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Ghosh Presentation


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Ghosh Presentation

  1. 1. Expanding Opportunities Abroad June 1, 2007 Kunal Ghosh, Senior Vice President, Portfolio Manager For Broker Dealer Use Only
  2. 2. Agenda <ul><li>Economic Summary </li></ul><ul><ul><li>US Slowdown </li></ul></ul><ul><ul><li>Earnings Growth </li></ul></ul><ul><ul><li>Corporate Health </li></ul></ul><ul><li>Valuations </li></ul><ul><li>Outlook </li></ul>
  3. 3. Leading Economic Indicators - Economic Slowdown Developing Leading economic indicators in major developed economies have trended lower in recent months on expectations of a U.S. led slowdown of the global economy. 1117 Source: OECD; See Additional Disclosures 31-Mar-07 Updated:
  4. 4. Outlook in Germany: IFO Index of Business Expectations German business expectations have rebounded and remain at elevated levels. Near term, Germany should be on track for its fastest economic growth in years as exports and investment overcome a VAT tax increase and a slowdown in the U.S. 983 Source: Bloomberg; see additional disclosure 30-Apr-07 Updated:
  5. 5. Capex Expectations Rebound After hitting multi-year lows, capex expectations spiked in the first quarter. This may be a sign that a slumping housing market is not spilling over to the broader economy - easing investor fear of a U.S. recession. 3195 Source: Federal Reserve Bank of Philadelphia; Nicholas-Applegate; See Additional Disclosures 30-Apr-07 Updated:
  6. 6. Growth in the CPI Core CPI (CPI less food and energy) is moderating while the broad CPI continues to spike upward on higher energy prices. Though inflation remains slightly above the &quot;comfort&quot; zone of many central bankers, we expect this will change in the months ahead. 4278 Source: FactSet; Nicholas-Applegate; See Additional Disclosures 30-Apr-07 Updated:
  7. 7. Earnings Growth Rates Fall Earnings growth continues to slow, falling to the long-term averages into the mid single digits. CY2007 growth should be about 6 percent. 1004 Source: FactSet; First Call; see additional disclosure 31-Mar-07 Updated:
  8. 8. Global Forward Price-to-Earnings Based on price-to-earnings ratios, most of the foreign markets still appear to be relatively undervalued. 684 Source: FactSet; Morgan Stanley; see additional disclosure 30-Apr-07 Updated:
  9. 9. Performance Versus Spreads 672 Source: Bloomberg; CSFB; Merrill Lynch; see additional disclosure Spreads are tight as investors reach for yield. We expect that spreads will remain at these levels as default rates rise only slightly this year. * High yield performance measured using Merrill Lynch High Yield Master II Index. High yield debt spreads are equal to yield-to-maturity of high yield debt market, less the 10-year US Treasury yield. 30-Apr-07 Updated:
  10. 10. Flattening Yield Curves Yield curves are flattening or inverting in most major developed economies. As a result, we suspect that in the U.S. the Fed has ended its tightening campaign; but rates will rise slowly in Europe and Japan. 1092 Source: FactSet; See Additional Disclosures 30-Apr-07 Updated:
  11. 11. Interest Rate Differential and Exchange Rate The interest rate differential is moving against the dollar, as the Fed ends tightening and Europe raises rates. The dollar should weaken slightly in this environment. ### Source: Datastream; Bloomberg; see additional disclosure * U.S. short term rates minus European constant short term rates 30-Apr-07 Updated:
  12. 12. International Systematic: Weightings Risk Controls Ensure Consistency with Benchmark. As of 31-Mar-07 * Representative account Source: Nicholas-Applegate; see additional disclosure Nicholas-Applegate International Systematic* MSCI EAFE Index Top Sector Weightings Top 10 Country Weightings 27.5 19.6 9.9 7.1 5.8 5.4 4.4 4.4 2.7 2.5 22.5 23.2 6.8 10.0 3.8 5.9 1.5 7.7 0.0 4.0 0 5 10 15 20 25 30 Japan United Kingdom Switzerland France Italy Australia Finland Germany China Spain 27.4 14.9 12.8 10.0 9.1 6.1 5.6 5.3 3.2 3.0 29.5 12.0 5.4 8.8 6.8 8.2 5.4 6.9 5.6 11.6 0 5 10 15 20 25 30 35 Financials Industrials Consumer Discretionary Information Technology Materials Health Care Consumer Staples Telecomm. Services Energy Utilities
  13. 13. International Systematic: Annual Returns The International Systematic Strategy Has Provided Strong Returns Relative to the MSCI EAFE Index Over Time. * Composite inception: 01-Jun-01 Source: Nicholas-Applegate; see additional disclosure As of 31-Mar-07
  14. 14. Additional Disclosure Updated Apr-07 Nicholas-Applegate Capital Management (NACM or the Firm), as defined below, has prepared and presented this report in compliance with the Performance Presentation Standards of the Association for Investment Management and Research (AIMR-PPS®), the U.S. and Canadian version of the Global Investment Performance Standards (GIPS®). AIMR (CFA Institute) has not been involved with the preparation or review of this report. The Firm, as defined below, has also prepared and presented this report in compliance with GIPS®. All materials are presented for Institutional Client use only and are not intended for distribution to the public. Past performance is no indication of future results. NACM is an investment advisory firm registered with the Securities and Exchange Commission. On January 31, 2001, Allianz SE, the public European company (formerly known as Allianz AG, the public German insurance company), through various wholly-owned/controlled subsidiaries, acquired and now controls Nicholas-Applegate and its affiliates. The Firm is defined as all actual, institutional and mutual fund accounts (including sub-advisory relationships) managed by NACM. Nicholas-Applegate also provides investment management services to its affiliate Allianz Global Investors Managed Accounts LLC (AGIMA), with regard to certain managed account assets for which AGIMA serves as the investment adviser. These assets managed on behalf of AGIMA are held out to both clients and potential clients as a separate and distinct business unit and are therefore excluded from the NACM definition of the Firm assets under AIMR-PPS®/GIPS®. The effective date of NACM’s firm-wide compliance with the AIMR-PPS® is January 1, 1993. Each Composite includes all actual fee paying discretionary institutional and mutual fund client accounts (including sub-advisory relationships) with comparable investment objectives and risks managed by NACM for at least one full month. The Composite can include both tax-exempt and taxable accounts and all reinvestment of earnings. A complete list and description of the Firm’s composites and presentations are available upon request by contacting (619) 687-2800, or writing Nicholas-Applegate Capital Management, 600 W. Broadway, 29th Floor, San Diego, CA 92101, Attn: Performance Measurement Manager. Returns are calculated on a total return basis, including all dividends (net of withholding tax) and interest, accrued income, realized and unrealized gains or losses, and are net of all brokerage commissions, execution costs and without provision for federal or state income taxes. Securities transactions are accounted for on trade date and accrual accounting is utilized. Cash and equivalents are included in performance returns. Monthly returns of the Composite combine the individual accounts' returns (calculated on a time weighted rate of return basis which is revalued daily) by asset-weighting each account's asset value as of the beginning of the month. Annual returns are calculated by geometrically linking the monthly returns. Additional information regarding policies for calculating and reporting returns is available upon request by contacting NACM. All returns presented are calculated using U.S. dollars unless otherwise noted. The dispersion of annual returns is measured by the standard deviation across asset-weighted portfolio returns represented within the Composite for the full year. Periods with five or fewer accounts are not deemed statistically representative and are not presented. All returns are gross unless otherwise noted. Gross returns do not give effect to investment advisory fees, which would reduce such returns. Investment advisory fees are described further in Part II of Form ADV. Advisory fees deducted periodically from accounts can have an impact on performance. As an example, the effect of investment advisory fees on the total value of a portfolio assuming (a) $1,000,000 investment, (b) portfolio return of 5% per year, and (c) 1.00% annual investment advisory fee would be $10,268.81 in the first year, $56,741.68 over five years, and $129,160.05 over ten years. Actual fees charged may vary by portfolio due to various conditions, including account size. Where “net of fee” performance is indicated, actual fees charged were used for performance calculations. The asset and industry reports contained herein are unaudited. The summation of dollar values and percentages reported may not equal the total values, due to rounding discrepancies. Portfolio characteristics are derived using currently available data from independent research resources that are believed to be accurate. Estimates (est.) are preliminary and unaudited. Market participation is based on the average of quarterly returns in up and down markets as determined by the benchmark’s performance. Ranking data is obtained from the independent consultant indicated, sampling may not be representative of any one client’s experience. Results may vary. Currency conversions are provided by Russell Performance Universe and are based on monthly linked performance converted from U.S. dollar. Exchange rates are provided by the Federal Reserve Statistical Release as of month end. Unless otherwise noted, Nicholas-Applegate is the source of illustrations, performance data, and characteristics. Representative account characteristics and partial lists of past recommendations do not reflect composite performance, which may be different. For more information regarding account characteristics, and a complete list of all representative buys and sells for a given time period, please contact Nicholas-Applegate at (619) 687-8000. Client lists represent a partial list of Nicholas-Applegate’s institutional clients who have consented to the use of their name. Inclusion on such list is not intended as an endorsement by any such client of Nicholas-Applegate or the advisory services provided to such client. Unless otherwise noted, equity index performance is calculated with gross dividends reinvested and estimated tax withheld, and bond index performance include all payments to bondholders, if any. Indexes may not represent the investment style of the given composite. Index calculations do not reflect fees, brokerage commissions or other expenses of investing. Investors may not make direct investments into any index. Products Ahead of Benchmark information reflects the percent of actively marketed composites with gross performance greater than primary benchmark performance, as of the date indicated. This information is not audited, and although each composite is prepared in accordance with GIPS, the compilation is supplemental information not presented in accordance with GIPS. Results would be different if the composite performance of strategies that are not actively marketed was included. Assets in strategy information reflects the total assets associated with each composite, whether or not such assets are included in the computation of composite performance.