Autumn 2011
 Working in partnership with The PFS
Investment principles and risk –
“Building Successful Portfolios"
1
 Agenda
 The difficulties / making changes
 What is the advisers role / limitations
 New breed – Absolute Return Funds
 Lots of choice – so where is your process
 A process / solutions
 Merlin Market view to conclude
 Suitability
3
 What are you selling?
Financial planning is distinct from investment management
 Influence over the variables that you & your clients control
 Maximise use of tax breaks etc
 Knowledge of product suitability
 Experience across a range of markets
 Constantly evaluating clients’ financial goals
 Time
“A goal without a plan is just a wish” Antoine de Saint-Exupery
4
 Key considerations when investing clients’ money
 Attitudes to risk
 Asset allocation
 Market volatility
 Diversification
 Funds’ style biases
 Performance records
 Regulatory issues
5
 The suitability cycle
1. Assess suitability –
Client
4. Review suitability –
Investment
Demonstrate
and
Document
3. Review suitability –
Client
2. Assess suitability –
Investment
6
 FSA Paper – January 2011
 Assessing suitability of Investments
“The high number of unsuitable investment selections we see in pension and investment
markets is still a significant concern”
50%
Of files assessed by FSA during an 18 month period ending
Sept 2010 were unsuitable on grounds of risk
Capacity for loss was not considered enough
7
 Understanding ‘reverse percentages’
 Concept:
The investment return required to recover from an investment loss
increases exponentially with the scale of the loss.
 Definitions:
rloss =
the loss rate from a specified starting point
(this is a -ve percentage)
rrecov = the growth rate required to recover to a previous starting point
rrecov / rloss = the growth factor
 This can be represented by the following equation:
1
–1
rrecov =
(1+rloss)
rloss
rrecov
Growth factor
-5%
5.3%
1.05
-10%
11.1%
1.11
-15%
17.6%
1.18
-20%
25.0%
1.25
-25%
33.3%
1.33
-30%
42.9%
1.43
-35%
53.8%
1.54
-40%
66.7%
1.67
-45%
81.8%
1.82
-50%
100.0%
2.00
-55%
122.2%
2.22
-60%
150.0%
2.50
-65%
185.7%
2.86
-70%
233.3%
3.33
-75%
300.0%
4.00
-80%
400.0%
5.00
-85%
566.7%
6.67
-90%
900.0%
10.00
-95%
1900.0%
20.00
8
 Downside risk
Source: FE.
9
 Relying solely on volatility as a proxy for risk
Investment A
Investment B
Investment C
Month 1
2.0%
5.0%
-5.0%
Month 2
4.0%
5.0%
-5.0%
Month 3
9.2%
5.0%
-5.0%
0
0%
15.7%
–14.3%
Volatility (SD)
Return
3.8
15.7%
Source: This slide is for illustrative purposes only. The figures do not represent actual investments.
10
 Ratios
Source: FE, bid to bid, net income reinvested , annualised from 31.10.08 to 31.10.11.
11
 AA tools
 It is not our area of expertise to comment on ATR tools but
where they lead to prescribed investment decisions by risk
we have a view
 Whilst theoretical risk parameters are kept with a boxing
method of risk by numbers, investors don't have full flexibility
to adjust to markets and this can lead to selling an asset that is
appreciating to buy one which is depreciating to keep within the
risk box
 Many new multi manager risk solutions are placed within the
unclassified sector making relative comparisons on risk return
to peers difficult
12
 AA Tools
 Stochastic modelling looks backwards and trys to project
forwards – The world we live in now is not the same
 MPT – Modern portfolio theory works on the academic belief
that holding all the major assets all of the time you increase the
risk / return of a portfolio – not so , a la property in recent times
 Many asset allocation tools fail at fund levels by boxing active
managers by tracking errors – the result you would ignore lots
of talent for core monies like Neil Woodford of IP
 Use a panel but, also use your discrection
13
 Assess suitability – Investment
Global Emerging Markets may represent 55% of Global market cap by 2030
Source: IMF, MSCI, Goldman Sachs Global ECS Research estimates 08.09.10.
14
 IMA Report to April 2011 – Sectors (NET sales)
Source: IMA Report to April 2011
15
 Issues for the IFA
16
 Best vs. worst UK Unit Trust/OEIC in 2007
Source: Financial Express, bid to bid, net income reinvested in GBP 31.12.06 to 31.12.07.
17
 Best vs. worst UK Unit Trust/OEIC in 2008
Source: Financial Express, bid to bid, net income reinvested in GBP 31.12.07 to 31.12.08.
18
 Best vs. worst UK Unit Trust/OEIC in 2009
Source: Financial Express, bid to bid, net income reinvested in GBP 31.12.08 to 31.12.09.
19
 Best vs. worst UK Unit Trust/OEIC in 2010
Source: Financial Express, bid to bid, net income reinvested in GBP 31.12.09 to 31.12.10.
20
 Over the last year…
1st Quartile
to
3rd Quartile or
moved from
4th Quartile
performance over the previous 12 months
Source: Financial Express,, bid to bid, net income reinvested from 31.08.09 to 31.08.11.
21
 Cost of missing best ten days
https://www.fidelity.co.in/market_volatility/timing.html
Source: Fidelity FundsNetwork. The chart shows how a notional Rs. One lakh investment would have been affected if the ten best days were missed, using
daily returns of the BSE Sensex (source: Bloomberg) for the calculations fro m 31.07.01 to 31.07.11. Indices are not a representation of a financial product.
The do not take account of costs or tax and do not reflect performance of any individual portfolio of stocks.
Past performance is not an indicator of future performance.
22
 Active vs. passive investing
 Active
 Passive
Potential for out-performance
Lower charges
Can react to market conditions
Less trading (often computer driven)
Access to smaller companies
Higher charges
No potential for out-performance
Can underperform the market
Tracking error / rebalancing
Must stay fully invested
Only feasible for larger markets
23
 FTSE 100 performance 2010: +12.7%
 Best performers 2010
Average Weight %
Total Return %
Fresnillo
0.16
+114.3
Burberry Group
0.25
+92.9
Petrofac
0.23
+68.1
Antofagasta
0.30
+65.3
Wolseley
0.31
+64.1
Source: FactSet, Bloomberg 31.12.09 to 31.12.10. Average weights are FTSE 100 average weights over 12 months to 31.12.10. on a buy and hold basis.
24
 FTSE 100 performance 2010: +12.7%
 Worst performers 2010
Average Weight %
Total Return %
Resolution
0.10
-28.0
BP
6.53
-21.2
Capita Group
0.33
-5.2
HSBC Holdings
8.25
-5.0
Marks & Spencer Group
0.41
-4.0
Avoiding one or two stocks would lead to outperformance
…but index managers can’t avoid this risk
Source: FactSet, Bloomberg 31.12.09 to 31.12.10. Average weights are FTSE 100 average weights over 12 months to 31.12.10. on a buy and hold basis.
25
 Stockmarket performance
 31.12.99 to 31.08.11
% Change
% Total Return
FTSE 100
-22.16
+20.27
S&P 500
-17.63
+2.01
Nikkei 225
-37.15
-28.23
DAX
+18.37
+18.37*
CAC 40
-22.18
+9.04
Source: Bloomberg as at 31.08.11. Figures based on GBP currency. *No dividends or coupons.
26
 Discrete performance – Jupiter Merlin Income
Calendar year performance
YTD
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
Jupiter Merlin Income Portfolio
-2.8
12.5
17.4
-10.8
2.8
11.0
17.0
11.8
15.2
-5.2
-2.2
5.9
IMA Cautious Managed average
-3.0
8.6
15.9
-15.8
1.4
7.0
12.6
9.4
14.4
-11.8
-4.9
1.1
Relative performance
+0.2
+3.9
+1.5
+5.0
+1.4
+4.1
+4.5
+2.4
+0.8
+6.6
+2.6
+4.8
2
1
2
2
2
1
1
1
2
1
2
1
Quartile rank
Source: Financial Express, bid to bid, net income reinvested to 31.08.11.
27
 Analyzing funds
 Fund manager tenure
 Risk vs. return (including discrete returns)
 Maximum loss
 ABI vs. IMA
 Stock and sector over/underweight (just as important)
 Number of holdings
 Commonality / overlap on funds held
28
 FundsLibrary
29
 Hiding the truth?
 Watch out for the
*. Who’s performance record is it really?
 There are no hard and fast rules as fund managers move
around and new funds are launched
Fund management is an art not a science;
it is a peoples business
John Chatfield Roberts, Director, Jupiter
30
 Brick in the snake – Discrete as well as cumulative
% Growth
 Jupiter European Fund performance over 5 years
Jupiter - European Inc TR in GB
FTSE World Europe EX UK Index TR in GB
IMA Europe Excluding UK TR in GB
Jupiter - European Inc TR in GB
90
80
70
60
50
40
30
20
10
0
-10
-20
-30
-40
22.1
18.8 16.4
17.6
9.4
-0.3 -3.4 -5.2
2006-2007
2007-2008
Source: Financial Express, bid to bid, net income reinvested to 31.08.11.
-4.0
3.4
4.7
-0.2 -1.5
-5.8 -6.8
2008-2009
2009-2010
2010-2011
31
 Risk metrics
 To be used in conjunction with performance analysis
to determine the risk / reward trade of
 Beta
 Alpha
 Standard deviation and tracking errors
 Correlation
 Maximum drawdown and many more, all can be found
on websites provided or direct from your manager
32
 Jupiter North American Income Fund – Risk & Return
 Risk/return over 5 years
60
50
40
% Change
30
20
S&P 500
10
0
-10
-20
-30
-40
15
16
17
18
19
20
Annualised Volatility
Source: Financial Express, bid to bid, net income reinvested 31.08.06 to 31.08.11.
21
22
23
24
33
 Criteria for ratings – 1 of 2
Agency
Description
Criteria
Standard & Poor’s
Fund Management
Ratings
Takes into account investment process and managers’ consistency of
performance
Less than 20% of funds receive a
rating
Morningstar
Overall Morningstar Ratings™ grades fund based on their risk-adjusted
returns within Morningstar Categories over separate performance
period depending on how long the fund has been running. The separate
periods are 36 months, 60 months and 120 months.
5 star:
4 star:
3 star:
2 star:
1 star:
Forsyth-OBSR
Examines fund’s investment style, process, performance and risk
Funds must be ‘highly
commendable’ or better
top 10%
next 22.5%
middle 35%
next 22.5%
bottom 10%
34
 Criteria for ratings – 2 of 2
Agency
Description
Criteria
Citywire Fund
Manager Ratings
Focusses on manager’s ability, regardless of fund managed, calculating
the level outperformance against the benchmark
‘Only a handful of managers
receive
a rating’
Lipper Leaders
Funds that are awarded Lipper Leader status have excelled when
compared to similar funds. Lipper’s scoring system is built on three
years of historical performance and is based on two main elements:
‘preservation’, the ability of the fund to preserve capital, even during any
market downturn and ‘consistent return’, the ability of a fund to provide
consistently superior returns when compared to similar funds.
Both measures are scored on a 1
to 5 basis (with 1 being the
highest). Funds that score 1 for
either measure are awarded
‘Lipper Leader’ recognition.
Trustnet Alpha
Manager Ratings
The calculation is achieved by constructing an artificial portfolio, as if the
manager’s funds had been bought and sold during the period he/she
managed them. The weighting between funds is equal, but is halved if
the fund is co-managed and the manager is also a sole manager on
another fund. Any periods where there is no record of fund manager
performance, perhaps due to gardening leave, is treated as a flat period.
The rating is based on three
components:
 Risk-adjusted alpha (with track
record length bias)
 Consistent outperformance of
a benchmark overall
 Out/underperformance
consistency in up and
down markets
35
 ABI vs. IMA
 Jupiter High Income Fund
 Fund sits within IMA UK equity and bond sector
 Fund invests 80% in UK equity, 20% UK fixed interest
36
 ABI vs. IMA
 Jupiter High Income Fund
 For Life and Pensions money, use ABI classification
 ABI do not have a UK equity and bond sector
 Fund is therefore placed in most appropriate sector – UK equity
is included in this case
 Problems?
37
 Specialism – is it your role to pick them?
 Is it your job or that of a MultiManager?
 If it’s the IFA, you must keep an eye on these funds
more regularly
 Possibly quarterly reviews, rather than annual
 Monitor these funds with more detailed analysis
38
 Specialist sector – Apples and Pears
 Top 5 performing funds over 5 years
Fund
%
Smith & Williamson - Global Gold & Resources
140.7
 Gold and Mining Resources Fund
BlackRock - Gold & General
134.9
 Gold and Mining Resources Fund
Investec - Global Gold
128.5
 Gold and Mining Resources Fund
Franklin Templeton - Franklin India
116.3
 Indian Equities
Fidelity - Latin America
113.2
 Latin American Equities
Source: Financial Express, bid to bid, net income reinvested to 31.08.11.
39
 Finding funds
 How many funds should you look at?
 How much time do ‘you’ have?
 Consider your limits – holistic advice
BUT with over 2000 UK funds alone to choose from,
you need filters and a system
40
 Directory
 www.barcap.com/egs
Equity-Gilt Study
 www.obsr.co.uk
Ratings and fund information
 www.ipdindex.co.uk
Property
 www.reita.org
REITS information
 www.trustnet.com
Performance & multi-manager guide
 www.citywire.co.uk
Fund manager news, views, ratings
 www.apcims.co.uk
Asset allocation model
 www.morningstar.co.uk
Performance & risk data
 www.fundslibrary.co.uk
Factsheets & reports
 www.jupiteronline.co.uk
Jupiter fund information
 The new breed – Absolute return investing
The differing funds on offer
42
 So why now?
 Just look at the last decade for investors
 Two significant bear / negative returning markets for equities
 Cash is not king, and other asset class volatility has increased
 Index returns negative for equity investors
 Correlation stronger between asset classes
43
 10 years of returns
Source: Financial Express, bid to bid, net income reinvested to 31.08.11.
44
 Absolute returns in mind
 There has been a recent flurry of funds launched in the UK,
so much so that a new IMA sector has been created
 We endorse the usage of these funds but…
 As part of an overall portfolio or complete solution?
 But NB: They can and have lost money
 They may find it difficult to fully participate in any rally
45
 IMA definition
Absolute Return
Funds managed with the aim
of delivering absolute
(i.e. more than zero) returns
in any market conditions.
Typically funds in this sector
would normally expect
to deliver absolute (more
than zero) returns on
a 12 months basis.
46
 Absolute Return sector (incorporated April 2008)
 IMA Absolute Return sector
 Offshore Recognised Absolute Return
Year
Funds launched
Year
Funds launched
1993
1
1989
1
1997
1
1996
1
1998
1
1997
2
2003
1
1998
1
2004
1
1999
4
2005
4
2000
2
2006
4
2001
1
2007
5
2003
2
2008
8
2004
2
2009
21
2005
6
2010
16
2006
18
2011
6
2007
11
Total
69
2008
3
2009
10
2010
15
Source: Financial Express..
2011
5
Total
84
47
 IMA Absolute Return sector members’ performance 2010
 IMA Absolute Return sector
Source: Financial Express, bid to bid, net income reinvested 31.12.09 to 31.12.10.
 Offshore Recognised Absolute Return
48
 Funds rated by S&P, OBSR and Financial Express
 IMA Absolute Return sector
 Offshore Recognised Absolute Return
Fund
S&P
OBSR
FE
crowns
Newton Real Return
AAA
A
2
Stan Life Global Absolute
Return Strategies
AA
A
3
Insight Absolute Return
AA
A
3
BlackRock UK
Absolute Alpha
AA
A
1
Threadneedle Absolute
Return Bond
Source: Trustnet 31.08.11.
A
A
2
S&P
FE
crowns
Insight Absolute UK Equity
Market Neutral
AA
3
Nordea European Value
AA
2
Polar Capital UK Absolute Return
AA
1
BNY Mellon Evolution
Global Alpha
A
1
Ennismore European
Small Companies
A
3
GLG UK Select Equity
A
1
Schroder Emerging Markets Debt
Absolute Return
A
2
Fund
49
 What are the opportunities?
 Long term all weather opportunities for investment
 Lower volatility, lower standard deviation
 The greater potential for protection of capital
 A multitude of different instruments and techniques
to maintain flexibility
50
 Types of Absolute Return
Equity
Multi-Asset
Bond
Directional
Blackrock UK Absolute Alpha
Directional
Jupiter Absolute Return
Target Return
Standard Life GARS
Market Neutral
Absolute Insight UK Equity Market Neutral
Directional
Threadneedle Absolute Return Bond
51
 Examples of funds and differences
 Insight Market Neutral – Cash Plus Return
 Standard Life GARS – Targeted return
 Jupiter AR – Absolute Return
52
 Failure of managed funds
 Performance over ten years
Source: Financial Express, bid to bid, net income reinvested to 31.08.11.
53
 The nascent sectors credentials
 Performance since July 2005
Source: Financial Express, bid to bid, net income reinvested to 31.08.11.
 Methods employed
55
 Legislation helps
 UCITS III and soon IV
 Hedge fund techniques can be used in UK Funds
under regulation
 Thus the emergence of absolute return funds
56
 UCITS new powers
 UCITS III
 Absolute Return funds have the ability to invest in a wider range
of instruments to a much greater degree compared to traditional
long only funds
 Making use of greater degrees of cash weighting
 Using derivatives not only to maximise returns but also to protect
portfolios, as opposed to simply EPM used in traditional funds
 Swaps, CFD’s, pair trades, index derivatives and much more can
be used synthetically
57
 Golden ticket?
 You can trade on Comex – But there will be dealing costs, storage, insurance etc..
…So we trade on ETC’s market – Cost effective, but can you market time?
 Gold acts as an inflation hedge, currency hedge and also acts as a flight to quality
asset in recessionary times
 US Dollar risk to consider & no yield, but only held as part of overall portfolio
58
 UCITS III – Absolute Return (“sophisticated”) vs. Long Only (“non-sophisticated”) funds
Funds managed with the aim of delivering absolute (i.e. more than zero) returns in
any market conditions. Typically, funds in this sector would normally expect to
deliver absolute (more than zero) returns on a 12 month basis.
IMA
 Long only
 Long only
 Highly correlated to equity/fixed interest indices
 Outperformance rather than absolute returns
 Limited ability to protect the fund when market
is falling
 Derivatives used for “efficient portfolio
management” purposes only
 Absolute return
 Long and (“synthetic”) short strategies – like
hedge funds
 Low correlation to equity returns
 Aim for positive returns in all market conditions
 Can actively manage the fund’s market exposure
(long, short or neutral).
 Derivatives for investment and hedging purposes
 “Commitment” approach to risk management
 Value at Risk (VaR)
 Regulated by FSA
 Regulated by FSA (unlike hedge funds)
59
 Evaluating – Absolute return funds
 Qualitative aspects
 Investment philosophy and objectives
 Resources
 Investment process
 Portfolio construction
 Risk
 Quantitative aspects
 VaR, drawdown, volatility, alpha,
correlation and many more
60
 How to monitor
 Corporate and individual / team experience
 Managers ability
 To what extent new powers will be used
 Main asset play or multi asset
 Risk monitoring and managements
 Understanding and articulation of fees
 USE WEBSITES OVERLEAF
 (see appendices for performance fee method of our fund)
61
 The Future
 Investors have a choice of an potential all weather vehicle
 Less correlation to market
 Cash plus, Target & Absolute return strategies available,
designed to return with less volatility
 Not all are the same, not all will perform as 2009 proved
62
 How will the performance fee work?
Performance Fee
 Fee is calculated and accrued daily in the price and is paid
annually, from the fund, on 31 October each year (the last day
of accounting year). However, this 15% performance fee
will only be paid if the fund outperforms the Hurdle and
High Water Mark
63
 Websites and surveys
www.fundslibrary.co.uk
Fund comparison site
www.defaqto.co.uk
Guide to sector
www.obsr.co.uk
Research & ratings
www.investopedia.co.uk
Glossary of terms
www.jupiteronline.co.uk
Jupiter AR Fund
64
 A possible process for picking funds?
 Assuming specific client requirements are considered, then
 Look at the majority of funds with a track record, 3 or 5 years+
on both an absolute and relative basis
 Perform quantitative performance and risk analysis using a tool
 Carry out qualitative research using tool, factsheets and
independent reports
 Find out how the fund is rated by the major agencies, if not check
if there are still reasons to choose before filtering out
 Make sure the fund adds to the portfolio’s diversity and does not
concentrate in similar areas for correlation
 Monitor your funds with pre-populated quant reports and regular
reading / updates, maybe semi annual or more regularly
65
 Caveats
 Manger may have recently moved to the group/fund after strong
performance elsewhere – Eg. Philip Ehrmann, Jupiter China
 Manager may have run offshore/ hedge or institutional
mandates and has a strong record to bring to the retail market –
Eg. Philip Gibbs, Jupiter Absolute Return
 Fund may be a new derivative of another successful fund /
manager Eg. Ariel Bezalel, Co manager of Jupiter High Income
and Manager of short term success with Strategic Bond
 Fund may have new manager and become a recovery story Eg.
Ben Whitmore, Jupiter UK Special Situations
 Fund maybe a new concept with suitability for modern
investing – AR fund as above
66
 Making changes - To manage or not to manage?
 Is the IFA an investment expert or financial planner?
 It all takes a lot of time, resource, and this costs money
 World is changing and fast so dynamic portfolios required
 Too much choice, so how do you slim down but at the same
time avoid missing new opportunities
 CGT on switches outside of a wrapper
 Paperwork and reporting
 Reviews essential
67
 Multi Management
Abdication or delegation?
68
 Benefits of Multi Management
 To manage to not to manage?
 Expert analysis of markets and funds on a daily basis
 Saving time so more can be spent on clients and their core needs
 Diversification with access to more than just conventional
onshore funds
 Investment risk can be spread, as our funds hold an average of 12
underlying funds and that gives access to well over 1000 stocks
 Consolidation of your core holdings, one portfolio, one report,
one point of contact
69
 Practical solutions for investors
 Financial planning
 Influence the variables that you control
 Maximise use of tax breaks etc
 Constantly evaluate your financial goals
 Investing
 Manage your expectations
 Adopt a forward looking focus
 Use flexible mandates
 Embrace risk
 Analyse performance over meaningful time periods
“A goal without a plan is just a wish” Antoine de Saint-Exupery
70
 Minimum amount earned per hour of work
PORTFOLIO SIZE
HOURLY
RATE
£25,000
£50,000
£75,000
£100,000
£125,000
£150,000
£200,000
£250,000
£25
5.00
10.00
15.00
20.00
25.00
30.00
40.00
50.00
£50
2.50
5.00
7.50
10.00
12.50
15.00
20.00
25.00
£75
1.67
3.33
5.00
6.67
8.33
10.00
13.33
16.67
£100
1.25
2.50
3.75
5.00
6.25
7.50
10.00
12.50
£125
1.00
2.00
3.00
4.00
5.00
6.00
8.00
10.00
£150
0.83
1.67
2.50
3.33
4.17
5.00
6.67
8.33
£175
0.71
1.43
2.14
2.86
3.57
4.29
5.71
7.14
£200
0.63
1.25
1.88
2.50
3.13
3.75
5.00
6.25
£225
0.56
1.11
1.67
2.22
2.78
3.33
4.44
5.56
£250
0.50
1.00
1.50
2.00
2.50
3.00
4.00
5.00
£125.00
£250.00
£375.00
£500.00
£625.00
£750.00
£1,000.00
£1,250.00
TIME
RENEWAL FEES
Source: Jupiter
71
 Reduce your workload
 Merlin Market view
73
 Jupiter Independent Funds team
John Chatfeild-Roberts
Director



2001 to Present – Jupiter Asset Management
1995 to 2001 – Lazard Asset Management
1989 to 1995 – Henderson Global Investors
Algy Smith-Maxwell
Director



2001 to Present – Jupiter Asset Management
1999 to 2001 – Lazard Asset Management
1995 to 1999 – Henderson Global Investors
Peter Lawery
Director


2001 to Present – Jupiter Asset Management
1992 to 2001 – Lazard Asset Management
74
 Merlin View
 Cash – recent deployment of cash to buy defensive managers
 Fixed Interest – Main strategy to buy Strategic Bond Managers
 UK Equities – Defensive, experienced Income Managers
 Global Equities – Like US Global winners, GEM Direct and
indirect, u/w Europe
 Others – No Property, hold Gold and energy funds
We always look at fundamentals, and for liquidity
and long terms absolute returns!
75
 Market thoughts
Global emerging markets – powerful demographics
 Working age population
Emerging
Developed
4,500
4,000
3,420
3,500
3,873 3,953
4,002 4,033 4,025
3,202
2,946
3,000
2,671
2,419
2,500
2,187
1,936
2,000
1,684
1,500
1,000
3,591
3,749
898
961 1,034
526
556
1,137
579
1,294
613
1,469
646
680
713
745
768
784
805
823
836
830
820
809
796
784
771
758
744
500
0
1950
55
60
65
70
75
80
85
90
95
2000
05
10E
15E
Rapid growth of middle class will drive wealth creation,
consumption and urbanisation
Source: UNPD, Morgan Stanley June 2009.
20E
25E 30E
35E
40E
45E
50E
76
 Decoupling; 10 years of proof?
Growth in emerging markets (6.1%) to outpace developed (1.5%)*
 Outperformance over ten years = 275%
% Growth
MSCI EM (Emerging Markets) 291.1%
400
350
300
250
200
150
100
S&P 500 Index 16.3%
50
0
-50
2001
2002
2003
2004
2005
2006
Source: Financial Express, total return 31.08.01 to 31.08.11. *Source: Morgan Stanley 2012 growth estimate.
2007
2008
2009
2010
2011
77
 Our Market is global
 The new “normal”
 70% + of FTSE 100 earnings are overseas
 2 constituents of FTSE 100 are Kazakhstan copper miners
 No link between GDP and FTSE growth as a result
 Income managers with strong dividends offer Global opportunities
with UK security
78
 Colgate: Developed world company – developing world growth
 Iconic brand with leading 44% global
market share
 Highly profitable operating margins
of 24%
 Exposed to emerging world dynamics
but with:
 Economic & accounting transparency
 Corporate governance
 Subject to the rule of law
Source: Colgate, Jupiter
BRIC sales = 46% of total sales
Market share
Brazil
70%
Russia
35%
India
51%
China
32%
79
 Making changes – to manage or not to manage?
 Is the IFA an investment expert or financial planner?
 It all takes a lot of time, resource, and this costs money
 World is changing and fast so dynamic portfolios required
 Too much choice, so how do you slim down but at the same
time avoid missing new opportunities
 CGT on switches outside of a wrapper
 Paperwork and reporting
 Reviews essential
80
 Managers we hold - Include
 Richard Woolnough, M&G, Ariel Bezalel, Jupiter – Strategic
Bond Funds
 Neil Woodford – IP Income, Tom Dobell – M&G Recovery
 Angus Tulloch & Martin Lau –First State Asia Funds
 James Findlay – Findlay Park US
 Gold ETF / Energy Funds
 We always look at fundamentals, and for liquidity and long
terms absolute returns!
81
 Final comments
 Platforms and Pricing
www.theplatforum.co.uk
82
 Disclosure
Jupiter Unit Trust Managers Limited (‘JUTM’) and Jupiter Asset Management Limited (‘JAM’) are
both registered in England and Wales (nos. 2009040 and 2036243). The registered office of both is 1
Grosvenor Place, London SW1X 7JJ. JUTM and JAM are authorised and regulated by the Financial
Services Authority whose address is 25 The North Colonnade, Canary Wharf, London E14 5HS.
This presentation is intended for investment professionals and not for the benefit of private investors.
However any one attending the presentation or who has the opportunity to view the accompanying
slides should bear in mind that the value of an investment in a unit trust and the income from it can
go down as well as up. It may be affected by exchange rate variations and you may not get back the
amount invested. Initial charges are likely to have a greater proportionate effect on returns if
investments are liquidated in the shorter term. Quoted yields are not guaranteed. Current tax levels
and reliefs will depend on the nature of the holding and details are contained in the key features
documents. Past performance should not be seen as a guide to future performance.
For your security we may record or randomly monitor all telephone calls. If you are unsure of the
suitability of an investment please contact your financial advisor. Any data or views given should not
be construed as investment advice. Every effort is made to ensure the accuracy of the information
but no assurance or warranties are given.