Baring Multi
                                  Asset Fund
                                  Asset allocation-led investing...
Multi-asset investing from Baring
Asset Management

Baring Multi                        Co

Asset Fund
Asset allocation: the most important investment
decision                                                                  ...
Taking advantage of a wide opportunity set                                 A proven investment approach
The Baring Multi A...
5-year track record of performance from the team                         As can be seen in the chart below, the Baring Dyn...
Our investment view: decrease exposure to risk                               Finally, a word on risk
assets               ...
PLEASE VISIT OR                ...
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  1. 1. Baring Multi Asset Fund Asset allocation-led investing Baring Asset Management Limited 155 Bishopsgate London EC2M 2XY APRIL 2010 Tel: +44 (0)20 7628 6000 FOR PROFESSIONAL ADVISERS ONLY Fax: +44 (0)20 7638 7928
  2. 2. Multi-asset investing from Baring Asset Management Baring Multi Co Asset Fund Asset allocation-led investing We believe in the equity risk premium: that investors are compensated for the higher risk of holding equities by higher real returns over the long-run. Furthermore, we believe that our multi-asset approach to investing, which we pioneered eight years ago in the institutional market, can deliver equity-like returns with less risk than holding an equity-only portfolio. We believe asset allocation, not stock or fund selection, is responsible for the majority of investment returns over the long term. Too often asset allocation is thought of as something static: an index weighting to which managers re-balance portfolios every few months. For us, it’s at the very heart of the investment process. We don’t attempt to call the direction of the market on a short- term basis. However, our experience suggests that if we can get the big decisions right, we can generate good long-term positive returns for investors. Since we pioneered managing money this way we have found that a growing number of pension funds agree with us. We have gained 16 consultant buy ratings and raised £2.7 billion in assets in our absolute return multi-asset investment strategies as at the end of February 2010. Twelve months ago, we launched the Baring Multi Asset Fund to retail investors in March 2009. The Fund aims to generate a capital return which exceeds UK inflation over the medium to long term. In an uncertain world, we believe that’s the type of return many investors are looking for. 1
  3. 3. Asset allocation: the most important investment decision The benefits of tactical asset allocation The way we manage the Baring Multi Asset Fund is asset Since we know that markets deliver returns unevenly through the allocation-led. We believe about 75% of investment returns business cycle we tactically adapt the asset allocation, with the aim of come from asset allocation, with fund and security selection generating investment returns when they are available, then reducing contributing the remaining 25%. risk when the environment deteriorates. The objective of the Fund is to generate a capital return in We believe the combination of strategic and tactical asset allocation excess of UK inflation (RPI) over the medium to long term, helps to reduce portfolio volatility compared to equities alone, and but there is no benchmark and no index against which the contributes to our meeting the investment objective of delivering returns fund is managed. This means that we don’t need to have a ahead of inflation. In this market environment, we believe that the ability starting bias towards any asset classes. to move quickly and take advantage of tactical asset allocation Instead, we rely on solid investment research to identify the opportunities as they arise will be key. most attractive investments at any given time. From this, we Current strategic and tactical asset allocation build a portfolio which seeks to meet the investment 10-year optimal portfolio objective. Our investment process Alternatives 8% Start with blank sheet of paper Property 8% UK Equity 35% RISK MANAGEMENT Identify best asset classes UK Fixed Income 30% Anticipate and respond to events quickly International Equity 19% Choose the best ingredients Predicted risk* 9.89% Current asset allocation Forward-looking return estimates P ro perty Cash We begin by analysing each asset class to determine what 3% 4% UK equity we believe its trend return will be over the long term. We are Go ld bullio n 26% forward looking rather than backward looking, and derive our 8% P acific ex return estimates from forecast trend growth, productivity and A lternatives Japan dividend levels for each major economy. 6% 2% Euro pean We then analyse “riskiness” by measuring the volatility of equity each asset and how it performs in relation to the other 2% UK credit investments we might make in the portfolio. We look for 13% Emerging investments which have a low correlation with other holdings. equity 2% By building a portfolio in this way, we can help to diversify A gricultural returns and manage investment risk, with the aim of equity achieving the investment objective. Glo bal bo nds 5% Glo bal index 19% Glo bal equity Taking a long-term view linked 6% 5% Having calculated the likely return, correlation and risk factors Predicted Risk 8.18% for each individual asset class, our optimisation software suggests an asset allocation for the portfolio which is then * Source: Barings. Risk = standard deviation of annualised return from asset reviewed and adjusted by the investment manager. allocation. Optimal and current asset allocation as at 28th February 2010. We call this the 10-year optimal portfolio. It is the portfolio we believe we could lock away in a drawer for ten years and which would still have a good chance of delivering the objective. 2
  4. 4. Taking advantage of a wide opportunity set A proven investment approach The Baring Multi Asset Fund benefits from a wide opportunity The Baring Multi Asset Fund might be relatively new to the set. Unlike some multi-asset funds, which are restricted to market, but we have successfully managed money for institutional investing in just the major asset classes, the Baring Multi Asset clients in this way since 2001. Fund can hold carefully selected alternative investments, Our experience covers bad times (2001-2002 and 2007-2008) as including commodities, property and private equity. well as good times (2003-2006 and 2009). This gives us valuable This means that we have greater flexibility when constructing the experience of how cross-correlations can change, how predicted investment portfolio whilst meeting the requirements of the IMA and actual risk can differ, and what tools are needed to protect the Cautious Managed Sector. At times of uncertainty this flexibility real value of investors’ money. will allow us to increase tactical exposure to funds of hedge At the end of February 2010 we had £2.7 billion under funds, cash, structured products and futures and options, with management in multi-asset absolute return portfolios, mainly for the aim of protecting the value of your investments. pension fund clients. We had 16 consultant buy ratings for our In practice, we believe that an investment return of RPI+4% p.a., ability in this area. net of fees, will be achievable over the long term. An experienced investment team Pragmatic implementation The Baring Multi Asset Fund is managed by Andrew Cole (bottom When it comes to implementing the tactical asset allocation row, second from left), a senior member of our Multi-Asset Team ideas we have identified, we are wholly pragmatic. We have the who has 30 years of investment experience. Including Andrew, flexibility to invest directly in the underlying securities, invest in a the Multi-Asset Team contains eight investment managers, with Barings fund, or invest in a fund managed by a third-party an average of more than 20 years of investment experience, and manager, and will pick the solution which we believe offers the one analyst. best value for investors. Andrew was appointed to the Strategic Policy Group (SPG), the Where the asset class and market are efficient, we are likely to company’s global macro research and Asset Allocation Team, in invest either directly or through an index fund, as these tend to 2005. He is chair of the SPG Risk Sub Group and a member of be lower cost options. However, in asset classes where manager the Economic Group. Andrew joined the Fixed Income skill can make a considerable difference to investment returns, Department at Baring Asset Management in 1986. He was we will assess all the options available before reaching a appointed a Director in 1994 and joined the Multi Asset Portfolio decision. We will generally look to manage money actively in Team in 1995. emerging equity markets for example. There is no obligation to buy Barings funds, and no double- charging from Barings on these products. Barings funds are assessed by the investment team in the same way as any other pooled fund, and must stand on their merits if they are to earn a place in the portfolio. Baring Multi Asset Fund characteristics Investment objective To generate a capital return which exceeds UK inflation over the medium to long term Investment approach Targeted return multi-asset investing Structure ICVC complying with Non-UCITS retail scheme (NURS) regulations Managers Andrew Cole IMA sector Cautious Managed Management fee Class A 1.5% AMC Dealing Daily Launch date 20th March 2009 3
  5. 5. 5-year track record of performance from the team As can be seen in the chart below, the Baring Dynamic Asset Allocation Fund, our flagship institutional product, ended the The charts below show the track record of the multi-asset team period in positive territory, despite exceptionally demanding in managing targeted return multi-asset portfolios, in the form of market conditions. This is significantly ahead of the MSCI World our Multi-Asset GBP Inflation/Cash Targeted Solutions: High Index and the IMA Cautious Managed Sector. Return composite. Full details of this can be found on page 5. Baring Dynamic Asset Allocation Fund track record The period shown is for the five years to the end of January 2010. Our track record shows that it is possible to deliver returns 130 Baring Dynamic Asset Allocation Fund similar to those available from global equity markets with typically MSCI AC World less risk, using our successful multi-asset approach. 120 IMA Cautious Managed Return % annualised 110 9.7 100 8.3 90 5.4 5.6 80 70 60 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Target Return FTSE All MSCI World Citi WGB Past performance is not a guide to future performance composite Share Index Index Index Source: Morningstar. Baring Dynamic Asset Allocation Fund inception date: 16th January 2007. Chart shows gross returns for the Fund, the IMA Cautious Managed sector and MSCI World Index from earliest available Risk data on 19th Jan 2007 to 31st January 2010. All in Sterling terms, indexed. 16.3 15.7 The Baring Multi Asset Fund’s track record The Baring Multi Asset Fund was launched in March 2009. 10.9 Although it is still early days for the Fund, we are pleased with its performance since launch. 8.5 (%) 30 25 Target Return FTSE All MSCI World Citi WGB composite Share Index Index Index 20 Past performance is not a guide to future performance st Source: Barings as at 31 January 2010 15 Reference to the index is for comparative purposes only. The composite risk and return data should be considered as supplemental information 10 which complements the Multi Asset GBP Inflation/Cash Targeted Solutions: High Return Composite presentation as provided on the following page. 5 Our institutional flagship fund points the way The Dynamic Asset Allocation Fund, the pooled fund we offer to 0 institutional investors in the UK, was launched in January 2007. 3 months 6 months 1 year Since While the funds have slightly different investment objectives and inception* charges, we believe the success of our absolute return multi- Baring Multi Asset Fund RPI +4% asset approach can be seen in the performance of this fund since its launch, compared to the MSCI World Index and the IMA Past performance is not a guide to future performance Cautious Managed Sector. Source: Morningstar, to end of March 2010. Bid to bid with net income reinvested, in Sterling. Inception 20th March 2009. 4
  6. 6. Our investment view: decrease exposure to risk Finally, a word on risk assets The Baring Multi Asset Fund is a targeted return multi-asset Since mid-2009 we have run the portfolio at a lower level of risk fund. It has a high degree of flexibility where it invests, including than we would normally expect over the longer term. In direct equities and bonds, pooled equities and bonds, cash and particular, we reduced equities and corporate bond positions in cash-like instruments, and various alternative investments such the belief that recovery in Western economies would be fragile. as commodities, property, private equity and hedge funds. Central banks are now beginning the slow process of As such, investment in the fund can involve exposure not just to withdrawing emergency measures introduced to support the the general volatility which can characterise equity and bond banking system, while governments are starting to roll back fiscal markets from time to time, but to the additional risk factors stimulus. Some of this is healthy, for example in China, where associated with investment in alternative investments, emerging authorities responded to a growth rate which reached 10.7% in markets and smaller companies. the fourth quarter of 2009. In Europe, the need to bring down These include liquidity and counterparty risks in the case of budget deficits will constrain growth. In the West more generally, certain alternative investments, and the possibility of a lower banks are curtailing some activities and shrinking parts of their standard of corporate governance, increased political risk and balance sheets in anticipation of tighter regulation. the likelihood of a high degree of volatility in the case of In bond markets, new issuance is expected to be at a high level, emerging markets and smaller companies. and this could force yields higher. In equities, the concern is that Returns from overseas equity markets can also be subject to company margins are relatively thin, leaving little room for fluctuations in exchange rates, which can have the effect of earnings downgrades. eroding or enhancing the value of the returns for investors. In this environment, we expect to remain reasonably cautious. A Although the manager will aim to generate a positive investment key test over the coming months will be evidence of whether the return ahead of inflation, it is possible that the asset allocation US consumer can bear slightly higher mortgage rates as the strategy and/or security selection will be unsuccessful and that a Federal Reserve stops buying mortgage bonds as part of its capital loss will be incurred as a result. Quantitative Easing programme. If the economy passes this test, For a full listing of the risk factors associated with the Baring equities should start to rally again. Multi Asset Fund investors should refer to the prospectus. Composite performance Baring Asset Management: Multi Asset : GBP Inflation/Cash Targeted Solutions: High Return Ending December 31, 2009 Period to date 3 Years per 5 Years per Results shown in GBP (3 Months) 1 Year annum annum Composite Gross of Investment Management Fees 3.19 21.40 6.42 10.22 Benchmark: RPI +4.5% p.a. 1.26 3.95 7.18 7.36 Benchmark: CPI +5% p.a. 1.75 7.28 7.83 7.62 For the purpose of GIPS Compliance, the "Firm" is defined as the investment firm Baring Asset Management Limited (and its relevant subsidiaries which are registered with the appropriate regulatory authorities to undertake investment business in those jurisdictions in which they operate) and Baring Asset Management Inc. (together hereinafter referred to as "the Firm"). The Composite is comprised of multi-asset accounts managed for Sterling based clients, which can invest across a broad spectrum of assets with an absolute return target. The investments strategy is to take an extended degree of risk in order to seek to achieve a return in line with the accounts investment objectives. The individual portfolios within the composite have the following current target objectives: 3mth LIBOR +4%; CPI +4.5%; CPI +5%; Produce Income; RPI + 4% (net of fees), RPI +4.5%; RPI +5%; RPI +6%; RPI +7%; To protect Capital & Produce Income; Total Return 7.5%, Total Return 8%. With effect from 1st April 2007 the Composite was renamed from 'Multi Asset Targeted Solutions GBP RPI +4.5% to + 5.5%'. Prior to 1st July 2006, the Composite was named 'Extended Risk Solutions GBP’. The Firm claims compliance with the Global Investment Performance Standards (GIPS ®). The benchmarks shown for comparison purposes are the RPI +4.5% per annum, and CPI + 5% per annum. Each monthly return for the CPI/RPI is calculated on an average of the monthly rate over the prior 12 months. A complete list and description of all composites and/or a presentation that adheres to the GIPS standards is available on request by sending an e-mail to Three portfolios run according to Baring Asset Management’s Multi Asset: GBP Inflation / Cash Targeted Solutions: High Return strategy have, on occasion, used equity index futures for the purpose of adjusting asset exposure and liquidity. Leveraged strategies have not been employed. 5
  7. 7. FOR FURTHER INFORMATION IMPORTANT INFORMATION PLEASE VISIT OR This document is approved and issued by Baring Asset Management CONTACT: Limited and in jurisdictions other than the UK it is provided by the France and Belgium: appropriate Baring Asset Management company/affiliate whose name(s) Benoit du Mesnil du Buisson and contact details are specified herein. This is not an offer to sell or an +33 (0)1 53 93 60 00 invitation to apply for any product or service of Baring Asset Management Email: and is by way of information only. Before investing in any product, we recommend that recipients who are not professional investors contact their Jérôme Spohn-Villeroy financial adviser. +33 (0)1 53 93 60 04 Email: All relevant documents relating to the product, such as reports and accounts and prospectus (which specify the particular risks associated with a product, Germany, Luxembourg and the Netherlands: together with any specific restrictions applying and the basis of dealing) Roland Schmidt should be read. The information in this document does not constitute +49 (0)69 7169-1832 investment, tax, legal or other advice or recommendation or, an offer to sell Email: or an invitation to apply for any product or service of Baring Asset Thomas Justen Management. +49 (0)69 7169-1826 The value of any investments and any income generated may go down as Email: well as up and is not guaranteed. Past performance is not a guide to future Marion Wolf performance. Quoted yields are not guaranteed. Changes in rates of +49 (0)69 7169-1814 exchange may have an adverse effect on the value, price or income of an Email: investment. There are additional risks associated with investments (made Middle East: directly or through investment vehicles which invest) in emerging or Rob Lay developing markets. Investments in higher yielding bonds issued by (+44) 020 7214-1025 borrowers with lower credit ratings may result in a greater risk of default and Email: have a negative impact on income and capital value. Income payments may constitute a return of capital in whole or in part. Income may be achieved by South America, Italy and Spain: foregoing future capital growth. We reasonably believe that the information Nick Davidson contained herein from 3rd party sources, as quoted, is accurate as at the (+44) 020 7214 1847 date of publication. The information and any opinions expressed herein may Email: change at any time. This document may include internal portfolio Switzerland and Scandinavia: construction guidelines. As guidelines the fund is not required to and may Jens Bjorheim not always be within these limits. These guidelines are subject to change (+44) 020 7214 1907 without prior notice and are provided for information purposes only. Email: Compensation arrangements under the Financial Services and Markets Act UK, Ireland & Channel Islands: 2000 of the United Kingdom will not be available in respect of any offshore Rod Aldridge fund. Shares in the Fund are not available in any jurisdiction in which the (+44) 020 7214 1005 offer or sale would be prohibited; in particular the Fund may not be sold Email: directly or indirectly in the US or to a US person. Subscriptions will only be Carl Wilmore received and shares issued on the basis of the current Prospectus. (+44) 020 7214 1227 For data sourced from Morningstar: © Morningstar, Inc. all rights reserved. Email: The information contained herein: (1) is proprietary to Morningstar and/or its Matthew Finch content providers; (2) may not be copied or distributed; and (3) is not (+44) 020 7214 1825 warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from Email: any use of this information. UK Sales Support 0845 082 2479* Email: Version 03/2009 *Telephone calls may be recorded and monitored. Baring Asset Management Limited 155 Bishopsgate, London, EC2M 3XY Authorised and regulated by the Financial Services Authority Complied (London): 16 April 2010 Follow us on