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  • Remove TER – make key bigger
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Transcript

  • 1. Multi-asset investing: risks and rewards Marcus Brookes – Head of Multi-Manager Robert Thorpe – Head of UK Retail Sales For professional advisers only.
  • 2. Cazenove equity funds - strong sector relative performance
    • Source: Lipper, net income reinvested at 30.12.11
    - - Fund 1 year 3 years 5 years % growth Quartile % growth Quartile % growth Quartile Cazenove UK Smaller Companies Fund 1.2 1 st 131.7 1 st 27.8 1 st Relative to IMA UK Smaller Companies Average 10.3 49.9 26.2 Cazenove UK Opportunities Fund 1.3 1 st 63.6 1 st 28.1 1 st Relative IMA UK All Companies Average 8.4 20.5 27.4 Cazenove UK Equity Income Fund 1.0 1 st 43.2 1 st 9.8 1 st Relative to IMA UK Equity Income Average 3.8 5.9 12.2 Cazenove UK Absolute Target Fund 10.7 1 st 2.4 4 th – – Relative to IMA Absolute Return Average 11.4 -10.3 -18.5 Cazenove European Fund -15.3 2 nd -0.2 4 th 0.4 1 st Relative to IMA Europe (Ex UK) Average 0.5 -10.4 6.1
  • 3.
    • Source: Lipper, net income reinvested at 30.12.11
    Cazenove multi-manager - performance across the range - - Fund 1 year 3 years 5 years % growth Quartile % growth Quartile % growth Quartile Multi-Manager Diversity Fund 0.4 1 st 25.2 2 nd 20.5 1 st Diversity Income Fund 0.9 1 st – – – – Multi-Manager Diversity Balanced Fund -3.4 1 st – – – – Multi-Manager Diversity Tactical Fund -3.0 1 st 20.8 4 th 1.9 3 rd Multi-Manager UK Growth Fund -4.0 1 st 31.0 4 th -4.3 3 rd Multi-Manager Global (ex UK) Fund -5.5 1 st 28.9 2 nd 18.8 1 st
  • 4.
    • Source: Lipper, net income reinvested at 30.12.11
    Volatility across the range - - Fund Volatility over 5 years Fund Sector Multi-Manager Diversity Fund 6.7 8.7 Diversity Income Fund – – Multi-Manager Diversity Balanced Fund – – Multi-Manager Diversity Tactical Fund 12.5 14.8 Multi-Manager UK Growth Fund 15.1 18.1 Multi-Manager Global (ex UK) Fund 15.0 17.1
  • 5. - - Multi-manager team Marcus Brookes, Robin McDonald, Joe Le Jehan & Tabitha Johnston 42 years’ combined investment experience Internal resources External resources Cazenove Capital strategy team
    • Cazenove Capital
    • fund managers:
    • Chris Rice
    • Peter Harvey
    • Paul Marriage
    • Julie Dean
    Independent strategists External Fund managers Broker research Our process in one slide Asset allocation views Strategy fund selection (5,000 funds) Portfolio construction Review
  • 6.
    • A portfolio of “good funds” does not necessarily make a good portfolio
    • Asset allocation and fund selection are interlinked disciplines
      • Different “good funds” are required for different market environments
      • Need to have a view on the future market environment to select the right “good fund”
    What we do for investment research: Philosophy - -
  • 7. Example of a review
  • 8. Case Study: 2008 Fixed Interest
    • Asset Allocation
      • View Gilts were expensive having acted as a safe haven in 2008
      • Credit Crisis had impacted corporate bonds too much. Implied defaults showed that Corporate Bonds were expecting 1930’s deflationary depression.
      • Decision:
      • Sell Gilts and purchase a corporate bond fund that would benefit from a recovery in credit markets. Remain wary of Financial (Banks) bonds .
    - -
  • 9.
    • Source: Lipper, net income reinvested.
    Fund Selection: Performance?
    • Best performing 3 funds (3 years to 31/10/08)
      • Schroder All Maturities Corp Bond +2.5%
      • S&W Church House IG +1.7%
      • Standard Life AAA Income +1.1%
    • View of these funds
      • These were not highest quality teams
      • Outperformance was due to being defensive
      • They were not positioned for a rally in credit
      • Decision:
    • Not suitable from quality perspective and not positioned for our expected scenario of a recovery in credit
    - -
  • 10. Fund Selection Performance?
    • Source: Lipper, net income reinvested.
    • Worst performing 3 Funds (3 years to 31/10/08)
      • Henderson Sterling Bond -21.9%
      • Axa Sterling Bond -22.8%
      • Old Mutual Corporate Bond -23.6%
    • View of these funds
      • Quality teams apart from Axa
      • Underperformance was due to too much exposure to Financials
      • Exposure to Financials still large and expected to remain
      • Decision:
      • Some good quality teams available but positioning too risky given our view of the risks in Financials.
    - -
  • 11. Fund Selection
    • Identify Quality funds:
      • Previous research favoured:
        • Kames (formerly Aegon) Sterling bond
        • Old Mutual Corporate Bond
        • M&G Corporate Bond
        • Invesco Perpetual Corporate Bond
        • Henderson (formerly New Star) Sterling bond.
    • Quantitative Research showed only M&G and Invesco Perpetual were positioned appropriately (modest Financials risk). Interviewed both teams.
    • Decision: Invest with Invesco Perpetual. (NB: we met all the teams listed above at least once during 2008)
    - -
  • 12.
    • Source: Lipper, net income reinvested 31/10/08 to 29/10/10.
    Corporate bonds outperform Gilts - Invesco Perpetual is top decile - - Percentage growth total return
  • 13. 2011
  • 14. What has happened 2011? Equities
    • Source: Lipper, net income reinvested 31/12/10 to 30/12/11.
    - - Percentage growth total return
  • 15. What has happened so far? Sectors
    • Source: Lipper, net income reinvested 31/12/10 to 30/12/11.
    - - Percentage growth total return
  • 16. What has happened 2011? Fixed Income
    • Source: Lipper, net income reinvested 31/12/10 to 30/12/11.
    - - Percentage growth total return
  • 17.
    • Source: Lipper, net income reinvested 31/12/10 to 30/12/11.
    What has happened 2011? Currencies (and Gold) - - Percentage growth total return
  • 18.
        • A multi-asset, fund of funds in the Cautious Managed sector.
        • Diversification through an economic cycle
        • We aim to smooth the journey regardless of the investment climate.
        • Target CPI +4% p.a. over the medium term*
        • TER 1.79%
    Cazenove MM Diversity Fund
        • *Not guaranteed.
    - - 1/3 Equities 1/3 Fixed Income & Cash 1/3 Alternatives - Property - Hedge - Commodities
  • 19. Contributors to Performance
        • Being defensively positioned helped as markets struggled
          • Fixed Income and Cash
          • Cash in Diversity as high as 22% (now 11%)
          • M&G Optimal Income +5.7%
          • Equities
          • Invesco Perpetual Income +8.3% (since sold)
          • JO Hambro UK Opportunities +4.3%
          • Low exposure to Emerging Markets and Europe (since added to).
          • Alternatives
          • Absolute funds that went up
            • Cazenove UK Absolute Target +10.7%
            • Majedie Tortoise +8.3%
            • The Eclectica Fund +12.2% (31/12/10-30/11/2011)
          • Gold (sold)
        • Not owning gilts hurt
    • Source: Lipper, Bloomberg and Eclectica
    - -
  • 20. Outlook
  • 21. A template for different investment environments Economic Activity Prices Inflation/Low Growth Buy: Precious Metals, Oil, Cash Sell: Financial Assets Inflation/High Growth Buy: Commodities, Emerging Markets, Cyclicals Sell: Bonds, Interest-rate-sensitive Stocks Deflation/Low Growth Buy: Government Bonds, Yield Sell: Equity, Negative Cash Flow Assets Deflation/High Growth Buy: Equity, Corporate Debt, Real Estate Sell: Price & Demand Inelastic Shares
  • 22. Global Inflation
    • Source: Thomson Datastream
    Eurozone Inflation US Inflation UK Inflation China Inflation
  • 23.
    • Global Composite PMI
    JPMorgan Global PMIs
  • 24. Eurozone Debt Crisis
    • Source: BIS & Thomson Datastream
    Eurozone Government Debt as a % GDP
  • 25. Eurozone Debt Crisis
    • Source: BIS & Thomson Datastream
    Eurozone 10 year government bond yield over Bund spreads
  • 26. Valuation
  • 27. Historic Non-financial Trend P/Es
    • Source: Thomson Datastream
    UK Non-financial Historic Trend P/E US Non-financial Historic Trend P/E Eurozone Non-financial Historic Trend P/E Japan Non-financial Historic Trend P/E
  • 28. Earnings Forecasts
    • Source: Thomson Datastream
    FTSE All Share Earnings Forecasts S&P 500 Earnings Forecasts FTSE Europe ex-UK Earnings Forecasts
  • 29. Corporate over Government Bond Yield Spreads
    • Source: Thomson Datastream
    - - UK Corporate Bond Spreads
  • 30.
    • The Diversity Range of funds are Multi-Asset, Multi-Manager strategies.
    • Performance has been strong relative to peers, particularly in risk adjusted terms
    • The fund is positioned defensively
          • QE1 and QE2 led to temporary growth and higher inflation
          • Economies have slowed without stimulus
          • Political backdrop is awful
    • Equity markets have fallen and reflect some of our worries, so we have marginally increased risk taking but there remains significant risk of further weakness.
    Summary - -
  • 31. Launching April 2012: Cazenove Portfolio Management Service
  • 32. Bespoke and fund solutions 6. What options you could offer instead of validating NBS decisions A fund and bespoke (DFM) solution Available across multiple platforms Cost effective fund solution 6 ATR profiled funds with a proven record A risk profiling tool 2 key Cazenove propositions already widely accessible fund AMC 0.5% p.a. profiled by Distribution Tech. available free to all advisers via cazenovecapital.com
  • 33. Cazenove Portfolio Management Service: ATR funds - - Distribution Technology risk profiles
  • 34. Thank you
  • 35.
    • This document is issued by Cazenove Capital Management (Cazenove Capital). It is for information purposes only and does not constitute an offer to enter into any contract/agreement nor a solicitation to buy or sell any investment or to provide any services referred to therein.
    • This document is solely for the use of professional intermediaries and is not for general public distribution.
    • The contents of this document are based upon sources of information believed to be reliable, however, save to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to its accuracy or completeness, and Cazenove Capital or connected companies, directors, officers and employees do not accept any liability or responsibility in respect of the information or any recommendations expressed herein which, moreover, are subject to change without notice.
    • This document has been produced based on Cazenove Capital Management’s research and analysis and represents our house view. Unless otherwise stated all views are those of Cazenove Capital Management. It may not be reproduced in any form without the express permission of Cazenove Capital Management and to the extent that it is passed on, care must be taken to ensure this is in the form which accurately reflects the information given here. Unless otherwise indicated, the source for all data is Cazenove Capital.
    • Past performance should not be seen as an indication of future performance. The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested and may be affected by fluctuations in markets and exchange rates.
    • Cazenove Capital Management is the name under which Cazenove Capital Management Limited (registered No. 3017060) and Cazenove Investment Fund Management Limited (registered No. 2134680) each authorised and regulated by the Financial Services Authority and of 12 Moorgate London EC2R 6DA provide investment products and services.
    Disclaimer - -
  • 36. Diversity Positioning
  • 37. Tactical views: 1/3 Equities
    • Strategy
    • We favour sectors or companies with:
      • Stable business model (utilities, staples, healthcare).
      • Strong balance sheets
      • Reliable dividend yields
      • Unloved and under-owned (underperformed).
    • We are avoiding
      • Companies with dangerous debt levels
      • Companies reliant on the economy.
    • Key Positions
    • Fidelity Special Situations ( NEW HOLDING )
    • JOHCM UK Opportunities
    • Neptune European Opportunities
    • Findlay Park American
    - - 1/3 Equities
  • 38. Tactical views: 1/3 Fixed Income & Cash
    • Strategy
    • Corporate Bonds remain favoured
      • Good yield
      • Lower risk as debt levels have fallen.
    • Government Bonds look unattractive
      • Inflation rising
      • Possible further Quantitative Easing (printing money) around the world
    • Key Positions
    • M&G Optimal Income
    • JPM Income Opportunities
    • Kames Capital High Yield ( NEW HOLDING )
    - - 1/3 Fixed Income & Cash
  • 39. Tactical views: 1/3 Alternatives - - 1/3 Alternatives
    • Strategy
    • Low correlation to equity markets
    • Relative Value strategies
    • Cautious strategies
    • Still don’t like property
    • Key positions
    • Jupiter Absolute Return
    • The Eclectica Fund
    • Majedie Tortoise
    • ETFS Physical Gold (recently sold but looking to repurchase at lower levels)
  • 40.
        • Alternatives (29.9%)
        • Jupiter Absolute Return = 8.1%
    • Cazenove UK Absolute Target = 5.1%
    • Majedie Tortoise = 4.9%
    • The Eclectica Fund = 3.6%
    • Artemis Strategic Assets = 3.1%
    • ETFS FX Short € Long $ = 2.1%
    • Odey Continental European = 1.8%
    • Nevsky = 1.0%
    • 13.5% Defensive Autocall = 0.5%
    MM Diversity – The current portfolio
        • Equities (29.6%)
        • JOHCM UK Opportunities = 5.2%
    • Franklin UK Mid Cap= 4.0%
    • Investec UK Special Sits = 4.0%
    • Findlay Park American = 4.0%
    • Fidelity Special Situations = 3.0%
    • Cazenove European = 2.9%
    • Walker Crips UK Growth = 2.1%
    • Neptune European Opps = 1.9%
    • GLG Japan Core Alpha USD= 2.5%
    - -
        • Fixed Interest & Cash (40.4%)
    • M&G Optimal Income = 10.1% JPM Income Opps = 7.0% Invesco Monthly Income Plus= 4.8%
    • Invesco Tactical Bond = 3.0% Thames River Global Bond = 2.1% Kames Capital High Yield = 2.1% Cash = 11.3%