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  • Thank you for the introduction…. Again, welcome everyone. It’s my pleasure to present to you today some myths about global equity investing. My name is Stephen Kwa and I am responsible for product and marketing at Schroders. Prior to joining Schroders this year I was a product specialist at Duetsche Asset Management in the quant equities grouop.
  • The first myth I’d like to talk about today is that cap weighted indices are hard to beat. There are actually many limitations with cap weighted benchmarks. I will be spending the next 10 minutes exploring some of these issues and why we need to take a different approach when it comes to investing into global equities. The first limitation I’d like to discuss is to do with the opportunity set.
  • In Australia we often equate the universe of opportunities with the ASX 200 index. Once we step outside of Australia we usually think of our opportunities defined by the MSCI World index – 23 countries and over 1900 stocks. However, are we really thinking global. Increasingly, some asset managers are broadening their universe to include emerging countries and the MSCI All Country index is often used to represent this opportunity set. The inclusion of emerging market stocks adds another 800 stocks to the universe to give a total of over 2700 in the MSCI All Country index . However, I ask again, are we really thinking global? why stop there? At Schroders we believe that if you want to invest globally why not look everywhere at every opportunity. Can you imagine that there is a universe of over 15,000 stocks out there? Not all of these stocks are small. Did you know that a stock in the US has to have a market cap of almost A$4 billion to make it into the index.! A lot of small and mid cap stocks are missed by our standard benchmarks. however, they represent an investment opportunity nonetheless and should not be forgotten. Consider this …………… Don’t let your index limit your investment opportunities. Don’t stop halfway - if you are going to invest global, invest truly global. Go as broad as you can.
  • The next issue with cap weighted benchmarks is that they really don’t give you good diversification. In fact they have quite significant biases which we probably don’t appreciate. The MSCI World ex Australia index is one of the most often used and followed benchmarks. Most global equity managers have portfolios which look and perform similar to this benchmark. But let’s see just what you get: 1800 of the biggest stocks The top 150 stocks make up over half of the benchmark. The top 40 stocks make up a quarter of the benchmark Effectively your returns will be dominated by the biggest stocks from developed markets. Furthermore, half of your porffolio will be to just one country the USA, while the other 22 countries split the rest – hardly diversified. No exposure to emerging markets I would argue that the MSCI World index has a developed market, large cap bias!!! The conclusion – go unconstrained, don’t let the benchmark force you into postiions where developed market large cap stocks dominate your portfolio.
  • Finally, did you know that an index is a momentum strategy which forces you to increase exposures to stocks, sectors or countries which have gone up in value? For example, the weighting of technology within the MSCI World index is shown in this chart. You will all remember very clearly the tech bubble of the late 90’s which reached such a stage that 36% of the world capitalisation was in tech!!!! An index fund or a manager who hugs the benchmark would have been forced to hold or buy tech despite the sillyness of the valuations and then watch as all the gains evaporated when the inevitable bust occured. A cap weighted benchmark, and those managers who invest in line with a cap weighted benchmark are following a momentum strategy. This means you buy more of what has gone up in price and sell what has gone down in price. This is a buy high, sell low strategy and doesn’t make sense What are we always tauught in investment 101? Rebalance, take some profits off the table. Buy low and sell high. Well index funds and those managers investing in line with the benchmark seem to have forgotten this lesson!!!!!
  • I have spent a lot of time talking about the limitations of cap weighted indices. It’s important to recap because our industry too often accepts with blind faith that managing to a cap weighted benchmark like the MSCI World is a sensible way to manage a portfolio of global stocks. We rarely question it’s characteristics and suitability as a starting point for creating/building a global equity portfolio. However, we have seen Its construction excludes many attractive investment opportunities It has a bias to developed markets not the best markets It has a bias to large cap stocks, not the best stocks It is a momentum strategy forcing you to buy high and sell low. A global equity strategy can beat a cap weighted index, if we release the constraints which bind a manager to a cap weighted benchmark. Allow a global equity portfolio to go truly global and allow a manager to drop constraints.
  • The next myth I’d like to talk about is the idea of concentrated portfolios. Are they always better than diversified ones? Martin talked about concentrated……..
  • However, before talking about concentration I’d like to discuss conviction. We have all read research reports which provide glowing reviews for those managers who have high conviction. What is conviction? It is the ability of a manager to back their best investment ideas in a meaningful way. Conviction is good because we don’t want managers to look like the index. We pay managers to stand out from the crowd. What are some of the ways in which manaers can express their conviction? Well, concentrating your bets is one way this can be done. Unfortunately it is often considered the only way. Well it’s not. There are other ways: 1. Drop constraints forcing you to hug the benchmark 2. New sources of alphas = > Broadening your universe A concentrated portfolio guarantees an increase in risk because you are betting big on a few stocks. It’s like putting all your eggs in one basket but doesn’t necessarily guarantee higher returns. I am not saying that concentration is wrong – we just need to go in, eyes wide open, to the fact that concentration is risky. The other approaches of dropping constraints or adding new sources of alpha can achieve equivalent levels of conviction but at much lower levels of risk Let’s explore this statement further.
  • At Schroders we have a global equity product called Global Active Value diversifies across more than 500 stocks yet looks nothing like the index. A good measure of conviction is Tracking Error. Remember conviction is not looking like the index. Tracking error measures how much a fund’s returns deviate from the benchmark. Concentrated managers tend to perform very differently to the benchmark and thus have a high tracking error in the 5-10% pa range. More traditional equity managers would typically have a tracking error in the 2-5% pa range. Concentrated managers achieve their high tracking error by betting big on just a few stocks. Our GAV strategy diversifies over more than 500 stocks yest still retains high tracking error relative to every major global equity and style index because we go down the path of building conviction from our broad universe and dropping constraints.
  • So what can we conclude about concentration? I think there is a place for concentrated portfolios so long as you appreciate the risk which this strategy entails for your clients and your business. Concentration doesn’t guarantee higher returns but there is the risk of a significant blow up. Again, it’s all contrary to what we have learnt in investment 101. Don’t put all your eggs in one basket – to control for risk you need to diversify. Don’t confuse concentration with conviction. We believe that rather than concentrating your bets on a few stocks, it is far better to diversify as broadly as you can and dropping constraints and expanding your universe to achieve a high conviction portfolio
  • The final myth I will be talking about is that you have to be small to be good. Martin talked earlier about the following points: FUM is one consideration in terms of manager size as we are concerned about a manager’s ability to add value as they become big Within the global equity space this is much less of an issue as the global equity market is so huge relative to the Australian market. In an increasingly global environment, it becomes essential to have scale to link into what’s happening beyond our shores.
  • What are the claimed advantages of being small? With fewer staff and less beaurocracy smaller managers should be more nimble This is an advantage for those high turnover strategies which trade maket volatility – however less relevant for low turnover longer horizon investment strategy Small managers can reposition their portfolios quickly and invest in small companies As small managers are typically concentrated ones they can often reach capacity limits much faster than larger managers who have the resources to properly research more stocks and create more diversified portfolios. Small managers are typically owned by the fund managers better aligning interests Fund managers can be equally incentivised at both small and large managers. I would argue that a it is not healthy to have a fund manager’s judgement complicated by the risk of business failure. Small managers are good managers if you rely on a “star” fund manager who knows his universe of stocks well.. However, the asset management industry is getting increasingly complicated and becoming increasingly global at an astonishing rate. It is impossible for one or two individuals to process all the information available on the global opportunities (remember there are over 15,000) so typically small managers will launch concentrated portfoliios. They will research a small universe of stocks and research it very well. However, as we saw there are dangers from concentrating your portfolio.
  • We have covered quite a few myths. What I’d like to do now is to bring it all together. The first myth was to do with the limitations of cap weighted benchmarks. What we learnt was to: Go global Remove constraints These will give us a portfolio with conviction. The second myth I talked about was to do with the issue of concentration. What we learnt was that concentration increases the volatility of returns. We can reduce this risk by simply diversifying yet still have a portfolio with high conviction. Finally, we looked at the issue of small managers. Small managers are restricted to a smaller investment universe and tend to concentrate their bets in areas they know well. However, you need the resources of a large organisation to provide the coverage and tools necessary to invest in a truly global universe. At Schroders we have such a product available now – called GAV. Compared with other managers especially concentrated products we cover a broader universe – we are truly global. Like concentrated products we also have high return expectations and tracking error. However, unlike concentrated products we diversify across more than 500 stocks and this diversification provides greater return predictability and lower volatility than a concentrated portfolio. The next few slides provide a brief overview of GAV. I hate presentations which have too much of a product spin however GAV is so different in my mind that it warrants special attention.
  • In terms of regional positioning GAV has a 30% exposure to the US compared with around 50% in the MSCI World ex Australia index. The weightings across the other regions are fairly uniform.
  • Now I’d like to turn to the final part of my presentation which provides a brief overview of the economic and market outlook.
  • Let’s start with a review of the first 9 months of 2006. The MSCI World ex Australia index has returned 8.4% since Jan 2006 to the end of Sep 2006. The MSCI Emerging Markets index has returned a healthy 12.4% over this same period. However, these numbers fail to show the roller coaster riide we have been on this year. From the chart on this slide we can see that world markets began the year strongly, with world equities rising around 7% driven by continued strong corporate earnings while emerging markets rose close to 20%. Emerging markets become the latest bubble attracting hot retail money with over $XX billion in funds flowing into this asset class in the first 5 months of this year. Markets peaked on May 11 and then experienced a one month correction which saw some of the speculative froth removed from emerging marketss. What triggered the correction? Since Jun a number of positive factors have seen markets continue to rise: Expectation that rates are at or near peak in the US Fears of impact of commodity prices on inflation subsiding as commodity prices have been easing since mid June. Realisation that US housing downturn has not had the bad knockon effect in the US 8.41 World Index 4.63 Small Companies 12.41 Emerging 13.15 Asia ex Japan 8.88 UK 14.05 Europe ex UK 1.29 Japan 8.03 US YTD Sep 06 Local return %
  • In conclusion: We have been talking about global equity investing and at Schroders we have a fund, GAV which provides you with access to global equity opportunities. It is time for us to question some of the myths of global equity investing. Ask yourself, are you getting the most out of your global equity opportunities or are you constrained to a limited universe of stocks, biased towards developed markets and big stocks or concentrated in too few stocks with far too much risk? At Schroders we believe that you can do better from a global equities by: Going truly global – accessing opportunities from over 15,000 stocks Dropping constrainnts – stop hugging the benchmark and investing in the best stocks not the biggest ones. Diversifying broadly – to reduce risk and understanding that this doesn’t have to reduce conviction Schroders Global Active Value – invests in most attractive opportunities from this truly global universe with broad diversification and a differentiated process. Available from the following platforms. If you want GAV on your platform of choice please let us know by completing the GAV form in your conference kits and leaving it behind. Your grass roots support helps to get GAV on the shelf of your choice.
  • In conclusion: We have been talking about global equity investing and at Schroders we have a fund, GAV which provides you with access to global equity opportunities. It is time for us to question some of the myths of global equity investing. Ask yourself, are you getting the most out of your global equity opportunities or are you constrained to a limited universe of stocks, biased towards developed markets and big stocks or concentrated in too few stocks with far too much risk? At Schroders we believe that you can do better from a global equities by: Going truly global – accessing opportunities from over 15,000 stocks Dropping constrainnts – stop hugging the benchmark and investing in the best stocks not the biggest ones. Diversifying broadly – to reduce risk and understanding that this doesn’t have to reduce conviction Schroders Global Active Value – invests in most attractive opportunities from this truly global universe with broad diversification and a differentiated process. Available from the following platforms. If you want GAV on your platform of choice please let us know by completing the GAV form in your conference kits and leaving it behind. Your grass roots support helps to get GAV on the shelf of your choice.
  • Competitive advantage to have strong small cap team in-house Where many boutique and ethical managers have added value
  • Important to understand what this means

Transcript

  • 1.  
  • 2. Adrian Whittingham Head of Retail
    • Concentrated is better
    • High dividend yield equals safety
    • You have to be small to be good
    • Cap weighted indices are hard to beat
  • 3. Martin Conlon Head of Australian Equities
  • 4. Our Philosophy
  • 5. Our Philosophy
    • External pressures to change product and business direction may not always be well informed
    • Change should be in the best interests of our clients
  • 6. Myth Concentrated is better
  • 7. Concentrated Portfolios – Will they win the race?
    • Betting on fewer horses in the race doesn’t change the odds
    • “ Sure things” don’t always win
    • Knowing a lot about 1 or 2 horses isn’t the point. To win you need to know how good they are versus the field
    • Confidence from picking winners in the past doesn’t improve your odds in the next race
    • Educated punters focus on process, not on outcomes
    Is Concentrated Better?
  • 8. Specialisation – has it gone too far?
    • Clients of fund managers are consolidating rapidly while fund managers are fragmenting
    • Decisions across asset classes have been largely removed from fund managers
    • Myopia is a significant danger for fund managers as product specialisation narrows
    Is Concentrated Better?
  • 9. High Dividend Yield = Safe Investment Myth
  • 10. Stable business may not be a stable investment
    • Aggressive gearing necessarily makes an equity investment more volatile
    • Valuations are based on extrapolating cashflows into the distant future
    • Distributions are not supported by current cashflow
    Source: Morgan Stanley as at 30 June 2006 Risk Free Rate Inflation Traffic MIG Valuation Sensitivity -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 1% -1%
  • 11. Stable business may not be a stable investment
    • Investor’s focus on yield is
    • removing focus on underlying
    • cashflow
    • Absence of tax and depreciation
    • for most infrastructure and
    • property trusts means yield
    • comparisons with traditional
    • companies are misleading
    Source: Company Reports, Schroders as at 30 June 2006 7.6% 7.1% 4.6% 6.3% 4.1% 0 5 10 15 20 25 30 35 40 45 Macquarie Infrastructure Group Macquarie Goodman Westfield Group Coca-Cola Amatil Telstra 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 EV/EBITDA Multiple Distribution Yield
  • 12. Stable business may not be a stable investment Source: Company Reports, Schroders as at 30 June 2006 High Dividend Yield = Safety?
  • 13. Myth You have to be small to be good
  • 14. How have smaller managers fared?
    • Limited evidence of smaller managers generating superior performance
    • Strong performance of small cap stocks has provided a tailwind
    • Track records are generally short and don’t cover varied market conditions
    • There are many good boutiques, but size in itself is an overemphasised attribute
    Australian Equity Managers/FUM vs Performance Source: Mercer Australian Shares Survey 3 Years Ended 31 Aug 2006 FUM Source: van Eyk, Rainmaker, Lonsec S&P/ASX Accum Index 3 Year Return to 31 August 2006 22.1% 0.0 5.0 10.0 15.0 20.0 25.0 30.0 FUM A$ Billion 0 5 10 15 20 25 30 35 3 Year Performance % pa FUM (lhs) 3 yr Perf % (rhs) Schroder Australian Equity
  • 15. How have smaller managers fared?
    • Size of FUM is only one factor impacting investment performance – it shouldn’t be overemphasised
    • Size is more important to short-term trading based processes than investment processes
    • As companies become global, fund managers must have global capability
    Incentivisation Global Capability Team & Focus Systems & Resources Process FUM Portfolio Performance
  • 16. Competition Works
    • As the number of small boutiques proliferates, the claimed advantages of being small and nimble will dissipate
    • Hedge funds have exhibited similar characteristics – their number has proliferated, excess returns have dwindled
    Does Size Matter?
  • 17. Myth Cap weighted indicies
  • 18. Enough Diversity in the ASX300?
    • Cap weighted indices often over emphasise sectors with strong recent performance
    • A well diversified portfolio may significantly depart from the index
    • Diversification is key – do your clients have property exposure in addition to a broader ASX mandate?
    Diversify Source: ASX300 as at 30 June 2006
  • 19. Market Outlook
  • 20. Market Outlook
    • Momentum in earnings and returns is slowing
    • Defensive assets are not defensively priced
    • Despite weaker earnings environment, riskier earnings streams offer greater reward
    Return on Equity Return on Equity Source: Schroders as at 30 June 2006 72 76 80 84 88 92 96 00 04 08 4 6 8 10 12 14 16 18 %
  • 21. Australian Equity Fund Performance Source: Schroders, performance is to end Sep 06, post fee %
  • 22. Myths
    • Concentrated is better
    • High dividend yield equals safety
    • You have to be small to be good
    • Cap weighted indices are hard to beat
  • 23. Where can you access us?
    • AMP
    • Portfolio Care
    • AUSMAQ
    • AXA Generations
    • AXA Summit
    • Asgard
    • BT Wrap
    • BT Wrap Essentials
    • Fiducian
    • First Choice
    • ING One Answer
    • IOOF
    • Macquarie Wrap
    • MLC Masterkey
    MLC Masterkey Custom Navigator Navigator Access Netwealth Investments Ltd Oasis Perpetual Wealthfocus Synergy Capital Skandia Tower Trust Westpac Life & PPS Zurich Financial Services
  • 24. Stephen Kwa Head of Product & Marketing
  • 25. Agenda
    • Myths in global equity investing
      • Cap weighted indices are hard to beat
      • Concentrated is better
      • Small is good
    • Schroder Global Active Value Fund (Hedged)
    • Market Review
  • 26. Myth Cap weighted indices are hard to beat
  • 27. Where do you look for global opportunities?
    • It’s a big world of opportunity…
    All global stocks (>15,000) MSCI All Country World (>2,700) MSCI World (>1,900) Consider this… In the top 100 stocks YTD Sep 06, Go broad Source: Schroders, MSCI Australian stocks ASX 200 Paladin +145% Pan Fish (Norway) +155% Akamai Tech (US) +151% Shenzhen Inv (China) +153% The other 96 stocks average stock +406%
  • 28. Is your benchmark biased?
    • 1,831 biggest stocks in the world
    • Half of the benchmark is in the top 150 stocks
    • A quarter of the benchmark is in the top 40 stocks
    • Exposure to big, liquid stocks in developed markets.
    • IT HAS A DEVELOPED MARKET, MEGA CAP BIAS!!!
    Source: MSCI at 29 September 2006 Go unconstrained MSCI World ex Australia (unhedged to AUD) index is the most common benchmark used for international equities.
  • 29. Other benchmark limitations
    • Buy & Hold / Momentum strategy
      • greater weight on stocks which have gone up
    • Classic example - Tech boom of late 90’s
    Technology/Telecoms weight as a % of MSCI World Follow markets up… and follow them back down! Invest Without Constraints Source: Schroders, MSCI Do you want 36% of your portfolio in tech stocks here?
  • 30. Limitations of cap weighted indices
    • Universe excludes valuable investment opportunities
    • Bias to developed markets not the best markets
    • Bias to large stocks not the best stocks
    • Momentum strategies forcing you to buy high and sell low
    Go global and unconstrained
  • 31. Myth Concentrated is better
  • 32. Concentration or Conviction?
    • Conviction = Backing your investment ideas
    • Not looking like the index
    • Drop constraints
    • Allow greater flexibility in stock, sector, region and currencies
    • New sources of alphas
    • Take off index bets
    • Emerging, small/micro
    • caps, etc
    • Shorting
    Conviction NOT concentration
    • Concentration
    • Reduce number of stocks and increase bet size
  • 33. Diversification with conviction Global Active Value Tracking Error versus global indices Source: Schroders, Barra Based on Schroder Global Active Value Fund, 29 September 2006 Tracking Error (%pa) Tracking Error: How much a fund’s returns deviate from the benchmark return Conviction with diversification
  • 34. Myth: Concentrated is better
    • Concentration = more volatile returns
    • Don’t confuse conviction and concentration
    Conviction with diversification
  • 35. Myth You have to be small to be good
  • 36. Myth: You need to be small to be good
    • The claims:
    • More nimble and faster decision making
    • Fewer capacity issues, can buy smaller stocks
    • Better aligned incentives as fund managers own the business
    • The reality:
    • Small is less relevant for low turnover long term strategies
    • Capacity less of an issue in global markets
    • Fewer distractions of business risks
    • Systems and infrastructure
    • Trading costs
    Does size really matter?
  • 37. Bringing it all together
    • Go global:
    • Adopt widest possible universe
    Schroder Global Active Value Remove constraints: Freeing ourselves from the rules of the benchmark boosts returns Diversify broadly: To manage risk yet retain high conviction Source: Schroders Unifying strategy Region/sector weights Stock weights Unconstrained bottom-up Non cap weighted, max 0.5% *Tracking error is not targeted, based upon simulations we expect a range of 5 to 10% p.a. relative to the MSCI world or comparable index Target excess return Number of stocks Tracking error 3% to 4% p.a. 500+ 5 to 10% p.a. Global Active Value Style Global Value Universe >15,000 stocks > 45 countries
  • 38. Portfolio positioning – Cap weights
    • Mega and large caps crowd out other opportunities
    • Mid cap stocks offer attractive opportunities
    Source: Schroder Global Quantitative Active Value Fund, MSCI World ex Australia as at 29 September 2006 All cap not large or small cap Mega and large account for 90% of the index Mid cap offers attractive opportunity
  • 39. Portfolio Positioning - Regions
      • More even allocation between regions
      • Within Emerging Markets Asia is favoured
    Source: Schroder Global Active Value Fund, current weights at 29 September 2006
  • 40. Global Active Value Performance Source: Schroders. Inception is 01 September 2005 to 29 September 2006 Performance is in AUD and post fees Schroder Global Active Value relative to MSCI World ex Australia (Both hedged to AUD) (Inception: 1 September 2005)
  • 41. GAV complements key competitors Source: Zephyr, Schroders Based on Schroder Global Active Value Composite and Backtest, 31 July 2003 to 30 June 2006 Global Active Value Correlation of Excess Returns with key competitors
  • 42. Market Review
  • 43. Global Equity Returns Source: MSCI as 29 September 2006 12.4% 8.4%
  • 44. Conclusion
    • Myths
    • Cap weighted benchmarks are hard to beat
    • Concentrated is better
    • Small is good
    Diversified Global Global Diversified Unconstrained Value
  • 45. Schroder Global Active Value
    • Available from
    • Direct
    • BT Wrap
    • Macquarie Wrap
    • SMF
    • Global Active Value offers a robust and repeatable process for capturing opportunities from global equity investing
    Global Unconstrained Diversified Global Diversified Value
  • 46. Panel Discussion
    • Tim Farrelly, Principal of farrelly’s
    • Marcus Hanel, Associate
    • Standard&Poor’s
    • Randal Jenneke, Head of Research
    • Schroders
    • David Philpotts, Portfolio Manager
    • Global Active Value
    • Schroders
  • 47. farrelly’s +3.6%pa +9.1%pa Small value and Big value vs All Ords 0.400 0.600 0.800 1.000 1.200 1.400 1.600 1.800 89 91 93 95 97 99 01 03 05 Small value vs All Ords Large value v All Ords
  • 48. Performance of large, mid & small caps
    • As at June 30, 2006 (% p.a.)
    • Source: Standard & Poor’s
    . CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. 0% 5% 10% 15% 20% 25% 30% 35% 1 year return 3 year return 5 year return Large Cap (1-50 ) Mid Cap (51-100 ) Small Cap (ex 100)
  • 49. Mainstream vs boutique market cap exposure
    • As at June 30, 2006
    • Source: Standard & Poor’s
    . CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s. Large Cap (1-50) Mid Cap (51-100) Small Cap (ex 100) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% S&P/ASX 200 Accumulation Index Average Mainstream Manager Average Boutique Manager
  • 50. farrelly’s Relative performance of Boutiques and Institutions for Australian equity portfolios Boutiques v Institutions 90 95 100 105 110 115 120 125 130 135 140 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
  • 51. farrelly’s Pricing Small v Big Australia 10 12 14 16 18 20 22 24 97 98 99 00 01 02 03 04 05 PE Ratio ASX 100 ASX Small Ords
  • 52. Disclosure
    • Analyst Disclosure: Analyst(s) remuneration is not linked to the rating outcome. The Analyst(s) may hold the financial product(s) referred to in the website or a rating report but Standard & Poor’s considers such holdings not to be sufficiently material to compromise the rating or opinion. Analyst(s) holdings may change during the life of a rating report. The Analyst(s) certify that the views expressed in the website or a rating report reflect their personal, professional opinion about the financial product(s) to which the website or report refers.
    • Standard & Poor’s Disclosure: In the event of any person subscribing to the financial product(s) referred to in the website or a rating report, such subscriptions may result in a Standard & Poor’s client receiving a commission, fee or other benefit or advantage. Details of any such benefits can be obtained from your financial adviser. Standard & Poor’s itself does not receive any commission. Prior to the assignment of any rating, the fund manager agreed to pay Standard & Poor’s a fee for the appraisal and rating service rendered. Standard & Poor’s assign ratings using comprehensive and objective criteria. Standard & Poor’s fee is not linked to the rating outcome. Costs incurred during the rating process, including travel and accommodation expenses, may be paid for by the fund manager to enable on site reviews. Standard & Poor’s does not hold or have a material interest in the financial product(s) referred to in the website or a rating report. Standard & Poor’s associates may hold the financial product(s) referred to in the website or a rating report but detail of these holdings are not known to the Analyst(s). Standard & Poor’s from time to time provides fund managers with investment data, research software, consulting and other financial planning services. Standard & Poor’s is a wholly owned member of the McGraw Hill Companies, a New York Corporation. The analytic services and products provided by Standard & Poor’s are the result of separate activities in order to preserve the independence and objectivity of each analytic process. Each analytic product or service is based on information received by the analytic group responsible for such product or service. Standard & Poor’s has established policies and procedures to maintain the confidentiality of non-public information received during each analytic process. Standard & Poor’s holds an Australian Financial Services Licence Number 258896.
    •  Standard & Poor’s Information Services (Australia) Pty Limited
    . CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s.
  • 53. Disclosure
    • Analyst Disclosure: Analyst(s) remuneration is not linked to the rating outcome. The Analyst(s) may hold the financial product(s) referred to in the website or a rating report but Standard & Poor’s considers such holdings not to be sufficiently material to compromise the rating or opinion. Analyst(s) holdings may change during the life of a rating report. The Analyst(s) certify that the views expressed in the website or a rating report reflect their personal, professional opinion about the financial product(s) to which the website or report refers.
    • Standard & Poor’s Disclosure: In the event of any person subscribing to the financial product(s) referred to in the website or a rating report, such subscriptions may result in a Standard & Poor’s client receiving a commission, fee or other benefit or advantage. Details of any such benefits can be obtained from your financial adviser. Standard & Poor’s itself does not receive any commission. Prior to the assignment of any rating, the fund manager agreed to pay Standard & Poor’s a fee for the appraisal and rating service rendered. Standard & Poor’s assign ratings using comprehensive and objective criteria. Standard & Poor’s fee is not linked to the rating outcome. Costs incurred during the rating process, including travel and accommodation expenses, may be paid for by the fund manager to enable on site reviews. Standard & Poor’s does not hold or have a material interest in the financial product(s) referred to in the website or a rating report. Standard & Poor’s associates may hold the financial product(s) referred to in the website or a rating report but detail of these holdings are not known to the Analyst(s). Standard & Poor’s from time to time provides fund managers with investment data, research software, consulting and other financial planning services. Standard & Poor’s is a wholly owned member of the McGraw Hill Companies, a New York Corporation. The analytic services and products provided by Standard & Poor’s are the result of separate activities in order to preserve the independence and objectivity of each analytic process. Each analytic product or service is based on information received by the analytic group responsible for such product or service. Standard & Poor’s has established policies and procedures to maintain the confidentiality of non-public information received during each analytic process. Standard & Poor’s holds an Australian Financial Services Licence Number 258896.
    •  Standard & Poor’s Information Services (Australia) Pty Limited
    . CONFIDENTIAL AND PROPRIETARY. Permission to reprint or distribute any content from this presentation requires the written approval of Standard & Poor’s.
  • 54. Disclaimer
    • This presentation is intended solely for the information of the person to whom it was provided by Schroder Investment Management Australia Limited (ABN 22 000 443 274) (Schroders). Investment in the Schroder Australian Equity Fund or the Schroder Global Active Value Fund Hedged (“the Fund”) may be made on an application form in the Product Disclosure Statement available from the Manager website www.schroders.com.au. It does not contain and should not be taken as containing any securities advice or securities recommendations.
    • Schroders does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation. Except insofar as liability under any statute cannot be excluded, Schroders and its directors, employees, consultants or any company in the Schroders Group do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this presentation or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this presentation or any other person. Returns shown are before tax and after fees and all income is reinvested.
    • You should note that past performance is not a reliable indicator of future performance. Opinions constitute our judgement at the time of issue and are subject to change.
  • 55.