Presentation on theme: "Keith Forslund, Senior Portfolio Manager"— Presentation transcript:
1 Keith Forslund, Senior Portfolio Manager Natives of KodiakShareholders MeetingSeptember 20, 2014Presented by:Keith Forslund, Senior Portfolio ManagerHighmark Capital Management, Inc. is a wholly owned subsidiary of MUFG Union Bank, N.A.
2 AGENDA Past Results Current Results Economic Outlook Investment Forecast
3 CAPITAL MARKET REVIEW - August 31, 2014 Source: HighMark Capital Management and Thomson Datastream as of August 31, Performance longer than 1-year is annualized.
4 Natives of Kodiak Performance Average Annual Returns (8/31/14) PAST RESULTSNatives of Kodiak PerformanceAverage Annual Returns (8/31/14)2 Years 3 Years 4 Years 5 YearsPermanent Fund % % % %Blended Benchmark** % % % %**75% MSCI All Country World Index 23% BC Intermediate US Govt/Credit Index 2% Citigroup 3 Mo T-Bill Index
5 PAST RESULTS Stock market returns since bottom (3/6/2009) US Stocks > 200%, including dividendsDeveloped International +150%, including dividendsEmerging Markets +130%, including dividendsWorldwide economic conditions stabilized but slow growth remainedSovereign debt crisis ebbingReal estate values stabilizingBanks reluctant to lendCorporate earnings strong
6 S&P 500 Large Cap Index – Price Changes Last 5 Years EQUITY MARKETS&P 500 Large Cap Index – Price Changes Last 5 YearsSeptember 2, 2009 – August 31, 2014Source: Bloomberg
7 30-Year Treasuries – Price Changes Last 30 Years BOND MARKET30-Year Treasuries – Price Changes Last 30 YearsSeptember 2, 1984 – August 31, 2014Source: Bloomberg
8 30-Year Treasuries – Price Changes Last 5 Years BOND MARKET30-Year Treasuries – Price Changes Last 5 YearsSeptember 2, 2009 – August 31, 2014Source: Bloomberg
9 Natives of Kodiak Account CURRENT RESULTSNatives of Kodiak AccountYTD MonthsPermanent Fund % % %Blended Benchmark** % % %**65% MSCI All Country World Index 23% BC Intermediate US Govt/Credit Index 2% Citigroup 3 Mo T-Bill Index10% HFRI FOF Market Defensive IndexAs of 8/31/14
10 CURRENT RESULTSUS stock market rallying on Central Bank activities, improving economic conditionsForeign stock markets are improvingBond market declining (yields rising from historic lows)Dollar up on global anxiety (hurts foreign investments)Economic ConcernsFederal Reserve bond purchase uncertaintyConsumer spendingEconomic data indicate slow global growthGeopolitical concernsEconomic PositivesUnemployment improvingCorporate earnings strongStrong corporate balance sheetsPent up demandHousing starts deficitFiscal / monetary stimulus
11 ECONOMIC OUTLOOK Economy Improving growth Consumer Less of a concern (unemployment, spending, reducing debt)Housing ImprovingInflation Not an issue through foreseeable futureGlobal Economy(non U.S.) Europe - A ConcernUncertainties Unwinding global government intervention, underemployment, Eurozone stability, Federal Reserve actions
12 INVESTMENT FORECAST Corporate earnings strength / peaking margins? Limited inflationary pressuresStock market valuation is reasonable in a low interest rateenvironmentStocks favored over bonds