Threadneedle (Lux) Global Opportunities Bond Fund
For investment professional use only
Jim Cielinski October 2013
Distinguishing features
Threadneedle (Lux) Global Opportunities Bond Fund
* Note this is not guaranteed
Source: Threadneed...
How Threadneedle Approaches Absolute Return Fixed Income
3
 Aim for positive returns in any rolling twelve month period, ...
 Portfolio Manager
 Ultimately responsible for fund performance
 Responsible for adherence to risk budget
 Ensure dive...
Total return 12 month projections for various market environments from 31 August 2013
Portfolio Construction
Pinpointing t...
Risk Budgeting is the Foundation for Sustainable Performance
6
 The fund does not allow any one strategy to
overwhelm the...
Threadneedle (Lux) Global Opportunities Bond Fund
Gross Performance in USD
Source: Threadneedle Investments as at 31 Augus...
 The fund diversifies across alpha sources
 The fund typically employs 80-100 trades, although the largest 10-12 trades ...
 Incorporating the best ideas of each of Threadneedle’s Fixed Income strategy teams.
 Insulation from higher interest ra...
AP1
Appendices: Current Themes
Trade examples
Performance Charts
Team and Biographies
Current Themes in Fixed Income
11
 Investors: The search for yield will continue
 Asset Managers: A focus on alpha will ...
We have witnessed a meaningful short term correction in rates
PT/12/02041
Government Bond Yields
(UK, US and German 10 yea...
1,1
1,2
1,3
1,4
1,5
1,6
1,7
1,8
2006 2007 2008 2009 2010 2011 2012 2013
EUR/CHF
 Background
 Switzerland was perceived a...
Source: Threadneedle Investments, Bloomberg September 2013
14PT/12/02041
0
1
2
3
4
5
6
2007 2009 2011 2013 2015 2017
%
US ...
 Opportunities exists within the credit markets to add alpha without taking “default risk”
 The corporate credit team ha...
 RBS Lower Tier 2 4.5pct January 2016 versus RBS Sub CDS
 Trade details
 Bought RBS Lower Tier 2 January 2016 in Septem...
Threadneedle (Lux) Global Opportunities Bond Fund
Gross Performance in USD
Source: Threadneedle Investments as at 31 Augus...
Threadneedle (Lux) Global Opportunities Bond Fund
Monthly Performance in USD
Source: Threadneedle Investments as at 31 Aug...
Threadneedle (Lux) Global Opportunities Bond Fund
Attribution Summary
Source: Threadneedle Investments as at 31 August 201...
Threadneedle Fixed Income Team
Threadneedle as at 1 July 2013
Jim Cielinski
Head of Fixed Income
FI Dealing and Cash Manag...
Robust track record in managing corporate credit
Threadneedle Credit Opportunities - Gross monthly performance
Fund data s...
Robust track record in managing corporate credit
Threadneedle European Corporate Bond Fund (Gross Performance in EUR)
Sour...
Biography
JIM CIELINSKI
Head of Fixed Income
Jim Cielinski joined Threadneedle in 2010 as Head of Fixed Income. In this ro...
Biography
24
DAVID OLIPHANT
Fund Manager
David began his career in 1989 with Eagle Star Investment Managers1 as a Sterling...
Biography
MARTIN HARVEY
Fund Manager
Martin Harvey joined Threadneedle in July 2006 and manages or co-manages a number of ...
The following key risks apply to the Threadneedle (Lux) Global Opportunities Bond Fund:
Currency Risk – Where investments ...
The following key risks apply to the Threadneedle European Corporate Bond Fund:
Currency Risk - Where investments are made...
Currency Risk – Where investments are made in assets that are denominated in foreign currency, changes in exchange rates m...
For internal use and for Professional and/or Qualified Investors only (not to be used with or passed on to retail clients)...
Please read the Prospectus before investing.
For Swiss investors: Subscriptions to a Fund may only be made on the basis of...
Threadneedle Investment Funds ICVC (“TIF”) is an open-ended investment company structured as an umbrella company, incorpor...
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20131003 global ops - citiwire paris

  1. 1. Threadneedle (Lux) Global Opportunities Bond Fund For investment professional use only Jim Cielinski October 2013
  2. 2. Distinguishing features Threadneedle (Lux) Global Opportunities Bond Fund * Note this is not guaranteed Source: Threadneedle Investments as at 31 August 2013. 2PT/12/01216  Incorporating best ideas from across the Fixed Income team  Macro Strategies: Duration, Yield Curve, Currency  Asset Allocation  Securitised EMD and Corporate Credit Strategies  Focus on relative value opportunities and producing consistent alpha Best Ideas  Consistent positive track-record since inception  Exceeded performance target of 4.5pct per annum since inception Consistent Alpha Multi- disciplinary team  Expertise across fixed income markets  Firm-wide co-operation & debate strengthen investment conclusions Fund Manager Jim Cielinski Benchmark Citigroup 1 Month deposit index Target Tracking Error 5-7pct tracking error over a market cycle Fund size 229 million USD Fund launch date Aug 2011 Aim to generate positive returns in excess of the benchmark plus 4.5%* (gross of fees) in any 12 month period, irrespective of market conditions
  3. 3. How Threadneedle Approaches Absolute Return Fixed Income 3  Aim for positive returns in any rolling twelve month period, and manage risk in a manner consistent with that objective.  The aim of fixed income in a portfolio is to: 1) Provide income and return 2) Protect wealth 3) Provide diversification Absolute return must seek ways to satisfy these goals.  A focus on alpha rather than beta, requiring a constant emphasis on relative value strategies  Seek the best risk-adjusted returns from across the fixed income markets, regardless of sector  Seek low-to-moderate correlations with interest rates and risk premia, but not zero correlation  Limited interest rate risk; investment grade quality
  4. 4.  Portfolio Manager  Ultimately responsible for fund performance  Responsible for adherence to risk budget  Ensure diversification across performance drivers, avoiding excessive correlations that could lead to unintended risks  Strategy teams  Propose best ideas within their respective strategies  Measured on the performance of the trade ideas that are incorporated into the fund Combining Ownership and Teamwork 4PT/12/01108 Global Opportunities Bond Fund Asset Allocation Team Securitized Credit Team Investment Grade Corporate Credit Team High Yield Corporate Credit Team Developed Market Macro Team Emerging Market Macro Team
  5. 5. Total return 12 month projections for various market environments from 31 August 2013 Portfolio Construction Pinpointing the best risk-adjusted returns Source: Bloomberg, Threadneedle as at 31 August 2013. * Additional default rates and recovery values assumed 3.7% 0.6% -3.2% 2.4% 2.4% 0.7% 4.4% 8.8% 10.5% -4.6% 3.6% 8.6% -8% -4% 0% 4% 8% 12% Double dip Slow growth Recovery US Treasuries USD Investment Grade USD Emerging Market Sovereign US High Yield 5PT/12/01953  Identify best ideas  Apply common scenarios to a range of assets  Identify best risk-adjusted returns  Coordinate with broader fixed income team to implement ideas
  6. 6. Risk Budgeting is the Foundation for Sustainable Performance 6  The fund does not allow any one strategy to overwhelm the others  Maximum risk is set at 2x target risk in each strategy  Diversification improves risk control  A broad opportunity set allows the fund to access the best risk-adjusted returns across the cycle. Contribution to portfolio risk (Total 6.10%) Duration & yield curve 1.00% Country selection 0.80% Currency 0.90% Strategic (short duration) 1.70%Cross-asset class 1.10% Security Selection: OECD sovereign 0.60% Security Selection: Emerging market 0.75% Security Selection: High yield 0.75% Security Selection: Investment grade corporate 0.60% Security Selection: Securitised (ABS/MBS) 0.75%
  7. 7. Threadneedle (Lux) Global Opportunities Bond Fund Gross Performance in USD Source: Threadneedle Investments as at 31 August 2013. Past performance is not a guide to future performance. 7 -0.54 -1.45 0.31 1.12 3.35 6.04 6.04 0.01 0.04 0.10 0.13 0.20 0.23 0.23 1 Month 3 Month 6 Month Year to Date 1 Year Annualised 2 Year Annualised Since Fund Inception (Sep 2011) Annualised Global Opportunities Bond Fund (Gross, USD) CITIGROUP USD Euro Deposit 1m Performance (%) 1 Month 3 Month 6 Month Year to Date 1 Year Annualised 2 Year Annualised Since Fund Inception (Sep 2011) Annualised Global Opportunities Bond Fund (Gross, USD) -0.54 -1.45 0.31 1.12 3.35 6.04 6.04 CITIGROUP USD Euro Deposit 1m 0.01 0.04 0.10 0.13 0.20 0.23 0.23 Excess Return -0.55 -1.49 0.21 0.99 3.14 5.79 5.79
  8. 8.  The fund diversifies across alpha sources  The fund typically employs 80-100 trades, although the largest 10-12 trades may account for roughly half the risk  Overall  Interest Rate Duration: 0.6 years  Credit Spread Duration: 2.5 years  Average credit rating: BBB+  Asset Allocation  Long 0.35 years HY (focus on BB credit rating sector)  Long 0.80 years Corporate IG (primarily short maturity)  Long 1.20 years EMD (external sovereign and quasi sovereign)  Long HY CDX Index vs. US IG (beta-adjusted) Current Strategy PT/12/01697 Source: Threadneedle as at 31 August 2013 8  Rates  Short Euro rates vs. Sweden  Short JPY (JGB future)  Long interest-futures vs short longer-dated bond futures in US, Europe and UK  FX  Long USD vs. CHF  Long USD vs. CAD  Long EUR vs. SEK  Long JPY vs. USD
  9. 9.  Incorporating the best ideas of each of Threadneedle’s Fixed Income strategy teams.  Insulation from higher interest rates  Designed to generate alpha rather than be reliant on beta across the cycle  Positive and consistent track record exceeding targets since inception Why Threadneedle for Global Opportunities Bond Fund? PT/12/01697 Past performance is not a guide to future performance. 9
  10. 10. AP1 Appendices: Current Themes Trade examples Performance Charts Team and Biographies
  11. 11. Current Themes in Fixed Income 11  Investors: The search for yield will continue  Asset Managers: A focus on alpha will supplant a fixation on beta as rates begin rising  Economics: The struggle for sustainable growth will create volatility – embrace it!  Markets: The crisis carousel; the ride is not over yet
  12. 12. We have witnessed a meaningful short term correction in rates PT/12/02041 Government Bond Yields (UK, US and German 10 year bond yields) Credit Spreads (investment grade, high yield & emerging market bonds relative to government yields) Source: Bloomberg, September 2013. 12 Spreads are attractive; core bond yields are not 0 2 4 6 8 10 12 91 93 95 97 99 01 03 05 07 09 11 13 Yield(pct) UK US Germany 0 200 400 600 800 1000 1200 1400 1600 1800 2000 97 99 01 03 05 07 09 11 13Spread(bps) High Yield Investment Grade Emerging Government
  13. 13. 1,1 1,2 1,3 1,4 1,5 1,6 1,7 1,8 2006 2007 2008 2009 2010 2011 2012 2013 EUR/CHF  Background  Switzerland was perceived as the ultimate safe haven through to the financial crisis resulting in an excessive demand for the Swiss Francs  As a result, the significant appreciation of the Swiss franc posed a threat to the Swiss economy and increased the risks of a more severe deflationary environment  Swiss National Bank announced a minimum exchange rate of SFr 1.20 per euro  Rationale  Expectation of a reversal in the exchange rate as nominal and real rates on SFr deposits become negative  Zero to slightly negative returns combined with the depreciation in the SFr will result in a mass exodus from the SFr and the depreciation in the Swiss Franc  Risk on environment improves causing outflows from SFr into higher yielding countries and riskier return assets Trade Example Strategic Long EUR/CHF 13 Announcement by SNB to implement a minimum exchange rate 3 years of appreciation as CHF claims safe haven status Will we see a return to historic levels? Source: Threadneedle Investments, Bloomberg September 2013 EUR CHF Cross Rate
  14. 14. Source: Threadneedle Investments, Bloomberg September 2013 14PT/12/02041 0 1 2 3 4 5 6 2007 2009 2011 2013 2015 2017 % US 10 yr ECB rates Fed funds Our view (on US rates) Trade Example Rate expectations are too aggressive  Long short dated rates  In anticipation that the forward path of policy rates is too aggressive  Tepid growth and inflation will allow central banks to adhere to forward guidance  A long position in short dated interest rates now provides an attractive hedge to a risk-off environment. Expected path of short term interest rates
  15. 15.  Opportunities exists within the credit markets to add alpha without taking “default risk”  The corporate credit team has had a positive view on subordinated financial debt from select issuers, for example RBS, over the past few years, this view has been implemented using directional trades  However a number of opportunities have emerged where significant alpha can be gained on an RV basis, by hedging a subordinate financial bond using the CDS market  This limits the effect of an issuer default or tail risk on the combined trade Trade Example Security Selection 15PT/12/01953
  16. 16.  RBS Lower Tier 2 4.5pct January 2016 versus RBS Sub CDS  Trade details  Bought RBS Lower Tier 2 January 2016 in September 2011, callable at par from 2011. Bought at 70.01 which equates to a YTM of 959bps  Market assuming bonds will not be called before maturity  Against this bought protection on RBS sub to March 2016 at a spread of 761bps  In March 2012 bonds were tendered at 86 for exchange into RBS 10.5pct 10yr nc 5 at a price of 99.87. The new bonds traded post issue at 104  CDS spreads had since tightened in to approximately 560 bps by March 2012  If RBS does improve the fund picks up the option on a par call (less unlikely) or a liability management exercise (which is what happened)  Resulting in mark to market profit of around 10pts (and no default risk) in March 2012 Trade Example Security Selection 16PT/12/01953
  17. 17. Threadneedle (Lux) Global Opportunities Bond Fund Gross Performance in USD Source: Threadneedle Investments as at 31 August 2013. Past performance is not a guide to future performance. 17 -0.54 -1.45 0.31 1.12 3.35 6.04 6.04 0.01 0.04 0.10 0.13 0.20 0.23 0.23 1 Month 3 Month 6 Month Year to Date 1 Year Annualised 2 Year Annualised Since Fund Inception (Sep 2011) Annualised Global Opportunities Bond Fund (Gross, USD) CITIGROUP USD Euro Deposit 1m Performance (%) 1 Month 3 Month 6 Month Year to Date 1 Year Annualised 2 Year Annualised Since Fund Inception (Sep 2011) Annualised Global Opportunities Bond Fund (Gross, USD) -0.54 -1.45 0.31 1.12 3.35 6.04 6.04 CITIGROUP USD Euro Deposit 1m 0.01 0.04 0.10 0.13 0.20 0.23 0.23 Excess Return -0.55 -1.49 0.21 0.99 3.14 5.79 5.79
  18. 18. Threadneedle (Lux) Global Opportunities Bond Fund Monthly Performance in USD Source: Threadneedle Investments as at 31 August 2013. Past performance is not a guide to future performance. 18 Performance (%) Sep 2011 Oct 2011 Nov 2011 Dec 2011 2011 Global Opportunities Bond Fund (Gross, USD) 0.61 1.34 0.21 0.22 2.38 USD Libor 1 Month 0.02 0.02 0.02 0.02 0.08 Excess Return 0.59 1.31 0.19 0.20 2.29 Performance (%) Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 2012 Global Opportunities Bond Fund (Gross, USD) 1.46 1.00 0.60 -0.10 0.15 1.05 0.73 1.16 1.15 0.65 -0.09 0.47 8.23 USD Libor 1 Month 0.02 0.02 0.02 0.02 0.02 0.03 0.02 0.03 0.02 0.01 0.02 0.02 0.25 Excess Return 1.44 0.97 0.58 -0.12 0.14 1.02 0.7 1.13 1.14 0.64 -0.11 0.45 7.98 Performance (%) Jan 2013 Feb 2013 Mar 2013 Apr 2013 May 2013 Jun 2013 Jul 2013 Aug 2013 YTD 2013 Global Opportunities Bond Fund (Gross, USD) 1.41 -0.60 -0.59 1.32 1.06 -1.89 1.00 -0.54 1.12 USD Libor 1 Month 0.02 0.02 0.02 0.02 0.02 0.02 0.01 0.01 0.13 Excess Return 1.40 -0.62 -0.61 1.31 1.04 -1.91 0.99 -0.55 0.99
  19. 19. Threadneedle (Lux) Global Opportunities Bond Fund Attribution Summary Source: Threadneedle Investments as at 31 August 2013. Past performance is not a guide to future performance. 19 Attribution (%) Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 TOTAL 2012 Duration 0.23 -0.27 -0.35 0.30 0.25 -0.12 0.24 -0.05 -0.02 0.01 0.19 -0.17 0.24 Country 0.03 -0.22 0.05 0.06 0.26 -0.16 0.13 -0.03 -0.01 0.02 -0.03 0.07 0.17 Curve -0.05 0.14 0.07 -0.09 0.02 0.07 0.02 0.00 0.01 0.03 0.05 0.10 0.38 Inflation 0.00 0.00 0.00 -0.01 0.03 -0.01 0.05 0.03 0.03 0.04 0.00 0.00 0.17 Allocation 1.25 1.35 0.58 -0.33 -0.79 0.62 0.53 0.54 0.80 0.54 -0.20 0.45 5.58 Selection 0.33 0.08 -0.04 0.07 -0.10 0.57 0.14 0.42 -0.01 0.01 0.05 0.10 1.67 Currency -0.35 -0.03 0.30 -0.14 0.42 0.01 -0.46 0.52 0.32 0.12 -0.27 0.01 0.45 Reporting Residual 0.03 -0.07 0.01 0.04 0.06 0.05 0.08 -0.26 0.03 -0.12 0.12 -0.09 -0.10 Total Portfolio 1.46 1.00 0.60 -0.10 0.15 1.05 0.73 1.16 1.15 0.65 -0.09 0.47 8.23 Attribution (%) Jan 2013 Feb 2013 Mar 2013 Apr 2013 May 2013 Jun 2013 Jul 2013 Aug 2013 YTD 2013 Duration -0.16 -0.03 0.17 0.08 -0.33 -0.30 0.01 -0.11 -0.67 Country -0.15 0.05 -0.07 0.22 -0.29 -0.71 0.14 -0.27 -1.08 Curve 0.10 -0.02 -0.19 0.12 0.21 0.13 -0.15 0.28 0.48 Inflation 0.01 -0.01 0.03 -0.02 0.02 0.01 0.01 0.01 0.06 Allocation 1.06 -0.23 0.15 0.72 -0.11 -1.24 0.74 -0.44 0.65 Selection 0.23 0.09 -0.25 -0.01 0.32 0.16 0.71 -0.11 1.14 Currency 0.32 -0.46 -0.44 0.21 1.25 0.05 -0.46 0.11 0.58 Reporting Residual 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Portfolio 1.41 -0.60 -0.59 1.32 1.06 -1.89 1.00 -0.54 1.12
  20. 20. Threadneedle Fixed Income Team Threadneedle as at 1 July 2013 Jim Cielinski Head of Fixed Income FI Dealing and Cash Management Emma Photis Paul Witchalls Mandy Coatsworth Gabriel Heskin Cindy Larke Sarah Kendrick Macro Developed Markets Matthew Cobon Dave Chappell Martin Harvey Richard Stevens Matt Rees Alexander Batten Cindy Larke Emerging Markets Henry Stipp John Peta Matthew Cobon Clifford Lau Zara Kazaryan Mindaugas Lepeska Gabriel Heskin Xiong Wei Poh 20 Securitized and Corporate Credit High Yield Barrie Whitman Michael Poole David Backhouse Jeff Mueller Jenny Wong Gareth Simmons Craig Nicol Investment Grade David Oliphant Simon Bond Alasdair Ross Zara Kazaryan David Morgan Paul Smillie Jonathan Pitkänen Arabella Duckworth Ryan Staszewski Tammie Chan Xiong Wei Poh Karan Samtani Sarah Kendrick Securitized Henry Cooke Ashley Burtenshaw Steven Fleming Shane Stanton Michael Groom Commodities David Donora Daniel Belchers Nicolas Robin Ullaas Misra Asset Allocation Jim Cielinski Alasdair Ross Henry Stipp Dave Chappell Henry Cooke Michael Poole Client Portfolio Management James Waters Andrew Key Quantitative Analysis Sanjay Roy Ullaas Misra Alessandro Tarello
  21. 21. Robust track record in managing corporate credit Threadneedle Credit Opportunities - Gross monthly performance Fund data sourced from Threadneedle/Morningstar, in €. Index data provided by Thomson Financial DataStream. Fund data is based on Global Close. Fund data is gross of T.E.R to facilitate comparison with the indices *Inception date used for performance calculation is 30 April 2009; actual launch date was 29 April 2009 21 2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Threadneedle Credit Opportunities Fund 0.87% 1.10% 1.63% 0.62% 1.11% 0.85% 0.98% 0.77% 7.94% Citigroup EUR 1 Month Euro Deposit Index 0.08% 0.06% 0.05% 0.04% 0.02% 0.02% 0.01% 0.02% 0.30% 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Threadneedle Credit Opportunities Fund 1.08% 0.42% 1.17% 1.02% -0.50% 0.28% 1.15% 0.59% 1.03% 0.93% -0.02% 0.87% 8.38% Citigroup EUR 1 Month Euro Deposit Index 0.02% 0.02% 0.02% 0.02% 0.02% 0.03% 0.02% 0.03% 0.03% 0.04% 0.06% 0.06% 0.37% 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Threadneedle Credit Opportunities Fund 0.95% 0.77% 0.44% 0.39% 0.37% -0.12% 0.16% -1.84% -1.55% 2.04% -1.12% 1.57% 2.01% Citigroup EUR 1 Month Euro Deposit Index 0.06% 0.06% 0.07% 0.07% 0.10% 0.09% 0.10% 0.11% 0.10% 0.10% 0.10% 0.09% 1.05% 2012 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Threadneedle Credit Opportunities Fund 1.60% 1.74% 0.76% 0.18% -0.31% 0.61% 0.86% 0.62% 0.65% 0.32% 0.18% 0.33% 7.90% Citigroup EUR 1 Month Euro Deposit Index 0.08% 0.08% 0.08% 0.02% 0.02% 0.02% 0.03% 0.01% 0.01% 0.01% 0.01% 0.00% 0.28% PT/12/01687 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Threadneedle Credit Opportunities Fund 0.34% 0.52% 0.44% 0.51% 0.11% -0.41% 0.63% 0.38% 2.55% Citigroup EUR 1 Month Euro Deposit Index 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
  22. 22. Robust track record in managing corporate credit Threadneedle European Corporate Bond Fund (Gross Performance in EUR) Source: Threadneedle Investments as at 31 August 2013. Past performance is not a guide to future performance. 22 -0.21 -0.89 1.47 5.92 5.99 6.86 -0.24 -1.08 0.67 4.37 4.46 6.18 1 Month 3 Month Year to Date 1 Year Annualised 3 Years Annualised 5 Years Annualised European Corporate Bond Fund (Gross, EUR) iBoxx Euro Corporate Performance (%) 1 Month 3 Month Year to Date 1 Year Annualised 3 Years Annualised 5 Years Annualised European Corporate Bond Fund (Gross, EUR) -0.21 -0.89 1.47 5.92 5.99 6.86 iBoxx Euro Corporate -0.24 -1.08 0.67 4.37 4.46 6.18 Excess Return 0.03 0.19 0.79 1.48 1.47 0.64
  23. 23. Biography JIM CIELINSKI Head of Fixed Income Jim Cielinski joined Threadneedle in 2010 as Head of Fixed Income. In this role he is responsible for the overall management of the fixed income business, including investment process, product development and investment strategy. He is also a key participant in Threadneedle’s asset allocation process. Prior to joining Threadneedle Jim spent 12 years at Goldman Sachs, leaving as Head of Global Credit – Investment Grade. He has also held senior investment roles at Utah Retirement Systems and Brown Brothers Harriman. Jim graduated from the University of Utah in 1983 with a BSc in Finance and gained an MBA from New York University in 1988. Threadneedle start date: 2010 Industry start date: 1983 23
  24. 24. Biography 24 DAVID OLIPHANT Fund Manager David began his career in 1989 with Eagle Star Investment Managers1 as a Sterling Bond analyst. He progressed to managing multi-currency portfolios for Eagle Star and then from 1994, for Threadneedle. David chairs the Fixed Income Themes meeting and is Head of Investment Grade Credit. He graduated in 1988 with an honours degree in economics from the University of St Andrews. He is an associate member of the UK Society of Investment Professionals. Threadneedle start date: 1994 Industry start date: 1989 1 Eagle Star Investment Managers became part of Threadneedle in May 1994.
  25. 25. Biography MARTIN HARVEY Fund Manager Martin Harvey joined Threadneedle in July 2006 and manages or co-manages a number of global and European bond portfolios. He has been supporting Threadneedle’s Absolute Return capability since 2007, with specific responsibility for maintaining the short-dated bond portfolio, idea generation and monitoring the overlay strategies. He also plays an active role in the formulation of the investment department’s economic forecasts. Before joining Threadneedle, Martin worked for HSBC as a research assistant to the Chief Economist. He graduated in 2006 from the University of Bath with a First Class BSc (Hons) in Economics and is a CFA Charterholder. Threadneedle start date: 2006 Industry start date: 2004 25
  26. 26. The following key risks apply to the Threadneedle (Lux) Global Opportunities Bond Fund: Currency Risk – Where investments are made in assets that are denominated in multiple currencies, changes in exchange rates may affect the value of the investments. Investor Currency Risk – Where investments in the fund are in currencies other than your own, changes in exchange rates may affect the value of your investments No Capital Guarantee – Positive returns are not guaranteed and no form of capital protection applies. Issuer Risk – The fund invests in securities whose value would be significantly affected if the issuer either refused to pay or was unable to pay or perceived to be unable to pay. Liquidity Risk – The fund may hold assets that are not always readily saleable without suffering a discount to fair value. The portfolio may have to lower the selling price, sell other investments or forego another, more appealing investment opportunity. Inflation Risk – Most bond and cash funds offer limited capital growth potential and an income that is not linked to inflation. Therefore, inflation can affect the real value of capital and income over time. Interest Rate Risk – Changes in interest rates are likely to affect the fund’s value. In general, as interest rates rise, the price of a fixed rate bond will fall, and vice versa. Valuation Risk – The fund’s assets may sometimes be difficult to value objectively and the actual value may not be recognised until assets are sold. Short Selling Risk – Short selling intends to make a profit from falling prices. However if the value of the underlying investment increases, the value of the short position will decrease. The potential losses are unlimited as the prices of the underlying investments can increase very significantly in a short space of time. Leverage Risk – Leverage amplifies the effect that a change in the price of an investment has on the fund’s value. As such, leverage can enhance returns to investors but can also increase losses, including losses in excess of the amount invested. Investment in Derivatives – The Investment Policy of the fund allows it to invest materially in derivatives. Volatility Risk – The fund may exhibit significant price volatility. Key Risks 26PT/12/01405
  27. 27. The following key risks apply to the Threadneedle European Corporate Bond Fund: Currency Risk - Where investments are made in assets that are denominated in multiple currencies, changes in exchange rates may affect the value of the investments. Investor Currency Risk - Where investments in the fund are in currencies other than your own, changes in exchange rates may affect the value of your investments Issuer Risk - The fund invests in securities whose value would be significantly affected if the issuer either refused to pay or was unable to pay or perceived to be unable to pay. Liquidity Risk - The fund may hold assets that are not always readily saleable without suffering a discount to fair value. The portfolio may have to lower the selling price, sell other investments or forego another, more appealing investment opportunity. Inflation Risk - Most bond and cash funds offer limited capital growth potential and an income that is not linked to inflation. Therefore, inflation can affect the real value of capital and income over time. Interest Rate Risk - Changes in interest rates are likely to affect the fund’s value. In general, as interest rates rise, the price of a fixed rate bond will fall, and vice versa. Key Risks 27PT/12/01405
  28. 28. Currency Risk – Where investments are made in assets that are denominated in foreign currency, changes in exchange rates may affect the value of the investments. No capital guarantee - Positive returns are not guaranteed and no form of capital protection applies. Issuer - The fund invests in securities whose value would be significantly affected if the issuer either refused to pay or was unable to pay. Liquidity Risk - The fund invests in assets that are not always readily saleable without suffering a discount to fair value. The portfolio may have to lower the selling price, sell other investments or forego another, more appealing investment opportunity. Inflation Risk - Most bond funds offer limited capital growth potential and an income that is not linked to inflation. Therefore, inflation can affect the value of capital and income over time. Interest Rate Risk - Changes in interest rates are likely to affect the fund’s value. In general, as interest rates rise, the price of a fixed rate bond will fall, and vice versa. Duration is a measure of the extent to which this is the case, with a longer duration suggesting higher sensitivity to interest rate moves. Volatility Risk - The fund may exhibit significant price volatility. Short selling risk – Short selling is designed to make a profit from falling prices. However, if the value of the underlying investment increases, the short position will negatively affect the fund’s value. Leverage Risk - Leverage amplifies the effect that a change in the price of an investment has on the fund’s value. As such, leverage can enhance returns to investors but can also increase losses. Derivatives Risk - Investment in derivatives may result in losses in excess of the amount invested. The Key Risks of Threadneedle Credit Opportunities Fund 28New Template May 2012
  29. 29. For internal use and for Professional and/or Qualified Investors only (not to be used with or passed on to retail clients) Past performance is not a guide to future performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Threadneedle (Lux) is an investment company with variable capital (Société d’investissement à capital variable, or "SICAV") formed under the laws of the Grand Duchy of Luxembourg. The SICAV issues, redeems and exchanges shares of different classes, which are listed on the Luxembourg Stock Exchange. The management company of the SICAV is Threadneedle Management Luxembourg S.A, who is advised by Threadneedle Asset Management Ltd. and/or selected sub-advisors. The SICAV is registered in Austria, Belgium, France, Finland, Germany, Hong Kong, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, Switzerland, Taiwan and the UK; however, this is subject to applicable jurisdictions and some sub-funds and/or share classes may not be available in all jurisdictions. Shares in the Funds may not be offered to the public in any other country and this document must not be issued, circulated or distributed other than in circumstances which do not constitute an offer to the public and are in accordance with applicable local legislation. Threadneedle (Lux) is authorised in Spain by the Comisión Nacional del Mercado de Valores (CNMV) and registered with the relevant CNMV's Registered with number 177. Shares in the Funds may not be offered, sold or delivered directly or indirectly in the United States or to or for the account or benefit of any “U.S. Person”, as defined in Regulation S under the 1933 Act. This material is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services. Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document, as well as the latest annual or interim reports and the applicable terms & conditions. Please refer to the ‘Risk Factors’ section of the Prospectus for all risks applicable to investing in any fund and specifically this Fund. The above documents are available in English, French, German, Portuguese, Italian, Spanish and Dutch (no Dutch Prospectus) and can be obtained free of charge on request by writing to the SICAV’s registered office at 31, Z.A. Bourmicht, L-8070 Bertrange, Grand Duchy of Luxembourg and/or from in Austria: Erste Bank, Graben 21 A-1010 Wien; in Belgium: J.P. Morgan Chase Bank Brussels, 1, Boulevard du Roi Albert II, 1210 Brussels; in France from CACEIS Bank, 1/3 Place Valhubert, 75013 Paris; in Finland from Eufex Bank Plc, Keilaranta 19, 02150 Espoo; in Germany from JP Morgan AG, Junghofstr. 14, 60311 Frankfurt, in the UK from JPMorgan Worldwide Securities Serv Het compartiment is op grond van artikel 1:107 van de Wet op het financieel toezicht opgenomen in het register dat wordt gehouden door de Autoriteit Financiële Markten. / Pursuant to article 1:107 of the Act of Financial Supervision, the subfund is included in the register that is kept by the AFM. Important notes 29PL5/09/193
  30. 30. Please read the Prospectus before investing. For Swiss investors: Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document, as well as the latest annual or interim reports, which can be obtained free of charge on request, and the applicable Terms & Conditions. Please refer to the ‘Risk Factors’ section of the Prospectus for all risks applicable to investing in any fund and specifically this Fund. The above documents and the instrument of incorporation can be obtained from our representative and Paying Agent in Switzerland, RBC Investor Services Bank S.A., Esch-sur-Alzette, succursale de Zurich, Badenerstrasse 567, Case Postale 101, CH-8066 Zurich. The mention of any specific shares or bonds should not be taken as a recommendation to deal. This document is a marketing communication. The research and analysis included in this document have not been prepared in accordance with the legal requirements designed to promote its independence and have been produced by Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed. This presentation and its contents are confidential and proprietary. The information provided in this presentation is for the sole use of those attending the presentation. It may not be reproduced in any form or passed on to any third party without the express written permission of Threadneedle Investments. This presentation is the property of Threadneedle Investments and must be returned upon request. Threadneedle Management Luxembourg S.A. Registered with the Registre de Commerce et des Societes (Luxembourg), Registered No. B 110242, 74, rue Mühlenweg, L-2155 Luxembourg, Grand Duchy of Luxembourg. In the UK issued by Threadneedle Asset Management Limited. Registered in England and Wales, Registered No. 573204, 60 St Mary Axe, London EC3A 8JQ, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. Threadneedle Investments is a brand name and both the Threadneedle Investments name and logo are trademarks or registered trademarks of the Threadneedle group of companies. ices, 60 Victoria Embankment, London EC4Y 0JP; in Sweden from Skandinaviska Enskilda Banken AB (publ), Sergels Torg 2, 106 40 Stockholm. Important notes 30PL5/09/193
  31. 31. Threadneedle Investment Funds ICVC (“TIF”) is an open-ended investment company structured as an umbrella company, incorporated in England and Wales, authorised and regulated in the UK by the Financial Conduct Authority (FCA) as a UCITS scheme. TIF is registered for public offer in Austria, Belgium, Finland, France, Germany, Hong Kong, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Switzerland (some sub-funds only) and the UK. Shares in the Funds may not be offered to the public in any other country and this document must not be issued, circulated or distributed other than in circumstances which do not constitute an offer to the public and are in accordance with applicable local legislation. TIF is registered with Danish Financial Services Authority for marketing to professional investors only. The Funds may not be offered or sold to retail investors in Denmark. TIF is authorised in Spain by the Comisión Nacional del Mercado de Valores (CNMV) and registered with the relevant CNMV's Registered with number 482. Income may fluctuate in accordance with market conditions and taxation arrangements. The difference at any one time between the sale and repurchase price of units in the scheme means that the investment should be viewed as a medium to long term investment. Investments may be subject to sudden and large falls in value, and the investor could lose the total value of the initial investment. Shares in the Funds may not be offered, sold or delivered directly or indirectly in the United States or to or for the account or benefit of any “U.S. Person”, as defined in Regulation S under the 1933 Act. Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document, as well as the latest annual or interim reports and the applicable terms & conditions. Please refer to the ‘Risk Factors’ section of the Prospectus for all risks applicable to investing in any fund and specifically this Fund. The above documents are available in English, French, German, Portuguese, Italian, Spanish and Dutch (no Dutch Prospectus) and can be obtained free of charge on request from: - in Austria: Raiffeisen Zentralbank Österreich AG, Am Stadtpark 9, 1030 Wien (TIF and TSIF), and Erste Bank, Graben 21 A-1010 Wien (TFIF); - in Belgium: J.P. Morgan Chase Bank Brussels, 1, Boulevard du Roi Albert II, 1210 Brussels; - in France: BNP Paribas Securities Services, 66 rue de la Victoire, 75009 Paris; - in Finland: Eufex Bank Plc, Keilaranta 19, 02150 Espoo, Finland (TIF) - in Germany: JP Morgan AG, Junghofstr. 14, 60311 Frankfurt, - in Ireland: J.P. Morgan Bank Administration Services (Ireland) Limited, J.P. Morgan House International Financial Services Centre, Dublin 1 - in Italy: State Street Bank S.p.A., via Col Moschin 16, 20136 Milano. - in Luxembourg: State Street Bank Luxembourg S.A., 49 Avenue J. F. Kennedy, 1855 Luxembourg; - in the Netherlands: Fortis Intertrust, Rokin 55, 1012 KK Amsterdam; - in Spain: any appointed distributor listed on the Spanish Financial Regulator’s website (www.cnmv.es); - in UK; Threadneedle Investments’ Client Services department P.O. Box 1331, Swindon SN38 7TA. For Swiss Investors: Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document , as well as the latest annual or interim reports, which can be obtained free of charge on request, and the applicable terms & conditions. Please refer to the ‘Risk Factors’ section of the Prospectus for all risks applicable to investing in any fund and specifically this Fund. The above documents and the instrument of incorporation are available on request from our representative and Paying Agent in Switzerland, BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16,CH-8002 Zurich. Issued by Threadneedle Investment Services Limited. Registered in England and Wales, Registered No. 3701768, St Mary Axe, London EC3A 8JQ, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority. Important notes 31PL5/09/193

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