Barings final 2012 nma - multi asset fund presentation faPresentation Transcript
Baring Multi Asset Fund New Model Advisers Conference January 2012 For Professional Advisers only
Multi Asset Fund The Baring Multi Asset team
Team formed in 2002
Drawing on circa 91 investment professionals*
2007 launched Dynamic Asset Allocation Fund
2009 launched Multi Asset Fund
£5.0bn assets under management in the strategy as at 30th November 2011
Source: Barings as at 30 th November 2011 * Investment Professionals as at 1 st December 2011
Multi Asset Fund Our approach
We target RPI+4% absolute returns within 70% of equity risk
Focus on dynamic asset allocation
Recognise that one disastrous year destroys several years’ growth
Source: Barings as at 20th October 2011
Multi Asset Fund Why RPI +4% Source: Barclays Equity Gilt Study 2011, 1899 – 2010 (pg 107 & 126) * Cumulative ~ Annual RPI + 4% = equity like returns with less risk
Multi Asset Fund Has it worked? Source: Barings as at 31.11.11 * Provisional figures only, subject to change Net of fees. Reference to the index is for comparative purposes only. The composite returns should be considered as supplemental information which complements the Multi Asset GBP Inflation/Cash Targeted Solutions: High Return Composite presentation as provided in appendix. Return (%) Risk (%) Past performance is not a guide to future performance Composite return & risk annualised: 1st January 2003 – 30th November 2011*
Multi Asset Fund Risk/Return - Investor Reward Total Return Bid-Bid performance vs. volatility scatter chart over 12 months (from 31 Oct 2010 to 31 Oct 2011) from UK IMA UT and OEICs universe. Rebased in Pounds Sterling Source: FE Analytics , 9 th January 2012 Past performance is not a guide to future performance 7.71 -6.05 G: Henderson - Multi Manager Income & Growth A TR in GB 7.66 -5.56 F: SWIP - MultiManager Diversity A TR in GB 8.24 -4.80 E: Thames River - Distribution A Acc TR in GB 7.01 -0.63 D: Jupiter - Merlin Income Portfolio Acc TR in GB 6.08 -0.35 C: Newton - Real Return TR in GB 4.36 0.43 B: Cazenove – Multi Manager Diversity A Acc TR in GB 3.97 0.69 A: Baring - Multi Asset A Inc TR in GB Ann. Volatility Performance Name Key
Multi Asset Fund 3 months that proved a process – July, August, September 2011 Source: Barings as at 20th October 2011 Past performance is not a guide to future performance -14.2 FTSE All Share -6.0 IMA Cautious Managed Sector Average -1.4 Baring Multi Asset TR in GB Custom Period Performance Customise Columns
Multi Asset Fund Avoiding a disastrous year is key! Dynamic Asset Allocation Fund vs. Cautious Managed Source: Morningstar, 9th January 2012 Past performance is not a guide to future performance -1.85 1.47 Return 01/01/2011 31/12/2011 9.08 10.29 Return 01/01/2010 31/12/2010 6.89 16.32 -15.68 1.57 IMA OE Mixed Investment 20-60% Shares ( Cautious Managed Sector) 38.50 20.23 -5.44 8.86 Baring Dyn Asset Alloc I GBP DAAF vs IMA Cautious Managed Return Return Return Return Group/Investment 17/01/2007 31/12/2011 01/01/2009 31/12/2009 01/01/2008 31/12/2008 17/01/2007 31/12/2007
Multi Asset Fund Rise of Baring Multi Asset Service
2009 Year End AUM £ 9.6m
2010 Year End AUM £25.0m
2011 Year End AUM £95.8m
£5.0bn in our inflation plus strategy (inc. Dynamic Asset Allocation & Multi Asset Funds)
Source: Barings as at 30th November 2011
Master Class New Model Advisers Conference Andrew Cole
Seeking equity like returns with less risk than equities Disciplined process with strong risk controls
Dynamic Asset Allocation Critical Source: Barings as at 31st December 2011 The right asset class at the right time is key 4.7 12.8 42.8 58.1 8.1 11.9 15.6 23.3 Cash UK Bonds Japan Equity Overseas Bonds N. America Equity Emerging Equity Asia ex Japan Gold Bullion 2010 0.5 -1.2 -5.9 -9.7 19.0 22.9 24.0 33.4 -17.6 Emerging Equity -24.4 Europe Equity 4.5 Hedge Funds 0.8 Corporate Bonds -15.2 Europe Equity -29.9 UK Equity 1.8 Corporate Bonds 0.7 UK Bonds -13.1 Japan Equity -31.3 Asia ex Japan -5.5 Property -7.4 Japan Equity -13.0 Asia ex Japan -35.2 Emerging Equity -6.5 Japan Equity -7.5 Overseas Bonds Property 19.4 Europe Equity Cash 15.3 Europe Equity Gold Bullion 30.1 UK Equity UK Bonds 29.0 Asia ex Japan UK Gilts 53.3 Asia ex Japan Gold Bullion 29.6 Gold Bullion Index Linked Gilts 59.4 Emerging Equity Overseas Bonds 37.4 Emerging Equity 2011 2009 2008 2007
Changes to asset allocation since inception Source: Barings, as at 31st December 2011, Gross Exposure DAA Inception date: 16th January 2007; MAF Inception date: 20th March 2009 *Themed Fixed Fund composition: Aug ’07-Feb ’08: 0-3yr Ster bonds. Mar ’09-June ’10: Overseas ILGovt; Aug 10-to date: EMD Dynamic Asset Allocation Fund Multi Asset Fund
Macro Matters Source: Barings as at 31st December 2011 The economy will tell you a lot about earnings Global Growth 12mth Change in MSCI World Earnings (RHS) -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Dec-79 Dec-84 Dec-89 Dec-94 Dec-99 Dec-04 Dec-09 Dec-14 -120.0% -70.0% -20.0% 30.0% 80.0%
European Growth to remain weak
USA & UK retain some flexibility
China Adjusting only, slowly
Financial Repression keeps bond yields low and equities seemly cheap but volatile
Who – credit and at what prices and important discipline
More fixed income like assets available
Source: Barings as at 12th December 2011 Markets to remain volatile still!
Choosing the best investments pragmatically
No obligation to buy Barings
No double charging on Barings funds-100% rebate on long only funds
Large, liquid third party alternatives and property
Index funds if active managers underperform
Source: Barings as at 12th December 2011 Simple & transparent building blocks
What are you being paid to own an asset class? UK Asset Class Risk Premia , January 2012 Government Bonds Breakeven Inflation Rates Credit Spreads Inflation Linked Bonds Source: Barings, January 2012 2.8 3.3 3.8 4.3 4.8 2.3 2.5 2.7 2.9 3.1 3.3 3.5 3.7 3.9 4.1 64 114 164 214 264 314 364 414 464 514 564 614 -0.2 0.3 0.8 1.3 1.8 2.3
What are you being paid to own an asset class? Equities ERP Tradeoff Current Consensus Consensus - 1 Year(s) Ago Consensus - 5 Year(s) Ago Current Tradeoff Tradeoff - 1 Year(s) Ago Tradeoff - 5 Year(s) Ago UK Asset Class Risk Premia , January 2012 Source: Barings, January 2012 0.25% 2.25% 4.25% 6.25% 8.25% 10.25% 12.25% -60% -40% -20% 0% 20% 40% 60% 3% 4% 5% 6% 7%
What are you being paid to own an asset class? US Asset Class Risk Premia , January 2012 Government Bonds Breakeven Inflation Rates Credit Spreads Inflation Linked Bonds Source: Barings, January 2012 2.7 3.2 3.7 4.2 4.7 5.2 5.7 0.5 1.0 1.5 2.0 2.5 72 122 172 222 272 322 372 422 472 522 572 622 672 0.5 1.0 1.5 2.0 2.5 3.0 3.5
What are you being paid to own an asset class? Equities Current Consensus Consensus - 1 Year(s) Ago Consensus - 5 Year(s) Ago Current Tradeoff Tradeoff - 1 Year(s) Ago Tradeoff - 5 Year(s) Ago ERP Tradeoff 1.25% 1.75% 2.25% 2.75% 3.25% 3.75% 4.25% 4.75% 5.25% 5.75% 6.25% Source: Barings, January 2012 US Asset Class Risk Premia , January 2012 -60% -40% -20% 0% 20% 40% 60% 1% 2% 3% 4% 5% 6%
What are you being paid to own an asset class? Source: Barings, January 2012 Europe Asset Class Risk Premia , January 2012 Government Bonds Breakeven Inflation Rates Credit Spreads Inflation Linked Bonds 3.5 4.0 4.5 5.0 5.5 1.7 1.9 2.1 2.3 2.5 2.7 2.9 3.1 3.3 40 90 140 190 240 290 340 390 1.0 1.5 2.0 2.5 3.0
What are you being paid to own an asset class? Equities ERP Tradeoff Current Consensus Consensus - 1 Year(s) Ago Consensus - 5 Year(s) Ago Current Tradeoff Tradeoff - 1 Year(s) Ago Tradeoff - 5 Year(s) Ago Source: Barings, January 2012 Europe Asset Class Risk Premia , January 2012 0.25% 2.25% 4.25% 6.25% 8.25% 10.25% 12.25% -60% -40% -20% 0% 20% 40% 60% 3% 4% 5% 6% 7% 8% 9%
Current Portfolio & Themes (as at 31 st December 2011) Baring Multi Asset Fund Source: Barings as at 31 st December 2011 Risk = standard deviation of annualised return from asset allocation Predicted Risk* 5.55% Fixed Income 47% Alternatives 14% Cash 13% UK Equities 20% Intl Equities 7% 19.8 UK Equity 4.1 Third party 15.7 Direct 5.8 In house Global Equity Emerging Equity 0.5 Third party 7.2 International Equity 0.9 In house 3.1 Third party 0.6 In house Property 0.5 Direct Portfolio Insurance 0.2 Third party Fund of Hedge Funds / Private Equity Commodities 13.6 Alternatives 9.3 Gold ETC 12.6 Cash 3.3 Direct Canadian Gov’t 46.9 Fixed Income Convertible Bonds 3.3 Third party 3.0 In house Corporate Debt 1.9 In house 18.8 Direct Australian Bonds 14.3 2.3 US Gov’t Emerging Market Debt Third party Direct 100% Total: 13% Cash: 53% Direct: 12% In-House: 23% Third Party:
Baring Multi Asset Targeted Return Composite Performance as of 30th September 2011 The Firm’s claim of GIPS compliance has been verified by our Independent Examiners (KPMG Audit plc) for the period from 1st July 1999 to 31st December 2010. Inception of the Firm is 1st July 1999. KPMG’s opinion is available upon request. The firm as defined herein, has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®). A complete list and description of all composites is available on request by sending an email to firstname.lastname@example.org
Baring Multi Asset Targeted Return Composite Performance as of 30th September 2011 The Firm’s claim of GIPS compliance has been verified by our Independent Examiners (KPMG Audit plc) for the period from 1st July 1999 to 31st December 2010. Inception of the Firm is 1st July 1999. KPMG’s opinion is available upon request. The firm as defined herein, has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®). A complete list and description of all composites is available on request by sending an email to email@example.com Composite Multi Asset: GBP Inflation / Cash Targeted Solutions: High Return For the purpose of GIPS compliance, the “Firm” is defined as the investment firm Baring Asset Management Limited (and its relevant subsidiaries which are registered with the appropriate regulatory authorities to undertake investment business in those jurisdictions in which they operate) and Baring Asset Management LLC from 31st December 2010, Baring Asset Management Inc. prior to 31st December 2010, (together hereinafter referred to as “the Firm”). At 27th May 2011 the Private Client Business, comprising both Onshore and Offshore private clients was sold to SG Hambros. From this date all Private Client portfolios that were transferred to SG Hambros (or are in the process of being transferred to SG Hambros) and those Private Client portfolios that have terminated (or are in the process of being terminated) were excluded from the "Firm" as defined herein. This is disclosed as a significant event for the purposes of the GIPS standards. Performance results are total, time-weighted and calculated monthly. Gross-of-fee performance results are presented before management and custody fees but after transaction costs and non-reclaimable foreign withholding taxes. Net-of-fee performance results are presented after management fees, transaction costs and non-reclaimable foreign withholding taxes but before custody fees with the exception of North American commingled funds which include custody fees within the management fee. The actual returns will be reduced by the investment management (advisory) fees and other expenses. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request. The Baring Asset Management pricing policy (or the relevant Fund Administrator pricing policy) is applied to funds in this Composite. These policies include provision that where markets are closed due to holidays or political events, the prices of securities in that market may be adjusted. This may on occasion cause differences to the valuation sources used by the benchmark, and to other funds in the Composite. The Composite is comprised of multi asset accounts managed for Sterling based clients, which can invest across a broad spectrum of assets with an absolute return target. The investments strategy is to take an extended degree of risk in order to seek to achieve a return in line with the accounts investment objectives. The individual portfolios within the composite have the following current target objectives: 3mth LIBOR +4%; CPI +4.5%; CPI +5%; Produce Income; RPI +4% (net of fees), RPI +4.5%; RPI +6%; RPI +7%; To protect Capital & Produce Income; Total Return 7.5%, Total Return 8%, FTSE UK Govt > 15 yr Index. With effect from 1st April 2007 the Composite was renamed from 'Multi Asset Targeted Solutions GBP RPI +4.5% to + 5.5%'. Prior to 1st July 2006 the Composite was named 'Extended Risk Solutions GBP’. To be included in the composite, each account must be managed with a similar mandate for at least one full month. Net-of-fee performance for the Firm is calculated at the constituent account level and deducted monthly using actual client fee schedules. Investment Trusts, Mutual Funds, other Common Investment Funds apply the equivalent standard Institutional Fee scale, which is the maximum fee that institutional clients would be charged for this product. Rebates apply to any Institutional clients invested in Common Investment Funds, thereby the fee that would be charged to Institutional clients would not exceed that deducted. Where performance fee arrangements exist the actual fee paid is applied. Where performance fees are billed annually, in between billing dates the base fee is applied, applying the performance fee for the entire period at the point that it becomes due. The Composite includes a Commingled Vehicle. The Commingled Vehicle Net of fees performance for inclusion in the Composite Net of Fees performance reflects the deduction of the highest applicable management fee ("Model Net Fee") that would be charged based on the fee schedule appropriate to you for this mandate. Please be advised that the Commingled Vehicle may include other participants that are subject to management fees that are inapplicable to you but are in excess of the Model Net Fee. Therefore, the actual performance of all the participants in the Commingled Vehicle on a net-of-fees basis will be different, and may be lower, than the Model Net Fee performance. However, such Model Net Fee performance is intended to provide the most appropriate example of the impact management fees would have by applying management fees relevant to you to the gross performance of the Commingled Vehicle. Composite net-of-fee performance reflects the weighted average of constituent account net-of-fee returns. Based on the above and taking into account individual client fee arrangements the fee deducted over the last 12 months to the stated reporting date for the composite was 0.50%. On January 1st 2003 the investment business of Barings (Guernsey) Limited was re-contracted to Baring Asset Management (C.I.) Limited, a legal subsidiary of Baring Asset Management Limited. The Barings (Guernsey) Limited portfolios included in this composite were therefore not contracted legally to BAM Ltd before January 1st 2003, the track record however is portable for GIPS purposes. This performance is representative of Baring Asset Management’s fully discretionary management capabilities. All similar mandates would be managed by the same team following the same philosophy and process. The Composite contains at least one fund valued using midday GMT prices and exchange rates calculated by the Fund Administrator. This may on occasion cause differences to the valuation and exchange rate sources used by the benchmark, and to other funds in the Composite. At 31st March 2011, the valuation basis for midday valued funds changed to a close of business price in each market, using the 4pm WM/Reuters exchange rate. The valuation was calculated by the Fund Administrator. From 1st April 2011 the valuations will be continue to be valued on a close of business basis, using BAM's internal valuation system. For Private Client portfolios the minimum portfolio size for inclusion in the composite is GBP250,000 Each monthly return for the CPI/RPI is calculated on an average of the monthly rate over the prior 12 months. As at the reporting date 2 portfolios reinvests capital gains and part of income is paid away and the remainder is reinvested, 13 portfolios reinvests capital gains and but not income and 10 portfolios reinvest capital gains and income, (including dividends and other earnings). In accordance with BAM's error correction policy, the annualised since inception return to 31st March 2011 has been restated. The incorrect numbers were; 5.31% gross, 4.87% net, 7.46% RPI +4.5%, 7.12% UK CPI +5%, & 8.39% £ 3 month LIBOR +4%. The corrected figures are; 6.88% gross, 6.42% net, 7.39% RPI +4.5%, 7.08% UK CPI +5%, & 8.46% £ 3 month LIBOR +4%. The inception date of the composite is 30/06/1999. In accordance with BAM’s error correction policy, 3 year ex post annualised standard deviation numbers have been restated for the 3 year periods to the year ends at 2002 & 2003. The amendments are: 2002 composite originally 14.93 now N/A, benchmark originally 0.17 now N/A & 2003 composite originally 13.59 now 13.66, benchmark originally 0.22 now 0.21. Prior to Jan 2001 return data for accounts in the composite was not produced on a monthly basis. As a result there are not 36 monthly observations available for year end 2002 & therefore 3 year annualised standard deviation is not available. This composite may include performance from certain funds that are not offered in the US and not available to US residents. Some portfolios run according to Baring Asset Management’s Multi Asset: GBP Inflation / Cash Targeted Solutions: High Return strategy, have on occasion, used equity index futures for the purpose of adjusting asset exposure, asset allocation, liquidity and efficient portfolio management. Leveraged strategies have not been employed.
For Professional Investors/Advisers only. It should not be distributed to or relied on by Retail Investors. This document is approved and issued by Baring Asset Management Limited, authorised and regulated by the Financial Services Authority and in jurisdictions other than the UK it is provided by the appropriate Baring Asset Management company/affiliate whose name(s) and contact details are specified herein. The information in this document does not constitute investment, tax, legal or other advice or recommendation. It is not an invitation to subscribe and is for information only.
Investment involves risk. The value of any investments and any income generated may go down as well as up and is not guaranteed. Past performance is not a guide to future performance. Where yields have been quoted they are not guaranteed. Changes in rates of exchange may have an adverse effect on the value, price or income of an investment. There are additional risks associated with investments (made directly or through investment vehicles which invest) in emerging or developing markets. Investments in higher yielding bonds issued by borrowers with lower credit ratings may result in a greater risk of default and have a negative impact on income and capital value. Income payments may constitute a return of capital in whole or in part. Income may be achieved by foregoing future capital growth. We reasonably believe that the information contained herein from 3rd party sources, as quoted, is accurate as at the date of publication. The information and any opinions expressed herein may change at any time. Companies and employees of the Baring Asset Management group may hold positions in the investment(s) concerned. This document may include internal portfolio construction guidelines. As guidelines the fund is not required to and may not always be within these limits. These guidelines are subject to change without prior notice and are provided for information purposes only.
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