future Outlook
We believe HubSpot is a financially sound company with a solid balance sheet, improving margins, and rapidly growing revenue. Capital is generally allocated to growth efforts, strategic investments, and acquisitions, with no dividends or buybacks on the horizon.As of 2020, HubSpot had $1.3 billion in cash, marketable securities, and restricted cash compared with $479 million in debt. The debt is a convertible bond issue that we believe will be converted rather than repaid. HubSpot generated a 6% free cash flow margin in 2020 and in the low double digits in 2018 and 2019, which improve steadily over the next five years. We are confident that HubSpot can satisfy its obligations while continuing to fund normal operations. HubSpot does not pay a dividend and has not repurchased shares, nor do we expect it to do so within the next several years. The company regularly makes small acquisitions and strategic investments.
Bulls Say’s
- HubSpot has made a splash in the SMB market with its freemium model, easier implementation, and simple and feature-rich software.
- HubSpot does not have to beat out Salesforce or Microsoft, but by offering a credible solution to the midmarket, we think it can grow rapidly in an underserved niche.
- HubSpot’s record of introducing new solutions in adjacent areas, upselling existing customers, and moving customers up the stack as they grow has driven strong revenue growth thus far and seems likely to continue over the next several years.
Company Profile
HubSpot provides a cloud-based marketing, sales, and customer service software platform referred to as the growth platform. The applications are available ala carte or packaged together. HubSpot’s mission is to help companies grow better and has expanded from its initial focus on inbound marketing to embrace marketing, sales, and service more broadly. The company was founded in 2006, completed its initial public offering in 2014, and is headquartered in Cambridge, Massachusetts.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.