Active is:<br/>High conviction investing without limits

Allianz Global Equity Unconstrained

The Allianz Global Equity Unconstrained strategy launched in 2013 with the goal of generating long-term outperformance through the ownership of a tightly focused portfolio of quality companies at reduced risk.

The strategy is entirely benchmarks agnostic. Rather than establishing portfolio positions relative to an index, this approach allows a focus on companies which offer the best possible combination of quality, growth and valuation.

Philosophy

Our philosophy is simple: we seek to own shares in great businesses for long periods of time in order to benefit from the compounding power of sustainable, high returns.

For us to invest, a company must demonstrate:

1. Quality: returns on capital employed that are sustainably above average
2. Growth: secular opportunities to expand revenues
3. Valuation: a share price which does not yet reflect these traits

We believe concentrated, high conviction portfolios are more conducive to long-term outperformance. Owning several highly profitable companies for a long time is a highly efficient means of generating returns. It also commits us to our role as corporate stewards. Consequently, portfolios hold c.30 stocks with a typical investment horizon of at least five years.

Process

Our unconstrained approach means we select stocks using bottom-up fundamental research across market capitalisations, sectors and regions, without considering relative positioning. As markets tend to be less efficient across these categories, we avoid paying expensive valuations.

There are four steps to our investment process:

1. Creating an investable universe – a liquidity check
2. Idea generation – using all of AllianzGI resources to collect investment ideas, these include our dedicated platform of career sector analysts, ESG Research and Grassroots Research – a proprietary market research team.
3. Stock selection – a collaborative, analytical process involving the entire Global Equity team
4. Portfolio Construction – constructing a conviction-weighted unconstrained portfolio

Integrated ESG

The Global Equity Unconstrained strategy was one of the first at AllianzGI to integrate Environmental, Social and Governance (ESG) research into its investment process. This means the portfolio managers analyse ESG issues alongside traditional financial factors. However, unlike a traditional Socially Responsible Investment (SRI) strategy, Integrated ESG does not force us to sell stocks on the basis of ESG concerns.

Instead, we are free to invest in these longer term societal tail risks, provided we give a clear explanation of their risk/reward rationale. This is much like any other equity strategy would invest in sector, country or currency risk. The reason being that while ESG analysis can help mitigate downside risk, actively embracing it can also yield valuable opportunities, leading to alpha generation for clients.

Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors might not get back the full amount invested. Past performance is not a reliable indicator of future results. If the currency in which the past performance is displayed differs from the currency of the country in which the investor resides, then the investor should be aware that due to the exchange rate fluctuations the performance shown may be higher or lower if converted into the investor’s local currency. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail. This is a marketing communication issued by Allianz Global Investors GmbH, www.allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, 199 Bishopsgate, London, EC2M 3TY, www.allianzglobalinvestors.co.uk, which is subject to limited regulation by the Financial Conduct Authority (www.fca.org.uk). Details about the extent of our regulation by the Financial Conduct Authority are available from us on request. The duplication, publication, or transmission of the contents, irrespective of the form, is not permitted; except for the case of explicit permission by Allianz Global Investors GmbH.