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Jersey Investment Presentation – 23 May 2012

Jersey Investment Presentation – 23 May 2012. Politics & the global economy. The outlook for markets & asset management industry for 2012 & beyond. Anatole Kaletsky | Peter Bourne | Tristan Hanson. Jersey Investment Presentation – 23 May 2012. 1. Peter Bourne. 2. Anatole Kaletsky.

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Jersey Investment Presentation – 23 May 2012

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  1. Jersey Investment Presentation – 23 May 2012 Politics & the global economy. The outlook for markets & asset management industry for 2012 & beyond. Anatole Kaletsky | Peter Bourne | Tristan Hanson Ashburton | A part of the FirstRand Group

  2. Jersey Investment Presentation – 23 May 2012 1. Peter Bourne 2. Anatole Kaletsky 3. Tristan Hanson What should really worry investors? Current views & asset allocation Trends in the Asset Management Industry Ashburton | A part of the FirstRand Group

  3. Trends • More regulation, more complexity, more cost • Alpha versus beta producers • Skill versus scale • Manufacturing versus distribution • Outcome based solutions • Resurgence of multi-asset solutions

  4. Shift from traditional asset management into Alpha & Beta 2. Rise of Alternatives Specialist / Product Focussed Traditional “index trackers” can’t competewith cheap beta on price adjusted returns Performance Structured Multi- Boutique “Tied” AM Cheap Beta Consolidation ETFs “Beta” Large Scale AUM

  5. Asset Management world dividing along Skill vs Scale Asset management becoming an expensive business due to rising compliance costs and revenue pressures Will increase specialisation and industry concentration Specialist / Product Focussed Skill Structured Performance “in between” Multi- Boutique “Tied” AM Scale ETFs “Beta” Large Scale AUM Business models = Skill orScalebut don’t get caught in between

  6. Shifting boundaries… Between manufacturing and distribution Asset management is as much about distribution and marketing as it is about manufacturing Delivering what the client wants is key factor in value chain Increasingly, asset managers will choose to play to their relative strengths in each discipline to maximise profitability Expect more outsourcing of product manufacturing either to the market (beta) or specialist providers (alpha)

  7. Increasing demand for outcome based solutions Structural and demographic reasons Compliance and governance pressures e.g., RDR Trend accelerating now due to the lack of yield available

  8. Resurgence of multi-asset products Multi asset to become an asset class on its own in time? Many names for this, balanced, target return, asset allocation etc but all looking to preserve capital and generate a pre-determined outcome Investment environment is very difficult to manage for individual investors RDR and similar pressures globally are pushing the outsourcing of asset allocation decision again Hedge funds with absolute return mandates are moving into the mainstream (UCITS products)  

  9. Jersey Investment Presentation – 23 May 2012 Anatole Kaletsky Peter Bourne Tristan Hanson Trends in the Asset Management Industry What should really worry investors? Current views & asset allocation Ashburton | A part of the FirstRand Group

  10. Jersey Investment Presentation – 23 May 2012 What should really worry investors? • Guest Speaker • Anatole Kaletsky • Chief Economist - GaveKal Research • Co-Chairman - GK Dragonomics Ashburton | A part of the FirstRand Group

  11. Where is the next big risk? • China and EMs: hard landing or steady growth? • The euro: collapse or resolution? • US: stagnation or recovery? • Financial bubbles: equities or bonds?

  12. Is “new normal” so different from old?

  13. Necessary conditions for euro survival • Fiscal federalism: joint responsibility for sovereign debts • Political federalism: centralised control of tax and spending • Monetary federalism: ECB underwrites government debt

  14. ECB liquidity creation has surpassed Fed

  15. US private sector is growing 4%

  16. US broad money points to boom, not bust

  17. Bonds could collapse, even if central banks on hold

  18. Equity investors should buy on dips

  19. Jersey Investment Presentation – 23 May 2012 Tristan Hanson Peter Bourne Anatole Kaletsky Trends in the Asset Management Industry What should really worry investors? Current views & asset allocation Ashburton | A part of the FirstRand Group

  20. Current views • US economy is growing at a moderate pace. Fiscal issues will be a focus in 2013. We see QE3 odds at 30-40%. • Euro area economy likely to suffer prolonged crisis under fiscal tightening. If Greece exits the euro, we expect considerable action from EU/ECB to counter contagion risks. • Chinese growth to rebound in H2 2012 supported by looser fiscal and monetary policy.

  21. Performance as at 30 April 2012 Source: Morningstar Direct, *retail share classes net of fees

  22. Asset Allocation Source: Ashburton

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