Zurich Horizon Funds Alex Lyle. For professional investors only January 2016

Transcription

1 Zurich Horizon Funds Alex Lyle For professional investors only January 2016

2 Learning objective Refresh your knowledge on current market themes and familiarise yourself with the Zurich Horizon Multi Asset Funds investment process.

3 The global economic outlook GDP forecasts IMF growth forecast, advanced economies End 2015 (%) End 2016 (%) US Euro area Japan UK Brazil Russia India China Expectations for developed market growth are greater than previous years 2016 expectations show scope for further improvement is limited Emerging Market growth expectations continue south Source: Columbia Threadneedle Investments and IMF as at November Brackets indicate consensus forecast. 3

4 Outlook for equities preferred asset class Reasonable valuations Global economic background continues to slowly improve which should lead to moderate earnings growth Corporate balance sheets strong and cash flow healthy Monetary conditions will remain supportive with BoJ s QE programme, ECB s QE programme and interest rate rises in the US and UK will be data dependent and measured M&A activity has risen to buoyant levels But, risks have risen: China, Brexit, commodity economies, debt overhang Source: Columbia Threadneedle Investments, November

5 Global equity valuations MSCI World CAPE Average MSCI World P/Book Average Source: Citi Research: Global Equity Strategy, November Past performance is not a guide to future performance. 5

6 Australia UK Canada Switz France Germany US Japan The search for yield Equities still attractive Dividend yield Govt bond yield Dividend yield Government Bond yield Source: Citi Research, 30 November

7 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 FTSEurofirst 300 ex UK since % % % -15% Greek Fears Armageddon Averted +25% -29% Euro Debt Crisis +27% -17% Greek Exit? +37% -11% US Taper Fears -12% Global Growth Fears -18% China Wobble Source: Bloomberg, Columbia Threadneedle Investments as at 30 November Past performance is not a guide to future performance. 7

8 Equity regional allocations Outlook and positioning + We are overweight UK equities where we see good quality companies with high levels of earnings from overseas that are attractively valued. The dividend yield is especially high. However, Brexit is a headwind. + We are above benchmark in Japan in light of the determination shown by the prime minister and the governor of the BoJ to reflate the economy. This is already having an impact on consumer and business confidence and, importantly, on inflation. There is also a significant change in attitude towards corporate efficiency. + We are overweight in Europe. We see better scope for margin and P/E expansion in this region than elsewhere, the euro has weakened and the region is a major beneficiary of low oil prices. + We are above benchmark in Asia. The region is a major beneficiary of lower oil prices, which has reduced inflationary pressures and allowed looser monetary policy. Valuations are attractive by historical standards. We are underweight in US equities. The US has the best economic background of the major regions, and we are optimistic on the US$. However, valuation levels are relatively expensive and the strong dollar is having a negative impact on overseas earnings. In addition, rising interest rates may act as a temporary hurdle relative to other regions. We are underweight in Emerging Markets (ex Asia). Many states are suffering from depressed commodity prices, weak trade and capital flows and slowing growth. Source: Columbia Threadneedle Investments, November

9 Outlook for bonds Expecting low official interest rates for extended period, anchors short dated government bonds Inflation outlook benign in short / medium-term However, valuations unattractive for core government bonds and yields expected to drift higher Improved global economic background reduces attraction Credit spreads offer some value but risk / reward balance less beneficial than previously Source: Columbia Threadneedle Investments, November

10 Core government bonds remain one of the world s most expensive asset classes Bond yields are around their lows thanks to further extraordinary policy from central banks Forward-looking return prospect is poor Source: Bloomberg, Macrobond, Columbia Threadneedle Investments, as at November

11 Valuations... IG corporate bond spreads are close to the historical average Spreads have room to compress; financials remain a credit improvement sector Credit Crisis Russia / LTCM Fraud / Corp Governance Source: Bloomberg, UN00 index, 31 December

12 Outlook for property Property offers an attractive yield The improved economic background is increasing demand for space Contribution to new space has been limited Investor demand remains healthy 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Source: Bloomberg, November % FTSE All-Share MSCI World UK 10 Year Gilt Bar Cap Global Agg IPD 12

13 Zurich Horizon Multi Asset - portfolio benchmarks UK Government Bonds Corporate Bonds UK Equity US Equity European Equity Japanese Equity Emerging Markets Equity Property Cash FTSE Actuaries UK All Stocks Conventional Gilts Index Markit Boxx GBP Corporate AA Index FTSE All-Share Index S&P 500 or the MSCI US Equity Index MSCI EMU Index MSCI Japan Equity Index MSCI Emerging Equity Index IPD UK Monthly Property Index Portfolio I 63.0% 37.0% Portfolio II 42.0% 37.0% 11.0% 10.0% Portfolio III 31.0% 29.0% 30.0% 10.0% Portfolio IV 14.0% 21.0% 49.0% 6.0% 10.0% Portfolio V 15.0% 60.0% 15.0% 10.0% Source: Columbia Threadneedle Investments, as at 30 November

14 Zurich Horizon Multi Asset - portfolio allocations UK Government Bonds Corporate Bonds UK Equity US Equity European Equity Japanese Equity Emerging Markets Equity Property Cash FTSE Actuaries UK All Stocks Conventional Gilts Index Markit Boxx GBP Corporate AA Index FTSE All-Share Index S&P 500 or the MSCI US Equity Index MSCI EMU Index MSCI Japan Equity Index MSCI Emerging Equity Index IPD UK Monthly Property Index Portfolio I -3.4% +2.8% +0.6% Portfolio II -4.6% +1.0% +1.4% +1.6% +0.6% Portfolio III -4.4% +0.9% +1.8% +1.3% +0.4% Portfolio IV -4.2% +1.1% +1.5% -0.9% +1.4% +1.1% Portfolio V +0.9% +2.3% -2.4% -1.0% +0.2% Source: Columbia Threadneedle Investments, as at 30 November

15 Zurich Horizon Multi Asset - provisional return profile Fund 1 Month 3 Months 1 Year Horizon Composite Benchmark* Relative Horizon Composite Benchmark* Relative Horizon Composite Benchmark* Relative Horizon Composite Benchmark* Relative Horizon Composite Benchmark* Relative *For benchmark compositions please refer to slide 13. Source: Columbia Threadneedle Investments as at 30 November Please note the Threadneedle Multi Asset Zurich Fund Range (TF) merged into the Zurich Horizon Multi Asset Fund Range (ZF) on 17 July 2015, therefore performance shown is based on the following funds and respective benchmarks: 01/01/ /03/2015, TF returns; 27/03/ /07/2015, average of TF and ZF returns; 30/07/2015 to 30/11/2015, ZF returns. Past performance is not a guide to future performance. 15

16 Why Columbia Threadneedle? Best in class fund of fettered funds benefiting from: Investing in internal funds superior understanding of portfolios and aligned strategy Controlled costs no additional charges for investing in internal funds Greater risk controls full look-through analysis to underlying individual stock holdings Long term outperformance Columbia Threadneedle was the best performing fund group in a recent study by FE Trustnet 1 Name % outperformers No. of funds Columbia Threadneedle 79.06% 42 Jupiter 75.00% 24 Invesco Perpetual 71.42% 35 L&G 66.67% 18 Newton 66.67% 18 Schroder 64.51% 62 Baillie Gifford 63.16% 19 Fidelity 57.78% 45 M&G 54.83% 31 Aviva 50.00% 16 Henderson 50.00% 42 Source: FE Analytics, as at 13 November Source: Alex Paget, FE Trustnet, as at 13 November Past performance is not a guide to future returns. To read the full article, visit The research conducted by FE Trustnet focused on actively managed funds within the Investment Association (IA) universe with a 10-year performance track record and measured outperformance of the funds compared to their stated benchmark or an appropriate comparator. Where funds did not have a stated benchmark, the most comparable index was used for equity funds and the relevant IA sector average used for bond funds and funds within the IA Mixed Investment Shares and IA Flexible sectors. Funds within the IA Specialist and IA Unclassified sectors that do not have a benchmark or an easily comparable index were excluded from the study, along with all funds in the IA Targeted Absolute Return sector and direct commercial property funds. 16

17 Biography ALEX LYLE Head of Managed Funds, EMEA Alex Lyle is Head of Managed Funds, EMEA. In this role he takes responsibility for a large number of the company s managed funds, is a member of the Asset Allocation Committee and is a key investment contact between the company and a number of its major clients. He joined the company in 1994 and was appointed Joint Head of UK / European Equity teams in 1999 and became Head of Managed Funds in Alex started his career at Hambros Bank s 1 Unit Trust Division, which was acquired by Allied Dunbar 2 in 1981 and subsequently became part of Threadneedle Asset Management Limited in He managed UK equity portfolios for more than 20 years. He has a degree in Geography from Oxford University. Company start date: 1994 Industry start date: Hambros Bank unit trust division was acquired by Allied Dunbar in Allied Dunbar Asset Management became part of Threadneedle Asset Management Limited in

18 Learning outcome Refreshed your knowledge on current market themes and familiarised yourself with the Zurich Horizon Multi Asset Funds investment process.

19 Important information For internal use by Professional and/or Qualified Investors only (not to be used with or passed on to retail clients) Past performance is not a guide to future performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. This material is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services. This presentation is not investment, legal, tax, or accounting advice. Investors should consult with their own professional advisors for advice on any investment, legal, tax, or accounting issues relating an investment with Columbia Threadneedle Investments. The mention of any specific shares or bonds should not be taken as a recommendation to deal. The research and analysis included in this document has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed. This presentation and its contents are confidential and proprietary. The information provided in this presentation is for the sole use of those attending the presentation. It may not be reproduced in any form or passed on to any third party without the express written permission of Columbia Threadneedle Investments. This presentation is the property of Columbia Threadneedle Investments and must be returned upon request. Issued by Threadneedle Asset Management Limited. Registered in England and Wales, No Registered Office: Cannon Place, 78 Cannon Street London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. 19