10 July 2023

Global Equities: Thinking Outside the (Style) Box for More Sustained Alpha

Author:

Rob Hinchliffe, CFA

Portfolio Manager, Head of Global Sector Cluster Research

Capital at Risk

All investments involve risk. The value of your investment and the income from it will fluctuate and a loss of capital may occur.

It is one of the longest-running debates in investing: growth vs. value. For decades, leading financial minds and countless investors around the world have gone back and forth over which of the two major investment styles is the more effective and reliable strategy for outperforming the markets. Investing in companies expected to rapidly grow their earnings over time, almost regardless of their current share price? Or going with the “bird in hand” of companies that look to be a better bargain now, based on how cheaply they’re valued on such measures as the amount of dividends they pay or their share price relative to their earnings or to the book value of their tangible assets?

For most of the past decade and a half, it wasn’t even close. As the low interest rates following the global financial crisis reduced the opportunity cost of forgoing other potential uses of the same capital, investors could afford to be more patient about how long it took technology and other growth companies to effectively grow into their price. At the same time, a rise of style-based index funds made it easier for retail and professional investors alike to follow the money. For 14 straight years, global growth stocks outperformed global value stocks by an average of 9.5% per annum, a 92% cumulative gap1. Never mind that for much of the previous 70 years, value had outperformed growth at times by a similarly astonishing margin. The furious rally in ecommerce, cloud, and other growth stocks ushered in by the pandemic’s migration of even more commerce online added to a narrative that value wasn’t merely in a rut – it was “dead.”

Source: Fama-French factor returns for the US. Chart shows the cumulative High Minus Low (HML) factor return from June 1926 (June 1926 = 100) through April 2023 defined as the average return on the Small Value and Big Value portfolios minus the average return on the Small Growth and Big Growth Portfolios. https://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html

More recently it seemed as if value might get the last laugh after all. A steady procession of interest rate hikes designed to quell the highest inflation in 30 years resulted in an abrupt change in the mental accounting used by many investors to value stocks. With bond yields climbing, waiting on distant earnings became a less appealing prospect. While value stocks fell by 10% in 2022, growth stocks sank by 30%. The early months of 2023 brought yet another reversal in these patterns as inflation modestly cooled, raising hopes for an end to interest rate hiking, and AI-related growth stocks in particular went on a tear. Yet, some notable investors have predicted the latest crosscurrents are just a temporary regathering. With historical evidence suggesting that inflation and interest rates could stay elevated for a prolonged period, and value stocks typically outperforming growth during inflationary eras, these investors predict the coming years could be banner ones for value.

Only time will tell which predictions are right, although there is another possibility. Instead of trying to determine which will outperform within finite periods, we believe in using growth and value as inputs as part of a process for choosing stocks individually for their ability to generate results ahead of market expectations. Our approach is classified as style neutral, or “core,” but in the context of the debate between growth and value it does raise a provocative idea.

To the question of which is better positioned to provide sustained outperformance, maybe the answer is “neither,” or in this case, “both.”

The growth and value shuffle

As we see it, there are two main problems with reducing equity allocation decisions to a binary decision between growth and value: one is a problem of prediction; the other, of definition.

Predicting the future is always tricky, and the timing of style shifts especially so. Historically, inflation has proved stubborn to control once it reaches as high as 8%, as it did in 2022, which bodes well for value. On the other hand, a few such periods have proved more transitory. How the current period plays out will depend on a lot of other factors, from the ways the pandemic makes this time different (and not), to policymakers’ next moves, including how they navigate the added monetary challenges raised by the US banking crisis, to the outcome of the war in Ukraine, to how all these unknowns and more filter through to the economy and market psychology. There are some investors whose expertise lies in untangling such knots to make and invest in top-down predictions. Ours takes a different tack.

But even if we were able to accurately predict the next turn in the growth vs. value debate, we would still be left with the problem of what exactly a growth and value investment is. As it turns out, there are subtle but important differences in the definitions various index providers and active managers use to construct their “growth” and “value” portfolios. Moreover, the degree to which stocks meet those definitions tends to move around over time. The classic example is Apple2. Widely viewed as the prototypical technology growth stock, the company has spent plenty of time over the years placed in value indexes as various headwinds temporarily challenged its share price even as the company continued to generate high levels of profits.

Such anomalies tend to proliferate during periods of higher volatility, and the recent period is no exception. Most investors would have little doubt about where to place an energy stock – generous dividends, highly cyclical earnings, massive capital base that dampens price-to-book (PB) – they all scream “value,” right? Yet, as of April, as an illustration, most major energy companies, including Exxon, Chevron, Conoco Phillips, and Marathon, were grouped in the S&P Growth Index. On the other side of the spectrum, Meta, the mega-cap asset-light technology company that helped headline the past decade’s growth rally and more recent slump, was a Value stock. Microsoft was grouped both ways—listed in the Growth and Value indexes3. Perhaps even more curious are some of the characteristics observed at the index level. Over the past three years, the Growth Index has traded at an average 55% higher price-to-earnings (PE) ratio higher than Value, but as of the end of March that gap had narrowed to just 13%4 – not the sort of discount most investors probably have in mind when contemplating a wholesale style reallocation.

Some of these are statistical quirks, a product, for example, of the S&P Growth Index’s heavy weighting to historical price momentum and change in earnings and sales growth (all of which, in the case of energy stocks, were impacted by the unusually strong surge in energy prices last year). But the anomalies also result from another aspect of the growth vs. value debate that sometimes gets overlooked by investors: beyond their roles as investing styles, growth and value, however they’re defined, each represent different characteristics exhibited in varying measures by every stock. Rather than hard-and-fast distinctions, they really are more traits or tendencies that can be more dominant or less and increase or recede in the importance the market attaches to them at different points of a company’s development.

That is also part of the issue we have with many traditional “core” approaches to building portfolios. A core portfolio that equal-weights growth and value stocks relative to the index may address the prediction problem and limit the fallout from major style shifts; however, unless it has an intuitive, cohesive, and consistently applied approach for evaluating companies, it may struggle to generate enough stock-specific alpha to outperform.

A framework for finding the value in growth, and vice versa

On the PineBridge Global Equity team, we start from a place of trying to outperform. Because we judge our success entirely on that metric, we also use our benchmark as our barometer for how much risk we’re taking. For that reason, our PineBridge Global Focus Equity Fund maintains an investment style exposure similar to the benchmark. In early 2022, growth accounted for nearly half the benchmark and, by design, half of the PineBridge Global Focus Equity Fund. And as growth underperformed as interest rates climbed over the course of the year, we stayed style-neutral to the benchmark as its growth exposure declined to about 40%. The interesting thing is, we don’t have to expend much effort staying in sync. It happens naturally as a product of how we consciously structure our portfolio: selecting stocks across the range of different stages of the company lifecycle.

In our world view, companies are inherently dynamic entities that evolve from less to more mature levels of growth over time (and sometimes back). Some, by the nature of their business, may be more tied to the economic cycle, but even they tend to evolve into more (or less) potent and dependable sources of earnings growth. Thus, it is important to understand both which growth stage a company is in today and where it will be in the future. These principles form the basis of our proprietary Lifecycle Categorization Research (LCR) framework, as summarized in the chart below.

We assign companies to one of six different categories based on their maturity and cyclicality and evaluate them using a valuation method and return requirement particular to each category. In classifying a cyclical company, for example, we’ll first normalize its revenue and earnings to smooth out the “lumps” across the economic cycle. We then assess its underlying growth trend to determine whether it is presently a High Cyclical Growth or Mature Cyclical company: the faster it is growing through the cycle, the likelier we are to categorize it as the former and value it using a higher multiple to reflect those higher future-state earnings estimates.

In contrast, a company with a stable revenue and margin outlook is more likely to be a Mature Stable company. A company in this category will be valued against the market, peers, and its own history – and given its better visibility require less return potential than a High Stable Growth company to be an attractive investment. Only through proper LCR categorization do we believe we can accurately evaluate a company and determine the likelihood of a stock outperforming the market’s expectations for it – our driving purpose.

Lifecycle Categories

For illustrative purposes only. Any views represent the opinion of the investment manager and are subject to change.

Still, even in analyzing a High Stable Growth company, we’re less interested in its growth for growth’s sake than in whether we think the business will grow faster than the market is expecting based on the company’s current valuation. That’s why we can be just as attracted to a more mature company growing at a much slower pace – the attraction isn’t so much the relative levels of growth as the potential for the company to improve in a way that the market is underestimating.

In the end, LCR provides a framework for evaluating companies consistently and comparing those with similar maturity and cyclicality characteristics against one another. Depending on an investor’s previous frame of reference, the portfolio may look growth-y or sound rather value-oriented. However, relative to the benchmark, which is our barometer of risk, Global Focus stylistically takes no side.

LCR Categories Provide Truer Comparisons and Greater Diversification than Sectors Do

Weighted Average Pairwise Inter-LCR and Inter-Sector Correlations

Source: PineBridge Investments, MSCI, Refinitiv, as of 31 March 2023. Information shown is for the PineBridge Global Focus Equity Fund (the “Fund”), reference class: Y, which is a sub-fund of PineBridge Global Funds, an Irish domiciled UCITS umbrella fund, authorized and regulated by the Central Bank of Ireland. The information is for a partial time period from 31 December 2015 through 2 December 2022, which corresponds the tenure of the current investment management on the Fund (whose inception date is 7 January 1999). Excess returns for each LCR category or sector are calculated by subtracting the market cap-weighted total returns of all the MSCI index members from the market cap-weighted total returns for the MSCI index members in that category or sector. Correlations are calculated between the excess return series of all possible unidentical pairs of categories or sectors. Weighted average pairwise correlations are calculated using the cross-product of average total market caps for each pair of categories or sectors as weight. For illustrative purposes only. Past performance is not indicative of future results. Diversification does not guarantee results in any market.

Diversification benefits and more sustained alpha

Another aspect of such a portfolio is that it tends be more deeply diversified and more explicitly risk-controlled than the typical growth, value, or even style-neutral portfolio. Not necessarily by sectors (which we consider to be mostly artificial designations), but more precisely by the traits that help determine how a company is affected by the fundamental turns in the economy.

Prospective clients are sometimes puzzled by how a portfolio with such a high (93%) active share can have such a relatively low (4.4%) tracking error, all with a beta of roughly 1. The answer gets to the heart of how the LCR framework operates, and how it doesn’t.

High Active Share

Source: PineBridge and FactSet, as of 31 March 2023. Past performance is not indicative of future results. Reflects the statistics for PineBridge Global Focus Equity Fund (the “Fund”), which is a sub-fund of PineBridge Global Funds, an Irish domiciled UCITS umbrella fund, authorised and regulated by the Central Bank of Ireland. The inception date of the Fund is 7 January 1999 with the current portfolio manager commencing on 1 January 2016. The benchmark for the Fund is the MSCI All Country World Index (ACWI). Diversification does not ensure against loss in any market. Benchmarks are used for illustrative purposes only, and any such references should not be understood to mean there would necessarily be a correlation between investment returns of any investment and any benchmark. Turnover is calculated as lesser of purchases or sales divided by average AUM. Information shown reflects a partial time period which identifies the tenure of the current investment management team on the portfolio.

Benchmark-Similar Risk

Source: PineBridge and Factset, as of 31 March 2023. Past performance is not indicative of future results. Reflects the statistics for PineBridge Global Focus Equity Fund (the “Fund”), which is a sub-fund of PineBridge Global Funds, an Irish domiciled UCITS umbrella fund, authorised and regulated by the Central Bank of Ireland. The inception date of the Fund is 7 January 1999 with the current portfolio manager commencing on 1 January 2016. The benchmark for the Fund is the MSCI All Country World Index (ACWI). Diversification does not ensure against loss in any market. Benchmarks are used for illustrative purposes only - it is not possible to invest directly in an index. Benchmarks are used for illustrative purposes only, and any such references should not be understood to mean there would necessarily be a correlation between investment returns of any investment and any benchmark. Information shown reflects a partial time period which identifies the tenure of the current investment management team on the portfolio.

LCR is a dual-purpose tool. It helps us concentrate our risks on the idiosyncratic business risks where we have the highest conviction and simultaneously helps us diversify our exposure across different facets of the economic, currency, interest rate, or commodity cycles where we do not believe we have a prediction edge. Our life stage categorizations are part of that tool used to source alpha and diversify our risks, but they are not the source of alpha themselves. Within each stage, our ability to generate alpha primarily rises or falls on the thesis we’ve formulated around each individual stock’s ability to surprise to the upside, not on our loading to any one underlying style (again, to which we are always neutral) or other market factor.

Deriving our active risk from such an eclectic assortment of company-specific risks, we think, ironically makes for a more stable portfolio less prone to being whipped around quite as much by shifts in the macro environment. If inflation and interest rates do end up staying high, our High Stable growers as a group would be expected to suffer, but (assuming our individual stock theses prove correct) suffer less than other companies of a comparable growth stage. Some of our cyclical companies, meanwhile, should be benefitting even more than peers from the high commodity prices, and our Mature Stable companies from the shift in market sentiment toward defensive names. That is, unless or until the macro tides shift in another direction, at which point the diversification benefits would all be expected to shift around as well.

To illustrate how this worked over the last three years, the strategy has averaged an annual excess return of 4.9% (net of fees) that placed it in the top first percentile of Morningstar’s universe of 1,501 global large cap core equity managers5. Stock selection drove nearly all the alpha and each LCR category was a positive contributor. Allocation, by design, was not a factor in driving performance.

A Clearer Signal – Stock Selection Effect for Global Focus Equity

Categorizing-Companies-by-Lifestyle-chart-1

Source: PineBridge and FactSet, as of 31 March 2023. Represents performance attribution information for the PineBridge Global Focus Equity Fund (the “Fund”), which is a sub-fund of PineBridge Global Funds, an Irish domiciled UCITS umbrella fund, authorised and regulated by the Central Bank of Ireland. The Fund’s inception date is 7 January 1999 with the current portfolio manager commencing on 1 January 2016. There can be no assurance that any of the above allocations will remain in the portfolio at the time this information is presented. Diversification does not ensure against loss in any market. Benchmarks are used for illustrative purposes only - it is not possible to invest directly in an index. Past performance is not indicative of future results.

Moving left

As the name implies, Lifecycle is about movement: both weathering the movements in the macro environment and capturing the movements in individual companies. We don’t need companies to change lifecycle stages to be a good investment. But if a company is going to move, we want it to move left in the lifecycle categorization chart above, transitioning from a more mature business back toward a more fulsome and kinetic stage of growth. In such instances, we expect its valuation to re-rate higher as the market gains visibility into the new lifecycle stage.

Of course, as mentioned earlier, stocks move around between the value and growth indexes as well. Compared to these sometimes-mercurial migrations, the moves left in our framework tend to be more intuitive and forward-looking and more conducive, we think, to the systematic generation of alpha. About six years ago, we began looking into a large European pharmaceutical company6. At the time, based on our analysis, the company rated as a Mature Stable grower – i.e., pretty much what we would have expected from a big, lumbering healthcare company. The company had hit our radar, though, because the cluster of sector analysts who work together across different equity teams at PineBridge had begun researching China’s healthcare market, where they noticed some surprising trends: access to care, and to sophisticated care, in China was rapidly improving. They also noticed that this European drugmaker had a then-small (10% of its total revenue) business in China. What’s more, it also had a then-small (15%) oncology business which itself was rapidly growing. Taken together with a new management team that our analysts knew well from the executives’ prior work at other leading pharma companies, and the analysts saw the makings of a potentially significant move left. We initiated with a sizeable starting position weight in the portfolio.

Fast-forward six years and we now categorize the company as a High Stable Growth company. At times over the past six years, our index provider has classified the company as a “growth” stock and at other times as both a “value” and a “growth” stock. More important for our purposes, during that time its earnings growth rate has accelerated, and its P/E ratio has expanded, to a trailing-12-month multiple of over 20x, compared to 16x when we first made the purchase. Along the way, it has grown into one of largest and longest-held positions in the portfolio.

We see this as a prime illustration not only of our LCR framework in action, but of the importance of teamwork in a bottom-up, style-neutral process such as ours – of teams collaborating and comparing notes in a structured framework across different parts of the global markets. Only then, we believe, is it possible to unlock and maximize the stock- and industry-specific knowledge tucked away in different parts of our own organization to find the hidden value in the companies we research. Or growth, for that matter. And all of the above.

Footnotes

1 Based on the MSCI World Value Index and MSCI World Growth Index returns from January 2015 to December 2020. Source: FactSet, MSCI, S&P Compustat, Worldscope. 2 For illustrative purposes only. Information provided should not be construed as a recommendation to buy or sell a security. There is no indication given that the security shown was purchased, sold or recommended in any portfolio. Any views are the opinion of the Investment Manager and are subject to change. 3 For illustrative purposes only. Information provided should not be construed as a recommendation to buy or sell a security. There is no indication given that the securities shown were purchased, sold or recommended in any portfolio. Any views are the opinion of the Investment Manager and are subject to change. 4 Source: PineBridge and FactSet, as of 31 March 2023. 5 Source: Morningstar, as of 31 May 2023. Reference class: Y. The peer group is the Morningstar Global Large Cap Core Equity Universe, which in the 3-year period had 1,501 members. Performance is calculated net of fees on NAV to NAV in USD with dividends reinvested. The benchmark for the Fund is the MSCI All-Country World (ACWI) Daily Total Return (Net) Index. Past performance is not indicative of future results.. 6 For illustrative purposes only. The selected case study has been chosen by PineBridge to illustrate the investment process for Global Focus Equity. It is not necessarily representative, or indicative of all investments made in the existing strategy or fund. Information provided about a portfolio company is intended to be illustrative and should not be used as an indication of current or future performance of any security, investment, or portfolio company. Prospective investors should be aware that these summaries are selective by nature, do not include all of the transactions made by the Manager's investment team on behalf of the composite and are not necessarily representative or indicative of all of the investments in the portfolio for any period. Past performance is not indicative of future results.

Disclosure

Investing involves risk, including possible loss of principal. The information presented herein is for illustrative purposes only and should not be considered reflective of any particular security, strategy, or investment product. It represents a general assessment of the markets at a specific time and is not a guarantee of future performance results or market movement. This material does not constitute investment, financial, legal, tax, or other advice; investment research or a product of any research department; an offer to sell, or the solicitation of an offer to purchase any security or interest in a fund; or a recommendation for any investment product or strategy. PineBridge Investments is not soliciting or recommending any action based on information in this document. Any opinions, projections, or forward-looking statements expressed herein are solely those of the author, may differ from the views or opinions expressed by other areas of PineBridge Investments, and are only for general informational purposes as of the date indicated. Views may be based on third-party data that has not been independently verified. PineBridge Investments does not approve of or endorse any republication of this material. You are solely responsible for deciding whether any investment product or strategy is appropriate for you based upon your investment goals, financial situation and tolerance for risk.

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PineBridge Investments (‘PineBridge’) is a group of international companies acquired by Pacific Century Group from American international Group, Inc. in March 2010. PineBridge companies provide investment advice and market asset management products and services to clients around the world.

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Argentina: Any interests identified within this document may not be offered or sold to the public in Argentina. Accordingly, the offering of any fund interest has not been submitted to the Comisión Nacional de Valores (CNV) for approval. Documents relating to this offering (as well as information contained herein) may not be supplied to the general public for purposes of a public offering in Argentina or be used in connection with any offer or subscription for sale to the public in Argentina.

Australia: PineBridge Investments LLC is exempt from the requirement to hold an Australian financial services license under the Corporations Act 2001 (Cth) in respect of the financial services it provides to wholesale clients, and is not licensed to provide financial services to individual investors or retail clients. Nothing herein constitutes an offer or solicitation to anyone in or outside Australia where such offer or solicitation is not authorised or to whom it is unlawful. This information is not directed to any person to whom its publication or availability is restricted.

Brazil: PineBridge Investments is not accredited with the Brazilian Securities Commission - CVM to perform investment management services. The investment management services may not be publicly offered or sold to the public in Brazil. Documents relating to the investment management services as well as the information contained therein may not be supplied to the public in Brazil.

Chile: PineBridge Investments is not registered or licensed in Chile to provide managed account services and is not subject to the supervision of the Comisión para el Mercado Financiero of Chile (“CMF”). The managed account services may not be publicly offered or sold in Chile.

Colombia: This document does not have the purpose or the effect of initiating, directly or indirectly, the purchase of a product or the rendering of a service by PineBridge Investments ("investment adviser") to Colombian residents. The investment adviser’s products and/or services may not be promoted or marketed in Colombia or to Colombian residents unless such promotion and marketing is made in compliance with decree 2555 of 2010 and other applicable rules and regulations related to the promotion of foreign financial and/or securities related products or services in Colombia. The investment adviser has not received authorisation of licensing from The Financial Superintendency of Colombia or any other governmental authority in Colombia to market or sell its financial products or services in Colombia. By receiving this document, each recipient resident in Colombia acknowledges and agrees that such recipient has contacted the investment adviser at its own initiative and not as a result of any promotion or publicity by the investment adviser or any of its representatives. Colombian residents acknowledge and represent that (1) the receipt of this presentation does not constitute a solicitation from the investment adviser for its financial products and/or services, and (2) they are not receiving from the investment adviser any direct or indirect promotion or marketing of financial products and/or services. Marketing and offering of products and/or services of a foreign financial [or securities related] entity represented in Colombia.

Promoción y oferta de los negocios y servicios de la entidad del mercado de valores del exterior [o financiera, según sea el caso] representada en Colombia.

Dubai: PineBridge Investments Europe Limited is regulated by the Dubai Financial Services Authority as a Representative Office and is making this document available to you. This document is intended for sophisticated/professional investors only and no other Person should act upon it.

Germany: This material is issued by PineBridge Investments Deutschland GmbH, licensed and regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).

Hong Kong: The issuer of this document is PineBridge Investments Asia Limited, a company incorporated in Bermuda with limited liability, licensed and regulated by the Securities and Futures Commission (SFC). This document has not been reviewed by the SFC.

Ireland: When this document is issued in the EEA, unless stated otherwise, it is approved and issued by PineBridge Investments Ireland Limited, licensed and regulated by the Central Bank of Ireland.

Israel: PineBridge Investments is neither licensed nor insured under the Israeli Investment Advice Law.

Japan: This document is not, and under no circumstances is to be considered as, a public offering of securities in Japan. No registration pursuant to Article 4 paragraph 1 of Japan’s Financial Instruments and Exchange Act (“FIEA”) has been or will be made with respect to any solicitation of applications for acquisition of interests of any vehicle or any account that may be undertaken, on the grounds that any such solicitation would constitute a “solicitation for qualified institutional investors” as set forth in Article 23-13, paragraph 1 of the FIEA. In Japan, this document is directed at and intended for qualified institutional investors (as such term is defined in Article 2, paragraph 3, item 1 of the FIEA; “QIIs”). If any offering is to be made, that would be made on the condition that each investor enters into an agreement whereby the investor covenants not to transfer its interests (i) to persons other than QIIs, or (ii) without entering into an agreement whereby the transferee covenants not to transfer its interests to persons other than QIIs.

Kuwait: The offering of any security in any vehicle has not been approved or licensed by the Kuwait Capital Markets Authority or any other relevant licensing authorities in the State of Kuwait, and accordingly does not constitute a public offer in the State of Kuwait in accordance with Law no. 7 for 2010 regarding the Establishment of the Capital Markets Authority and the Regulating Securities Activities (“CMA Law”). This document is strictly private and confidential and is being issued to a limited number of professional investors: A) who meet the criteria of a Professional Client by Nature as defined in Article 2-6 of Module 8 of the Executive Regulations No. 72 of 2015 of the CMA Law; B) upon their request and confirmation that they understand that the securities have not been approved or licensed by or registered with the Kuwait Capital Markets Authority or any other relevant licensing authorities or governmental agencies in the State of Kuwait; and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purposes whatsoever.

Malaysia: PineBridge Investments Malaysia Sdn Bhd is licensed and regulated by Securities Commission of Malaysia (SC). This material is not reviewed or endorsed by the SC.

Mexico: The fund interest(s) have not been, and will not be, registered with the Mexican National Securities Registry (Registro Nacional de Valores) maintained by the Mexican National Banking Commission, (Comisión Nacional Bancaria y de Valores) or the “CNBV” and may not be publicly offered or sold in the United Mexican States. The materials relating to the fund interest(s) offering may not be distributed publicly in Mexico and the fund interest(s) may not be traded in Mexico. The CNBV has not reviewed or approval these offering materials. This is not a public offering of securities in Mexico.

Netherlands: PineBridge Investment Ireland Limited, Netherlands Branch is licensed and regulated by The Dutch Authority for the Financial Markets (AFM). This is a branch office of PineBridge Investments Ireland Limited, licensed and regulated by the Central Bank of Ireland.

Panama: These fund interest(s) have not been and will not be registered with the Superintendence of the Securities Market of Panama (Superintendencia del Mercado de Valores de la República de Panamá). Accordingly, (i) the fund interest(s) cannot be publicly offered or sold in Panama, except in transactions exempted from registration under the securities laws of Panama, (ii) the Superintendence of the Securities Market of Panama has not reviewed the information contained in this material, (iii) the fund interest(s) securities and the offering thereof are not subject to the supervision of the Superintendence of the Securities Market of Panama, and (iv) the fund interest(s) securities do not benefit from the tax incentives provided by Panamanian securities laws and regulations.Neither these securities, nor their offer, sale, or transfer, have been registered with the Superintendence of the Securities Market (before named National Securities Commission). The exemption from registration is based on numeral 3 of Article 129 of Decree Law 1 of July 8, 1999 (Institutional Investors), as amended. In consequence, the tax treatment established in Articles 334 to 336 of Decree Law 1 of July 8, 1999, as amended, does not apply to them. These securities are not under the supervision of the Superintendence of the Securities Market (before named National Securities Commission).

Peru: Specifically, the Interests will not be subject to a public offering in Peru. The Interests described herein have not been and will not be approved by or registered with the Peruvian Superintendency of Capital Markets (Superintendencia del Mercado de Valores, or the “SMV”) or the Lima Stock Exchange (Bolsa de Valores de Lima). Accordingly, the Interests may not be offered or sold in Peru except, among others, if such offering is considered a private offer under the securities laws and regulations of Peru. The Interests cannot be offered or sold in Peru or in any other jurisdiction except in compliance with the securities laws thereof. In making an investment decision, institutional investors (as defined by Peruvian law) must rely on their own examination of the terms of the offering of the Interests to determine their ability to invest in the Interests. All content in this document is for information or general use only. The information contained in this document is referential and may not be construed as an offer, invitation or recommendation, nor should be taken as a basis to take (or stop taking) any decision. This document has been prepared on the basis of public information that is subject to change. This information may not be construed as services provided by PineBridge Investments within Peru without having the corresponding banking or similar license according to the applicable regulation.

Singapore: PineBridge Investments Singapore Limited is licensed and regulated by the Monetary Authority of Singapore (MAS). In Singapore, this material may not be suitable to a retail investor. This advertisement or publication has not been reviewed by the MAS.

Sweden: PineBridge Investments Ireland Limited Sweden filial is licensed and regulated by Finansinspektionen. This is a branch office of PineBridge Investments Ireland Limited, licensed and regulated by the Central Bank of Ireland.

Switzerland: This material is issued by PineBridge Investments Switzerland GmbH and classes this communication as a financial promotion which is intended for Institutional and Professional clients as defined by the Swiss Federal Financial Services Act ("FinSA").

Taiwan: PineBridge Investments Management Taiwan Ltd. Is licensed and regulated by Securities and Futures Bureau of Taiwan (SFB). In Taiwan, this material may not be suitable to investors and is not reviewed or endorsed by the SFB.

United Kingdom: This material is issued by PineBridge Investments Europe Limited, licensed and regulated by the Financial Conduct Authority. In the UK this communication is a financial promotion solely intended for professional clients as defined in the FCA Handbook and has been approved by PineBridge Investments Europe Limited. Should you like to request a different classification, please contact your PineBridge representative. In the UK, this material may also be issued by PineBridge Benson Elliot LLP, registered in England (company number OC317119) with its registered address at 50 Hans Crescent, London, SW1X 0NA. PineBridge Benson Elliot LLP is authorised and regulated by the Financial Conduct Authority.

Uruguay: The sale of the securities qualifies as a private placement pursuant to section 2 of Uruguayan law 18.627. The issuer represents and agrees that it has not offered or sold, and will not offer or sell, any securities to the public in Uruguay, except in circumstances which do not constitute a public offering or distribution under Uruguayan laws and regulations. The securities are not and will not be registered with the Central Bank of Uruguay to be publicly offered in Uruguay. The securities correspond to investment funds that are not investment funds regulated by Uruguayan law 16,774 dated 27 September 1996, as amended.Where applicable, the Manager may determine to terminate any arrangements made for marketing the Shares in one or more jurisdictions in accordance with the AIFM Directive and UCITS Directive respectively, as may be amended from time to time.Investors and potential investors can obtain a summary of investor rights and information on access to collective redress mechanisms at www.pinebridge.com/investorrights.Last updated 04 January 2022.