IOOF adviserbriefing “Australia – are we digging a hole for ourselves?” 2012

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Disclaimer This presentation is for financial adviser use only – it is not to be distributed to clients. Issued by IOOF Investment Management Limited (IIML), ABN , AFSL IIML is a company within the IOOF group of companies, consisting of IOOF Holdings Limited ABN and its related bodies corporate. Examples are for illustrative purposes only. Past performance is not a reliable indicator of future performance.

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” The rise of resources

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Resources dominate EPS growth EPS growth (pa) Source: Bloomberg Consumer (Discretionary) IndustrialsFinancialsConsumer (Staples) Resources TelecomsEnergyUtilitiesHealthcare Earnings growth

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Change can be rapid Source: Legg Mason/ASX/IOOF Everything else Resources Telecoms Australian share market composition Resources

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Resources have dominated… but for how much longer?

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Resource market outlook PROJECTED Strong analyst forecast for resource earnings EPS (based to 100) Source: Bloomberg Resources Financials MayJunJulAugSepOctNovDecJanFebMar

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Resource market outlook Historical P/E near long-term average Source: Bloomberg Actual P/E Resources Average P/E Resources

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” China GDP forecast to slow Source: Bloomberg Median High Low PROJECTED GDP growth (%)

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Massive increase in iron ore supply Seaborne iron ore exports Source: Bloomberg Million metric tonnes Brazil Rest of world Australia

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” New iron ore projects Perth Geraldton Kalgoorlie Port Hedland Significant increases in supply ahead

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” No growth in iron ore price Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Q2 Q3 Q Source: Bloomberg PROJECTED Iron ore price Analyst forecast Futures prices

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Slower resource growth ? ? Phenomenal resource growth coming to an end Last 10 years Next 3 years Beyond 2015 Annual earnings growth (pa) Source: Bloomberg

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Positioning portfolios post-boom

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Watch for long-term trends 1998 Source: Bloomberg Telstra BHP

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Watch for long-term trends Source: Bloomberg Telstra BHP

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Under 15 (US) Over 65 (US) The world is getting older Source: Bloomberg

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” The world is getting older Under 15 (US) Over 65 (US) Under 15 (China) Over 65 (China) Source: Bloomberg

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” The world is getting older Source: Bloomberg Under 15 (Japan) Over 65 (Japan) % Population

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Healthcare under-represented Room for growth in Australian healthcare Source: Bloomberg Healthcare

IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?” Opportunities in healthcare Australian health stocks can be winners 9,400% 339% 3,675% Source: Bloomberg 20 billion 18 billion 16 billion 14 billion 12 billion 10 billion 8 billion 6 billion 4 billion 2 billion

The next ten years won’t look like the last ten years What are the implications for public policy? How do we manage this transition as investors? Look for emerging sources of EPS growth Employ active management to capture value from emerging trends IOOFadviserbriefing 2012“Australia – are we digging a hole for ourselves?”

IOOF adviserbriefing 2012