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Investors’ Seminar November 2014 “How Risky Are Our Investments?”

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Presentation on theme: "Investors’ Seminar November 2014 “How Risky Are Our Investments?”"— Presentation transcript:

1 Investors’ Seminar November 2014 “How Risky Are Our Investments?”

2 Disclaimer This is not Advice. Please see Mark before considering any changes. Mark will put any recommendations in writing The information contained in this presentation has been prepared for general use only and does not take into account your personal investment objectives, financial situation or particular needs. Before you make any decision about whether to invest in a financial product, you should obtain and consider the Product Disclosure Statement of the financial product. The information provided by HFS has been done so in good faith and has been derived from sources believed to be accurate at the time of compilation. Changes in circumstances, including unlawful interference and unauthorised tampering, after the date of publication may impact on the accuracy of the information. Neither HFS d nor any member of HFS accepts responsibility for any inaccuracy or for investment decisions or any other actions taken by any person on the basis of the information included. Past performance is not a reliable indicator of future performance. Neither HFS nor any member of HFS guarantees the performance of the Funds, the repayment of capital or any particular rate of return. The performance of any unit trust depends on the performance of its underlying investment which can fall as well as rise and can result in both capital losses and gains. Consequently, due to market influences, no assurance can be given that all stated objectives will be achieved.

3 Investors’ Seminar November 2014 How Risky Are Our Investments? Past performance; Economic data Forecasts Ideal Cash & Term Deposit Levels Top 10 Holdings

4 IOO – iShares S&P Global 100 XAO – S&P All Ords

5 What could go Wrong? 1.Drawdown Levels may significantly increase 2.Dividends may not provide sufficient cash-flow to the RHS 3.The Security of the RHS may cease 4.The businesses part-owned in the LHS may not produce adequate Earnings 5.A loss of the long-term focus and the patience – cannot “stay the journey”

6 Volatility – it’s not a risk; it’s a certainty What Are The Risks? Risk Capacity Risk Attitude Longevity Risk Inflation Risk Liquidity Risk Credit Risk; Diversification Risk; Market Risk Market Timing Risk

7 Past Performance Australian Equities % pa Global Equities % pa Australian Listed Property % pa Australian Fixed Interest % pa Cash % pa 5 years 6.6 11.2 8.6 6.7 3.9 10 years 8.2 5.0 1.7 6.3 4.9 15 years 8.7 2.0 5.9 6.4 5.1 20 years 9.4 6.0 7.5 7.4 5.4

8 Current market statistics and valuations Consensus expectations for EPS growth and P/Es 10 October 2014 PE FY 2015 (f) x PE FY 2016 (f) x EPS Growth FY 2015 (f) % EPS Growth FY 2016 % MARKET14. Financials12.812.27.24.8 -REITS14.513.86.84.6 Industrials16.514.99.810.68 Resources12.611.0-3.614.5 Top 5013.812.83.77.2 Mid Cap 5015.213.310.514.4 Small Ords15.312.921.817.9 Source: Ausbil calculation based on consensus broker earnings forecasts, 10 October 2014 8

9 Forecast Returns Yield % pa Growth % pa Total % pa Australian Equities 4.5 4.2 8.7 Global Equities 2.5 5.8 8.3 Australian Listed Property 6.0 2.0 8.0 Australian Fixed Interest 4.4 0.2 4.6 Cash 4.2 - 4.2

10 10 Average annual total returns after inflation Australian long term returns 1900-2013 % 1950- 2013 % 1950s % 1960s % 1970s % 1980s % 1990s % 2000s % 2010- 2013 % Real bond returns1.51.0-6.30.9- Real equity total returns Real equity capital gains less inflation Income compounding effect5. Source: Credit Suisse / London Business School : ‘Global Investment Returns Yearbook 2014’

11 The Ideal Level Of Cash & Term Deposits Segmentation Bar Placement – the key issues are: A.Drawdown Goals – allocate considerable time to this B.Market Issues (a) Dividends from the LHS; (b) Worst Case long-term share prices in LHS

12 LHS – Long-Term Investing 10 Year Investing vs 1 Year Investing “Rolling Smoothed” 10 Year Returns Hayden Investment Paradox Allowance for Inflation is crucial because we must retain our Purchasing Power

13 AS IS P TD Cash Specialist Stock-picker XYZ Manager

14 We want to: 1.Buy a designated portfolio of shares 2.Contract a high-quality specialist Investment Manager to manage the portfolio and instigate changes to ensure best forecast (prognostic) returns Specialist Stock-picker How do we ensure a high quality result A.Analyse the portfolio of shares B.Analyse the skill-set of the Investment Manager

15 Realistic Goals Structure/Strategy (Tax etc) Super Fund Admin Asset Mix 1 -Cash/TermDeposits Asset Mix 2–Growth Section (LHS) Stock-Picker Selection The Boxes to Tick

16 What can Investors expect from HaydenFS? A.Revision of the Segmentation Bar Placement – to ensure the ideal level of Cash & Term Deposits B.Revision of the Investment Managers and Specialist Stock-Pickers

17 Peace-of-mind for Investors 1.Part-own a lot of great businesses. We have a portfolio of businesses that is well diversified across locations, industries and size. 2.Employing (contracting) some very wise people to monitor and change our portfolio of investee businesses when necessary.

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