Bankhall Conference 2009 -Henderson


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  • Central banks, globally, have cut rates in attempt to push down borrowing costs across the economy
  • The result is a global economy that seems to be slipping towards recession We’ve shown the UK here. In comparison: -2% in 74/75; -4% in 80/81; -2% in 90/91
  • Asset allocation is key! Here are a list of themes and how the team played them across the existing Multi Asset portfolios. Although this is no strict list of events, these are opinions that Bill has followed producing successful performance, and this gives you an example of the team’s behaviour and reaction to market conditions. Applications – Buying UK Mid-Cap in Q1 2009 = Old Mutual UK Mid Cap Select Technology = Henderson Technology Government bonds (2008) = 10-year gilts Note: Emphasise patience, and asymmetric outcomes Note: This may also be a good moment to explain how Bill “challenges” buy / sell decisions with the rest of the team
  • Bankhall Conference 2009 -Henderson

    1. 1. October 2009
    2. 2. Henderson New Star <ul><li>Agenda </li></ul><ul><li>Introduction of Henderson New Star </li></ul><ul><li>Market Overview </li></ul><ul><li>What we like! </li></ul><ul><li>Summary </li></ul>Source: Henderson Global Investors, as at 30 June 2009
    3. 3. A history of Henderson New Star De-merged from AMP. HHG PLC returns to being an independent asset management company Bought by AMP and merged with AMP Asset Management Acquired Touche Remnant, establishing Henderson as the UK’s leading investment trust manager Listed on the London Stock Exchange Henderson starts managing pension funds Founded to administer the estate of Alexander Henderson 2003 1998 1934 1975 1983 1992 2008 The company is incorporated in Jersey and tax-resident in the Republic of Ireland 2009 Henderson buy New Star Asset Management
    4. 4. Seven stages of scepticism <ul><li>“The economy won’t recover” </li></ul><ul><li>“The recovery will be weak” </li></ul><ul><li>“A second dip is coming” </li></ul><ul><li>“Medium-term growth will be slow” </li></ul><ul><li>“Price stability won’t last” </li></ul><ul><li>“It’s all priced in” </li></ul><ul><li>“Higher rates will kill the rally” </li></ul>
    5. 5. The Zarnowitz forecast - deep recessions have strong recoveries G7 industrial output February 2008 = 100
    6. 6. Will there be a second dip? Source: Henderson Global Investors Double dips uncommon Only 5 out of 33 expansions ended within 18 months Duration (in months) of US business cycle expansions since 1854
    7. 7. FED doesn’t raise rates... 1981 - 1984 % 2002 - 2005 Source: Datastream, Henderson Global Investors, as at 3 September 2009 1991 - 1994 % % 2007 - % Source: Datastream, Henderson Global Investors, as at 3 September 2009 Source: Datastream, Henderson Global Investors, as at 3 September 2009 Source: Datastream, Henderson Global Investors, as at 3 September 2009 ...until some time after unemployment has peaked
    8. 8. Is the recovery already priced in? Graham & Dodd P/E (Current price against a 10 year moving average of reported earnings) Source: Henderson, S&P, Datastream, as at 31 July 2009 sd = standard deviation Graham & Dodd P/E (Current price against a 10 year moving average of reported earnings)
    9. 9. Still value in equities... FTSE All-Share Dividend Yield and ILG yield Source: Henderson Global Investors, Datastream, as at 3 September 2009 ...even with expected dividend cuts
    10. 10. *Source: Morningstar at 31 August 2009, based on cumulative performance, on a mid to mid basis (excluding initial charge), with net income reinvested for a basic rate taxpayer. Henderson New Star Multi-Manager
    11. 11. <ul><li>Identifying attractive investments </li></ul><ul><li>Focus on valuation (buy cheap assets) </li></ul><ul><li>Consider unfashionable assets </li></ul><ul><li>Avoid popular/crowded trades </li></ul><ul><li>Be patient (invest over a longer horizon than most) </li></ul><ul><li>Look for asymmetric outcomes </li></ul><ul><li>Applications </li></ul><ul><li>Buying UK Mid-Cap (Q1 2009) </li></ul><ul><li>Technology (Actively traded through 2006-2007) </li></ul><ul><li>Alternatives (2007) </li></ul><ul><li>Short Sterling (2007-2009) </li></ul><ul><li>Government bonds (2008) </li></ul>We want to find investments that maximise upside/minimise downside (asymmetrical trades) Asset allocation is a key driver of returns Investment approach
    12. 12. Investment grade spreads by sector - Still like corporate bonds Indices breakout Source: Merrill Lynch, at 31 August 2009 bp Wide 1012 Currently 442 Value is in financials
    13. 13. Threat - huge forecast increase in UK gilt issuance Enormous increase in gilt issuance partially offset by near-term quantitative easing Nominal amount issued £bn Source: UK Debt Management Office (DMO), at April 2009 Actual Forecast ‘ Elephant is about to leave the room’
    14. 14. Seven stages of scepticism <ul><li>“The economy won’t recover” </li></ul><ul><ul><li>Already under way </li></ul></ul><ul><li>“The recovery will be weak” </li></ul><ul><ul><li>Usually strong after deep recessions </li></ul></ul><ul><li>“A second dip is coming” </li></ul><ul><ul><li>“ Double dip” recessions unusual – watch money trends </li></ul></ul><ul><li>“Medium-term growth will be slow” </li></ul><ul><ul><li>“ Structural drags” possibly overstated </li></ul></ul><ul><li>“Price stability won’t last” </li></ul><ul><ul><li>Medium-term inflation risk </li></ul></ul><ul><li>“It’s all priced in” </li></ul><ul><ul><li>Equities inexpensive assuming return to “normality” </li></ul></ul><ul><li>“Higher rates will kill the rally” </li></ul><ul><ul><li>Limited impact while below “neutral” </li></ul></ul>
    15. 15. Please see us at the Exhibition…… <ul><li>New fund launch – Richard Pease’s European Special Situations </li></ul><ul><li>Multi Manager range – performance and process </li></ul><ul><li>Fixed Income range </li></ul><ul><li>Fund Range and Managers </li></ul>
    16. 16. Important Information This document is solely for the use of professionals and is not for general public distribution. This document is issued and approved by Henderson New Star and is solely for the use of professionals, defined as Eligible Counterparties or Professionals in the Glossary of the Financial Services Authority’s Handbook of Rules and Guidance for Authorised Firms made under the Financial Services and Markets Act 2000, and is not for general public distribution. Any other persons who receive this document should not rely on or act upon its contents. This document may not be reproduced in any form without the express permission of Henderson New Star and to the extent that it is passed on care must be taken to ensure that this reproduction is in a form which accurately reflects the information presented here. No responsibility or liability is accepted by Henderson New Star or by any of its directors for any action taken on the basis of the content of this document. This document has been produced based on Henderson New Star’s research and analysis and represents our house view. The information is made available to clients only incidentally. Unless otherwise indicated, the source for all data is Henderson New Star. Any reference to individual companies is purely for the purpose of illustration and should not be construed as a recommendation to buy or sell or advice in relation to investment, legal or tax matters.    This document does not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase any investment, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract for the same. Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Tax assumptions may change if the law changes and the value of tax relief will depend upon individual circumstances. Issued in the UK by Henderson New Star.  Henderson New Star is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management plc (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no.1795354), New Star Asset Management Limited (reg no. 3984658) and New Star Investment Funds Limited (reg no. 4033107)  (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE and authorised and regulated by the Financial Services Authority) provide UK retail investment products and services.   Telephone calls may be recorded and monitored. Henderson Global Investors 201 Bishopsgate, London EC2M 3AE Tel: 020 7818 1818 Fax: 020 7818 1819