Funds investing in a range of assets with the maximum equity exposure restricted to 60% of the fund
The fund will have at least 30% invested in fixed interest and cash.
There is no specific requirement to hold a minimum % of non UK equity within the equity limits.
Assets must be at least 50% in Sterling/Euro and equities are deemed to include convertibles.
Source: IMA Cautious Managed Sector definition
Example of a traditional Cautious Managed fund Source: Skandia Investment Group; Skandia Cautious fund asset allocation 31/03/2003
Example of a traditional Cautious Managed fund Source: Financial Express; Gartmore Cautious Managed fund asset allocation 30/06/2006 – 30/06/2009
IMA Cautious Managed Sector Source: Financial Express IMA Unit Trust/OEIC/ Cautious Managed sectors, 5 years to 30 September. Bid to bid basis. Past performance is not a guide to future performance. 5 years to 30 September 2009 -10 10 20 30 40 50 60 0 Performance Percentage (%) IMA Cautious Managed 66.73% differential between best and worst performing funds +64.04% -2.69% 22.28% Sector Average 70
Source: Financial Express IMA Unit Trust/OEIC/ Cautious Managed sectors, 1 year to 30 September 2009. Bid to bid basis. Past performance is not a guide to future performance. IMA Cautious Managed -10 -0 5 10 15 20 25 -5 Performance Percentage (%) -15 +28.56% -12.53% 7.62% Sector Average 41.09% differential between best and worst performing funds 30 1 year to 30 September 2009 IMA Cautious Managed Sector
Source: Lipper Hindsight IMA Unit Trust/OEIC/ Cautious Managed sectors, 5 years to 30 September 2009. Bid to bid basis. Past performance is not a guide to future performance. IMA Cautious Managed 8.13% Sector Average 14.79% 3.92% Annualised Volatility Percentage (%) 0 4 6 8 10 12 14 2 16 5 years to 30 September 2009 IMA Cautious Managed Sector
Source: Financial Express IMA Unit Trust/OEIC/ Cautious Managed sectors, 1 year to 30 September 2009. Bid to bid basis. Past performance is not a guide to future performance. IMA Cautious Managed 0 10 15 20 25 30 5 13.46% Sector Average 27.21% 1.56% Annualised Volatility Percentage (%) 1 year to 30 September 2009 IMA Cautious Managed Sector
Structure of a traditional Cautious Managed fund Exposure to Hedge Fund like strategies Exposure to Private Equity Exposure to Commodities Tactical Asset Allocation Strategic Asset Allocation Exposure to Fixed Interest Exposure to Equities Cautious Managed Fund
Much lower cost than fund of hedge fund exposure because there is only one layer of fees and does not charge a performance fee
Regulated (UCITs III)
Fulcrum Alternative Beta Plus
Correlations between asset classes Source: Financial Express, 30/09/1999 – 30/09/2009. Credit Suisse Tremont Hedge Fund Index, FTSE All Share Index, MSCI AC World Index, IBOXX Sterling Corporate Bond All Maturities Index & IBOXX Sterling Gilts All Maturities Index. Past performance is not a guide to future performance. 0.52 -0.07 -0.13 0.02 Gilts 0.52 0.24 0.33 0.06 Corporate Bonds -0.07 0.24 0.92 0.58 International Equities -0.13 0.33 0.92 0.43 UK Equities 0.02 0.06 0.58 0.43 Alternatives Gilts Corporate Bonds International Equities UK Equities Alternatives Asset Classes
Exposure to all asset types, including alternatives
Utilising Strategic and Tactical asset allocation
Aims to outperform benchmark/sector on a risk adjusted basis
Adaptability to current market conditions
Just changing the fund name is not enough!
“ 4 Pillars” of a modern Multi-Asset fund Alternative Asset Classes Providing Diversification Adding Alpha Tactical Asset Allocation Strategic Asset Allocation Minimising Client Risk Manager Selection Single Strategy v MultiManager
Strategic – limited rebalancing as based on changes to long-term risk-return expectations
Tactical – frequent rebalancing as short-term expectations driven by market sentiment and volatile economic conditions
Controlled tactical asset allocation – permits allocations around Strategic Asset Allocation to incrementally enhance risk-return profile within strictly defined limits
Diversifying asset classes Source: Financial Express, Total Return, Bid to Bid with net income re-invested, discrete years from 01/01/1999 – 31/12/2008. Past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up.
Traditional Cautious Managed fund v Multi-Asset fund Cautious Managed Fund Exposure to Hedge Fund like strategies Exposure to Private Equity Exposure to Commodities Tactical Asset Allocation Strategic Asset Allocation Exposure to Fixed Interest Exposure to Equities Multi-Asset Fund
Are traditional Cautious Managed funds still relevant?
Restricted in exposure to asset classes
Rigid in terms of changing asset allocation
Not using full investment powers available
Not fully diversified
Skandia Diversified fund Source: *Skandia Investment Group; as at 31/07/2009 1.79% TER* Key Points Objective To provide investors with long term capital growth through investment in a diversified range of asset classes UK IMA Sector Cautious Managed Type of fund Multi-Manager
Source: Skandia Investment Group; as at 30/09/2009 Skandia Diversified fund TAA benefits 13.00% 24% 20% 10% Alternatives 52.75% 60% 50% 40% Equities 30.00% 40% 30% 30% Bonds 4.25% 10% 0% 0% Cash Current Max Neutral Min
Source: Skandia Investment Group; as at 30/09/2009 Skandia Diversified fund allocation
Skandia Diversified fund Asset Classes and Managers Fixed Interest + Cash Alternatives Source: Skandia Investment Group; as at 30/09/2009 Morgan Stanley Commodities Fund Commerzbank UK Premia Fund JPM Highbridge Statistical Market Neutral Fund Fulcrum Alternative Beta Plus Fund Aviva Tactical Asset Allocation Fund Morgan Stanley FX Alpha RC400 Fund GSAM Sterling Liquidity Fund BlackRock Royal London GSAM JP Morgan PIMCO Inflation Linked Bond Fund M&G Optimal Income Fund Threadneedle
Skandia Diversified fund International Equities (Skandia Global Dynamic Equity) UK Equities Source: Skandia Investment Group; as at 30/09/2009. * Following the forthcoming departure of Dirk Enderlein from Allianz RCM, State Street have taken control of this mandate and are currently managing it passively. **Please note the Investment Adviser is Dalton Capital (Guernsey) Limited and Dalton Strategic Partnership LLP (Dalton). FuNNeX Asset Management, Inc. provides investment advice on a non discretionary basis to Dalton. Asset Classes and Managers Origin Mirabaud UBS Lazard Schroders (Skandia Global Dynamic Equity) BGI Skandia UK Best Ideas Fund Skandia UK Strategic Best Ideas Fund Acadian Epoch Bernstein QMA Marsico State Street* Argonaut Gartmore MIR FuNNeX** First State
Skandia Diversified fund performance Source: Financial Express, Data to 30/09/2009, bid to bid with net income reinvested. Past performance is not a guide to future performance. Skandia Cautious fund changed its name on 15 May 2009 to Skandia Diversified fund. 2nd 25.10% 5 years 2nd 2.09% 3 years 1st 15.03% 1 year 1st 24.15% 6 months 1st 15.43% 3 months 1st 4.36% 1 month Quartile Performance Skandia Diversified fund
What you get back will depend on investment performance and is therefore not guaranteed. The value of investments and any income from them can fall as well as rise.
When you cash in your investment you may get back less than you invested, especially in the early years.
The past performance of an investment is not a guide to future investment performance.
You should appreciate that there are inherent risks in all types of investment. There can be no guarantee that the objectives of the funds will be achieved.
This Fund includes some exposure to emerging markets, which tend to be less well regulated and more volatile than more established stock markets, so increasing the potential risk to investors.
Where the fund enters into derivative transactions with counterparties, there is a risk that they may default on their obligations or become insolvent.
At times, the Fund may invest in smaller companies, which may carry a higher degree of risk and be more difficult to sell than larger companies.
You should remember that the real value of your investment will be reduced by inflation.
Where the Fund invests in securities designated in a different currency to the Fund, the value of the Fund may rise and fall purely as a result of exchange rate fluctuations.
Skandia Investment Group is a trading name of Skandia Investment Management Limited. Skandia Investment Management Limited is authorised and regulated by the Financial Services Authority. FSA Registered Number 208543 Registered Number: 4227837 England Registered office: Skandia House, Portland Terrace, Southampton, SO14 7EJ, United Kingdom This presentation is designed for professional advisers only and should not be relied upon by existing or prospective clients of Skandia. November 2009