Mexico Equity & Income Fund Inc · NYSE:MXE
Mexico Equity & Income Fund — CEF Capital Link Forum (April 2014)
31 slides from Mexico Equity & Income Fund's conference presentation, April 2014
Slide 1: Pichardo Asset Management
Pichardo Asset Management Independent Portfolio Management Firm Experience Consistency Vision 23 years of experience in Mexican equities 1
Slide 2: Reasons to invest in the MXE
Reasons to invest in the “MXE” PICHARDO ASSET MANAGEMENT, The Portfolio Manager of The Mexico Equity & Income Fund, Inc., “MXE”, since its Inception in 1990. 1) A 23-Year Track Record 2) Two Portfolio Managers and Four Strategic Officers 3) One Assistant Portfolio Manager and Head of Four Fundamenta
Slide 3: Agenda
Reasons to invest in the “MXE” AGENDA Annette Acosta: Assistant Portfolio Manager and Head of Valuation Methodologies 1) Nine Constitutional Initiatives are undoubtedly an un-precedent structural change. (key to putting Mexico firmly on track to boosting its rate of economic growth in the medium-to-
Slide 4: 2013: Annus Mirabilis
Reasons to invest in the “MXE” 2013: ANNUS MIRABILIS Zedillo Fox Fox Calderon Calderon Peña Nieto 1997-2000 2000-2003 2000-2003 2006-2009 2009-2012 2012-2013 IPAB Fiscal Act for the Promolion Federal Police Act Labor Energy FOBAPROA Senior Citizens Act of Reading Renewable Energy Act General Law of
Slide 5: Pichardo Asset Management Uses a Highly Diversified, De-Indexed Strategy
Reasons to invest in the “MXE” PICHARDO ASSET MANAGEMENT USES A HIGHLY DIVERSIFIED – DE-INDEXED STRATEGY 1) Full-time committed Portfolio Managers 2) In-house Fundamental Research based on Value Investing and Earnings Per Share Valuation Methodologies. 3) Independent decision-making 4) Focused on re
Slide 6: Pichardo Asset Management Uses a Highly Diversified, De-Indexed Strategy
Reasons to invest in the “MXE” PICHARDO ASSET MANAGEMENT USES A HIGHLY DIVERSIFIED – DE-INDEXED STRATEGY 6) We have an open and productive channel of communication with the MXE’s Board of Directors within the boundaries of its independence from our firm. 7) We provide information on the MXE’s perfor
Slide 7: MXE Highlights
Reasons to invest in the “MXE” MXE HIGHLIGHTS 1) Provides Daily NAV 2) The MXE has a discount control mechanism through a share repurchase program and the Board continues to pursue an exemptive order from the SEC to implement a managed distribution plan. 3) High and Low Premium / Discount to NAV las
Slide 8: MXE Highlights
Reasons to invest in the “MXE” MXE HIGHLIGHTS 4) The MXE Board of Director’s Chairman plays a key role in ensuring that the Board meets is fiduciary obligations to Shareholders. 5) The MXE’s Board of Directors is committed to protecting shareholders from excessive cost. The annualized total ratio of
Slide 9: MSCI Mexico Index Top-Ten Holdings vs. MXE
Reasons to invest in the “MXE” PICHARDO ASSET MANAGEMENT USES A HIGHLY DIVERSIFIED – DE-INDEXED STRATEGY MSCI Mexico Index Top-Ten Holdings vs. MXE As of March 31, 2014. Weight OW/ UW Issuer MSCI Mexico Index MXE basis points AMXL 18.65% 0.47% (1,818) FEMSAUBD 9.10% 2.64% (646) TLEVICPO 8.74% 0.00%
Slide 10: MXE Asset Allocation by GICS Sectors
Reasons to invest in the “MXE” MXE HIGHLIGHTS MXE Asset Allocation by GICS Sectors As of March 31, 2014 Financials, 16.68% Consumer Discretionary, Consumer 16.68% Staples, 19.04% Materials, 13.04% Utilities, Industrials, 5.51% 20.38% Telecom, Other, 8.20% 0.47% Experience Consistency Vision 23 years
Slide 11: MXE Asset Allocation by Market Cap
Reasons to invest in the “MXE” MXE HIGHLIGHTS MXE Asset Allocation by Market Cap March 31, 2014 Mid Cap Large Cap 34.48% 53.02% Small Cap 6.44% Private Equity 2.09% Marketable Corporate Bond USD Securities 1.95% 2.02% Experience Consistency Vision 23 years of experience in Mexican equities 11
Slide 12: MXE Asset Allocation by GICS Industry
Reasons to invest in the “MXE” MXE HIGHLIGHTS MXE Asset Allocation by GICS Industry As of March 31, 2014 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Experience Consistency Vision 23 years of experience in Mexican equities 12
Slide 13: One Year Return as of March 31, 2014
Reasons to invest in the “MXE” MXE HIGHLIGHTS One Year Return as of March 31, 2014. MXE’s NAV Total Return = Mexbol Return + MXN Peso Depreciation + PAM’s Contribution 2.33% = -6.23% + -5.53% + 14.09% Excess Risk-Adjusted Return MXE’s Alpha (Jensen’s Alpha) 12.36% Compared to the MSCI Mexico Index 8
Slide 14: MXE's U.S. Dollar and Excess Return Compared to Benchmark and Peer
Reasons to invest in the “MXE” MXE’S U.S. DOLLAR AND EXCESS RETURN COMPARED TO ITS BENCHMARK AND FULLY COMPARABLE PEER 23 Year FUND 1 Month Y-T-D 1 Year 3 Years 5 Years 10 Years Since Inception in 08/30/90. MXE NAV 6.68% 0.58% 2.33% 13.43% 28.49% 17.56% 14.53% Excess Return Compared to: 23 Year FUND
Slide 15: One-Year to March 31, 2014: 2.33% Gain vs MEXBOL Index
Reasons to invest in the “MXE” ONE-YEAR TO MARCH 31, 2014. A 2.33% U.S. DOLLAR GAIN COMPARED TO THE MEXBOL INDEX 110 MXE NAV 2.33% MEXBOL Index -11.36% 105 100 MXE NAV Adjusted 2.33% 95 90 MEXBOL Index -11.36% 85 80 75 Source: US Bancorp, Bloomberg. Past performance does not guarantee future results
Slide 16: One-Year Gain Compared to MSCI Mexico and Trackers
Reasons to invest in the “MXE” ONE-YEAR TO MARCH 31, 2014. A 2.33% U.S. DOLLAR GAIN COMPARED TO MSCI MEXICO AND TRACKERS 2.33% MXE iShares NAFTRAC -6.53% MSCI Mexico-Index -9.88% MEXBOL Index -11.36% iShares MSCI Mexico -12.52% -20% -15% -10% -5% 0% 5% 10% Source: US Bancorp, Bloomberg. Past perform
Slide 17: Ten-Year Annual Average Gain vs MEXBOL Index
Reasons to invest in the “MXE” TEN-YEAR TO MARCH 31, 2014. A 17.56% ANNUAL AVERAGE U.S. DOLLAR GAIN COMPARED TO THE 14.65% OF MEXBOL INDEX Dec. 26, 2013 MXE NAV Adjusted MEXBOL Index Short Term Gains: 1.65 600 Dec. 19, 2012 Short Term Gains: 0.04 Long Term: 0.48 Dec. 26, 2007 Long Term: 0.15 Short T
Slide 18: Reasons to invest in the “MXE”
Reasons to invest in the “MXE” Source: Bloomberg, PAM Experience Consistency Vision 23 years of experience in Mexican equities 18
Slide 19: Important Disclosures
Important Disclosures THE MEXICO EQUITY AND INCOME FUND, INC. (MXE) Closed‐End Fund listed in the New York Stock Exchange in 1990 1. Investment Objective: To seek high total return through capital appreciation and current income by investing at least 80% of the Fund’s assets in equity and convertibl
Slide 20: Important Disclosures
Important Disclosures THE MEXICO EQUITY AND INCOME FUND, INC. (MXE) •Gains realized from the sale or disposition of debt securities may be subject to a 4.9% withholding tax. Gains realized by the Fund from the sale or disposition of equity securities that are listed and traded on the Mexican Stock E
Slide 21: Important Disclosures
Important Disclosures *THE MEXICO FUND, INC. (MXF) Closed‐End Fund listed in the New York Stock Exchange in 1981 1. Investment Objective: Long‐term capital appreciation through investments in securities, primarily equity, listed on the Mexican Stock Exchange. 2. Expense ratio: 1.42% (as of October 2
Slide 22: Important Disclosures
Important Disclosures The information contained herein reflects the opinion of “Pichardo Asset Management” and as such should not be taken to be fundamental analysis or a decision-making model. Neither should the information be interpreted as a solicitation, offer or recommendation to buy or sell fi
Slide 23: Global and Domestic Macro: Exports
Reasons to invest in the “MXE” Global and Domestic Macro 1) Mexico has an enviable geographical position relative to the U.S.A and other trade-oriented economies. 2) Mexico’s exports-to-GDP ratio of nearly 33% is among the highest in Latin America, followed by Chile with 32%. Exports per Region: Uni
Slide 24: Global and Domestic Macro: Imports
Reasons to invest in the “MXE” Global and Domestic Macro 3) Mexican imports have grown significantly since 1994 when the North American Free Trade Agreement “NAFTA” was implemented. Imports per region: Asia 31% United States 50% Europe 11% South America 3% Canada 3% Central America Other 1% 1% Exper
Slide 25: Emerging Markets Credit Default Swaps
Reasons to invest in the “MXE” Emerging Markets Credit Default Swaps (Bps) (OneYear to February 28, 2014) Source: Bloomberg, PAM Experience Consistency Vision 23 years of experience in Mexican equities 25
Slide 26: Emerging Markets Currencies
Reasons to invest in the “MXE” Emerging Markets Currencies (Appreciation-Depreciation) (OneYear to February 28, 2014) Source: Bloomberg, PAM Experience Consistency Vision 23 years of experience in Mexican equities 26
Slide 27: Emerging Markets Central Bank Reference Rate
Reasons to invest in the “MXE” Emerging Markets Central Bank Reference Rate (One-year to February 28, 2014) Source: Bloomberg, PAM Experience Consistency Vision 23 years of experience in Mexican equities 27
Slide 28: Global and Domestic Macro
Reasons to invest in the “MXE” Global and Domestic Macro 4) Independent Central Bank, “Banco de Mexico” 5) Inflation has been gradually converging towards the Central Bank’s +/-3% target over the last 10 years 6) Monetary discipline and prudent fiscal policies have enabled the country to develop str
Slide 29: Conclusions - Reforms at a Glance
Reasons to invest in the “MXE” CONCLUSIONS - REFORMS AT A GLANCE The Telecommunication Reform proposed changes to the Constitution and Media Sectors. It aims to eliminate monopolies and lower entry barriers for new participants, strengthen regulatory bodies, and revise limits on foreign direct inves
Slide 30: Conclusions - Reforms at a Glance
Reasons to invest in the “MXE” CONCLUSIONS - REFORMS AT A GLANCE Increase Pemex’s investment flexibility by enhancing its labor and fiscal regimes and corporate governance. Create a national oil fund to manage oil-related revenues, and foster domestic savings for the government by strengthening publ
Slide 31: Conclusions - Reforms at a Glance
Reasons to invest in the “MXE” CONCLUSIONS - REFORMS AT GLANCE Experience Consistency Vision 23 years of experience in Mexican equities 31
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