# BL-Global 50
## a sub-fund of SICAV BL
Management Report	
31/05/2021
Despite the deterioration in inflation statistics, US Treasury yields were stable in May. The yield on the 10-year US Treasury note dipped from 1.63% to 1.59% over the month. In the eurozone, long-dated yields also stagnated, with the benchmark 10-year government bond yield moving from -0.20% to - 0.19% in Germany, from 0.16% to 0.17% in France, from 0.90% to 0.91% in Italy, and from 0.47% to 0.46% in Spain. At the end of May, the average yield to maturity in the bond portfolio (excluding inflation-linked bonds) was -0.59% (0.10% for the benchmark) and the modified duration was 4.6 (8.6 for the benchmark).
After a strong rally in the first four months of the year, equity markets made little headway in May. Despite most companies reporting much better than expected results and hopes of herd immunity in Europe and the United States due to good progress in the vaccination campaigns, equity markets merely consolidated the gains recorded in the previous months. The MSCI All Country World Index Net Total Return expressed in euros was unchanged over the month due to the strength of the European currency. Expressed in local currency, the S&P 500 in the US, the Stoxx Europe 600, the Topix in Japan and the MSCI Emerging Markets respectively gained 0.6% (in USD), 2.1% (in EUR), 1.3% (in JPY) and 2.1% (in USD). To date, only highly speculative stocks have suffered a major setback on the equity markets, having lost around 30% since their peak in February. Although subject to high valuations, the shares of solid companies continue to trend up. The favourable economic outlook is also encouraging investors to have significant exposure to companies that are sensitive to the business cycle.
The lack of any sign of monetary tightening in the US despite worsening inflation figures weighed on the dollar in May, with the euro/dollar exchange rate rising from 1.20 to 1.22 in May. The dollar’s weakness and stagnating bond yields helped precious metal prices continue to recover. Gold gained 7.8%, rising from $1,769 to $1,907 per ounce. Silver appreciated by 8.1%, up from $25.9 to $28.0 per ounce.
A new line was opened in the equity portfolio, Yum China Holdings, a company listed in New York and Hong Kong. Yum China is the largest restaurant chain in China, with nearly 10,600 restaurants and $9.5 billion in sales in 2020. The company generates revenue from its own restaurants and from royalties collected by its franchise network. Its main brands are Kentucky Fried Chicken (7,166 units) and Pizza Hut (2,355 units), but Yum China's portfolio also includes other brands such as Little Sheep, East Dawning, Taco Bell, Huang Ji Huang, COFFii & Joy, and Lavazza (collectively accounting for approximately 985 units). Yum China's businesses were spun off from US-based Yum Brands in October 2016, to which Yum China still pays royalties.

#### Investment Principles Limit losses

#### The value of an investment that has lost 50% must double to recover incurred losses.
- Avoiding losses is more important than generating extraordinary gains.


#### Master investment risks

#### Risks arise when the parameters of an investment are not properly understood.
- We avoid investing in assets we do not fully understand.


#### Valuation / margin of safety

#### The price paid for an investment determines its potential return.
- We invest with a margin of safety in order to limit the risk of loss and increase the potential return.


#### Consideration of an entire business cycle

#### Foregoing part of potential gains in strongly rising markets pays dividends in falling markets.
- Our objective is to outperform the relevant market indices over an entire business cycle by limiting the drawdown in challenging markets.


#### Active management

#### The market reference index is solely used for performance measurement principles.
- Owing to the active investment approach of our portfolio management, the portfolio structure may deviate strongly from that of market indices.


#### Asset Allocation
Analysis of the valuation of the S&P 500 is the basis for determining the percentage invested in equities, which is between 35% and 65%. The potential use of derivatives and the sale of futures on equity market indices may lead to net equity exposure outside this bracket. The default regional weighting of equities (17.5% for Europe, 20% for the United States, 5% for Japan, 6% for Asia excluding Japan and 1.5% for Latin America) is adjusted according to valuation levels and the manager’s opinion on the relative attractiveness of each region.

#### Equity Investment Approach: Business-Like Investing
We consider an equity investment as a long-term participation in a quality business. As a consequence, we need to make sure that the businesses we invest in are able to compete successfully within their line of business and remain profitable for the years to come.

##### Quality
In the first step of our investment process, we perform an in-depth review of the targeted company's business model in order to identify its sustainable competitive advantage. A competitive advantage differentiates the company from its competitors and creates barriers to entry, adding value for its investors. In the second step we analyse whether the competitive advantage translates into recurrent free cash flow. We put a special emphasis on the analysis of the maintenance capex requirements of the targeted companies to make sure that the cash flow generated is not absorbed by investment needs to sustain the company’s current business operations.
In the third step, we analyse how the targeted company uses its capital. The company's management faces the following options: investment in current business activities, development of new activities, takeovers, dividend payments, stock buybacks or debt repayments.

#### Only companies that comply with our bottom-up quality criteria are considered for inclusion into our portfolios, which may lead to significant deviations from the relevant market indices.

##### Valuation
Even investments in quality companies may result in significant capital losses if the price that was paid for the investment proves too high. To avoid this pitfall, we determine a fair value for each targeted company prior to investing. This fair value is based on the company's normalised free cash flow and serves as reference point for our buy and sell discipline.

#### Bond Investment Approach: Government Bonds Only
In the bond portfolio, we only invest in government and supranational bonds. We include both developed and emerging market government bonds in the portfolio. As the objective of the bond segment is to stabilise the portfolio during equity market corrections, we limit corporate risk to equities and avoid it altogether for bonds. Given the excessive debt racked up by most countries following the collapse of Lehman Brothers in 2008, we limit our exposure to the most solid government issuers. The main management decisions for the bond portfolio are duration and exposure to emerging markets.

#### Gold: Insurance Against Systemic Risk
Given massive state intervention in the financial markets since the collapse of Lehman Brothers, the economic system has evolved from market capitalism in which the financial markets are a meeting point between savers and investors, to state capitalism in which the authorities decide who receives money and who does not. The authorities have turned the financial markets into an instrument for political ends on the pretext that the economy will go into freefall without government intervention, thus suspending the rules governing the operation of the market economy.
Political decisions that clash permanently with economic forces destabilize the financial system. Despite the unlimited capacity of central banks’ financial resources in a paper money system, failure to respect economic laws is jeopardising the viability of the financial system. For this reason, we also include gold index certificates (physically deposited in bank vaults in London) which act as an insurance against systemic risk.
This document is issued by Banque de Luxembourg Investments ("BLI"), with the greatest care and to the best of its knowledge and belief. However, no guarantee is provided with regard to its content and completeness and BLI does not accept any liability for any losses which might arise from making use of the information contained herein. The opinions expressed in this document are those of BLI at the time of writing and are subject to change at any time without notice. If nothing is indicated to the contrary, all figures are unaudited.
The product description contained herein is for information purposes only and is for the exclusive use of the recipient. Nothing in this document should be construed as an offer and is therefore not a recommendation to purchase or sell shares. It does not release the recipient from exercising his own judgement. Unless specifically indicated, this description is solely aimed at institutional investors according to the Luxembourgish law of 17 december 2010.
The securities and financial instruments described in this document may generate considerable losses and are not therefore suitable for all investors. Among other risks, these include market risks, currency fluctuation risks, credit or payment default risks, liquidity risks and interest rate risks. BLI cannot guarantee that the securities and financial instruments will achieve the intended investment objectives. Each investor must ensure that he is aware of the risks and the consequent legal, tax, accounting and commercial aspects related to these securities and financial instruments.
The accuracy of the data, the evaluation, opinions and estimates of which are included in this document, has been very carefully checked. Any statements made in this document may be subject to change without prior warning.

#### References to past performances of financial instruments should not be interpreted as a guarantee of future returns.
The recipient is recommended in particular to check that the information provided is in line with his own circumstances with regard to any legal, regulatory, tax or other consequences, if necessary with the help of a professional adviser. It is expressly not intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law. Neither this document nor any copy thereof may be sent, taken into or distributed in the United States or to any U.S. person as defined in the fund’s prospectus. This material is not for distribution to the general public. It is intended for the recipient personally, and it may be used solely by the person to whom it was presented. It does not constitute and may not be used for or in connection with a public offer in Luxembourg of the products referred to herein.
The prospectus, the articles of incorporation, the annual and semi-annual reports of BL as well as the key investor information document (KIID) of the sub-fund are available on www.bli.lu or upon request from BLI. The KIIDs are available in French, English and in any other official language of registration of BL.

#### This document may not be reproduced either in part or in full without the prior written consent of BLI.

#### Specific Information concerning MSCI Data:
All MSCI data is provided “as is”. Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the result to be obtained by the use thereof) and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.

#### Specific Information concerning GICS Data:
The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed to use by Banque de Luxembourg S.A.. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if noticed of the possibility of such damages.

#### Specific Information for Switzerland:
Legal documentation of the fund may be obtained, free of charge, at the offices of the Swiss representative, CACEIS (Switzerland) S.A.,7-9, Chemin de Précossy, CH-1260 Nyon, Switzerland, in accordance with the provisions of the Swiss Collective Investment Schemes Act of 23 June 2006 (“CISA”).

#### The SICAV has appointed Banque CIC (Suisse) SA, Marktplatz 13, CH-4001 Bâle, Switzerland to act as paying agent for Switzerland. The present document may be distributed to Swiss qualified investors.

#### Specific Information for France:

#### The present document may be distributed to French professional investors.

Translation (ENFR, 2021-05-31):
# BL-Global 50
##  Un compartiment de la SICAV BL Informations légales
Ce document a été rédigé par BLI - Banque de Luxembourg Investissements («BLI»), avec la plus grande attention et le plus grand soin. Cependant, aucune garantie n'est fournie en ce qui concerne son contenu et son intégralité et BLI n'accepte aucune responsabilité pour les pertes qui pourraient découler de l'utilisation des informations contenues dans ce document. Les opinions exprimées dans ce document sont celles de BLI au moment de la rédaction du présent document et peuvent être modifiées à tout moment sans préavis. Sauf mentions contraires, tous les chiffres présents dans ce document n’ont pas fait l’objet d’un audit.
La description du produit contenue dans ce document est uniquement à titre d'information et est destinée à l'usage exclusif du destinataire. Rien dans ce document ne doit être interprété comme une offre et n'est donc pas une recommandation d'achat ou de vente d'actions, ni un avis juridique ou fiscal. Il ne libère pas le destinataire d'exercer son propre jugement. Cette description vise uniquement les investisseurs institutionnels.
Les titres et les instruments financiers décrits dans ce document peuvent générer des pertes considérables et ne conviennent donc pas à tous les investisseurs. Parmi les autres risques présentés en détail dans le prospectus, l'investissement dans les titres et les instruments financiers décrits dans ce document expose les investisseurs aux risques de marché, aux risques de fluctuation des devises, aux risques de défaut de crédit ou de paiement, aux risques de liquidité et aux risques de taux d'intérêt. BLI ne peut garantir que les titres et les instruments financiers atteindront les objectifs de placement prévus. Chaque investisseur doit s'assurer qu'il connaît les risques et les aspects juridiques, fiscaux, comptables et commerciaux conséquents liés à ces titres et instruments financiers.
La précision des données, les évaluations, opinions et estimations incluses dans ce document ont été très soigneusement vérifiées. Toute déclaration faite dans ce document peut être modifiée sans avertissement préalable.

#### Les références aux performances passées des instruments financiers ne doivent pas être interprétées comme une garantie de rendements futurs.
Le destinataire doit en particulier vérifier que les informations fournies sont conformes à sa propre situation en ce qui concerne les conséquences légales, réglementaires, fiscales ou autres, le cas échéant avec l'aide d'un conseiller professionnel. Il n'est expressément pas destiné aux personnes qui, en raison de leur nationalité ou de leur lieu de résidence, ne sont pas autorisées à accéder à ces informations en vertu de la législation locale. Ni ce document ni aucune copie de celui-ci ne peut être envoyé, pris ou distribué aux États-Unis ou à toute personne américaine telle que définie dans le prospectus du fonds. Ce document n'est pas destiné au public en général. Il vise son destinataire personnellement, et il peut être utilisé uniquement par la personne à qui il a été présenté. Il ne constitue pas et ne peut être utilisé pour ou dans le cadre d'une offre publique au Luxembourg des produits visés dans le présent document.
Le prospectus, les statuts, les rapports annuels et semestriels de BL ainsi que le document d'information clé (KIID) du compartiment sont disponibles sur www.bli.lu ou sur demande auprès de BLI. Les KIID sont disponibles en français, en anglais et dans toute autre langue officielle d'enregistrement de BL.

#### Ce document ne peut être reproduit en tout ou en partie sans le consentement écrit préalable de BLI. Specific Information concerning MSCI Data:

#### All MSCI data is provided “as is”. Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express
or implied warranties or representations with respect to such data (or the result to be obtained by the use thereof) and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.

#### Specific Information concerning GICS Data:
The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard and Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed to use by Banque de Luxembourg S.A.. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classification have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if noticed of the possibility of such damages.

#### Informations spécifiques pour la Suisse:
La documentation juridique du fonds peut être obtenue gratuitement auprès du représentant suisse, CACEIS (Suisse) SA, 7-9, Chemin de Précossy, CH-1260 Nyon, Suisse, conformément aux dispositions de la Loi du 23 juin 2006 sur les placements collectifs («LPCC»).

#### La SICAV a chargé la Banque CIC (Suisse) SA, Marktplatz 13, CH-4001 Bâle, Suisse d’agir comme agent payeur pour la Suisse. Le présent document peut être distribué aux investisseurs qualifiés suisses.

#### Informations spécifiques pour la France:

#### Le présent document peut être distribué aux investisseurs professionnels français.