Interview Series

WIOF Pakistan Performance Fund

Investment Manager: Habib Bank AG Zurich

(November 2011)



How has the Fund performed recently compared to its peers and are there any particular stocks or areas where the Fund is performing well?

The fund is performing well in its investment in oil, power generation and fertilizer companies. The companies have increased dividends over the last year with the help of improved margins and favourable business conditions despite an economic contraction.

The government has introduced structural and regulatory reforms to help encourage private sector investment. How has this helped the capital markets and are there any sectors in particular which have benefitted specifically from reforms?

The reforms have helped bring in direct investment to the country in the last five years. Capital markets have also benefited as P/E and P/Book value multiples have increased due to takeovers and mergers.

What more could the government be doing to encourage growth in the private sector?

Power generation has now become a chronic problem for the country. The government needs to make serious investment in this area and to stop looking for short term solutions. According to studies, power breakdowns in urban/industrial areas are leading to a drop of almost 2% in GDP. Tax reforms should also be introduced in order to make the process more transparent.

To what extent is Pakistan’s market affected by events and developments on developed markets e.g. the Eurozone debt crisis, QE1,2?

Pakistan’s major export market is still North America. The Eurozone crisis is not going to have a serious effect on exports but any underlying wave of protectionism may reduce country quotas.

Foreign Direct Investment (FDI) is another key element to Pakistan’s economic growth. What is the government doing to encourage FDI?

The government has implemented structural reforms in the last 5 years to make the environment attractive for business.

Infrastructure development is needed in Pakistan. Is this need something which presents an opportunity for investment, either through FDI or via boosts to domestic companies in related fields?

The need is an opportunity for companies investing in the power, transportation and public works sectors. Domestic companies in these sectors need investment and technical support from abroad.

Pakistan is perceived as a frontier market i.e. one with specific risks but also potential rewards. Does Pakistan present the risks normally associated with a frontier market and how do you managed the Fund to deal with these risks?

Pakistan was classified as a frontier market after the global financial crises of 2007-8. Pakistan’s capital markets trade at a discount in comparison to even its frontier market peers. We focus on sectors which have a demand and supply imbalance.

Statistics show Pakistan’s middle class is growing and employment is also expanding, driving domestic consumption. What do these developments mean for markets and the Fund?

Normally, these developments affect the services and retail sectors positively. Our fund focuses on these sectors.

Where do you see the Pakistan economy being at the end of the year?

The economy is still recovering from the effects of twin floods. Generally speaking, the economy will remain on a path of slow growth with the bulk of government revenues coming from indirect taxes.

IMPORTANT NOTE: This report has been prepared for information only, and it does not represent an offer to purchase or subscribe to shares. World Investment Opportunities Funds (“WIOF”) is registered on the official list of collective investment undertakings pursuant to part I of the Luxembourg law of 20th December 2002 on collective investment undertakings as an open-ended investment company. WIOF believes that the information is correct at the date of production while obtained from carefully selected sources considered to be reliable. No warranty or representation is given to this effect and no liability can be assumed for the correctness or accuracy of the given information which may be subject to change at any time, without notice. Past performance provides neither a guarantee, nor an indication of future performance. Value of the shares and return they generate can fall as well as rise. Currency fluctuations, either up or down, may also affect value of the investment. Due to continuing market volatility and exchange rate fluctuations, the performance may be subject to significant changes over a short-term period. Investors should be aware that shares in the financial instruments entail investment risks, including the possible loss of the invested capital. Performance is usually calculated on the basis of the relevant NAV unless stated otherwise. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested. WIOF prospectus is available and may be obtained through www.1cornhill.com. Before investing in any WIOF Sub-fund(s) investors should contact their financial adviser / legal adviser / tax adviser and refer to all relevant documents relating to the WIOF and its particular Sub-fund(s), such as the latest annual report and prospectus that specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing. In the event investors choose not to seek advice from a financial adviser / legal adviser / tax adviser, they should consider whether the WIOF is a suitable investment for them.