Grr eur ppt citywire conference 11_13_05_2011(paper)_final_09052011

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Grr eur ppt citywire conference 11_13_05_2011(paper)_final_09052011

  1. 1. Presentation on:Achieving perspective in an uncertain world –Newton’s solution - BNY Mellon Global RealReturn Fund (EUR)Suzanne Hutchins – Investment Manager and lead fund manager for BNY Mellon Global Real Return Fund (USD) at NewtonCitywire Montreaux - 11th -13th May 2011Prepared for professional investors only
  2. 2. Suzanne Hutchins Curriculum Vitae Biography 2010 to date Newton Investment Management Suzanne Hutchins rejoined Newton in 2010 as global 2005 – 2010 Capital International Limited investment manager and member of the Real Return team. She moved to Capital International in 2005 as Investment Specialist 1991 – 2005 Newton Investment Management for global equity, income and absolute return based strategies. She had additional client facing responsibility for ESG Responsibilities (Environmental, Social and Governance) issues. Suzanne joined Newton in 1991 as a research analyst after completing a Investment manager – global funds BA (Hons) at University College London. During her 14 years Member of the Real Return investment team with Newton, she worked closely with Stewart Newton before Member of the global investment meeting becoming lead on the UK and Intrepid team. She managed multi-asset, global equity mandates and RPI+ based strategies for institutional and retail clients. Qualifications Associate member of the United Kingdom Society of Investment Professionals (UKSIP) BA (Hons) 15 years at Newton 20 years‟ investment experience
  3. 3. Newton’s appealBusiness focusTotal assets under management • Performance culture – concentrates teamwork, communication and resources towards delivering outperformance 60 53.6 50 41.9 • Global specialists – 70% of 40 34.8 mandates are global including over €30 billion in global funds €bn* 30 20 16.0 • Long-term incentive plan attracts 10 6.9 and motivates staff. We operate as „owners‟ of the business 0 1993 1997 2001 2005 2011** Institutional Retail Private * ECU prior to Euro ** As at 31 March 2011 Source: Newton Our culture is aligned with your objectives
  4. 4. Newton’s Real Return strategy for long-term growth Strategy type Absolute return Allowable assets EURIBOR +4% p.a. gross of fees Can invest in: Target over rolling 5 year periods ● Equities ● Government Bonds ● An unconstrained active multi-asset strategy with lower volatility ● Corporate Bonds ● Emphasis on long term investing and capital preservation ● Cash ● Transparent, single portfolio of direct, liquid investments ● Derivatives ● Other assets via tradeable securities e.g. ● Maximum flexibility at the portfolio construction level;  Real estate  emphasis on traditional asset classes  Commodities  no asset allocation constraints  Currencies  „Alternative‟ strategies The power of perspective and flexibility 4
  5. 5. Newtons absolute return credentialsNewton Real Return FundRisk versus return since inception1 April 2004 to 31 March 2011 14 ● Unconstrained evolution of Newtons proven 12 Newton Real Return global multi-asset approach 10 UK equities ● Compelling long-term Return (% p.a.) 8 return; not possible Global equities Global bonds through market returns in broad asset classes UK Index-linked bonds 6 UK Govt bonds Property ● Absolute return in every 4 Cash Hedge funds calendar year 2 ● Achieved with absolute Low High volatility closer to bonds 0 than equities 0 2 4 6 8 10 12 14 16 18 Volatility (% p.a.)Past performance is not a guide to the futureSource: Newton, weekly data, total return in sterling, gross of fees and income reinvested. Asset class statistics relate to the following measures: FTSE All Share, FTSE World,FTSE Brit. Govt Fixed All Stocks, FTSE Brit. Govt Index IL All Mats, JPM Global Govt Bond, HFRI Fund of Funds (net), IPD All Properties, LIBOR 1 Month 5
  6. 6. Newton’s real return strategiesOverview as at 31 March 2011 Real Return Strategy Global Real Return Strategy GBP version EUR version USD version Investment team James Harries, Iain Stewart, Matt Brown, James Harries, Iain Stewart, Matt Brown, James Harries, Iain Stewart, Matt Brown, Suzanne Hutchins, Aron Pataki Suzanne Hutchins, Aron Pataki Suzanne Hutchins, Aron Pataki plus wider investment team plus wider investment team plus wider investment team Benchmark UK Libor (1 month) Euribor (1 month) USD Libor (1 month) Base currency risk GBP EUR USD Base currency exposure (current) 69.2% 61.3% 81.8% Target outperformance +4%pa +4%pa +4%pa Time horizon 3-5 years 3-5 years 3-5 years Strategy AUM £4.6bn €208m $65m Pooled vehicle name Newton Real Return Fund (£3.0bn) BNY Mellon Global Real Return Fund (EUR) BNY Mellon Global Real Return Fund (USD) Pooled vehicle country of domicile UK Ireland Ireland Launch year 2004 2010 2009 Full flexibility Able to invest anywhere (including Private Equity, Able to invest anywhere (including Private Equity, Able to invest anywhere (including Private Equity, HFOF, Convertibles, Property and other HFOF, Convertibles, Property and other HFOF, Convertibles, Property and other Alternatives) Alternatives) Alternatives) Expected long term volatility intermediate between equities intermediate between equities intermediate between equities and government bonds and government bonds and government bonds Use of derivatives yes yes yes Equity sector constraints max 20% in one sector max 20% in one sector max 20% in one sector Regional constraints no no no Maximum position in one company 5% 5% 5% Hedging capability yes yes yesPlease see important information at the end of this presentation.Source: Newton 6
  7. 7. Newton’s structure and multi-asset investment approachThe importance of perspective ● Highly interactive investment process ● Newtons structure of thinking globally from a single location allows us to utilise themes ● Themes provide valuable perspective ● Generalist multi-asset team supported by teams of specialists provide objective thinking and a powerful combination of perspectives;  global cross comparison of asset types  global cross comparison of securities within asset types ● Single ‘holistic’ portfolios enable global portfolio construction and enhanced risk awareness Assessing the world as one investment opportunity 7
  8. 8. Newton’s Real Return teamIdea generation and input Macro Strategy Group Asset Class Strategy Group Equity Strategy Group Bond / FX Strategy Group Strategy – 3 Global equity – 14 Avg yrs’ experience: 16 Avg yrs’ experience: 16 Avg yrs at Newton: 11 Avg yrs at Newton: 13 Real Return team Global equity Specialist research – 22 regional equity – 18 Avg yrs’ experience: 14 Avg yrs’ experience: 12 Avg yrs at Newton: 6 Avg yrs at Newton: 7 Aron James Iain Matthew Suzanne Pataki Harries Stewart Brown Hutchins Fixed income – 8 Other assets – 5 Avg yrs’ experience: 12 Avg yrs’ experience: 9 Avg yrs at Newton: 5 Avg yrs at Newton: 9 Real Return Meeting Portfolio ideas come from everywhere – powerful combination of perspectivesSource: Newton, March 2011 8
  9. 9. Unconstrained multi-asset investingThe processNewtons starting point … and Newtons view …which defines the … and provides the … to construct a single,is the target… of the world… portfolio structure… building blocks… flexible portfolio Return (EURIBOR +%) ● Security characteristics Research ● Capital Recommended preservation Lists Real Return ● Asset strategy Risk Global Strategy allocation (Volatility%) A BNY Mellon Financial CompanySM ● Regional mix Model Portfolios ● Volatility ● Currency Absolutely focused – flexibility is key 9
  10. 10. Idea generationHow themes influence investment selection The popping of the credit bubble marks the beginning of the end for rapid credit creation in the developed world, and the start of a period of deleveraging. Higher volatility anticipated as well as detrimental consequences for growth in consumer driven economies. Equity Fixed Income Other assets Currency + Self financing, „stable‟ earnings, high + Senior debt in more cyclical + Equity market + Selected developing yields sectors hedges world currencies (eg. Chinese RMB) + Government bond options + Strong mature economy currencies Large capitalisation, global reach (eg. Norwegian + Krone) + „Surplus‟ economy Government bonds eg. Norway – Weak, deficit economy currencies + Growth areas (eg. Sterling, US dollar) – Deficit economy sovereign debt – Credit dependent sectors/leveraged business modelsSource: Newton, 28 February 2011Information is for illustrative purposes only and should not be construed as investment recommendations. 10
  11. 11. Idea generationStock selection Stock example: Roche Attractive valuation Strong fundamentals • Market cap $150bn • P/E 9.0x 2012 • Product pipeline innovation • EV/EBITDA 7.0x 2012 • Specialist product portfolio • Dividend yield 5.3% • Low patent expiry Identifying global winnersAs at April 2011Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendations 11
  12. 12. Idea generationStock selection Stock example: Campofrio Attractive valuation Strong fundamentals • Largest producer of processed • Senior paper meats in Europe • Leverage of 4.3x net debt / • Market leading positions in both EBITDA branded and private labels in its key markets • Running yield of 7.6% • Company continues to delever and is targeting a range of 2.5- 3.0x net debt / EBITDA • Good liquidity with no near term debt maturing Identifying global winnersAs at April 2011Portfolio holdings are subject to change at any time without notice and should not be construed as investment recommendations 12
  13. 13. BNY Mellon Global Real Return Fund (EUR)Equity analysis – Top ten holdings at 31 March 2011 Stock Weighting (%) Bayer 2.66 Newcrest Mining 2.46 Roche 2.19 GlaxoSmithKline 1.98 Reynolds American 1.96 Mtn Group 1.53 Novartis 1.50 Petroleo Brasileiro 1.49 Scottish & Southern Energy 1.47 Statoil 1.45Portfolio holdings are subject to change at any time without notice. This information should not be construed as a recommendation to purchase or sell any security.Source: Newton, as at 31 March 2011 13
  14. 14. Newton Real Return positioningConceptual representationBuilding an asymmetric multi-asset portfolio ● Emphasis on traditional asset classes ● A return seeking core with particular security characteristics ● Risk offsetting positions for dampened volatility and downside protection ● Not an asset allocation fund – flexibility to adjust risk hedging in addition to shifting asset allocation Seamless management of „risk‟ and returnSource: Newton, 31 December 2010 14
  15. 15. BNY Mellon Global Real Return Fund (Euro)Strategic positioning at 31 March 2011 Return enhancing assets ● Equities  High yielding global equities  Positions in unloved sectors (healthcare, telecoms) and Other 4.2% emerging world growth Commodities 4.1% Equities 57.4% ● Corporate debt  Selective exposure at compelling yield Derivatives 0.1% UK 11.1% Risk offsetting positions ● DerivativesCash & equivalents 17.6%  Euro Stoxx options providing downside protection if equity markets sell-off North America 14.1%  AUD put options Bonds 17.3% risk aversion commodity cooling  US Bond call options Corporate 10.7% Providing protection if bond markets rally  Euro put options risk aversion increasing peripheral Europe contagion risk Government bonds 4.7% Europe ex UK 19.4% ● Currency Government index linked 2.3%  Approximately 40% exposure to overseas currencies Convertibles 3.0% not accounting for overseas earnings of domestic stocks Pacific Basin ex Japan 2.6% Emerging markets 8.3% ● Commodities Japan 2.0%  Inflation hedge – gold via physical gold ETF hedge against any inflation from the scale of loose policy and QE  Inflation hedge – soft commodities via agricultural ETF earth matters and developing economies support thisSource: NewtonPortfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations. 15
  16. 16. BNY Mellon Global Real Return Fund (Euro)* Historical analysis of fund positioning 40 140 20 120 0 100 80Weighting 60 40 20 0 0 -20 -20 -40 -40 -60 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Apr-04 Sep-04 Dec-04 Mar-05 Sep-05 Dec-05 Mar-06 Sep-06 Dec-06 Mar-07 Sep-07 Dec-07 Mar-08 Sep-08 Dec-08 Mar-09 Sep-09 Dec-09 Mar-10 Sep-10 Dec-10 Mar-11 Equities Government bonds Corporate bonds Index-linked Convertibles Commodities Cash Equity hedge (delta adjusted protection*) Synthetic fixed income exposure (delta adjusted) The chart above illustrates changes in asset allocation for the € Real Return Fund over five years. For illustrative purposes, delta adjusted equity market option exposure is shown below the main body of the chart, to demonstrate the extent to which downside protection has been utilised over time. Similarly, synthetic bond positions (bond options) have been highlighted above the main body of the chart to illustrate clearly the different bond exposures -via options and physical positions. Importantly, the strategy does not borrow to implement derivative strategies and risk controls exist to prevent exposing the strategy to open-ended losses. * Pre July 2007, delta has been adjusted using end of day data sourced from the relevant exchanges. ** Data pre April 2010 relates to £ Newton Real Return Fund. Data post April 2010 relates to the € Newton real Return Fund Source: Newton, 31 March 2011 Portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations. 16
  17. 17. Newton’s Real Return StrategyDerivatives use since inception Cash / income generation Hedging / risk management Synthetic exposure Written covered Written equity index call options Bought equity put options Single stock strategy / calls on securities FTSE 100 Index, S&P 500 Index stock replacement S&P 500 Index, FTSE 100 Equity Hang Seng Index, DJ Euro Stoxx 14 stocks DJ Euro Stoxx 50 Index 50 Index BP Written equity index put options S&P 500 Index, FTSE 100 DJ Euro Stoxx 50 Index Bought call options on bond futures Bond US Long bond US 10 year Notes Euro – Bund 10 year future Taken forward currency Taken exchange traded Taken OTC currency Currency positions currency option position option position Cash / Sterling to Singapore Dollar, Australian dollar to USD Sterling to Yen Japanese Yen, Swiss Franc Euro to USD Sterling to USD Sterling to Euro USD to Chinese Rembini (non deliverable forward) Bought volatility index put Other options VIX Index (volatility index of S&P 500 index)Source: Newton, March 2011Portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations. 17
  18. 18. Real Return investingControlling the risks Portfolio Bottom up risk management objectives Themes (1 month Euribor +4% target) Security selection Proprietary research Fundamentals Price Real Return strategy Portfolio construction Single portfolio approach Perspective A BNY Mellon Financial CompanySM Risk parameters Volatility expectations 10% – 12%* Risk control (portfolio guidelines) Portfolio diversification Max 5% in any corporate issuer at purchase Portfolio concentration Max 20% in any sector Quantitative risk assessment Risk monitoring How much risk? – (stock weights, correlation, volatility) What kind of risk? – (currency, industry, stock specific) Is risk consistent? – (strategic views, stock & bond picks) Ensuring risk is appropriate, consistent and intended* Based on long term volatility statistics 18
  19. 19. Newton Real Return Fund (GBP)Results analysis Contribution by asset class Results in differing equity markets since inception (to 31 March 2011)* Cumulative contribution month by month for 2008 200 15 179.3 Real Return +6.05% 10 Target return (LIBOR +4%) +9.52% Global equities (MSCI World NDR) -17.92% 5 150 0 (%) 123.7 -5 109.3 -10 100 -15 (%) -20 65.8 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Equities Bonds 50 Cash & currency Derivative Instruments Commodities Total Fund 6.9 Cumulative contribution month by month for 2009 0 15 Real Return +10.93% Target return (LIBOR +4%) +4.86% 10 Global equities (MSCI World NDR) +15.73% 5 -50 -40.6 (%) Rising Markets Falling Markets Cumulative 0 New ton Real Return Fund MSCI World NDR -5 -10 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09Source: Newton* Monthly data, total return, gross of fees. Rising and falling periods defined using quarterly MSCI World NDR returns 19
  20. 20. BNY Mellon Global Real Return Fund (EUR)Results contribution by asset classCumulative attribution month by month since inception to date 12 BNY Mellon Global Real Return Fund (EUR) +10.30% 10 Target return (EURIBOR +4%) +4.93% Global equities (MSCI World NDR) +11.75% 8 6 (%) 4 2 0 -2 -4 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Equities Bonds Cash Derivative instruments Commodities Unitised/structured investments (other) Total fund Different investments take the strain in different environmentsSource: Newton as at 31 March 2011Past performance is not a guide to the futurePlease remember that the value of shares and the income from them can fall as well as rise and investors may not get back the full amount originally invested 20
  21. 21. Newton Real Return Fund (£)Long-term investment results 140 120 +123.74% 100 Cummulative % growth 80 +69.74% 60 +65.83% 40 20 1.9 0 -2.0 -3.3 -3.0 -7.8 -1.8 -5.5 -1.6 -11.5 -20 -40 -30.9 -60 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jun-04 Jan-05 Jun-05 Jan-06 Jun-06 Jan-07 Jun-07 Jan-08 Jun-08 Jan-09 Jun-09 Jan-10 Jun-10 Jan-11 Apr-04 Aug-04 Sep-04 Dec-04 Feb-05 Mar-05 Apr-05 Aug-05 Sep-05 Dec-05 Feb-06 Mar-06 Apr-06 Aug-06 Sep-06 Dec-06 Feb-07 Mar-07 Apr-07 Aug-07 Sep-07 Dec-07 Feb-08 Mar-08 Apr-08 Aug-08 Sep-08 Dec-08 Feb-09 Mar-09 Apr-09 Aug-09 Sep-09 Dec-09 Feb-10 Mar-10 Apr-10 Aug-10 Sep-10 Dec-10 Feb-11 Mar-11 May-04 Oct-04 May-05 Oct-05 May-06 Oct-06 May-07 Oct-07 May-08 Oct-08 May-09 Oct-09 May-10 Oct-10 March 2004 Market downturn Market downturn Market downturn Market downturn Market downturn March 05 – April 05 April 06 – May 06 June 07 – July 07 December 07 – Feb 09 April 10 – June 10 Newton Real Return MSCI World (NDR) Libor plus 4%p.a. Newton Real Return in market downturn MSCI World in market downturn Figures are based on sterling returns. Past performance is not a guide to the future Source: Newton, weekly data, total return, gross of management fees, gross income reinvested. 31 March 2011
  22. 22. BNY Mellon Global Real Return Fund (EUR)Conclusion Specialist approach to fund management. Appointed Newton to manage the portfolio as their Why Global Thematic specialist with expertise in global mixed funds. Newton has €9.7 bn in multi-asset/real BNY Mellon AM return strategies. Aims to beat 1 month EURIBOR +4% over a 3- 5 year rolling periods cash returns Based on the Newton Real Return Fund, managed by Newton since 2004, which has achieved this objective Track record in this time frame and has AAA rating by Standard & Poors, 5 stars Morningstar. Can invest in a variety of asset classes (equity, fixed income, cash instruments, REITS, commodities) with a Flexible approach global approach. Can also invest in simple derivatives to capture strong returns and preserve capital in all conditions. Fund manager is supported by a team that generates ‘global themes’ and the macroeconomic strategy as Resourceful well as by a team of 21 analysts responsible for the bottom-up input. Strategy Director has 23 years investment experience at Newton. Fund manager, has 15 years’ experience Experienced managing multi-asset class portfolios. Qualitative ratingThe strategy was launched on 31 March 2004 (the Fund was previously called Newton Intrepid and followed a completely different strategy). 22
  23. 23. More informationFund Microsites – www.bnymellonam.com/grr/en 23
  24. 24. Appendices 24
  25. 25. Newton Real Return FundInvestment teamPortfolio management team Iain Stewart Iain is investment leader of the global funds, a member of the Real Return team and a senior member of the strategy group, with particular responsibility for co- ordinating the development of Newton‟s global investment themes. He joined Newton in 1985, and has specialised in the management of multi-asset and global equity mandates. Iain is also responsible for a significant portion of Newton‟s pooled balanced portfolios. James Harries James is a member of the Real Return team, a global manager specialising in our global higher income and real return strategy. He joined Newton in 1995 and is a member of the global investment and global model groups. Additionally, he worked at Veritas Asset Management between 2004 and 2005, where he established and managed a global income fund. Matthew Brown Matthew is a global funds manager and a member of the Real Return team. He is also a member of both the multi asset and European equities groups. Since joining the Newton multi asset team in 2000, Matthew has acquired varied experience in a range of mandates including multi asset, global equity and absolute return portfolios. He is a chartered financial analyst (CFA). Aron Pataki Aron is a risk strategist for the Real Return strategy, with a particular focus on the use of derivatives and hedging. He joined Newton in 2006 as a member of the portfolio analytics team, where he was responsible for risk analysis and portfolio construction across Newton‟s institutional and retail portfolios. Previously, he worked as a quantitative analyst at Lacima Group. Suzanne Hutchins Suzanne Hutchins rejoined Newton in 2010 as global investment manager and member of the Real Return team. She moved to Capital International in 2005 as Investment Specialist for global equity, income and absolute return based strategies. She had additional client facing responsibility for ESG (Environmental, Social and Governance) issues. Suzanne joined Newton in 1991 as a research analyst after completing a BA (Hons) at University College London. During her 14 years with Newton, she worked closely with Stewart Newton before becoming lead on the UK and Intrepid team. She managed multi-asset, global equity mandates and RPI+ based strategies for institutional and retail clients. 25
  26. 26. Investment teamOverview at April 2011 Paul Brain Paul Stephany Howard Cunningham1 Robert Shelton Helena Morrissey Tineke Frikkee Trevor Holder Jonathan Day Chief executive officer Carl Shepherd Simon Nichols Uzo Ekwue Scott Freedman Ben Russon Jeff Munroe Parmeshwar Chadha1 Chief investment officer Europe Richard Wilmot Martin Chambers Rajesh Shant Simon Pryke Thomas Beevers Caroline Tye + Onshore Head of private clients & Roger Wilkinson Gemma Kingsley Paul Schenk charities Fred Moore Rosie Bichard Tim Lucas Christopher Smith Naomi Waistell Duncan Bulgin Jonathan McMullan David Stephenson Caroline Mair + International Andrew Downs Asia Pacific Robert Canepa-Anson Fatemah Naraghi Jeremy Stuber Chief operating officer Jason Pidcock Tracey Dominick Michael Plotkowiak Charles Whall Mike Connor + Edinburgh US Zoe Kan Charles French Russell Pointon Ian Burger2 Matt Duncan Simon Laing Robert Gullett Stephen Rowntree Amanda Young2 Caroline Keen Aidan Butler + Leeds Head of business Elly Irving2 Emily Fletcher strategy Strategy Specialists Credit Paul Markham Tim Wilson1 Paul Flood5 Howard Cunningham1 Ian Enslin Roger Wilkinson Jon Bell Peter Hensman Aron Pataki5 Parmeshwar Chadha1 Gemma Woodward Investment leader, Terry Coles Douglas Reed Sophia Whitbread4 Scott Freedman James Korner Alan Goodwin global research Yuko Takano4 Martin Chambers Robert Hay Charlotte Ryland Oliver Larminie Wilfred Frost Campbell Watterson Peter Henderson Deputy chief investment Rob Marshall-Lee3 Matthew Brown officer Nick Moss Robert Stewart Hilary Meades James Harries Nick Clay Chris Rexworthy Christopher Metcalfe Chief risk and Jeff Munroe Suzanne Hutchins compliance officer Iain StewartNotesChart illustrates primary responsibilities. Regional fund management teams combine portfolio management with regional research responsibilities.1 Combined Global Research/Investment Management roles. 2 Corporate Governance / SRI. 3 Combined Investment Management / Specialist Research. 4 Specialist Research. 5 Derivatives 26
  27. 27. Newton Real Return FundPerformance contribution by asset class5 years to 31 December 2009 80 Annualised performance Real Return +11.76% 70 Target return (LIBOR +4%) +8.53% 60 Global equities (MSCI World NDR) +5.60% 50 40 (%) 30 20 10 0 -10 Dec-04 Oct-05 Aug-06 Jun-07 Apr-08 Feb-09 Dec-09 Equities Bonds Cash & currency Derivative Instruments Commodities Total fund Different investments take the strain in different environmentsSource: Newton, gross of fees 27
  28. 28. Newton Real Return Fund (£)Longer term results From 1 April 2004† Real Return MSCI World UK Govt All to 31 March 2011 Fund NDR Stocks LIBOR +4% UK RPI +5% Key Total return (cumulative) 123.74 65.83 42.61 70.24 76.29 1. Return less risk free rate Ex Post Total return (annualised) 12.19 7.47 5.18 7.87 8.41 (LIBOR 1 month) divided Observed2 volatility (annual) 9.05 17.16 5.74 0.30 1.72 by standard deviation 2. Standard Sharpe ratio1 0.94 0.22 0.25 deviation 3. Value at risk: worst case of 95% confidence Algorithmics to 31 March 2011 (normal distribution Predicted volatility2 (annual) 5.5% 10.4% 6.7% assumed) Ex Ante Value at risk3 – (annual) 8.8% 17.1% 11.2% Value at risk – (monthly) 2.6% 4.9% 3.2% „Equity like‟ performance with lower volatilitySource: Newton, as at 31 March 2011, total return, gross of management fees, gross income reinvestedFigures are based on sterling returns. Past performance is not a guide to the futurePlease remember that the value of shares and the income from them can fall as well as rise andinvestors may not get back the full amount originally invested. †Restyle date 28
  29. 29. Newton Real Return FundCalendar year results (since inception) 25 22.4 20 17.1 15.8 15.7 15.3 14.5 15 12.2 10.3 10.9 10.6 9.0 9.3 9.1 9.5 10 7.2 7.9 7.5 6.6 7.0 6.1 5.3 4.9 4.5 5 (%) 1.9 0.4 0.8 0 -5 -10 -15 -20 -17.9 2004* 2005 2006 2007 2008 2009 2010 2011 YTD Since Inception Newton Real Return LIBOR plus 4% MSCI World (NDR)* 31 March 2004 to 31 December 2004Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.The value of overseas securities will be influenced by fluctuations in exchange rates.Source: Newton, as at 28 February 2011, gross of fees, COB prices 29
  30. 30. BNY Mellon Global Real Return Fund (EUR)Positioning Corporate bond positioning Average maturity (Years) Investment grade 10.25 High Yield 5.17 Bond Sector breakdown (% of credit exposure) Credit rating (% of credit exposure) Industrial 73.74 A 6.59 Telco/Utility 11.52 BBB 11.39 Financial 9.24 BB 35.66 Govt/Agency 3.97 B 45.45 Asset Backed 1.53 CCC & Below 0.90Source: Newton as at 31 March 2011Portfolio holdings are subject to change at any time without notice, are for information purposes only and should not be construed as investment recommendations 30
  31. 31. Newton Real Return FundDistribution of weekly returns as at 31 March 2011 Newton Real Return MSCI World NDR index 140 140 120 120 100 100 Frequency Frequency 80 80 60 60 40 40 20 20 0 0 <-5 -4 to -5 -3 to -4 -2 to -3 -1 to -2 0 to -1 0 to 1 1 to 2 2 to 3 3 to 4 4 to 5 >5 <-5 -4 to -5 -3 to -4 -2 to -3 -1 to -2 0 to -1 0 to 1 1 to 2 2 to 3 3 to 4 4 to 5 >5 Weekly returns (%) Narrower, less volatile return profile than global equitiesSource: Newton, weekly data, total return, gross of management fees, grossincome reinvested, since inception (1 April 2004 ) 31
  32. 32. Newton Real Return Fund (£)Relaunch (1 April 2004) to 31 March 2011Investment results 140 120 100 80 60 40 20 0 -20 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 May-04 May-05 May-06 May-07 May-08 May-09 May-10 Newton Real Return (gross of fees 1.0%) FTSE Govt. All-Stocks MSCI World NDR LIBOR 1 Month +4% p.a. UK RPI +5% p.a.Figures are based on sterling returns. Past performance is not a guide to the future.Please remember that the value of shares and the income from them can fall as well as rise and investors may not get back the full amount originally investedSource: Newton, weekly data, total return, gross of management fees, gross income reinvested 32

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