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    Dan draper credit suisse presentation Dan draper credit suisse presentation Presentation Transcript

    • DAN DRAPERCredit Suisse ETFs
    • November 15th, 2011Credit Suisse ETFsCitywire CabinetDan Draper, Global Head of CS ETFs
    • We have seen exponential growth across the ETF market  ETFs are a worldwide phenomenon with more than US$ 1.24 trillion invested across the globe and a Compounded Annual Growth Rate (CAGR) of 30% over the last 11 years  More than half of current assets are in US domiciled ETFs with Europe accounting for 20% of the market 1,400 1,307 CAGR Debt and money market 1,241 Dec 2000 – Q3 2011: 1,200 Commodity 30% Equity 1,034 Sep 2011 Regional AUM Market Share 1,000 796 US 68%US$ bn 800 710 Europe 21% 566 Asia 6% 600 Others 5% 412 400 310 212 142 200 74 105 0 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 •Source: CS ETF Sales Strategy, Blackrock Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 3
    • And this growth trajectory is set to continue into 2015Based on current projections, total global ETF AUM could grow from approximatelyUS$ 1.5 trillion today to between US$3.1 trillion and US$4.7 trillion over the next fiveyears. 5-year CAGR Percent ETP AUM1,2 High case US$ trillion Low case 26.7 4.7 3.7 2.9 2.3 1.8 1.5 1.7 2.0 2.3 2.7 3.1 16.7 2010 2011F 2012F 2013F 2014F 2015F 1 Includes estimates for Americas, Europe, Asia (excluding Japan) and all other regions (eg Japan, Mideast, etc.) 2 Includes all exchange traded products (eg ETF, ETFN, ETC) and baseline steady-state growth (no shocks to system). Source: McKinsey analysis; ETF Landscape Year-end 2010; industry reports Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 4
    • Alternative and passive products are expected to keepgrowing faster than traditional active products Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 5
    • The Beta ContinuumCapturing risk premia & the evolution of index strategies Access to Capturing Access to "Endogenous Access to Fundamental High Risk but Broad Local Risk Alternative Asset Alpha" via enhanced Law of Active Big Capacity Benchmarks Premiums Classes index construction Beta Management Traditional long- Unconstrained only active Hedge Fund Active Risk Active management Indexes Management CS ETF CS Holt Quantitative CS ETF MSCI EMU Gold Strategy CS ETF DJ Eurostoxx 50 Small Cap Bulk Beta Alpha Enhanced Fundamental Beta Beta Bespoke Beta Alternative Beta Classic Beta Systematic Risk Premiums Active ReturnsSource: The investment expertise of NWQ, Nuveen, Rittenhouse, Santa Barbara, Symphony and Tradewinds Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 6
    • ETFs are attracting a broad and growing investor base  Long only asset managers; including pensions, endowments, charities and Central Banks Traditional ETF investors  Fund of funds  Wealth management; advisory  Hedge fund managers; increasing use of listed products and over-the-counter derivatives  Pension fund managers; ETFs as strategic asset allocation tools New ETF investors  Private banks; ETFs as core solutions in discretionary portfolios  Financial advisor community; RDR impetus  Third party platforms and self directed retail Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Page 7
    • A challenging year for the underlying markets and investorconfidence3150 Eurostoxx 50 Fitch cuts Greek SX5E: -11.05% debt to junk Osama bin Laden killed 02 May SPX: 1.30% 14 Jan Greek government approves2950 Japan austerity programme and end of NKY: -10.51% earthquake QE2 11 Mar 30 Jun MXWO: -2.67%* 17 May 17 Mar 01 Jun2750 Portugal bailout 22 Jul approved 14 Jul 29 Jul 22: US Debt Ceiling debate intensifies, Italian 10yr spreads rising 29: Shock downward revisions to US GDP2550 08/08: ECB intervenes in bond markets to purchase Italian debt 28 Oct 12/08: US Consumer Sentiment plunges (Aug preliminary). France, Italy, Spain and Belgium place restrictions on short 03 Nov2350 selling 10 Oct 26 Oct 24/08: Moodys downgrades Japanese Government Debt 24 Oct 08 Aug 06/09: SNB announced intervention in the currency markets, pegging the EUR/CHF at a minimum of 1.20 12 Aug 24 Aug 15/09: ECB, BoE, SNB and BoJ announced liquidity-providing operations via the Feds dollar liquidity swap line 20/09: S&P downgrades Italian Government Debt 04/10: Moodys downgrades Italian Government Debt 05 Oct 05/10: BoE announces £75b QE 15 Sep2150 10/10: Sarkozy and Merkel say they have a plan 24/10: Brussels summit part 1, ended 23/11 20 Sep 06 Sep 26/10: Brussels summit part 2 04 Oct 28/10: Over the weekend Papandreou mentions a referendum for Greece 03/11: Referendum plan dropped, ECB cuts policy rate by 25bps1950 Jan 11 Jan 11 Mar 11 Apr 11 May 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 * Year to date total return, as of 31.10.2011, in local currency Slide 8 Source: Credit Suisse Global Strategy, Thomson Reuters DataStream, Bloomberg
    • 2011: A challenging year but continued success forETFsExhibit: AUM evolution for ETFs domiciled and listed in Europe Asset Allocation Debt Equity Money Market Real Estate Commodity SX5E Index 350 3,500 320.11 315.54 311.78 312.61 291.72 298.66 292.55 300 283.49 284.17 284.93 3,000 261.70 Eurostoxx 50 level (points) 250 2,500 200 2,000 US$ bn Performance YTD SX5E: -11.05% ETFs AUM 150 1,500 SPX: 1.30% YTD NKY: -10.51% +0.51% 100 1,000 MXWO: -2.67% 50 500 - - Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11* Year to date total return, as of 31.10.2011, in local currencySource: CS ETF Sales Strategy, Bloomberg as of 31/10/2011 CS ETF Sales Strategy FOR INSTITUTIONAL CLIENTS ONLY November 2011 Slide 9
    • ETFs in portfolio construction Effective asset allocation is widely regarded as the key to optimal portfolio returns ETFs are ideal building blocks for implementing a wide range of asset allocation strategies A portfolio can be simply restructured to be overweight or underweight in entire sectors using ETFs ETFs can be blended with active funds to build efficient investment portfolios Produced by: CS ETFs Slide 10
    • ETFs: Effective asset allocation tools Asset Mutual Pension Private Hedge Retail Managers Funds Plans Banks Funds InvestorsStrategic Tactical: Market exposure: Implement a wide variety of  Transition tool: Maintain exposure to a given market investment strategies using broad local or while searching for a specific market international market reach  Cash management: Able to invest cash rapidly and Directional views: Use long or shorts to implement cost efficiently to gain desired market exposure directional market views  Derivatives alternative: Ability to set similar or even Strategic asset allocation: Implement core or wider Delta 1 exposures with single line cash-based satellite strategies settlement Rebalancing: Attaining or adjusting asset allocation,  Exposure management: Easily shift portfolio sector or style exposure emphasis by adjusting exposures (e.g. duration, Hedging: Achieve neutral market or sector exposure credit) Dynamic portfolio construction: Fill allocations  Thematic: Implement thematic exposures required by the investment strategy; gain exposure to  Active risk budgeting: Combine ETFs in managing size, style, yield, sector and country total portfolio volatility Produced by: CS ETFs Slide 11
    • Indexing via Core-Satellite strategy Based on the idea of keeping core investments and diversifiers entirely separate Permits better risk management Can be implemented simply and efficiently Satellite 1  Basic return Core investment  Broad spread to reduce Core risk Satellite 3 investment  Excess return against Diversifiers benchmark Satellite 2  Active risk management  Tactical allocation and active timingSource: Credit Suisse Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 12
    • The six stages of the business cycle Idealised Six Stages of the Business Cycle Stage I Stage II Stage III Stage IV Stage V Stage VI Stocks Bonds Commodities Recovery Recession Bonds Commodities Stocks Bonds turn up Stocks turn up Commodities Bonds turn Stocks turn Commodities turn up down down turn down (Stocks & (Bonds risking, (All three markets (Stocks & (Bonds dropping, (All three marketscommodities falling) commodities falling) rising) commodities rising) commodities rising) dropping)Source: The six stages of a typical business cycle through recession and recovery. InterMarket Review by Martin J. Pring www.Pring.com, 2004 Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 13
    • Strategic asset allocation Conservative allocation Balanced allocation Fixed Income Developed Equity Emerging Equity CS ETF (IE) iBoxx EUR Govt 1-3 CS ETF (IE) EURO STOXX 50 CS ETF (LUX) on MSCI EM* CS ETF (IE) iBoxx EUR Govt 3-7 CS ETF (IE) FTSE 100 CS ETF (IE) on MSCI EM Asia CS ETF (IE) iBoxx USD Govt 1-3 CS ETF (IE) MSCI EMU CS ETF (IE) on Latin America CS ETF (IE) iBoxx EUR inflation linked CS ETF (IE) S&P 500 CS ETF (IE) on EM EMEA CS ETF (IE) iBoxx USD inflation linked OtherFor illustrative purposes only CS ETF (CH) on Gold** Please note these funds are domiciled in Luxembourg and Switzerland respectively CS ETF (IE) on EONIA Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 14
    • Sector rotation throughout the business cycle Technology Basic Industry Staples Utilities Cyclicals Industrial Energy Services Finance Full Recession Early Recovery Full Recovery Early Recession Market Bottom Bull Market Market Top Bear MarketLegend: Market Cycle Economic Cycle Source: Intermarket Analysis, John J Murphy, 2004 Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 15
    • Tactical asset allocation Balanced allocation Tactical overlays to strategic asset allocation:  Exposure to thematic equity: CS ETF (IE) on Credit Suisse Global Alternative energy  Increase Latin America exposure with single country focus: CS ETF (IE) on MSCI Brazil CS ETF (IE) on MSCI Chile Fixed Income Developed Equity Emerging Equity CS ETF (IE) iBoxx EUR Govt 1-3 CS ETF (IE) EURO STOXX 50 CS ETF (LUX) on MSCI EM* CS ETF (IE) iBoxx EUR Govt 3-7 CS ETF (IE) FTSE 100 CS ETF (IE) on MSCI EM Asia CS ETF (IE) iBoxx USD Govt 1-3 CS ETF (IE) MSCI EMU CS ETF (IE) on Latin America CS ETF (IE) iBoxx EUR inflation linked CS ETF (IE) S&P 500 CS ETF (IE) on EM EMEA CS ETF (IE) iBoxx USD inflation linked OtherFor illustrative purposes only CS ETF (CH) on Gold** Please note these funds are domiciled in Luxembourg and Switzerland respectively CS ETF (IE) on EONIA Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 16
    • 2012 will see a return to the fundamentals of ETFs Turbulent markets and regulatory uncertainty continues Demand for less complex, more transparent investment products A focus on physical replication… … Within an asset management framework The traditional benefits of ETF  Assets managed by a regulated investment: Simplicity, transparency, fiduciary liquidity and low cost  Minimal conflicts of interest Benchmark exposure through a transparent, direct replication wrapper:  Increasing importance of fund ‘own’ the index governance at the Board of Directors level Nearly two decades of continued growth and investor trust  Converging regulatory landscape across the EU Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 17
    • Why Credit Suisse ETFs  4th largest ETF provider in Europe with $17.2bn of AUM*A Leading  The largest ETF provider in Switzerland – 29% market share*ETF Provider  One of the most experienced ETF providers in the European market: ETFs since 2001, indexing solutions since 1994  The second largest provider of physically replicated ETFs in EuropeAssetManagement  Credit Suisse Asset Management is a pioneer of index investment solutions with a 17 year track record in delivering consistent performanceExpertise  Zurich based team of portfolio management professionals managing over CHF 70bn  CS ETFs is 100% owned by Credit Suisse Asset ManagementA RegulatedFiduciary  Operates solely within Credit Suisse Asset Management’s fiduciary framework, minimising conflicts of interest to the greatest degree possible*Source: CS ETF Sales Strategy 04.11.2011 ** Source: CS ETF Sales Strategy, Bloomberg, 30.09.2011 Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 18
    • Credit Suisse ETFs: Quality, Transparency, Trust Physical replication structure applied as preference  Managed by experienced index team in Zurich Physical Replication 46 Funds  Total transparency: index constituents published daily on www.csetf.com  No securities lending on Irish domiciled fund range Synthetic replication applied when underlying index is difficult to access via physical replication Synthetic Replication  Minimal counterparty risk: daily swap reset and Credit Suisse as sole counterparty 12 Funds  Total transparency: swap spread and substitute basket published daily on www.csetf.com  Collateral quality: 100% stoxx 600 securities, fully owned by the fund (unfunded swap set up) Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 19
    • Important InformationCredit Suisse Exchange Traded Funds (CS ETFs) may not be suitable for all investors. Credit Suisse AG does not guarantee the performance of the shares orfunds. The value of the investment involving exposure to foreign currencies can be affected by exchange rate movements. We remind you that the levels andbases of, and reliefs from, taxation can change. Affiliated companies of Credit Suisse AG may make markets in the securities mentioned in this document. Further,Credit Suisse AG and/or its affiliated companies and/or their employees from time to time may hold shares or holdings in the underlying shares of, or options on,any security included in this document and may as principal or agent buy or sell securities.Credit Suisse Asset Management Limited (CSAML) who is authorised and regulated by the Financial Services Authority (25 The North Colonnade, Canary Wharf,London E14 5HS), has issued this document for access in the UK only and no other person should rely upon the information contained within it. CS ETF (IE) plc(“the Company”) is an open-ended investment company with variable capital having segregated liability between its funds organised under the laws of Ireland andauthorised by the Financial Regulator. Most of the protections provided by the UK regulatory system do not apply to the operation of the Company, andcompensation will not be available under the UK Financial Services Compensation Scheme on its default. The Company is a recognised scheme for the purposesof the Financial Services and Markets Act 2000. Important information is contained in the relevant prospectus, the simplified prospectus and other documents,which may be obtained free of charge from Credit Suisse Funds AG, Zurich or by writing to Credit Suisse Asset Management Limited, ETF Business Development,One Cabot Square, London, E14 4QJ.This document has been compiled with great care and attention to accuracy, however this material is not the result of asubstantive research or financial analysis and does not constitute investment research or a research recommendation. This material is provided for informationpurposes, is intended for your use only and does not constitute an invitation or offer to subscribe for or purchase any of the products or services mentioned. Theinformation provided is not intended to provide a sufficient basis on which to make an investment decision. Information and opinions presented in this material havebeen obtained or derived from sources believed by Credit Suisse to be reliable, but Credit Suisse makes no representation as to their accuracy or completeness.Credit Suisse accepts no liability for loss arising from the use of this material. The price and value of investments mentioned and any income that might accrue mayfluctuate and may rise or fall. Nothing in this report constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy issuitable or appropriate to individual circumstances, or otherwise constitutes a personal recommendation to any specific investor. Any reference to past performanceis not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any products mentioned in thisdocument. Alternative investments, derivative or structured products are complex instruments, typically involve a high degree of risk and are intended for sale onlyto investors who are capable of understanding and assuming all the risks involved. Investments in emerging markets are speculative and considerably more volatilethan investments in established markets. Risks include but are not necessarily limited to: political risks; economic risks; credit risks; currency risks; and marketrisks. Before entering into any transaction, investors should consider the suitability of the transaction to individual circumstances and objectives. Credit Suisserecommends that investors independently assess, with a professional financial advisor, the specific financial risks as well as legal, regulatory, credit, tax andaccounting consequences. The issuer of the securities referred to herein or a Credit Suisse company may have acted upon the information and analysis containedin this publication before being made available to clients of Credit Suisse. A Credit Suisse company may, to the extent permitted by law, participate or invest inother financing transactions with the issuer of the securities referred to herein, perform services or solicit business from such issuers, and/or have a position oreffect transactions in the securities or options thereof. NEITHER THIS DOCUMENT NOR ANY COPY THEREOF MAY BE SENT, TAKEN INTO OR DISTRIBUTEDIN THE UNITED STATES OR TO ANY US PERSON. This material is not directed at, or intended for distribution to or use by, any person or entity who is a citizenor resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which wouldsubject Credit Suisse and/or its subsidiaries or affiliates to any registration or licensing requirement within such jurisdiction. This document may not be reproducedeither in whole or in part, without the written permission of Credit Suisse.Copyright © 2011 Credit Suisse Group and/or its affiliates. All rights reserved. Please see “Important Information” at the end of this material for important disclosures regarding the data and information contained and the views and opinions expressed in this material. November 2011 Slide 20