allianzgi global water fund - advisortoolbox.pro€¦ · 3. life & health ranking based on...
TRANSCRIPT
AllianzGI Global
Water Fund Fourth Quarter 2017
Agenda
1 Allianz Global Investors Overview
2 Global Water Theme
3 Investment Opportunity in Water
4 AllianzGI Global Water Investment Process
2
Allianz Global
Investors
Overview 1 3
Organizational structure and overview
1. Property & casualty ranking based on 2016 revenues. Source: 2016 Allianz Group Annual Report and published peer reports.
2. P&I/Towers Watson World 500: World’s largest money managers. Pensions & Investments, October 31, 2016.
3. Life & health ranking based on operating profit. Source: 2015 Allianz Analyst Presentation and published peer reports.
4. Data as of September 30, 2017. Source: Allianz Global Investors. Any differences in totals are due to rounding
Among the Top 5 Worldwide
Life/Health Insurers3
Among Global Top 5 in Asset Management2
World’s Largest Property & Casualty
Insurer1
Global leadership positions in core businesses
125-year history of successfully:
Protecting client assets
Managing investments in
a risk-aware framework
Providing innovative
solutions for clients
Allianz Global Investors
Guided by a client-centric philosophy of: Understand. Act.
Global investment footprint with local presence in 18 countries
Strategies and solutions designed to meet client needs
$583 billion in worldwide assets under management4
Assets under management
1. Data as at September 30, 2017. Source: Allianz Global Investors. Any differences in totals are due to rounding.
2. Includes Institutional share classes of mutual funds.
This is for guidance only and not indicative of future allocation.
Total AUM: $583 billion1
AUM by Region AUM by Client Segment AUM by Asset Class
Retail
$190bn
Institutional2
$393bn
Equity
$166bn
Multi Asset
$147bn
Fixed Income
and Money
Market
$230bn
Alternatives
$41bn
Asia Pacific
$24bn
US$108bn
Europe
$451bn
Global breadth, local expertise and resources
Note: All numbers as of June 30, 2017.
Office locations
North America Europe Asia Pacific Total
Office Locations 4 13 8 25
Relationship Managers 156 337 183 676
Investment Professionals 155 386 123 664
North America
Dallas
New York
San Diego
San Francisco
Europe
Brussels
Dublin
Frankfurt
London
Luxembourg
Madrid
Milan
Munich
Paris
Rotterdam
Stockholm
Stuttgart
Zurich
Asia Pacific
Hong Kong
Kaohsiung
Singapore
Sydney
Taipei
Taichung
Tokyo
Global investment platform
Representative list of investment strategies. Not all strategies are currently available in all markets. Not all AllianzGI entities operate in all markets.
Key investment capabilities
Fixed Income Alternatives Global Multi Asset and Client Advisory Group Equities
Investment and
Risk Management
Advisory
Portfolio Risk
Analytics
Asset-Liability
Management
Outcome Specific
Fundamental
− Across styles and
capitalizations
Global/Regional/
Emerging Markets
Systematic
Sector and
Specialty
Global Fixed Income
Emerging Market
Debt
High Yield
Convertible
Options Strategies
Infrastructure
Volatility
Equity Long/Short
Dynamic Risk
Mitigation
Global Tactical
Asset Allocation
Target Date
Target Risk
Global research
GrassrootsSM Research is a division of Allianz Global Investors that commissions investigative market research for asset-management professionals. Research data used to generate GrassrootsSM Research reports are
received from reporters and Field Force investigators, who work as independent, third-party contractors, as well as external research panel providers—all of whom supply research that may be paid for by commissions
generated by trades executed on behalf of clients.
Broad capabilities, deep insights
Quantitative
Research
Fundamental
Company
Research
Behavioral
Finance
Macro-
economic
Research
GrassrootsSM
Research
Environmental,
Social and
Governance
Research resources
Global Water
Theme 2 9
10
Static global water supply but growing demand
*Forecast
Source: World Business Council for Sustainable Development, Water Facts and Trends; World Bank; Goldman Sachs. FAO. 2016. AQUASTAT. http://www.unwater.org/water-facts/water-food-and-energy/
World water withdrawal, km3 per year, ‘000
0
1
2
3
4
5
6
1900 1950 1990 2005 2020*
Domestic Industrial Agriculture
World water use
Agriculture
70%
Industry
22%
Domestic
8%
11
1. Domestic Usage and Consumption
FAO. 2016. AQUASTAT. http://www.unwater.org/water-facts/water-food-and-energy/
8% of all water is used for domestic purposes (cities)
Global Trends affecting water use at the consumer level:
+ Population growth
+ Urbanization
+ Increased Per Capita Usage
________________________
Higher Water Stress
12
1.1 Population Growth
Global population growth is increasing demand on water resources
Sources: populationData.net, http://kedc.com/kern-bakersfield-leads-in-u-s-population-growth/
Population is expected to increase from 7bn to 9bn by 2030
Growth occurring in regions lacking water infrastructure
Ex. Population growth: at an exponential pace
Increased pressure on natural resources
13
1.2 Urbanization Increasing concentration of population in water scarce regions
Source: World Urbanization Prospects: The 2014 Revision, United Nations. Panasianbiz.net, populationData.net and http://chinesestudies.prv.pl/adm_china_popden.jpg Foster and Garduno 2004. Note: Designations
employed and the presentation of material on this map do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory or
area, or of its authorities, or concerning the delimitation of its frontiers or boundaries.
Ex. Projected urbanization growth, 2014 – 2030
Urbanization is increasing population density
Concentration tends to occur in regions where water is already scarce
Population growth compounds the effects of urbanization
Ex. Groundwater Depletion: In China, precipitation and ground water supply are
misaligned with population concentration
14
1.3 Increased Per Capita Usage
Water usage per person per day increases with living standards
Source: AQUASTAT, http://chartsbin.com/view/16529, as of September 2013.
Ex. Domestic water use per year (in liters, thousands) Rising living standards increase water demand
– Per capita usage in some developed regions continues
to grow
Access to drinking water and sanitation is a basic need
– Emerging markets still lack the necessary infrastructure 4
32
52
77 106
215
0
50
100
150
200
250
Mali China India Egypt France USA
15
2. Industry
Source http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Proportion_of_abstractions_for_the_manufacturing_and_production_of_electricity-cooling_industries,_2011_(%25).png as of 2011,
http://www.unwater.org/water-facts/quality-and-wastewater/
22% of all water is used for industrial purposes
Industrial production uses water as a facilitator and an input throughout the manufacturing
cycle, while simultaneously producing waste and wastewater
Water is a key input in:
Electricity
Industrial Manufacturing
Ex. Proportion of water abstractions for manufacturing and production of electricity, % of total abstractions in 2011
16
2.1 Power Market Energy generation is the heaviest user of water, and a large input into any production process
Source: The World Bank, Thirsty Energy: Securing Energy in a Water-Constrained World. http://www.bbc.com/news/world-asia-india-35888535
Ex. Indian water crisis : The canal connecting the Ganges
to the power station dried up because of a lack of water.
In 2010, water use for energy production accounted for
15% of the world’s water withdrawals
– In the US, over 40% of freshwater withdrawals are for
thermoelectric power production
– Industrialization and digitalization further drive water
demand through power use
17
2.2 Consumer Goods
Indirect water footprint is larger than perceived
Source: Ecolab, Closing Keynote Presentation from the Financial Times Water Summit from Doug Baker, CEO of Ecolab. Emerald Edible, Water, Waste & Energy.
Industrial production exacerbates the water scarcity issue:
Water used in the manufacturing process as both input and facilitator
Indirect water usage is a factor of the manufacturing energy requirements
Industrial wastewater discharge issue:
Contamination of water resources
Over 200 Liters of water to produce
a single cup of coffee
18
3. Agriculture
FAO, 2016. AQUASTAT http://www.unwater.org/water-facts/water-food-and-energy/
70% of available water is used in agriculture
Accelerating Population Growth & Rising Living Standards
Increasing demand
Preference for water-intense foods
Ex. Water depletion: regions of water stress in the US
19
3.1 Increased Agricultural Demand
Increased agricultural production depletes the Earth’s natural resources
Source: NASA Earth Observatory, A sea vanishes: Satellite photos show disappearing Aral Sea
Ex. The Aral Sea 2000-2014: World’s 4th largest lake between Kazakhstan and Uzbekistan dried up
Growing population increases demand for food and reduces available land for agriculture
Food grown in non-optimal regions is demanding active irrigation
Water diverted for irrigation puts further strain on water supply
Water is
being used
faster than it
is being
replenished
20
3.2 Agriculture Demand & Adequate Diet Shift in diet preference further intensifies water demand
Source: Water Foot Print Network. Barclays: “The Water Challenge: Preserving a Global Resource” March 2017. America’s water risk: Current demand and climate variability, Geophys. Res. Lett., 42,
doi:10.1002/2015GL063487
Lettuce =
15 gallons
per pound
Chicken =
450 gallons
per pound
Beef =
1,850 gallons
per pound
Ex. Gallons to produce one pound of each of the product
Changes in nutritional habits are intensifying water stress
Growing middle class in emerging countries accelerates demand for protein-rich foods
– Protein-rich foods have higher water footprints than grains
21
Groundwater Depletion
Earth’s major aquifers are in trouble
Sources: US Geological Survey, California’s Central Valley Groundwater Study, Groundwater Depletion and Land Subsidence in Ca lifornia's Central Valley
Circle of Blue, Earth’s Major Aquifers Are in Trouble, J.S. Famiglietti, The Global Groundwater Crisis, Nature Climate Change, November 2014
Aquifers are primary source of drinking and irrigation water
Groundwater accounts for about 1/3 of global water withdrawals
– The highest rates of groundwater depletion are in the world’s largest
food-growing regions
Ex. California’s Central Valley groundwater Ex. Groundwater evolution globally
22
Increasing Regions of High Water Stress Macro factors leading to increased water supply / demand imbalance
Source: Barlays, “The Water Challenge: Preserving a Global Resource”
Geological constraints plus increasing pressure on water resources create a growing global
natural resource issue which requires an active approach to water scarcity management
23
Investment
Opportunity in
Water 3
24
Water has outperformed the broader equity markets
As of December 31, 2017 Source: Morningstar Direct. Past performance is not indicative of future results. It is not possible to invest in an index.
Secular drivers behind water resource management drive value creation
This value can be captured by investing in public equity markets
Hypothetical growth of investment : S&P Global Water Index / MSCI ACWI / S&P 500
0.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
400.00
450.00
500.00
550.00
600.00
650.00
2001 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2015 2016 2017
S&P Global Water
S&P 500
MSCI ACWI
$609
$324 $323
25
Investing in Global Water
Clarifying Common Misperceptions:
The strategy does not speculate on rising water
prices
Water does not have a price; only the service of
delivery has
The strategy is not investing in water resources
AllianzGI Global Water Fund
The strategy aims at investing in companies
which offer solutions that actively contribute to
resolving the water scarcity issues and improve
the water quality
26
Solutions to poor Water Resource Management
Globally, there is a 40% gap between existing water supply and expected water demand
Source: The 2030 Water Resources Group; Water 2030 Global Water Supply and Demand model; agricultural production based on IFPRI IMPACT-WATER base case. Shikomanov 1999, US Census Bureau 2011
Water Quality
1
3
Water Supply 1
Water-use
Efficiency 2
27
Investment Opportunities in Water
AllianzGI Global Water aims to capture value across all three dimensions
Water network operators
Water infrastructure
Pumps and pipes
Water Quality
Water Supply
Water
Efficiency
Automation controls
Irrigation equipment
Meters, leakage detection
Disinfection chemicals
Wastewater treatment
Monitoring and testing
Waste management
Develop infrastructure that facilitates
sustainable, reliable and efficient
water supply
Implement solutions that reduce water
demand while promoting sustainable use of
existing resources
Meet as well as exceed the regulated water
standards for water quality; and create and
improve water and wastewater treatment
technology
Investment opportunities Dimensions Solutions
1
2
3
28
Water Supply: Infrastructure
Immense need for capital expenditure on global infrastructure
Repair and replace infrastructure in developed countries
Construct infrastructure in developing countries
Develop alternative solutions for water supply
Water Supply
29
Addressing Aging Water Infrastructure in the US
US Grade for Drinking Water Infrastructure = D, Wastewater Infrastructure = D+
Source: ASCE 2017 Infrastructure Report Card, American Water Works System – Pipe Age Distribution. LA Times, L.A.’s aging pipes; a $1 billion dilemma, February 16, 2015.
Congressional Budget Office, Public Spending on Transportation and Water Infrastructure, 1956 to 2014 (March 2015), graphed by the Environmental Finance Center at the University of North Carolina, Chapel Hill.
Aging US water infrastructure is approaching a critical level
850 water main breaks occur daily
2 trillion gallons of water lost per year due to leakages which equates to 14-18% of the
total water treated
Ex. Age Profile of Los Angeles pipes Ex. State and local governments spent 24x as much as the federal government in 2014
Water Supply
30
US Infrastructure: Repair and Replace
Repairing infrastructure to create positive impact on society and environment
Holdings in portfolio as of November 30, 2017: American Water Works 8.9%
Implement optimal water sourcing
methods to protect water supply and
minimize water wastage
Provide access to drinking water and
reduce wastewater release into the
environment
Water Supply
American Water Works
Operator of water infrastructure, including clean water distribution, wastewater collection and treatment
Invests in improving and replacing existing infrastructure to improve water supply
31
Access to Clean Water & Sanitation in Emerging Markets
Adequate infrastructure is not yet in place
https://www.mappingmegan.com/travelers-guide-to-safe-tap-water-countries-with-unsafe-drinking-water-can-i-drink-the-water-in/ OECF/UN World Water Development Report 2015 via
http://www.ibtimes.com/catastrophic-global-water-crisis-looming-large-un-warns-1854622
1/3 of the population still lacks access
to basic needs
– Access to safe drinking water
– Basic hygiene and sanitation
requirements
Ex. Countries with safe to drink tap water
The UN reported that globally:
– Over 1.8 bn people lack access to
clean water
– 2.4 bn people lack access to basic
sanitation
Water Supply
32
Emerging Nations: Develop & Create Infrastructure
Infrastructure to provide fresh water to growing populations
Holdings in portfolio as of November 30, 2017: Beijing Enterprise Water 3.3%
Constructs and operates sewage and wastewater
treatment plants for enhanced water supply
across China
Provides technology for water reuse and recycling
Ex. Beijing Water Installation: Reclaimed water plant, Beijing, China Ex. Waste water discharge into emergency container following a chemical leak, China
Beijing Enterprise Water
Specialist in water services and environmental
protection business with a focus on waste
water management
Creates water system solutions that enhance
environmental water protection
Water Supply
33
Alternative Water Sources
Looking at desalination as a water supply solution
Holdings in portfolio as of November 30, 2017: Veolia Environment SA 7.2%
Sources: Equinox Center 2010, Key Issues for Seawater Desalination in California: Cost and Financing, Pacific Institute. Veolia https://www.veolia.com/en/solution/desalination-seawater-drinking-water
Veolia Environment
Manages water supplies and distribution
systems; provides waste management
services
Leader in desalination with capacity to
provide 13 million meters of water per day
across the globe
Ex. of the Marginal Cost of Water in San Diego County
Desalination offers enhancement of water supply,
but with limitations:
Most expensive means of providing fresh water
supply
Energy intensity creates high costs
Water Alternative Cost Per Acre-Foot
Imported Water $875 - $975
Surface Water $400 - $800
Groundwater $375 - $1100
Seawater Desalination $1800 - $2800
Recycled Water (non-Potable) $1600 - $2600
Recycled Water (Potable Water) $1200 - $1800
Water Conservation and Efficiency $150 - $1000
Water Supply
34
Water Efficiency: Equipment and Solutions
Improving the efficiency of processes where water use cannot be avoided
Sources: Badgermeter.com. Geritnorthamerica.com
Reduce the domestic water abuse
Enhance water efficiency in industrial processes
Increase efficiency in water resource management across agricultural needs
Water Efficiency
35
Domestic Water Efficiency
Efficiency at the consumer end is a crucial contributor to reducing water use
Holding in portfolio as of November 30, 2017: Geberit 6.7%
Source: Geberit
Geberit
Producer of water supply components and
installation systems including sanitary systems,
and parts of the water infrastructure
Creates water efficient plumbing and sanitary
systems that enable water conservation
Products enable residential water efficiency
Concealed cistern can reduce flush volume over 3x
Dual flush systems save 4 billion liters of water
daily
Water Efficiency
36
Industrial Processes and Water Resource Management
Industrial water efficiency contributes to preserving water
Holding in portfolio as of November 30, 2017: Badger Meter 1.1%
Source: Badger Meter
Badger Meter
Develops best in class water metering
equipment, used in various industrial applications
Products enable maximum industrial water
efficiency
Water meters can enable precise measurement
of water dispensed
Ex. IOG flow meter – enables precise dispensing of water Ex. ModMAG Electromagnetic Flow Meter – critical flow measurement
Water Efficiency
37
Opportunity for Efficiency Gains in Agriculture
70% of water supply is used for agricultural purposes
Holdings in portfolio as of November 30, 2017: Xylem: 8.3%
Sources: Xylem: https://www.xylem.com/en-us/industries-applications/agriculture-irrigation/crop-irrigation/ . Pacific Insitute 2009, via http://vitalsigns.worldwatch.org/vs-trend/looming-threat-water-scarcity
Xylem
Global Water technology provider of engineered
solutions for water industry
Creates water efficient agricultural equipment
such as irrigation systems
Precision irrigation and correct water sourcing
infrastructure can increase water efficiency and
reduce water loss
Ex. Water requirements for crops
Water Efficiency
38
Water Quality: Technology
Water treatment solutions needed across the spectrum
Source: https://water.usgs.gov/edu/urbansew.html
Proper management of wastewater to protect and preserve water resources
Water quality analysis systems
Water treatment technology to enhance quality and enable water reuse
Water Quality
39
Pollution in Emerging Markets Industrial wastewater discharge degrades environment in China
Source: Greenpeace, “Swimming in Poison – An analysis of hazardous chemicals in Yangtze River fish”, 2010
Ex. Water Quality of Yangtze River, 2008 Ex. Yangtze River : a woman fetches water from the river
Water Quality
Pollution from poorly regulated industrial activity and inefficient infrastructure has caused
major water contamination issues
Water treatment and water quality monitoring solutions are essential for management of the
water resources and for adherence to the quality standards
40
Water Treatment Methods
Disinfection of water for use in various end markets
Holdings in portfolio as of November 30, 2017: Kurita 2.1%
Source: Kurita, http://www.kurita.co.jp/english/our_business/business.html#anchorArea10
Ex. Water Quality Analysis Ex. Groundwater Remediation
Water Quality
Kurita
Leading provider of wastewater treatment solutions
Water quality analysis for various purposes: from industrial to ultra-pure needs
Ground water remediation technology enabling analysis of water during regular business operations
41
Water Quality Analysis
Ability to detect water quality issues before impacting the end market
Holdings in portfolio as of November 30, 2017: Danaher 6.0%
Source: Danaher, http://www.trojanuv.com/resources/trojanuv/casestudies/MWW/UV_Disinfection_Upgrade_for_Water_Reuse___EWA_Beach_Case_Study.pdf, https://www.hach.com/turbidity-meter/tu5-series-
laboratory-turbidimeters/family?productCategoryId=35547372715
Ex) Danaher Trojan UV Solutions
Over 10,000 UV installations globally
including municipal waste water, drinking
water and water for use in irrigation
Water Quality
Danaher
Diversified global science and technology provider
Operates across healthcare, environmental and
industrial end markets.
Chemicals and UV disinfection technology
42
AllianzGI
Global Water
Investment
Process 4
43
AllianzGI Global Water Fund The strategy targets sustainable water solutions
AllianzGI Global Water Fund…
…invests in companies whose offering
actively addresses the water scarcity and
quality issues, and helps to improve the
sustainability of global water
resources.
The strategy offers investors the means to contribute to the development of
solutions for the global environment and society
44
Investment Process
During any given stage of the investment process the selection criteria may vary from those shown above. The diagrams and statements above reflect the typical investment process applied to this strategy. At any given
time other criteria may affect the investment process.
Universe
Screening
Stock
Selection Portfolio
Construction
<150 <80 30-40
Screen for companies with
solutions to address global water
crisis through across Water Supply,
Efficiency, and Quality
Sector and region agnostic
The universe is continuously
reviewed by the team with an active
knowledge of the water space
Filtering the investable
universe on the basis of:
(1) Degree of Impact (Water
related impact of the
Product/Service)
(2) ESG (quality of
corporate’s operations)
Exclude the companies
with insufficient water
focus or clear ESG risks
Selecting companies
with high Conviction
(leading market position,
growth opportunities…)
and attractive Valuation
Bottom-up stock
selection with >3 years
investment horizon
Balance of risk factors within Portfolio
Monthly and quarterly risk reviews with CIO and CRO
Independent Performance and Portfolio Risk Team
Risk Management:
AllianzGI Global
Water Fund
Aim for effective
alignment of the
Water philosophy
with the long term
value creation
Target
outperformance of
the broader global
equity market over
the cycle and across
the peer group
45
Investment Process : Universe
During any given stage of the investment process the selection criteria may vary from those shown above. The diagrams and statements above reflect the typical investment process applied to this strategy. At any given
time other criteria may affect the investment process.
Universe
Screening
<150
Screen for companies with
solutions to address global water
crisis through across Water Supply,
Efficiency, and Quality
Sector and region agnostic
The universe is continuously
reviewed by the team with an active
knowledge of the water space
Three major impact dimensions for the Water strategy:
Water Supply
Water Efficiency
Water Quality
Universe construction is centred around the contribution of the
companies’ products and services to the the improvements in global
water resource management
Water Investment Opportunity Set
Examples of water-related segment exclusions:
Bottled water
Fish farming
46
Investment Process : Stock Selection
During any given stage of the investment process the selection criteria may vary from those shown above. The diagrams and statements above reflect the typical investment process applied to this strategy. At any given
time other criteria may affect the investment process.
Stock
Selection
<80
Filtering the investable
universe on the basis of:
(1) Degree of Purity (Quality
and size of exposure to
the Water theme)
(2) ESG (quality of
corporate’s operations)
Exclude the companies
with insufficient water
focus or clear ESG risks
Water exposure defined by the company’s products/services’ active
contribution to improvement of the Water resource management
(Water Supply, Efficiency, Quality)
Final rank of each company based on combination of the quality and
the size of exposure to the theme
Companies’ Environmental, Social and Governance practices’ quality
as evaluated by the intrinsic AllianzGI ESG team’s ratings
Risk management tool integrated in the investment process
Degree of Impact
ESG
47
Investment Process : ESG Risk Analysis
During any given stage of the investment process the selection criteria may vary from those shown above. The diagrams and statements above reflect the typical investment process applied to this strategy. At any given
time other criteria may affect the investment process. Holdings in the portfolio as of November 30, 2017: Guangdong Investment Ltd., 3.40%.
Companies’ ESG ratings introduced in the screening process
Continuously monitoring the risk exposure
Understanding / rationalising the rating outliers within fund holdings
ESG
E (*) S G
Fund
average 6,2 4,9 5,9
Universe
average 5,3 5,0 5,6
(*) E, S and G ratings where available, as defined by the AllianzGI internal
ESG ratings
48
Investment Process : Portfolio Construction
During any given stage of the investment process the selection criteria may vary from those shown above. The diagrams and statements above reflect the typical investment process applied to this strategy. At any given
time other criteria may affect the investment process.
Portfolio
Construction
30-40
Selecting companies
with high Conviction
(leading market
position, growth
opportunities…) and
attractive Valuation
Bottom-up stock
selection with >3
years investment
horizon
Stock selection within the identified narrow pool of Water stocks driven
by the Conviction level of the portfolio managers and analysts
Integration of all stages with Conviction
Fundamental analysis Valuation
Deep understanding of the long
term drivers
Valuation and Risk/Return
analysis on absolute and relative
basis
Leveraging on the Research Platform with fundamental analysis
Team of dedicated investors with the thematic expertise and deep
insights into water specific issues and solutions
49
Global Water team
Our experienced team managing over $667.6 million (USD)1 in assets
1. As of December 31, 2017. *Andreas Fruschki, CFA is the portfolio manager for the AllianzGI Global Water Fund.
Experienced team with global resources
Global CIO
Steve Berexa
29 Years Experience
Global Strategist
Neil Dwane
28 Years Experience
PMT Resources
ESG Research
Other PM Teams
Company Meetings
Customers & Suppliers
Street Research
Quantitative Analysts
Trading
Product Specialist
Robust Global Research Platform
Global Sector Fundamental
Research Team GrassrootsSM Research Global Policy Council Sustainability Research
Investment Team
Andreas Fruschki, CFA* Lead Portfolio Manager, Global Water
Director of Equity Research – Europe
Frankfurt, 12 years experience
Alina Donets, CFA Research Analyst, Global Water
London, 5 years experience
Alexandra Russo Product Specialist Associate, Global
Water
New York, 6 years experience
Key Research Analysts
USA Ray Cunha, Industrials
Bryan Agbabian, Water
Utilities and Agriculture
Europe Daniele Patti, Building Materials
Richard Budgett, Water Utilities
Asia Charles Guo, Utilities
Karen Chan, Industrials
Izumi Kimijima, Water Industrials
50
Access to the AllianzGI ESG Platform
* Investment Industry Relevant Experience / Years with AllianzGI
Source: Allianz Global Investors, as of January 2017. For illustrative purposes only.
Global Executive Committee Members
Global Head of ESG
Steffen Hoerter
(23/15)*
N.N
(tbd.)*
Global Head of ESG Research
Eugenia Jackson
(13/1)*
ESG Integration Manager
Nina Hodzic
(12/1)*
Senior ESG Analyst
Marissa Blankenship
(18/5)*
ESG Analyst
Marie-Sybille Connan
(24/8)*
ESG Analyst
Henrike Kulmann
(9/5)*
ESG Analyst
Robbie Miles
(7/2)*
ESG Analyst
Mathilde Moulin
(13/9)*
Global Head of ESG
ESG Policy, Strategy and Market Positioning, ESG
Investment Offering and Product Design
Global Head of ESG Research
Proprietary ESG Research, Engagement, Proxy Voting
51
GrassrootsSM Research—Overview
Methodology:
Customized to answer specific questions about key stock
drivers identified by Portfolio Managers and Analysts
Resources:
In-house staff of 10
61 reporters
300+ Field Force Investigators
50,000+ industry contacts
Results:
30+ company/industry studies per month
Data as of December 31, 2017. GrassrootsSM Research is a division of Allianz Global Investors that commissions investigative market research for asset-management professionals. Research data used to generate
GrassrootsSM Research reports are received from reporters and Field Force investigators, who work as independent, third-party contractors, as well as external research panel providers—all of whom supply research
that may be paid for by commissions generated by trades executed on behalf of clients.
Investment decisions—reality checked
Mission:
Provide investment professionals with timely business insights that
help identify inflection points and increase investment conviction
GrassrootsSM Analysts
Portfolio Managers &
Analysts
Client
GrassrootsSM Reporters
Field Force Investigators Experts
Regulators
Managers
Physicians
Consumers
Competitors
Distributors
Suppliers
Customers
www.grassrootsresearch.com
52
Portfolio Exposures
Strategy managed to provide a diversified exposure without compromising the theme
These ranges are not binding, but indicate how the strategy would normally be invested. During any given stage of the investment process the selection criteria may vary from those shown above. The statements above
reflect the typical investment process applied to this strategy. At any given time other criteria may affect the investment process and the characteristics shown above. See additional disclosure at the end of this
presentation.
Actively managed long-only equity fund
Focus on high quality companies with a unique position within the water supply chain
North America
Europe
RoW
40-50%
~ 50%
10-20%
Indicative ranges of breakdowns
Industrials
Utilities
Technology
Materials
40-50%
40-50%
0-10%
0-10%
Water Dimensions
Water Supply
Water Efficiency
Water Quality
Environmental Sustainability
Global Infrastructure
Emerging Markets Consumer
Energy Efficiency
Smart Cities and IoT
Agriculture Automation
Geographies Core
Sectors Ancillary areas of exposure
53
AllianzGI Global Water Fund: A-Share Performance
*Inception 03/31/2008. Performance quoted represents past performance. Past performance is no guarantee of future results. Investment return and the principal value of an investment will
fluctuate. Shares may be worth more or less than original cost when redeemed. Current performance may be lower or higher than performance shown. For performance current to the
most recent month-end, visit our Web site at us.allianzgi.com. The MOP returns take into account the 5.5% maximum initial sales charge. The Fund’s expense ratio is 1.49%. **Annualized for
periods greater than one year. Please see the end of the presentation for important information on inception date. The MSCI ACWI is a free float-adjusted market capitalization weighted index that is designed to
measure the equity market performance of developed and emerging markets. The Standard & Poor's Global Water Index is comprised of 50 of the largest publicly traded companies in water-related businesses that meet
specific invest ability requirements. The Index is designed to provide liquid exposure to the leading publicly-listed companies in the global water industry, from both developed markets and emerging markets. Unless otherwise
noted, index returns reflect the reinvestment of income dividends and capital gains, if any, but do not reflect fees, brokerage commissions or other expenses of investing. It is not possible to invest directly in an index.
Data Source: IDS
As of December 31, 2017
Annualized (%)**
Calendar (%)
3.9
22.3 22.3
8.8 9.5
5.7
-1.8
15.6 15.6
6.78.3
5.15.3
27.7 27.7
10.712.6
7.95.7
24.0 24.0
9.310.8
5.8
-5
0
5
10
15
20
25
30
4th Quarter Year-to-Date 1 Year 3 Year 5 Year Since Inception*
AllianzGI Global Water Fund A Share NAV* AllianzGI Global Water Fund A Share MOP* S&P Global Water Index MSCI ACWI
26.8
16.1
-8.0
21.623.8
-1.2
0.34.9
22.3
32.7
15.9
-6.7
21.3
27.3
4.6
-1.0
7.4
27.7
34.6
12.7
-7.3
16.1
22.8
4.2
-2.4
7.9
24.0
-15
-10
-5
0
5
10
15
20
25
30
35
40
2009 2010 2011 2012 2013 2014 2015 2016 2017
54
AllianzGI Global Water Fund: I-Share Performance
*Inception 03/31/2008. Performance quoted represents past performance. Past performance is no guarantee of future results. Investment return and the principal value of an investment will
fluctuate. Shares may be worth more or less than original cost when redeemed. Current performance may be lower or higher than performance shown. For performance current to the
most recent month-end, visit our Web site at us.allianzgi.com. The Fund’s expense ratio is 1.21%. **Annualized for periods greater than one year. Please see the end of the presentation for important
information on inception date. The MSCI ACWI is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Standard &
Poor's Global Water Index is comprised of 50 of the largest publicly traded companies in water-related businesses that meet specific invest ability requirements. The Index is designed to provide liquid exposure to the leading
publicly-listed companies in the global water industry, from both developed markets and emerging markets. Unless otherwise noted, index returns reflect the reinvestment of income dividends and capital gains, if any, but do not
reflect fees, brokerage commissions or other expenses of investing. It is not possible to invest directly in an index.
Data Source: IDS
As of December 31, 2017
Annualized (%)**
27.3
16.4
-7.7
21.924.2
-0.8
0.65.1
22.7
32.7
15.9
-6.7
21.3
27.3
4.6
-1.0
7.4
27.7
34.6
12.7
-7.3
16.1
22.8
4.2
-2.4
7.9
24.0
-15
-5
5
15
25
35
45
2009 2010 2011 2012 2013 2014 2015 2016 2017
4.0
22.7 22.7
9.1 9.8
6.05.3
27.7 27.7
10.712.6
7.95.7
24.0 24.0
9.310.8
5.8
0
5
10
15
20
25
30
4th Quarter Year-to-Date 1 Year 3 Year 5 Year Since Inception*
AllianzGI Global Water Fund I Share S&P Global Water Index MSCI ACWI
Calendar (%)
55
AllianzGI Global Water Fund: Top Holdings
The top ten holdings are subject to change and the portfolio holdings will vary over time. Current and future portfolio holdings are subject to risk. References to specific securities and their issues are examples of
securities held in the portfolio and are not intended to be, and should not be interpreted as an offer, solicitation or recommendation to purchase or sell any financial instrument. Data source: IDS
AllianzGI Global Water Fund As of December 31, 2017
Top Ten Holdings Portfolio Weights (%)
American Water Works Co., Inc. 8.9
Xylem, Inc. 8.2
Veolia Environnement SA 7.3
Geberit AG 6.8
Danaher Corp. 5.9
Idex Corp. 5.7
Suez 4.9
Severn Trent PLC 4.0
Aalberts Industries N.V. 4.0
China Everbright International Ltd. 3.4
Total 59.1
56
AllianzGI Global Water Fund: Weightings
*Data Source: IDS. All holdings and sector allocations are subject to change. The Standard & Poor's Global Water Index is comprised of 50 of the largest publicly traded companies in water-related businesses that
meet specific invest ability requirements. The Index is designed to provide liquid exposure to the leading publicly-listed companies in the global water industry, from both developed markets and emerging markets. It is
not possible to invest directly in an index.
Top SubIndustry weightings (%)*
AllianzGI Global Water Fund vs. S&P Global Water Index As of December 31, 2017
29.2
21.1
12.9
9.5
7.8
6.2
5.9
2.1
2.1
0.9
0.0
30.8
33.9
11.1
5.5
1.5
3.3
5.2
0.4
0.0
0.0
2.5
Industrial Machinery
Water Utilities
Multi Utilities
Building Products
Environ. & Facil. Svcs.
Electr. Equip. & Instr.
Health-Care Equip.
Agricultural & Farm Mach.
Research & Cons. Svcs.
Construction Materials
Commodity Chemicals
AllianzGI Global Water Fund S&P Global Water Index
57
AllianzGI Global Water Fund: Regional Distribution
*Data Source: IDS. Regional allocations are subject to change.
Regional Distribution (%)*
AllianzGI Global Water Fund vs. S&P Global Water Index As of December 31, 2017
42.2
34.3
10.2
6.7
4.3
0.0
0.0
49.1
25.1
13.1
7.0
3.0
0.8
1.9
North America
Europe ex UK
United Kingdom
EM Asia
Japan
Pacific ex Japan
EM Latin America
AllianzGI Global Water Fund S&P Global Water Index
Important Information:
Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. This and other
information is contained in the fund’s prospectus and summary prospectus, which can be found at us.allianzgi.com. Please read the prospectus
carefully before investing.
A Word About Risk: Investing in a limited number of issuers or sectors may increase risk and volatility. Investing in the water-related resource
sector may be significantly affected by events relating to international political and economic developments, water conservation, the success of
exploration projects, commodity prices and tax and other government regulations. Foreign markets may be more volatile, less liquid, less
transparent and subject to less oversight, and values may fluctuate with currency exchange rates; these risks may be greater in emerging markets.
Derivative prices depend on the performance of an underlying asset; derivatives carry market, credit and liquidity risk
The inception date (3/31/2008)) is for the oldest class of shares (A, C and P). The Institutional share class was first offered in 7/08. Returns prior to
the inception date apply the returns of the A share class adjusted to reflect the class specific charges and expenses. Projections in this
presentation are based on assumptions with respect to future events. The actual future events may differ from the assumptions.
Funds are distributed by Allianz Global Investors Distributors LLC. Current opinions of the presenter are subject to change without notice. This
presentation does not represent a recommendation of any particular security, strategy or investment product. Forecasts and estimates have certain
inherent limitations, and are not intended to be relied upon as advice or interpreted as a recommendation. Allianz Global Investors Distributors
LLC, 1633 Broadway, New York, NY 10019-7585, us.allianzgi.com.
Investment Products: NOT FDIC INSURED / MAY LOSE VALUE / ARE NOT BANK GUARANTEED
58 © Allianz Global Investors 2018 367088