European play on emerging markets – Allianz Global Investors

Matthias Born, lead fund manager of the Allianz RCM Euroland Equity Growth fund and co-fund manager of the Allianz RCM Europe Equity Growth fund comments:

“The impact of emerging markets on Europe has created two key themes for us. Firstly, how can we play on their domestic demand growth story, and secondly, what competition do emerging market companies pose to their European counterparts?”

“Turning to the domestic demand growth story, it was evident on my recent trip to Asia that Chinese consumers are likely to continue to increase spending in the next couple of years. This is probably also true for other Asian countries, such as India, where the middle class is growing rapidly and with it demand for Western products and brands. There is major potential for growth in luxury and retail brands in emerging markets and we will continue to look for opportunities to invest in European companies that we expect to benefit from this trend.”

“Energy efficiency is another theme which plays into the domestic demand growth story. China‟s Five Year Plan for energy efficiency focuses on a shift towards quality products. This means, in my view, that high energy consuming areas and industries will be forced to increase their energy efficiency going forward, benefiting European companies such as Siemens and Schneider Electric.”

“We are closely monitoring the competition between European and Asian companies and the impact this may have on European stocks. Recently, European companies have been losing orders in Asia to Asian companies, for example Alstom, a world leader in transport and energy infrastructure, lost an order in India to a Chinese company, Shanghai Electric. Competition is increasing and in particular in areas that are strategically important to China.”

European outlook

“Europe is being driven by German exports and the improving consumer environment there. Recent gross domestic product (GDP) figures show that Germany is ahead of the rest of Europe (Source: RCM). Our view on Europe for the next couple of years is that GDP is likely to remain below par, and we will be concentrating on exposure to emerging markets that we believe will continue to grow. The European equity market for 2011 should see some upside as we believe most of these companies‟ growth potential is not reflected in the current valuation.”

“Looking at our performance for the 3rd quarter of 2010, both funds posted positive absolute and relative performance numbers. The Allianz RCM Europe Equity Growth fund was 3% ahead of benchmark* and the Allianz RCM Euroland Equity Growth fund was 2.2% ahead of benchmark**. The main drivers for the strong performance were the consumer, discretionary and industrial sectors. Also, our exposure to prominent themes such as healthcare, investment cycles in oil and mining and consumer demand in emerging markets contributed to this outperformance.”

– ENDS –

* S&P Europe LargeMidCap Growth Net Total Return, source: RCM
** S&P Eurozone LargeMidCap Growth Net Total Return, source: RCM

About Allianz Global Investors

Disclaimer

Allianz RCM Europe Equity Growth and Allianz RCM Euroland Equity Growth are sub-funds of Allianz Global Investors Fund, which is an open-ended investment company with variable share capital (also known as a SICAV) organised under the laws of Luxembourg. Allianz Global Investors Fund qualifies as an undertaking for collective investments in transferable securities („UCITS‟) in accordance with the provisions of the European Union („EU‟) Directive EEC/85/611 (as amended subsequently).

Allianz RCM Europe Equity Growth and/or Allianz RCM Euroland Equity Growth may not be registered or authorised for public distribution in the country of residence of investors. Accordingly, it is the responsibility of investors to be aware of the applicable laws and regulations of their country of residence in respect of financial promotion. Thus, the information contained in this document should not be construed as constitutive of an offer or solicitation (i) by anyone to buy shares in Allianz RCM Europe Equity Growth and/or Allianz RCM Euroland Equity Growth in any jurisdiction in which such offer or solicitation would be unlawful or in which the person making such offer or solicitation is not qualified to do so or (ii) to anyone to whom it is unlawful to make such offer or solicitation in the jurisdiction in which this person resides. Specifically, Allianz RCM Europe Equity Growth and Allianz RCM Euroland Equity Growth are not available for distribution to or investments by investors in the United States of America („USA‟). Their shares are not registered under the US Securities Act of 1933, as amended, and, except in a transaction which does not violate the Securities Act or any other applicable securities laws (including without limitation any applicable law of any of the States of the USA), such shares may not be directly or indirectly offered or sold in the USA or any of its territories or possessions or areas subject to its jurisdiction or to or for the benefit of an investor in the USA.
Subscriptions for shares of Allianz RCM Europe Equity Growth and/or Allianz RCM Euroland Equity Growth can only be made on the basis of the latest prospectus and simplified prospectus of Allianz Global Investors Fund, complemented by any local supplement to these prospectuses, together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copies of which can be obtained, free of charge, from the management company, Allianz Global Investors Luxembourg S.A., as well as from Allianz Global Investors Europe GmbH. As with all investment products, a fund‟s past performance is not necessarily a guide to future performance and the value of the shares of Allianz RCM Europe Equity Growth and Allianz RCM Euroland Equity Growth and any income from them may fall as well as rise. On redemption of shares, investors may receive back an amount less than the original amount of their investments.

Allianz RCM Europe Equity Growth:
The assets of Allianz RCM Europe Equity Growth may be denominated in a variety of currencies and therefore movements in the value of currencies may also affect the value of investors‟ holdings. Furthermore, the value of the shares of Allianz RCM Europe Equity Growth may be adversely affected by fluctuations in exchange rates between the investors‟ reference currencies and its base currency. Further information on the risks associated with investments in Allianz RCM Europe Equity Growth -those briefly described above as well as others, if applicable- can be found in the prospectuses of Allianz Global Investors Fund. All performance data in respect of Allianz RCM Europe Equity Growth until its launch date (16.10.2006) relates to another fund with an identical investment objective and whose assets are also managed by Allianz Global Investors Kapitalanlagegesellschaft mbH, namely Allianz-dit Wachstum Europa. The latter, which is an open-ended unit trust organised under the laws of Germany, was launched on 13.1.1997. This does not imply that Allianz RCM Europe Equity Growth will enjoy similar performance in the future.

Allianz RCM Euroland Equity Growth:
The value of the shares of Allianz RCM Euroland Equity Growth may be adversely affected by fluctuations in exchange rates between the investors‟ reference currencies and its base currency. Further information on the risks associated with investments in Allianz RCM Euroland Equity Growth -those briefly described above as well as others, if applicable- can be found in the prospectuses of Allianz Global Investors Fund. All performance data in respect of Allianz RCM Euroland Equity Growth until its launch date (16.10.2006) relates to another fund with an identical investment objective and whose assets are also managed by Allianz Global Investors Kapitalanlagegesellschaft mbH, namely Allianz-dit Wachstum Euroland. The latter, which is an open-ended unit trust organised under the laws of Germany, was launched on 5.7.1999. This does not imply that Allianz RCM Euroland Equity Growth will enjoy similar performance in the future.

This document has been issued and approved by Allianz Global Investors Europe GmbH, a subsidiary of Allianz Global Investors AG (part of the Allianz Group). Allianz Global Investors Europe GmbH is a limited liability company incorporated under the laws of the Federal Republic of Germany with its registered office at Seidlstrasse 24-24a, D-80335 Munich. Allianz Global Investors Europe GmbH is licensed as a provider of financial services (Finanzdienstleistungsinstitut); for the conduct of its business activities, Allianz Global Investors Europe GmbH is subject to the supervision of the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). This document is meant to provide a broad overview for discussion and/or information purposes. Furthermore, this document was not prepared with the intention of providing legal or tax advice. The views and opinions expressed in this document, which are subject to change, are those of Allianz Global Investors Europe GmbH and its affiliated companies at the time of publication. The duplication, publication, or transmission of the contents of this document to unauthorised persons, irrespective of the form, is not permitted. While some of the data provided herein is derived from various published and unpublished sources, and is assumed to be correct and reliable, it has not been independently verified. Therefore, Allianz Global Investors Europe GmbH does not guarantee the accuracy or completeness of such data/information and will not accept any liability for any direct or consequential losses arising from its use. The investment opportunities described herein are not guaranteed by Allianz Global Investors Europe GmbH or affiliated companies within the Allianz Group.

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