Safe Port in the recent Sub-Prime Storm Gartmore’s Cautious Managed fund in today’s market Chris Burvill October 2007 For business and professional investors.
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Presentation on theme: "Safe Port in the recent Sub-Prime Storm Gartmore’s Cautious Managed fund in today’s market Chris Burvill October 2007 For business and professional investors."— Presentation transcript:
1 Safe Port in the recent Sub-Prime Storm Gartmore’s Cautious Managed fund in today’s market Chris BurvillOctober 2007For business and professional investors only. Please do not circulate to private investors.
3 AgendaWhy this sector is so importantWhy the traditional approach worksWhy it’s important nowHow the Gartmore Cautious Managed Fund can weather the storm
4 What do Cautious Managed Funds do? Hold no more than 60% in equities (often no less than 40%)Genuinely “balanced” portfolios – as opposed to:Balanced Managed (Max equities 85%)UK Equity and Bond Income (Max equities 80%)Active Managed (Max equities 100%)… with different risk profiles:Which appeal to cautious investors….
7 What is their attitude to risk? Return200Our objective180160140120100806040Won’t accept2020406080100120140160180200Market LevelFor illustrative purposes only.
8 Some evidence that it’s happening %8Maximum GainMaximum Loss642-2-4-6-8Gartmore CautiousIMA ActiveIMA BalancedIMA CautiousIMA UK Equity &Managed AccManagedManagedManagedBond IncomeSource: Gartmore, as at 31st August 2007Basis: Measured between 28/02/03 to 31/08/07
9 Performance: 1m 3m 6m 1yr 2yr 3yr Since Inception Percentile Ranking %1m3m6m1yr2yr3yrSince InceptionPercentile Ranking5th22nd24th27th28th19th35thRelative to Sector Average0.881.241.501.172.075.148.48Source: Lipper/ Thomson Datastream, as at 31st August 2007 Basis: Mid to mid, net income reinvested and net of fees in Sterling
10 Protecting & adding value in asset allocation CautiousOptimistic60% Bonds40% Equities40% Bonds60% EquitiesStructure of portfolio is key
11 How about more diversification? Overseas equities?Large UK companies provide international exposureDoes the cautious investor appreciate the riskDoes he need the risk?Property?Equities provide property exposureBonds track property yieldsDiversify into property…or away from it?Commodities?ArtStampsTea cosies
12 The Investment Background or “What’s all the fuss about?”
13 We all know the market is cheap…..isn’t it? Traditional valuations look fineCompany balance sheets strongWorld economy appears healthyInterest rates set to fall
14 If only it were that easy Earnings are cyclically highRates falling for governments – rising for everyone else?Hard to divorce Financial Sector from everything else
15 Just in case we forgot… …There’s a few financial problems out there Prices of US Sub-Prime Mortgages (ABX.HE Indices)11010090807060504030AAAAAABBBBBB-The indices are published by Markit, based on credit default swaps on MBS backed by sub-prime home equity loans. Each series contains five-sub indices, based on credit rating. The ratings range from AAA to BBB-. The indices roll every six months; This chart is based on the 07-1 index
16 Gartmore Cautious Managed Fund Current Asset Allocation Top Ten Equity HoldingsAsset Name% of EquitiesBP7.91GlaxoSmithKline6.28Royal Dutch Shell6.01HSBC5.59Vodafone5.03Aviva4.00AstraZeneca3.20HBOS2.81Unilever2.80Tesco2.76Cash 11.6%Equities 46.1%Bonds42.3%Fund size: £592mSource: Gartmore/FactSet as at 30th September 2007
17 ConclusionCautious Managed Funds have a crucial roleTraditional cautious managed funds – more than capable of fulfilling that roleInvestment parametersDiversificationRarely have those virtues been more relevantStill plenty of potential for absolute returns
18 Important Information For business and professional investors only. This document should not be circulated to private investors.Past performance is not a guide to future performance.The value of investments and the income from them may go down as well as up and you may not get back your original investment.When a Fund holds high yielding bonds there is an increased risk of capital erosion through default or if the redemption yield is below the income yield. You should also be aware that economic conditions and changes to interest rate levels may significantly impact the values of high yield bonds.The annual management fee is currently charged to the capital of the Fund. Whilst this increases the yield, it will restrict the potential for capital growth.The level of yield is subject to fluctuation and is not guaranteed.More than 35% of the Fund is likely to consist of Government and other Public Securities issued by one issuer.Please ensure clients read the Simplified Prospectus Document before investing.All opinions and estimates constitute our judgment as of the date of this presentation and are subject to change without notice. Clients of Gartmore Group or any individual involved in the preparation of this material may at any time have a position in securities or options of the issuers named within this material. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.Gartmore Group consists of the following affiliates of Gartmore Investment Management Ltd: Gartmore Fund Managers Ltd, Gartmore Investment Ltd, Gartmore Investment Japan Ltd, Gartmore Global Partners*. *SEC Registered.These asset management affiliates of Gartmore Investment Management Ltd do business under the trade name of 'Gartmore Group'.All data as at 31st August 2007, unless otherwise stated.Issued by Gartmore Investment Limited (GIL). Gartmore’s authorised unit trusts and OEICs are managed by Gartmore Fund Managers Limited (GFM). Both GIL and GFM are authorised and regulated by the Financial Services Authority. Gartmore House, 8 Fenchurch Place, London EC3M 4PB.18