Nma

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Nma

  1. 1. SEPTEMBER 2013 NEW MODEL ADVISER PRESENTATION BY TOM SHERIDAN CEO, SEVEN INVESTMENT MANAGEMENT THIS IS NOT FOR DISTRIBUTION TO RETAIL CLIENTS
  2. 2. DOTHE RIGHT THING CLEAR AND COMPLIANT GREAT SERVICE COSTEFFECTIVE INNOVATIVE
  3. 3. DISCRETIONARY MANAGEMENT 7IM PLATFORM MULTI-ASSET FUNDS
  4. 4. FOCUS ONMULTI-ASSET WITH PASSIVES AAP AND MODEL PORTFOLIOS
  5. 5. • Historical – 7IM & Ibbotson • Forward-Looking - 7IM Asset Allocation Committee • Due Diligence, Monitoring, Liquidity
  6. 6. • Credit Risk • Liquidity Risk • Concentration Risk • Currency Risk • Regulatory Risk • Tracking Error • Cost
  7. 7. Fund Profile Personal Injury Moderately Cautious Balanced Moderately Adventurous Adventurous UK Equity 10 11 16 18 19 UK Equity Small Cap 0 3 4 6 8 US Equity 7 6 10 12 12 European Equity 5 4 6 9 9 Japan Equity 0 0 3 4 4 Far East Equity 0 0 3 3 3 Emerging Markets Equity 0 3 6 11 15 Frontier Markets 0 0 0 3 5 Equities 22 27 48 66 75 Commodities (incl. Gold) 7 3 3 4 4 Hedge Funds 3 3 3 3 3 Managed Futures 3 3 3 4 4 Private Equity (listed) 0 0 0 3 6 Real Estate (Global REITs) 0 0 3 4 5 Alternatives 13 9 12 18 22 Global Government Bonds 8 4 3 0 0 Global Inflation Linked Bonds 3 3 0 0 0 Global Corporate Bonds 4 7 4 0 0 Global High Yield Bonds 3 6 4 0 0 Gilts 9 7 6 3 0 Short Term Gilts 4 5 0 0 0 Index Linked Gilts 9 6 5 3 0 UK Corporate Bonds 9 13 9 4 0 Emerging Market Bonds 4 6 5 3 0 Fixed Income 53 57 36 13 0 Cash 12 7 4 3 3 Expected Average Return 4.4 5.1 6.5 7.9 8.9 Standard Deviation 6.6 8.0 11.5 14.9 17.3
  8. 8. Expected Compound Return Expected Maximum Return Expected Minimum Return -15 -10 -5 0 5 10 15 20 25 30 0 1 2 3 4 5 6 7 8 9 10 Returns Years Invested
  9. 9. Expected Compound Return Expected Maximum Return Expected Minimum Return Actual Compound Return As at 30 June 2013 -15 -10 -5 0 5 10 15 20 25 30 0 1 2 3 4 5 6 7 8 9 10 Returns Years Invested
  10. 10. MICHAEL HUGHES ex CIO, Baring ALEX SCOTT 7IM Senior Investment Manager GERARD LYONS Economic Adviser ~ to Mayor of London CHARLES DIAMOND Founder Econostat TONY NORRIS First International JOHN GIBBON Ex British Aerospace pension fund director ROS PRICE 7IM Chief Strategist and Chair JOHN HATHERLY Research Consultant for M&G CHRIS CHARLTON Currency Management JUSTIN URQUHART STEWART 7IM co-Founder HENRY BOUCHER Deputy CIO for Sarasin The Seven Investment Management Asset Allocation Committee CHRIS DARBYSHIRE 7IM CIO PHILIP STRAEHL Ibbotson Associates
  11. 11. SOURCE: 7IM/IBBOTSON AS AT JUNE 2013 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cash & Money Markets Currency Funds CTAs Hedge Funds & Other Strategies Infrastructure Property & Related Equity Private Equity Timber Commodites & Related Equity Emerging Market Bonds Global High Yield Global Corporate Bonds Sterling Corporate Bonds Index-linked Gilts Global Index Linked Bonds Short Term Gilts Gilts Global Government Bonds Global Themes Frontier Markets Equity Emerging Markets Equity Far East Equity Japan Equity European Equity North American Equity UK Small Cap Equity UK Equity
  12. 12. SOURCE: 2008-2010 LIPPER UK FUND OF FUNDS ‘INCLUSIVE’ TOTAL EXPENSE RATIO ANALYSIS REPORTS. 2011 & 2012 ONGOING CHARGES FROM CAPITA FUND ACCOUNTS DATA. N.B. LIPPER AND CAPITA ARE BOTH INDUSTRY STANDARDS BUT HAVE DIFFERENT METHODOLOGIES 0.60% 0.70% 0.80% 0.90% 1.00% 1.10% 1.20% 1.30% 2008 2009 2010 2011 2012 AAP Mod Cautious AAP Balanced AAP Moderately Adventurous AAP Adventurous
  13. 13. *Includes VAT 7IM Platform 0.00% Underlying Passives 0.17% 7IM AMC 0.50% 7IM Platform 0.30% Underlying Passives 0.20% 7IM Discretionary Fee 0.30%* 0.67% 0.80%
  14. 14. SAFE DOES NOT = BORING
  15. 15. WHAT IS SMART PASSIVE?
  16. 16. 24 RATIONALE IMPLENTATION • Strategy cannot be implemented by other means • Only if independent 3rd party pricing exists • Bidding process between credit worthy counterparties • Zero tracking error guaranteed • Daily liquidity guaranteed at NAV, calculated independently • Trading costs must be disclosed • Select from qualifying counterparties based on lowest costs
  17. 17. Performance of equal weight index vs S&P 500 SOURCE : BLOOMBERG 27
  18. 18. MINIMUM VARIANCE &PORTFOLIO CORRELATION MAXIMISING THE “DIVERSIFACTION RATIO” OPTIMISED MIX-LESS CORRELATED RELATIONSHIPS
  19. 19. Aims to build portfolio of uncorrelated stocks SOURCE: TOBAM 29 Reduces exposure to volatile stocks like financials TOP BENCHMARK FINANCIALS CHINA CONSTRUCTION BANK BANK OF CHINA LTD STANDARD BANK ICICI BANK LTD BANK CENTRAL ASIA TOP MAX DIVERSIFICATION FINANCIALS CHINA CONSTRUCTION BANK BANK OF CHINA LTD STANDARD BANK ICICI BANK LTD BANK CENTRAL ASIA
  20. 20. Returns vs benchmark since inception SOURCE : BLOOMBERG 30
  21. 21. Performance vs market cap index (Annualised Returns) SOURCE: RAFI 33
  22. 22. Developed Markets SOURCE: RAFI 34 Top 5 by Market Cap Fundamental Index Market Cap Index Difference United States 22.1% 29.5% -7.4% Japan 7.3% 27.4% -20.2% France 6.3% 7.4% -1.1% Italy 6.0% 7.0% -1.0% Germany 7.2% 6.5% 0.7% Japan has a significant underweight
  23. 23. Emerging Markets SOURCE: RAFI 35 Top 5 by Market Cap Fundamental Index Market Cap Index Difference Mexico 10.7% 16.3% -5.6% Poland 7.1% 12.5% -5.4% South Africa 6.6% 9.3% -2.7% Thailand 7.5% 8.8% -1.3% Malaysia 6.0% 8.4% -2.4%
  24. 24. AUMs of popular smart passive product providers SOURCE: RAFI AND TOBAM 37
  25. 25. QUESTIONS? NOT FOR DISTRIBUTION TO RETAIL INVESTORS

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