First State UK Business Overview July 2003
Agenda <ul><li>Company history </li></ul><ul><li>Current position </li></ul><ul><li>Strategic drivers </li></ul><ul><li>Co...
Company history <ul><li>Colonial First State UK </li></ul><ul><li>Legacy of Colonial Life UK </li></ul><ul><li>Established...
Company history <ul><li>Stewart Ivory & Co </li></ul><ul><li>Management origins from 1873 (SAINTS) </li></ul><ul><li>Quasi...
Current position <ul><li>Focused business and investment entity </li></ul><ul><li>Funds under management £5.3B (May 03) </...
First State UK FUM breakdown May 03 <ul><li>Colonial First State Investments Group £ 34.9bn*  </li></ul><ul><li>First Stat...
Fund ratings As at 30 May 2003 - - -  A - - British Smaller Companies - - -  - - - Corporate Bond - - -  A - - UK ...
Brand : Awareness of Competitors (Total) Source : Continental Research, Ashes research 2003 % Yes
Strong asset flow in a difficult environment
Strategic drivers <ul><li>Advent of compulsion </li></ul><ul><li>Shift from “balanced” to “specialist” mandates </li></ul>...
1. Advent of compulsion <ul><li>The UK </li></ul><ul><li>£27 bn “savings gap”  (source:ABI Sept ’02) </li></ul><ul><li>No ...
2. Shift from balanced to specialist mandates <ul><li>Single manager, asset allocator model unsuccessful </li></ul><ul><li...
3. Growing demand for global approach
3. Growing demand for global approach <ul><li>Views of the global consulting firms </li></ul><ul><li>Fewer regional divers...
4. Investment mgt for Group entities <ul><li>One centre of excellence: </li></ul><ul><ul><li>Global equities </li></ul></u...
‘ Local’ leverage opportunity <ul><li>Expected development of intermediation </li></ul><ul><li>Growth in consumer awarenes...
Core strategies <ul><li>1. Drive pan European distribution </li></ul><ul><ul><ul><li>Low cost of incremental business flow...
Core strategies <ul><li>Focus on institutional & mezzanine distribution   </li></ul><ul><ul><ul><li>Leverage global consul...
Core strategies <ul><li>Develop institutional distribution in the US </li></ul><ul><ul><ul><li>GEM market US$3.7bn, Global...
Core strategies <ul><li>Focused manufacturing  </li></ul><ul><ul><ul><li>Strong support of prime funds/teams </li></ul></u...
Summary <ul><li>Four key strategic drivers: </li></ul><ul><ul><li>compulsion; specialist funds; global approach; Group.   ...
Appendix: Investment Philosophy  <ul><li>EPS GROWTH   </li></ul><ul><ul><li>drives long term share prices </li></ul></ul><...
Equity Investment Team Global/International Equities David Leary Andrew Dalrymple Tom Mermagen Alistair Staddon Nicole Mar...
Global Fixed Interest Team Head of Global  Fixed Interest Kevin Colglazier Head of Global  Credit Malcolm White Head of UK...
FS Global Growth Fund Performance since inception to 30/05/03 Source: Reuters Hindsight, bid to bid, net income reinvested...
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First State UK - Business Overview

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First State UK - Business Overview

  1. 1. First State UK Business Overview July 2003
  2. 2. Agenda <ul><li>Company history </li></ul><ul><li>Current position </li></ul><ul><li>Strategic drivers </li></ul><ul><li>Core strategies </li></ul><ul><li>Appendix: Investment approach </li></ul>
  3. 3. Company history <ul><li>Colonial First State UK </li></ul><ul><li>Legacy of Colonial Life UK </li></ul><ul><li>Established in 1998 </li></ul><ul><li>1998 - acquired Co-op Investment Mgt </li></ul><ul><li>Mar 1999 - offered first external fund range in </li></ul><ul><li>May 1999 – combined investment teams </li></ul><ul><li>Investment/ business management separation </li></ul><ul><li>At SICO acquisition: </li></ul><ul><ul><li>£6.0bn FUM </li></ul></ul><ul><ul><li>45 staff (ex investments) </li></ul></ul><ul><ul><li>Poor external assets, profile and performance </li></ul></ul><ul><ul><li>Strong life company links </li></ul></ul>
  4. 4. Company history <ul><li>Stewart Ivory & Co </li></ul><ul><li>Management origins from 1873 (SAINTS) </li></ul><ul><li>Quasi-partnership in need of capital </li></ul><ul><li>Diverse business: </li></ul><ul><ul><li>Private clients </li></ul></ul><ul><ul><li>Listed trusts </li></ul></ul><ul><ul><li>UK pension funds </li></ul></ul><ul><ul><li>Small retail presence </li></ul></ul><ul><ul><li>US institutional accounts </li></ul></ul><ul><li>At SICO acquisition: </li></ul><ul><ul><li>£3.0 bn FUM </li></ul></ul><ul><ul><li>110 staff </li></ul></ul><ul><ul><li>Poor external assets, profile and performance </li></ul></ul><ul><ul><li>Lack of investment across the business </li></ul></ul>
  5. 5. Current position <ul><li>Focused business and investment entity </li></ul><ul><li>Funds under management £5.3B (May 03) </li></ul><ul><li>180 staff, 59 investment staff </li></ul><ul><li>Single product range </li></ul><ul><li>Strengthened investment team, and improving investment performance </li></ul><ul><li>Investment in systems, brand and distribution </li></ul><ul><li>Increasing brand awareness </li></ul><ul><li>Robust distribution development </li></ul><ul><li>Strong asset flow in a difficult environment </li></ul>
  6. 6. First State UK FUM breakdown May 03 <ul><li>Colonial First State Investments Group £ 34.9bn* </li></ul><ul><li>First State Investments (UK) £ 5.3bn </li></ul><ul><li>Global Equity Assets £ 1.9bn </li></ul>As at Mar 2003 All figures as at 30 May 2003 except Group figure which is as at 31 Mar 2003. Client Type: Product Type:
  7. 7. Fund ratings As at 30 May 2003 - - -  A - - British Smaller Companies - - -  - - - Corporate Bond - - -  A - - UK Gilt - A -  - A - Global Opportunities - - - - A - - British Mid-Cap A AAA AAA Citywire Bluerating      Standard & Poor's Fund Stars - 4 W-Rating 4 W-Rating 5 W-Rating 5 W-Rating Wassum Investment Network A - - Global Health & Biotechnology A A - Global Growth A AA A European Smaller Companies AAA AAA A Global Emerging Markets AAA AAA A Asia Pacific Standard & Poor's Fund Manager Rating Forsyth OBSR Fund Rating Feri Trust  
  8. 8. Brand : Awareness of Competitors (Total) Source : Continental Research, Ashes research 2003 % Yes
  9. 9. Strong asset flow in a difficult environment
  10. 10. Strategic drivers <ul><li>Advent of compulsion </li></ul><ul><li>Shift from “balanced” to “specialist” mandates </li></ul><ul><li>Growing demand for “global” approach </li></ul><ul><li>Asset management for Group entities </li></ul>
  11. 11. 1. Advent of compulsion <ul><li>The UK </li></ul><ul><li>£27 bn “savings gap” (source:ABI Sept ’02) </li></ul><ul><li>No consumer take-up (mistrust/understanding) </li></ul><ul><li>Failure of ‘Stakeholder’ </li></ul><ul><li>Poor standards of retail intermediation </li></ul><ul><li>Scheme deficits </li></ul><ul><li>Move from DB to DC </li></ul><ul><li>France & Germany </li></ul><ul><li>Proportionately similar savings gaps </li></ul><ul><li>Growing occupational pension sector </li></ul><ul><li>Same demographic profiles. </li></ul>
  12. 12. 2. Shift from balanced to specialist mandates <ul><li>Single manager, asset allocator model unsuccessful </li></ul><ul><li>Development/results of specialist houses </li></ul><ul><li>Role of asset consultants </li></ul><ul><li>“ Core” and “satellite” approach </li></ul><ul><li>Loss of mandates from traditional managers: </li></ul><ul><ul><li>Schroders – lost 40% of balanced mandates in ‘02 </li></ul></ul><ul><ul><li>Merrill Lynch – lost 25% of balanced mandates in ‘02 </li></ul></ul>
  13. 13. 3. Growing demand for global approach
  14. 14. 3. Growing demand for global approach <ul><li>Views of the global consulting firms </li></ul><ul><li>Fewer regional diversification opportunities: </li></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Communications </li></ul></ul><ul><ul><li>Cross-border investment </li></ul></ul><ul><ul><li>Continued opening of markets </li></ul></ul><ul><li>Increased analytical focus on global industries </li></ul><ul><li>Lack of consistent results in asset allocation </li></ul>
  15. 15. 4. Investment mgt for Group entities <ul><li>One centre of excellence: </li></ul><ul><ul><li>Global equities </li></ul></ul><ul><ul><li>Global fixed income </li></ul></ul><ul><li>Consistency of approach </li></ul><ul><li>Leverage infrastructure </li></ul><ul><li>Economies of scale </li></ul><ul><li>Future avenue of growth for Investment and Insurance Services (IIS) </li></ul>
  16. 16. ‘ Local’ leverage opportunity <ul><li>Expected development of intermediation </li></ul><ul><li>Growth in consumer awareness </li></ul><ul><li>Growth in platforms </li></ul><ul><li>Alignment of retail and institutional markets </li></ul><ul><li>Poor local standards of business management </li></ul><ul><li>Restrictions of legacy products and systems </li></ul><ul><li>Proven business model, refined for UK/Europe. </li></ul>
  17. 17. Core strategies <ul><li>1. Drive pan European distribution </li></ul><ul><ul><ul><li>Low cost of incremental business flows </li></ul></ul></ul><ul><ul><ul><li>Solid margins </li></ul></ul></ul><ul><ul><ul><li>Improved market accessibility </li></ul></ul></ul><ul><ul><ul><li>Relative ease of distribution </li></ul></ul></ul>
  18. 18. Core strategies <ul><li>Focus on institutional & mezzanine distribution </li></ul><ul><ul><ul><li>Leverage global consultant recommendations </li></ul></ul></ul><ul><ul><ul><li>Low cost of incremental business </li></ul></ul></ul><ul><ul><ul><li>Limited registry needs </li></ul></ul></ul><ul><ul><ul><li>Solid margins </li></ul></ul></ul><ul><ul><ul><li>First State operational strength </li></ul></ul></ul>
  19. 19. Core strategies <ul><li>Develop institutional distribution in the US </li></ul><ul><ul><ul><li>GEM market US$3.7bn, Global market $25bn (2002) </li></ul></ul></ul><ul><ul><ul><li>Quality of our key funds </li></ul></ul></ul><ul><ul><ul><li>Growing demand for global equity strategies </li></ul></ul></ul><ul><ul><ul><li>Solid margins </li></ul></ul></ul><ul><ul><ul><li>Babson acquisition </li></ul></ul></ul><ul><ul><ul><li>Leverage global consultant recommendations </li></ul></ul></ul>
  20. 20. Core strategies <ul><li>Focused manufacturing </li></ul><ul><ul><ul><li>Strong support of prime funds/teams </li></ul></ul></ul><ul><ul><ul><li>Build skills over medium term </li></ul></ul></ul><ul><ul><ul><li>Investment environment attracts talent </li></ul></ul></ul>
  21. 21. Summary <ul><li>Four key strategic drivers: </li></ul><ul><ul><li>compulsion; specialist funds; global approach; Group. </li></ul></ul><ul><li>Competitive advantages: </li></ul><ul><ul><li>business management; Group; heritage; global; use of technology. </li></ul></ul><ul><li>Robust business structure </li></ul><ul><li>Growing market recognition </li></ul><ul><li>Key growth opportunity for IIS </li></ul>
  22. 22. Appendix: Investment Philosophy <ul><li>EPS GROWTH </li></ul><ul><ul><li>drives long term share prices </li></ul></ul><ul><li>QUALITY </li></ul><ul><ul><li>determines the sustainability of EPS growth </li></ul></ul><ul><li>VALUATION </li></ul><ul><ul><li>is all important. Everything has a price </li></ul></ul>
  23. 23. Equity Investment Team Global/International Equities David Leary Andrew Dalrymple Tom Mermagen Alistair Staddon Nicole Mardell Trent Koch Global Emerging Markets Angus Tulloch Alan Nesbitt Charles Heenan Susie Rippingall Alistair Thompson David Gait Vijay Tohani Millar Mathieson Glen Finegan Scott McNab Health & Biotechnology Dr Joe Anderson Oliver Trefgarne Lorenza Castellon Technology &Communications Graham Hay Nigel Masding Financial Services Rob Grant Vincent Houtteville Consumer Products Neil Abbott Lynne Braddick Resources David Whitten Dr Joanne Warner Dr Chris Baker Todd Warren Continental European John Ewart Jimmy Burns North American Susan O’Brien Julian Bishop United Kingdom Derek Lygo Dr Paul Jourdan Adam White Mikhail Zverev Regional Teams Global Sector Analysts Global Teams Asia Pacific Angus Tulloch Alistair Thompson Susie Rippingall David Gait Vijay Tohani Scott McNab Equity Dealing Ian Firth Jeremy Campbell Stephen Petersen Matthew McKeith Chief Investment Officer Global Asset Management Stuart Paul Investment Operations Shaun Forster Michael Summers As at 30 th June 2003
  24. 24. Global Fixed Interest Team Head of Global Fixed Interest Kevin Colglazier Head of Global Credit Malcolm White Head of UK Fixed Interest John Creet Senior Portfolio Manager - Global Steven Murphy Portfolio Manager Cash Murray Collis Dealer Stuart Doyle Hong Kong Credit Team Staff: 4 Sydney Credit Team Staff: 8
  25. 25. FS Global Growth Fund Performance since inception to 30/05/03 Source: Reuters Hindsight, bid to bid, net income reinvested, in £ sterling
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