buying tomorrow’sfuture … today · 2018. 6. 5. · marketing document intended exclusively for...
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BUYING TOMORROW’S FUTURE … TODAY
Marketing document intended
exclusively for Professional Investors
Past performance is no guarantee
of future results and is not constant over time
Johan VAN DER BIEST, Senior Fund Manager
Zurich, January 16th 2018
Robotics and Innovative Technology
The world is changing faster than everCombining AI and IoT: intelligent KONE elevators talk in human language
January 2018 Marketing document intended exclusively for Qualified Investors 2
Source: ©Kone Corporation
Why is the technological revolution still accelerating?Moore’s law
Prices of memory and storage have declined
dramaticallyComputing power doubles every 2 year
3Marketing document intended exclusively for Qualified Investors
year Average cost Per Gigabyte
1980 $ 437 500
1985 $105 000
1990 $11 200
1995 $ 1 120
2000 $ 11
2005 $ 1,24
2010 $ 0,09
2013 $ 0,05
2014 $ 0,03
2015 $ 0,022
2016 $ 0,019
Source: Statistic Brain Research Institute
Moore’s law
January 2018
What is the impact of Moore’s law?The wide availability of memory and computing power will enable a myriad of disruptive applications
Marketing document intended exclusively for Qualified Investors
10xmore viewership thanks to AI use by Youtubecompared to 2010 (source Wall Street Journal)
15 secondsis what it takes IBM Watson to ‘read’ 500k medical research papers (source IBM)
750krobo-assisted procedures in 2016 compared to 1k in 2000 (source Intuitive Surgical)
66%of US farmers is using self-driving technology (source John Deere)
$47bnestimated size of AI solutions in 2020 compared to $8bn in 2016 (source IDC)
500 millionpeople are using this translation app to talk in their native language to non-native speakers
4January 2018 4
1800 1900 2000
The world is changing, investors have to adaptFrom investing in steam power to investing in robotics and other innovative technology
Investors need to adapt, as they did in former industrial revolutions
FIRST
Industrial Revolution
Mechanical production
equipment driven by water
and steam power
e.g.: CONSOLIDATED EDISON
THIRD
Industrial Revolution
Use of electronics and
IT to further automate
production
e.g.: IBM, INTEL
SECOND
Industrial Revolution
Mass production
driven by the use of
electrical energy
e.g.: GE, SIEMENS
FOURTH
INDUSTRIAL REVOLUTION
integration of smart,
internet-connected machines and human
labour
e.g. AMAZON, ALPHABET,
YASKAWA
Marketing document intended exclusively for Qualified Investors 5January 2018
Equity investors have taken notice of the opportunityRobotics and Automation stocks have consistently outperformed
Marketing document intended exclusively for Qualified Investors 6January 2018
Robotics and automation index vs MSCI World on 10Y horizonCandriam
Robotics Fund Robo Index MSCI World
P/E 12M FWD 25.25 24.5 17
FCF yield 3.2% 3.1% 4.5%
Gross Margin 42% 35% 31.5%
R&D/Sales 12% 8.7% 5.9%
LT EPS growth (3y) 16.6% 13.8% 11.5%
Net Debt/EBITDA -1.16 -0.72 1.45
source: Bloomberg as of Jan 3rd 2018
0
50
100
150
200
250
300
350
400
ROBO Index (PI) MXWO Index (PI)
What’s the link between robotics and innovative technology?Robots have been among the biggest beneficiaries of disruptive technology
Robotics cannot be isolated from the technology sectoras machine learning and advanced robot tasks need sophisticated data centers.
The advanced robot is the ultimate fusion of state of the art hardware, software, engineering and artificial intelligence
Programming
Rockwell
Automation
Advanced
sensor
technology
Keyence
Mechatronics
Fanuc
Factory
automation
ABB
Mapping
technology
Hexagon
Cloud
computing:
Amazon
Speech
technology
Nuance
Artificial
Intelligence
Marketing document intended exclusively for Qualified Investors 7Sources: company websites
January 2018
Why will robotics remain a growth sector? Some major countries and industries are still behind the curve
Marketing document intended exclusively for Qualified Investors 8
Source: IFR 2017
January 2018
631
309 303
189
68
0
100
200
300
400
500
600
700
Korea Germany Japan USA China
Robot density per 10 000 workers in 2016
Can the USA and
China afford to not
catch up?
2145
475
1261
93
1240
214
1131
181
505
180
500
1000
1500
2000
2500
Robot density per 10 000 workers automotive vs non automotive in 2016
* 2015 data
Service robots will outgrow industrial robotsThe use of robotics in healthcare is accelerating
The number of robot assisted procedures has more than doubled over the last 6 years
Sources: Intuitive Surgical
Marketing document intended exclusively for Qualified Investors 9January 2018
Long Short DigitalRobotics and Innovative Technology
10Marketing document intended exclusively for Qualified Investors
Why Candriam?A long experience in turning strong secular trends into successful investment strategies
César ZeitouniHead of Long Short Equity
22 years experience
1 year with the firm
Johan Van der BiestSenior Fund Manager
24 years experience
24 years with the firm
Candriam Technology Analysis
1 expert Automotives
4 experts Biotechnology /Health Care
2 experts Industrials/Utilities
2 experts Consumer
2 experts Financials
1 expert Energy
Candriam Advisory Board
Innovative Technologies and Robotics
Professor
Jeremy L WyattUniversity Of
Birmingham
Professor
Takeo KanadeCarnegie Mellon
University
Professor
Peter Allen Columbia
University
January 2018
The investment processA 3 stage approach
Investment universe: Global Equities, All caps
Idea generation from the Advisory Board:
• Industry Trends
• Technological Trends
At least 30% of revenues related to one or more of these thematics and market cap>250 mio USD
Robotics and Innovative Technology Screening
Industrial Robots Service Robots
Sensors Mechatronics Artificial Intelligence
Security Virtual Reality Leapfrogging Technologies
Internet of Things / Big Data
Smart Factory
Company Scorecard
Innovation Financials CompetitionManagement + Valuation
Co
mp
an
y M
eetin
gs
Sele
cte
d B
roker In
pu
t
Ind
ustry
co
nfe
ren
ces
Final portfolio30-50 stocks
Internal Risk LimitsUCIT Fund Rules
Sharpe optimisation
11Marketing document intended exclusively for Qualified InvestorsJanuary 2018
Candriam Equities L Robotics and Innovative TechnologyIndustrials and IT are prominent sectors
Marketing document intended exclusively for Qualified Investors 12
Source Candriam as 29/12/2017
January 2018
Information Technology
64%
Industrials24%
Consumer Discretionary
6%Health Care
6%
Sector distribution
Americas55%
EMEA22%
Pacific Rim23%
Regional distribution
Industrial Robots
7.1%
Service Robots
8.9%
Smart Factory29.2%
Sensors/Me-chatronics
11.4%
A.I.3.4%
I.o.T./Big Data16.2%
Security4.4%
VR/AR0.8%
Leapfrogging Technology
18.6%
Thematic exposure
Active share vs MSCI World 92.4% - Tracking Error (ex ante): 4.92% - Total risk: 10.6%
Candriam Equities L Robotics and Innovative TechnologyIndustrials and IT are prominent sectors (top 20)
Marketing document intended exclusively for Qualified Investors 13January 2018
Name Country Name Main active segments Industry Group Weight
ALPHABET INC A UNITED STATES A.I./Big Data/V.R./Leapfrogging Tech Software & Services 4.39%
FACEBOOK INC UNITED STATES A.I./Big Data/V.R./Leapfrogging Tech Software & Services 3.64%
ROCKWELL AUTOMATION INC UNITED STATES Smart Factory Capital Goods 3.42%
INTUITIVE SURGICAL INC UNITED STATES Service Robot Health Care Equipment & Servic 3.42%
SALESFORCE COM INC UNITED STATES Leapfrogging Tech/AI Software & Services 3.35%
MICROSOFT UNITED STATES A.I./Big Data/V.R./Leapfrogging Tech Software & Services 3.14%
SMC CORP JAPAN Sensors/Mechatronics Capital Goods 2.97%
OMRON JAPAN Smart Factory/Sensors/Mechatronics Technology Hardware & Equipmen 2.95%
APTIV PLC UNITED STATES Leapfrogging Tech Automobiles & Components 2.67%
APPLIED MATERIALS INC UNITED STATES Smart Factory/Leapfrogging Tech Semiconductors & Semiconductor 2.64%
KEYENCE JAPAN Sensors Technology Hardware & Equipmen 2.59%
PAYPAL HOLDINGS INC UNITED STATES Leapfrogging Tech Software & Services 2.59%
SIEMENS GERMANY Smart Factory Capital Goods 2.37%
SCHNEIDER ELECTRIC FRANCE Smart Factory/Big Data Capital Goods 2.33%
FANUC CORP JAPAN Industrial Robots/Sensors Technology Hardware & Equipmen 2.26%
IROBOT CORP UNITED STATES Service Robot Consumer Durables & Apparel 2.22%
ABB LTD SWITZERLAND Industrial Robots/Smart Factory Capital Goods 2.21%
HOLLYSYS AUTOMATION CHINA Smart Factory Technology Hardware & Equipmen 2.18%
ASML HOLDING NETHERLANDS Leapfrogging Tech Semiconductors & Semiconductor 2.11%
INFINEON GERMANY Sensors/Security/Leapfrogging Tech Semiconductors & Semiconductor 2.10%
Source Candriam as 29/12/2017
Candriam Equities L Robotics and Innovative Technology
General PhilosophyThe fund offers exposure to the secular growth theme of
robotics and innovative technology
Disciplined Investment
Process
The robotics advisory board ensures the exchange of key
strategic insights in the broad area of robotics and innovative
technology
An Experienced
Investment Team
The Thematic Global Equity team consists of seasoned
investment professionals with a proven track record.
Industry Experts
interaction
14Marketing document intended exclusively for Qualified Investors
A disciplined bottom-up process focussing on companies with
above average revenue growth, strong competitive
positioning and innovative technologies
January 2018
This document is provided for information purposes only, it does not constitute an offer to buy or sell financial instruments, nor does it represent an investment
recommendation or confirm any kind of transaction, except where expressly agreed. Although Candriam selects carefully the data and sources within this document,
errors or omissions cannot be excluded a priori. Candriam cannot be held liable for any direct or indirect losses as a result of the use of this document. The
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performances are not reliable indicators of future performances. Gross performances may be impacted by commissions, fees and other expenses. Performances
expressed in a currency other than that of the investor's country of residence are subject to exchange rate fluctuations, with a negative or positive impact on gains. If
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The present document does not constitute investment research as defined by Article 24, paragraph 1 of the Commission Directive 2006/73/EC. Candriam stresses
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Candriam consistently recommends investors to consult via our website www.candriam.com the key investor information document, the prospectus, and all other
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15January 2018 Marketing document intended exclusively for Qualified Investors
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