Product Factsheet

QUARTER 3
2014
QUARTERLY INSTITUTIONAL PRODUCT UPDATE
ACTIVE/PASSIVE
INTERNATIONAL EQUITY
Barings Active/Passive International Equity utilizes a combination of
active country and sector allocations and passive stock selection
within a risk-controlled framework to maximize return.
What sets us apart?
Experience
 We are one of the first managers to have introduced the
Active/Passive management concept and have been managing
money in this style since 1988
Captures principal sources of alpha
 The Active/Passive International Equity product takes advantage
of strategic anomalies in international markets, focusing on
country, sector, and currency decisions.
Overall program diversification
 Our Active/Passive product is style neutral, providing consistent
return streams when compared with value and growth managers.
Our program diversifies well against bottom-up management and
satellite programs
Efficient approach to management
 Low management costs, liquid, transparent
Clients use Active/Passive as an alternative to indexation or as a
style neutral placement to provide diversification against either
growth or value managers. The strategy aims to maintain a lower
tracking error than fully active products, as well as higher returns
compared with passive strategies.
Active & Passive
 We construct portfolios with the goal of generating high riskadjusted returns. Risk budgeting is a central feature of our
Active/Passive investment process.
 Active allocation to countries and sectors which we find to be the
most attractive given our quantitative and fundamental analysis.
 Passive stock selection achieved via investment in geographic
and sector index strategies, guided by a risk controlled framework
that seeks to maximize return.
.
Performance Commentary
 The MSCI EAFE (net) index returned -5.9% for the quarter in
USD terms. All of the loss was due to currency movement, i.e.
US dollar strength. In local currency terms, the index was in
positive territory.
 In US dollar terms, the strongest key markets were Israel,
Singapore and Japan. The strongest developed market sectors
were Health Care and Information Technology. Energy and
Materials were the weakest performers. Sectors witnessed a
strong preference for expected growth, and some of the
geopolitical themes earlier in the year were wound down.
 The portfolio outperformed its index during the quarter. The most
important contributor was an overweight to Japan, with
overweight currency hedged back to US dollars (neutral Yen to
the benchmark). Our overweight to Israel also added value. In
sector positioning, most if not all sectors added value with the
most significant being the overweight to Information Technology
and underweight Energy.
 Markets seem to be more rationally discounting the slower
economic growth period, slower revenue growth and better
corporate management of cash and investments. This marks an
end to a year-long response to government policies. Such
policies remain important, but so are relative fundamentals.
Multiple Sources of Alpha

Active/Passive International Equity attempts to add value
through a combination of country, sector and currency drivers.
As such, it utilizes research from every area of the firm.
Portfolio Objective

Outperform the index by 1.5%, gross of fees

Targeted tracking error of 2% “plus” p.a.

Information ratio of at least .75%
The index is the Morgan Stanley Capital International EAFE – Net Dividends Reinvested
Index.
Composite Performance*
Composite
Benchmark
Reporting Ccy.
Date
Active Passive: International Equity
MSCI EAFE Total Return with Net Dividends Reinvested
USD
30-Sept-14
Q3 14
1 Yr
3 Yrs (Ann.)
5 Yrs (Ann.)
Barings Active/Passive International Equity Composite (Gross)
-4.9
5.1
14.6
8.0
Barings Active/Passive International Equity Composite (Net)
-5.0
4.8
14.2
7.7
MSCI EAFE Net
-5.9
4.3
13.7
6.6
Relative vs. Gross
1.0
0.8
0.9
1.4
The firm, as defined herein, claims compliance with the Global Investment Performance Standards (GIPS®). A complete list and description of all composites, along with Compliant
Presentations are available on request by sending an e-mail to [email protected].
For the purpose of GIPS compliance, the “Firm” is defined as the investment firm Baring Asset Management Limited (and its rel evant subsidiaries which are registered with the appropriate
regulatory authorities to undertake investment business in those jurisdictions in which they operate). Baring Asset Management Korea Limited, a wholly owned subsidiary of Baring Asset
Management (Asia) Limited, which is in turn a wholly owned indirect subsidiary of Baring Asset Management Limited, is excluded from the Firm definition.
The Composite is comprised of accounts which invest in selected State Street Global Advisors’ Country and Sector index funds, each of which seek to replicate their respective developed
market MSCI country or sector indices. Performance results prior to April 1, 2001 were comprised of accounts which invested solely in selected State Street Global Advisors’ Country index
funds, each of which seek to replicate their respective developed market MSCI country indices.
As at the reporting date all portfolios in the Composite reinvest capital gains and income (including dividends and other earnin gs).
Benchmark Source: MSCI
Style Characteristics*
Barings Active/Passive International Equity
vs. MSCI EAFE Net
Barings
Index
Variation
3 Years EPS Growth
11.3
10.9
1.0
P/E FY1
14.9
15.1
1.0
Return on Equity %
14.4
15.4
0.9
Debt/Equity Ratio %
118.7
116.0
1.0
Dividend Yield FY1
3.2
3.3
1.0
Wtd Market Cap (US$)
53.9
59.8
0.9
Institutional Regulatory Disclosure
This document has been produced for, and is intended for receipt by, professional
investors/advisers and must not be relied on by any other category of recipient.
This document may include forward-looking statements, which are based upon our current
opinions, expectations and projections. We undertake no obligation to update or revise
any forward-looking statements. Actual results could differ materially from those
anticipated in the forward-looking statements.
Except where otherwise indicated performance numbers are sourced from Barings.
Past performance is not a guide to future performance.
Additional Performance Disclosure
Strategy Performance shown is performance of a GIPS Composite, consisting of an
aggregation of accounts managed to a particular mandate. References to attribution
(performance of a particular country, sector, individual stock), along with characteristics,
weightings and portfolio level data are based upon a representative account within the
Composite. Please use all information contained in this presentation, which is supplemental
to the GIPS Advertising Disclosure contained on page 2 of the booklet.
For more information please contact
Boston:
Michael Brown
[email protected]
Tel: 617-946-5200
West Coast:
Susan Marshall (San Francisco)
[email protected]
Tel: 415-834-1500
Michael Siciliano
[email protected]
Tel: 617-946-5352
Kieran Stover (Portland)
[email protected]
Tel: 503-396-9795
Eric Lareau
[email protected]
Tel: 617 946-5217
Toronto:
Michael Annis
[email protected]
Tel: 416-572-2400
Barbara Cassidy
[email protected]
Tel: 617-946-5222
*All Performance and Characteristics as of September 30, 2014