Your SlideShare is downloading. ×
0
Kames Strategic Global Bond Fund
September 2013
Colin Finlayson – Investment Manager Fixed IncomeColin Finlayson Investmen...
The Great Rotation?
2
Then and now – is history repeating itself?y p g
20
1994 Total return
20
Is history repeating?
5
10
15
5
10
15
10
-5
0
-10...
Bond market in forward looking shockerg
3
The US yield curve is very steep
2
1
Yield%
0
-1
983
984
985
986
987
988
989
990...
Kames Strategic Global Bond Fund – Flexibilitiesg
Government bonds
Investment grade corporate bonds
What we own and will o...
2013 – Volatility and divergent returnsy g
Asset type
Total return
%
Drawdown
%
US Corporates -3.2 -5.0
1%
3%
US Treasurie...
Kames Strategic Global Bond Fund performance
70
Cumulative 5 year medians
g p
40
50
60 58.3%
10
20
30
%growth
28.9%
-10
0
...
Strong risk adjusted performanceg j p
Key
Return Return volatility Sharpe ratio
15 14 2 0
Kames Fund
Median Fund
3years
12...
Kames Strategic Global Bond Fund positioningg p g
Asset allocation Dec 2007 – Jul 2013
100
Active asset allocation
Min (%)...
Kames Strategic Global Bond Fund duration allocationg
8
Duration by currency bloc excluding high yield
4
6
miannual)
0
2
d...
Asset class flexibility is keyy y
Asset class Current environment Strategy
Government
• Monetary cycle turned in the US
Re...
Ignore technicals at your peril
• FOMC: “exceptionally low levels…
at least through late 2014”
g y p
1600
Quantifying quan...
Investment grade strategyg gy
800
900
600
700
read(sa)
300
400
500
enchmarkspr
0
100
200
Be
0
Jan07
Apr07
Jul07
Oct07
Jan0...
High yield: cheap relative to any realistic default scenariog y p y
44.8%
41 1%
50%
e
Implied default rates vs actual expe...
Emerging Markets – the perfect storm
• Growing list of problems:
– Over-owned asset class
g g p
2.0
1 5
0
100
– Fed “Taper...
Non Agency RMBS – very attractive fixed income asset class
• US housing market is recovering
– Non Agency RMBS a greatway ...
Kames Strategic Global Bond Fund
• Strategic global bond portfolio
– Total return fixed income fund
g
– Managed fixed inco...
Kames Strategic Global Bond Fundg
Launch date 8 November 2007
Fund manager David Roberts and Philip Milburn
Support manage...
Important information
This document is not intended for retail distribution and is directed only at investment professiona...
Important information
The Kames Strategic Global Bond Fund is registered in the UK, Channel Islands, Ireland, Netherlands,...
Upcoming SlideShare
Loading in...5
×

Gstaad 2013 kames strategic global bond fund final

509

Published on

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
509
On Slideshare
0
From Embeds
0
Number of Embeds
13
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Gstaad 2013 kames strategic global bond fund final"

  1. 1. Kames Strategic Global Bond Fund September 2013 Colin Finlayson – Investment Manager Fixed IncomeColin Finlayson Investment Manager, Fixed Income
  2. 2. The Great Rotation? 2
  3. 3. Then and now – is history repeating itself?y p g 20 1994 Total return 20 Is history repeating? 5 10 15 5 10 15 10 -5 0 -10 -5 0 -20 -15 -10 -25 -20 -15 bt ty 00 ts Ts ps Y 00 -25 EM$debt EMEquity FTSE100 Gilts USTs USCorps USHY S&P500 EM$deb EMEquit FTSE10 Gilt UST USCorp USH S&P50 1994 returns to end August 2013 returns to end August Source: BoA Merrill Lynch, Morgan Stanley, FTSE, S&P, Bloomberg, Kames Capital as at 31 August 2013 E E U 1994 returns to end August 2013 returns to end August 3
  4. 4. Bond market in forward looking shockerg 3 The US yield curve is very steep 2 1 Yield% 0 -1 983 984 985 986 987 988 989 990 991 992 993 994 995 996 997 998 999 000 001 002 003 004 005 006 007 008 009 010 011 012 013 Source: Bloomberg, Kames Capital as at 30 August 2013 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 2 20 20 4
  5. 5. Kames Strategic Global Bond Fund – Flexibilitiesg Government bonds Investment grade corporate bonds What we own and will own g p High yield bonds Emerging market bonds Index-linked bonds Asset backed securities Cash Foreign Exchange What we haven’t owned and won’t own Ordinary Equity Private Placement Debt 5 Convertible Bonds
  6. 6. 2013 – Volatility and divergent returnsy g Asset type Total return % Drawdown % US Corporates -3.2 -5.0 1% 3% US Treasuries -3.3 -6.4 Emerging Market Debt -9.3 -11.3 -3% -1% 1% urn% US TIPS -8.7 -10.7 Kames Strategic Global Bond 0.2 -3.9% -7% -5% Totalretu -11% -9% Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Kames Strategic Global Bond US Treasuries Emerging Market Debt US TIPS US C t Source: Bloomberg, Kames Capital and BoA Merrill Lynch as at 31 July 2013 6 US Corporates
  7. 7. Kames Strategic Global Bond Fund performance 70 Cumulative 5 year medians g p 40 50 60 58.3% 10 20 30 %growth 28.9% -10 0 10 -20 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09 Aug09 Oct09 Dec09 Feb10 Apr10 Jun10 Aug10 Oct10 Dec10 Feb11 Apr11 Jun11 Aug11 Oct11 Dec11 Feb12 Apr12 Jun12 Aug12 Oct12 Dec12 Feb13 Apr13 Jun13 Aug13 7 Kames Strategic Global Bond B Inc USD Lipper Global - Bond Global median Source: Lipper as at 30 August 2013. NAV to NAV, income re-invested. Total return, local currency, B Inc USD class. Launch date 8 November 2007. Past performance is not a guide to the future.
  8. 8. Strong risk adjusted performanceg j p Key Return Return volatility Sharpe ratio 15 14 2 0 Kames Fund Median Fund 3years 12.4 5.25 10 15 13.3 6.56 8 10 12 14 0 3 1.8 0.9 0.5 1.0 1.5 2.0 Sector range Quartile range 3 2.4 -2.9 -5 0 4.0 1.5 0 2 4 6 0.3 -0.6 -1.0 -0.5 0.0 ears 14.7 10 15 20 15.615 20 1.5 1.0 1.5 2.0 5ye 3.6 -0.2 7.9 -5 0 5 10 6.7 2.2 9.9 0 5 10 0.4 -0.3 0.8 -0 5 0.0 0.5 1.0 8 Source: Lipper Hindsight, Kames Capital as at 28 June 2013. Kames Strategic Global Bond Fund B (Inc) USD, returns, volatility and sharpe ratio are calculated on a monthly basis (annualised). Volatility is standard deviation. 5 0 0.5
  9. 9. Kames Strategic Global Bond Fund positioningg p g Asset allocation Dec 2007 – Jul 2013 100 Active asset allocation Min (%) Max (%) Cash -3.90 17.60 60 70 80 90 sets Government 0.00 48.00 Index-Linked 0.00 1.91 Investment Grade 35.40 85.0030 40 50 60 %ofass High Yield 4.20 32.50 US RMBS 0.00 5.570 10 20 07 08 08 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 12 12 12 13 13 Emerging Markets 0.00 3.39 Nov0 Feb0 May0 Aug0 Nov0 Feb0 May0 Aug0 Nov0 Feb1 May1 Aug1 Nov1 Feb1 May1 Aug1 Nov1 Feb1 May1 Aug1 Nov1 Feb1 May1 Cash Govt Index Linked IG HY US RMBS Emerging Markets Source: Kames Capital as at 31 July 2013. 9
  10. 10. Kames Strategic Global Bond Fund duration allocationg 8 Duration by currency bloc excluding high yield 4 6 miannual) 0 2 duration(sem 4 -2 0 Modified -4 Nov07 Jan08 Mar08 May08 Jul08 Sep08 Nov08 Jan09 Mar09 May09 Jul09 Sep09 Nov09 Jan10 Mar10 May10 Jul10 Sep10 Nov10 Jan11 Mar11 May11 Jul11 Sep11 Nov11 Jan12 Mar12 May12 Jul12 Sep12 Nov12 Jan13 Mar13 May13 Jul13 AUD CAD EURO GBP NZD SEK CHF USD YEN Grand Total Source: Kames Capital as at 31 July 2013 10
  11. 11. Asset class flexibility is keyy y Asset class Current environment Strategy Government • Monetary cycle turned in the US Remain underweight interest rateGovernment bonds • Rest of the world not immune • A large part of the move already in the price Remain underweight interest rate risk, but temper position Investment • Valuations still attractive on a long term basis Core part of strategic bond funds. Investment grade • Valuations still attractive on a long-term basis • Avoid re-leveraging event risk Capture spread and manage duration risk Hi h i ld • Total return prospects attractive P f f US Hi h Yi ld E Hi h Sti k t hi h lit hi h i ldHigh yield • Preference for US High Yield over European High Yield Stick to higher quality high yield Emerging markets • Sell-off brings some realism back to markets • Fund outflows mean it is too early to catch the falling Selected exposure to stock specific corporates too earl to bmarkets y g knife corporates, too early to buy RMBS • US housing market strong even with increasing mortgage rates • Supportive technicals Non Agency RMBS (Option ARM sub-segment ) offers value and diversification 11 • Supportive technicals diversification
  12. 12. Ignore technicals at your peril • FOMC: “exceptionally low levels… at least through late 2014” g y p 1600 Quantifying quantitative easing • ECB: “we will do all that it takes (to save the Euro)” SNB no o n more than 10% of 1200 1400 • SNB: now own more than 10% of the entire stock of Bunds* • BoE: QE program at £375billion and 800 1000 $billions forward guidance • BoJ: ¥140 trillion of planned asset purchases over two year period 400 600 purchases over two year period 0 200 Fed BoE ECB SNB BoJ Source: Central Bank websites as at 31 March 2013. *SNB assumes 50% of CHF 400bn+ balance sheet. Ignores ECB covered bonds €70bn, US MBS $1.5trn 12
  13. 13. Investment grade strategyg gy 800 900 600 700 read(sa) 300 400 500 enchmarkspr 0 100 200 Be 0 Jan07 Apr07 Jul07 Oct07 Jan08 Apr08 Jul08 Oct08 Jan09 Apr09 Jul09 Oct09 Jan10 Apr10 Jul10 Oct10 Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 Jan13 Apr13 Jul13 N G A t d BBB t d Fi i l Source: Barclaysas at 31 July 2013 Non-Gov A rated BBB rated Financials 13
  14. 14. High yield: cheap relative to any realistic default scenariog y p y 44.8% 41 1% 50% e Implied default rates vs actual experiences 2,00020% High yield spreads and default rates 30.1% 29.5% 39.3% 23.0% 41.1% 25.0% 30% 40% ativedefaultrate 1,50015% bps rate% 14.2% 15.2% 5.8% 1.9% 10.1% 10% 20% 5yearcumula 500 1,000 5% 10% Spread Defaultr 0% BBB BB B Credit Rating 00% Jan85 Sep86 May88 Jan90 Sep91 May93 Jan95 Sep96 May98 Jan00 Sep01 May03 Jan05 Sep06 May08 Jan10 Sep11 May13 Implied 5yr cumulative default rate, 40% recovery rate EUR Implied 5yr cumulative default rate, 40% recovery rate USD Actual 5yr cumulative default rates (since 1970) worst Actual 5yr cumulative default rates (since 1970) average J S M J S M J S M J S M J S M J S M Global Speculative DR Average DR Projected Global Speculative DR HY Spreads A S d Source: Left hand chart - Moody’s Investors Service, MerrillLynch and Kames Capitalas at 31 July 2013. Right hand chart - Deutsche Bank, Kames Capital, data as at 30 June 2013, average recoveryrates and default experiencessince 1970 Average Spread 14
  15. 15. Emerging Markets – the perfect storm • Growing list of problems: – Over-owned asset class g g p 2.0 1 5 0 100 – Fed “Tapering” – EM currency depreciation – Slower Chinese GDP 1.5 1.0 0 5 100 200 300 M Slower Chinese GDP • Inevitable result: 0.5 0.0 -0.5 300 400 500 %AU bps – Outflows and wider spreads... – ….prompting more outflows? 0 5 -1.0 -1.5 500 600 700 -2.0 800 2007 2008 2009 2010 2011 20132012 EMBI GI Spreads (rhs) 4wma flows to EXD funds (lhs) Source: EPFR Global, Thomson Reuters Datastream, HSBC 15 EMBI GI Spreads (rhs) 4wma flows to EXD funds (lhs)
  16. 16. Non Agency RMBS – very attractive fixed income asset class • US housing market is recovering – Non Agency RMBS a greatway of gaining exposure to this g y y – Specificallythe sub-sectorOption ARMs(Adjustable Rate Mortgages) Desired attribute Benefit High originalmortgage balance c.$500k House stillhas some value,aids recovery P f f j di i l t t i C lif iPreferencefornon-judicialstates i.e.California over Florida Speedsup any repossessionprocess Selected originalunderwriters Relatively betterquality of borrowers and assets 2006/07vintages with fastamortisation Capitalpayback opportunity greatest Superseniortranchesonly,with lots ranking below you Subordinated bonds absorb losses first 16
  17. 17. Kames Strategic Global Bond Fund • Strategic global bond portfolio – Total return fixed income fund g – Managed fixed income solution; delegate your fixed income strategy – €/$/£/¥/CHF/SGD – track your clients’ needs 1 year 2 years 3 years 4 years 5 years Fund 3.37% 12.36% 16.23% 33.21% 58.29% Median 0.01% 5.22% 7.11% 17.69% 28.88% Quartile 1 1 1 1 1 Outperformance 3 36% 7 14% 9 12% 15 52% 29 41% 17 Source: Lipper as at 30 August 2013. NAV to NAV, income re-invested. Total return, local currency, B Inc USD class. Launch date 8 November 2007. Past performance is not a guide to the future. Outperformance 3.36% 7.14% 9.12% 15.52% 29.41%
  18. 18. Kames Strategic Global Bond Fundg Launch date 8 November 2007 Fund manager David Roberts and Philip Milburn Support manager Colin Finlayson Investment policies Invests across fixed income universe, ranging from AAAgovernment bonds through to high yield and emerging market corporate bonds in any currency. P i f t t Second quartile over rolling 12 months and top quartile over a rolling 3 year periods in Primary performance target q g p q g y p the Lipper global bond global sector. Secondary performance target To outperform the Barclays Capital global aggregate index by +2% p.a. over rolling 3 year periods. Investment grade corporate bonds 0 100% Asset allocation ranges Investment grade corporate bonds 0-100% Government bonds 0-100% High yield bonds 0-100% Emerging market bonds 0-100%Emerging market bonds 0 100% Unhedged currency 0-10% Cash 0-20% Base currency US DollarBase currency US Dollar Hedged share classes Sterling, Euro, US Dollar, Yen, Swiss Franc, Singapore Dollar 18
  19. 19. Important information This document is not intended for retail distribution and is directed only at investment professionals. It should not be distributed to, or relied upon by, private investors. p All data in this presentation is sourced to Kames Capital unless otherwise stated. The views expressed in this document represent our understanding of the current and historical positions of the market. They should not be interpreted as a recommendation or advice. Past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and is not guaranteed. This document is accurate at the time of writing but can be subject to change without notification Kames Capital Investment Company (Ireland)This document is accurate at the time of writing but can be subject to change without notification. Kames Capital Investment Company (Ireland) plc, is an umbrella type open-ended investment company with variable capital registered in the Republic of Ireland (Company Number 442106), registered office at 25-28 North Wall Quay, International Financial Services Centre, Dublin 1. Board of Directors: Andrew Bell (UK), Mike Kirby (Ireland) and Bronwyn Wright (Ireland). Kames Capital Investment Company (Ireland) plc is regulated by the Central Bank of Ireland. Kames Capital is an Aegon Asset Management company and includes Kames Capital plc (Company Number SC113505) and Kames Capital Management Limited (Company Number SC212159). Both are registered in Scotland and have their registered office at Kames House, 3 Lochside Crescent, Edinburgh, EH12 9SA. Kames Capital plc is authorised and regulated by the Financial Conduct Authority, (FCA reference no: 144267). Kames Capital plc is the Investment Manager and Marketing Agent for Kames Capital Investment Company (Ireland) plc. Kames Capital Management Limited is an appointed representative of Scottish Equitable plc (Company Number SC144517), an Aegon company, whose registered office is 1 Lochside Crescent, Edinburgh Park, Edinburgh, EH12 9SE (PRA/FCA reference no: 165548).g , g , g , ( ) 19
  20. 20. Important information The Kames Strategic Global Bond Fund is registered in the UK, Channel Islands, Ireland, Netherlands, Switzerland, Luxembourg, Germany, Malta and Austria. Not all available shareclasses are registered in every country. Refer to the full prospectus for details. p For Investors in Switzerland - On March 26th 2009, the Swiss Financial Market Supervisory Authority FINMA authorised the distribution to the public of the shares of Kames Capital Investment Company (Ireland) plc (the “Company”) in or from Switzerland in conformity with article 120 of the Federal Law on Collective Investments of Capital dated June 23rd 2006. The Company was authorised as a Foreign Collective Investment Scheme. The articles of the Company, the Extract Prospectus for Switzerland, the Key Investor Information (Swiss edition), the annual and semi annual Report for Switzerland of the Company can be obtained free of charge on our website www.kamescapital.com or from the Representative in Switzerland, BGG Banque Genevoise De Gestion, 15, Rue Toepffer, 1206 Geneva, Switzerland, (Tel : + 41 22 3479040; Fax: + 41 22 3479327). For Investors in Luxembourg - Kames Capital Investment Company (Ireland) plc is a UCITS collective investment scheme registered in Luxembourg by the Commission de Surveillance du Secteur Financier. The Prospectus, Supplement and Key Investor Information of Kames Capital Investment Company (Ireland) plc are available from CACEIS Bank Luxembourg 5, allée Scheffer, L-2520 Luxembourg. FPID: 2013/16489 20
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×