1 global investment management harmony funds update james klempster, cfa february 2012

1global investment management

Harmony funds update

James Klempster, CFA

February 2012

2

Contents

global investment management

1. Market update

2. Fund focus

3 global investment management

1. Market update


Asset class returns 2011 – local currency terms

8.5% 8.2%7.2%

5.0%

-5.5%-6.9%

-12.7%-15%

-10%

-5%

0%

5%

10%

Gold Investment grade

fixed income

Global Government

bonds

High yield Global developed marketequities

Commodities Global emerging marketequities

Source: Bloomberg, February 2012


Asset class returns YTD 2012 – local currency terms

12.5%

11.3%

8.6%

5.6%

4.2%

2.0%

-0.2%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Gold Global emerging marketequities

Global developed marketequities

Commodities High yield Investment grade

fixed income

Global Government

bonds



Sector returns since 19 December 2011

17.8% 17.6%

15.9%15.3%

14.3%

13.7%

12.0%

6.9%

5.0%

3.7%

2.6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Financials Consumerd iscretionary

IT Industrials Materials MSCIWorld

Energy Healthcare

Consumerstap les

Utility Telecoms



Global equities back to 2008 levels

30

40

50

60

70

80

90

100

110

Nov 07 May 08 Nov 08 May 09 Nov 09 May 10 Nov 10 May 11 Nov 11

Perf

orm

ance rebased to

100

MSCI Daily TR Net World USD MSCI Daily TR Net Emerging Markets USD



What is worrying investors?

• Instability in the Middle East and North Africa• Global imbalances• Unsustainable growth in China • Fiscal consolidation• Weak growth in the US, rising risks of recession• Europe



Global imbalances

5,000

3,000

1,000

-3,000

-5,000

-7,000

-9,000

-1,000

Developing national reserves

US Treasury borrowing

Source: Old Mutual,/ Bloomberg. November 2011 (for illustrative purposes)


The weakest US recovery on record

Source: Deutsche Bank,/ Bloomberg. November 2011 (for illustrative purposes)

%

Nominal US GDP recoveries…….


10 year Treasury yields close to all time 220 year lows

US 10 year Treasury yields since 1790



US 10 year yields versus equities

2500

2600

2700

2800

2900

3000

3100

3200

3300

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Oct 11 Nov 11 Dec 11 Jan 12 Feb 12

Ind

ex le

vel

Yie

ld (%

)

US 10 year government yield MSCI World USD



Is there anyone left that thinks Greece won’t default?

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12

Pri

ce

Greece 10 year government bond



Europe continues to fuel concerns

“Greece will remain a unique case”

Source: Mario Draghi


10 year government bond spreads over Bunds


-500

0

500

1000

1500

2000

2500

3000

3500

4000

Nov 01 Nov 02 Nov 03 Nov 04 Nov 05 Nov 06 Nov 07 Nov 08 Nov 09 Nov 10 Nov 11

Sp

read

(bas

is p

oin

ts)

Italy France Greece Spain Ireland


Greece – austerity bites

Source: The Economist


The European debt mountain update

Source: Bloomberg. November 2011 (for illustrative purposes)

79.9%

61.0%

-9.3%

93.2%

-9.8%

82.3%

-7.1%

83.2%

-4.3%

118.4%

-4.6%

144.9%

-10.6%

Debt to GDP

Budget deficit to GDP

94.9%

-31.3%

-10.3%


Loss of competitiveness in the periphery

80

90

100

110

120

130

140

Dec 99

Dec 00

Dec 01

Dec 02

Dec 03

Dec 04

Dec 05

Dec 06

Dec 07

Dec 08

Dec 09

Dec 10

Ind

ex le

vel r

ebas

ed to

100

Spain

Italy

Greece

Portugal

France

Ireland

Germany



Jean Claude Trichet“The Governing Council will, in early

[May] take decisions on the continued implementation of the gradual

phasing-out of the extraordinary liquidity measures that are not

needed to the same extent as in the past”

MAY 2010


Mario Draghi

“We see no stigma attached to the use of central banking credit provisions; our facilities are there

to be used”


EU base rate

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Sep 05 Mar 06 Sep 06 Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11

Yie

ld (%

)

ECB Main Refinancing Rate



European brands benefitting from global growth

Source: Intebrand Top 100 Global Brands, December 2011. Third party trademark, copyright and other intellectual property rights are and remain the property of their respective owners.


Chinese inflation

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

Dec 99 Dec 00 Dec 01 Dec 02 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11

Yie

ld (%

)

Ch ina CPI YoY



Monetary policy

2.0

7.0

12.0

17.0

22.0

Oct 07 Apr 08 Oct 08 Apr 09 Oct 09 Apr 10 Oct 10 Apr 11 Oct 11

Yie

ld (%

)

Ch ina 1 Year Best Lend ing Rate Brazil Selic Target Rate Reserve Bank o f India REPO Cut Ch ina Required Deposit Reserve



Equity market valuations

Price/Earnings Dividend yield10-year Government

bond yields

United States 14.1 2.0% 2.0%

Eurozone 12.7 4.6% 1.9%

United Kingdom 11.0 3.6% 2.2%

Germany 11.4 3.7% 1.9%

Japan 24.5 2.1% 0.9%

Hong Kong 9.7 3.0% 1.4%

Australia 14.0 4.6% 4.0%



Key themes for 2012

• ‘New normal’ is now the consensus• Global rebalancing set to continue for several years• Subdued GDP growth now widely expected• Eurozone sovereign debt remains a tail risk• Recent data suggests economic thawing in DM• Current deflationary environment will ultimately turn inflationary

as governments resort to the printing presses – but not yet• 2012 started strongly, remain positive but do not let

expectations become outlandish

• Diversification and dynamic asset allocation key to performance


2. Fund focus


Harmony Balanced fund strategic allocation

January 2012

Global Equity10%

Local Equity30%

Global Bonds10%

Local Government Debt30%

Global Property10%

Cash10%


Harmony Growth fund strategic allocation

January 2012

Global Equity15%

Local Equity50%

Global Bonds5%

Local Government Debt15%

Global Property10%

Cash5%


Harmony US Dollar Balanced asset allocation

January 2012.

Equity26.0% Equity

22.0%

Equity31.0%

Equity33.1%

Equity40.3%

Equity41.3%

Equity41.8%

Equity40.0%

Fixed Income31.0% Fixed Income

34.0%

Fixed Income48.0% Fixed Income

40.0%

Fixed Income34.6%

Fixed Income31.3%

Fixed Income29.5%

Fixed Income40.0%

Alt. Investments24.0%





Property11.0%

Property4.0%

Property11.0%

Property9.5%

Property9.6%

Property10.8% Property

10.2%

Property10.0%

Cash8.0%

Cash15.0%

Cash4.0%

Cash13.5%

Cash13.0% Cash

16.6%Cash18.4%

Cash10.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-07 Dec-08 Dec-09 Dec-10 Jun-11 Dec-11 Jan-12 Benchmark


Harmony US Dollar Balanced currency allocation

January 2012.

USD79.0%

USD92.0%

USD71.0%

USD78.9%

USD70.5%

USD77.8%

USD78.7%

USD82.8%

EUR7.0%

EUR1.0%

EUR9.0%

EUR7.2%

EUR9.1%

EUR7.1%

EUR6.7%

EUR6.3%

GBP 1.0%

GBP 4.0%

GBP 3.0%

GBP 3.0%

GBP 5.4%

GBP 3.2% GBP 3.1%

GBP 3.1%JPY 5.0%

JPY 7.0%

JPY 4.4%

JPY 4.4%JPY 2.3% JPY 2.2%

JPY 3.2%Other 8.0%

Other 3.0%

Other 10.0%Other 6.4%

Other 10.6% Other 9.6% Other 9.2%Other 4.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%



Harmony US Dollar Balanced performance

Source: Lipper Hindsight, Momentum Global Investment Management, January 2012.

Past performance is not indicative of future returns. *30/06/2005 to 30/12/2005. †Harmony fund average percentage rank over discrete years shown.

1 month 3 months 2011 2010 2009 2008 2007 2006 2005*

Harmony US Dollar Balanced Peer Rank 11/19 7/19 7/19 8/17 4/16 9/13 3/12 2/12 4/12

Fund Performance 2.8% 1.3% -1.5% 5.6% 20.0% -27.2% 6.7% 13.2% 4.7%

Peer Max 5.8% 3.3% 1.6% 12.2% 25.2% -6.7% 7.8% 13.5% 14.2%

Peer Min 0.0% -3.5% -18.8% -2.6% -0.7% -36.2% 2.1% 5.0% 0.7%

Peer Median 3.2% 0.8% -3.7% 5.5% 15.9% -21.2% 5.1% 8.8% 3.3%

0%

20%

40%

60%

80%

100%

1 month 3 months 2011 2010 2009 2008 2007 2006 2005* Average2005-2011†

Har

mo

ny

fun

d p

erce

ntag

e ra

nk


Harmony US Dollar Balanced manager performance

Source: Lipper January 2012

Returns in US dollar 3 months 6 months 12 months

Equity

Artisan Global Value -0.3% 0.4% -

Momentum IF Global Equity 1.3% -6.2% -4.3%

Morgan Stanley Global Brands -1.4% -2.4% 11.4%

BlackRock US Index 5.3% 2.6% 3.9%

Momentum IF Global Emerging Markets 0.2% -13.3% -13.5%

Fixed Income

Old Mutual Global Bond -1.6% 5.3% 3.3%

RWC Global Convertibles 0.9% -1.8% -1.7%

BlackRock US Dollar High Yield Bond 3.1% 0.7% 3.5%

BlackRock US Corporate Bond Index 1.8% 3.5% 8.2%

iShares USD Treasury Bond 1-3 0.2% 0.4% 1.4%

iShares USD Treasury Bond 7-10 3.7% 9.1% 16.3%

Property

Cohen & Steers Global Real Estate 2.8% -7.9% -3.6%


Harmony US Dollar Growth asset allocation

January 2012.

Equity49.0%

Equity35.0%

Equity51.0%

Equity53.3% Equity

47.5%

Equity65.3%

Equity67.5% Equity

65.0%

Fixed Income15.0%

Fixed Income28.0%

Fixed Income27.0%

Fixed Income25.2%

Fixed Income13.0%

Fixed Income17.4%

Fixed Income16.8%

Fixed Income20.0%

Alt. Investments25.0% Alt. Investments

24.0%




Property9.0%

Property4.0%

Property13.0%

Property9.9%

Property5.9%

Property10.3%

Property9.9%

Property10.0%

Cash2.0%

Cash9.0%

Cash2.0% Cash

4.4%

Cash30.4%

Cash7.0%

Cash5.7%

Cash5.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%



Harmony US Dollar Growth currency allocation

USD80.0%

USD88.0%

USD69.0% USD

64.2%

USD76.2%

USD68.6%

USD69.1%

USD76.8%

EUR10.0%

EUR1.0%

EUR9.0%

EUR10.6%

EUR7.1%

EUR9.6%

EUR9.5%

EUR8.9%

GBP2.0%

GBP7.0%

GBP5.0% GBP

6.5%

GBP4.4%

GBP4.8%

GBP4.8%

GBP4.4%

JPY4.0%

JPY5.0% JPY

5.1%

JPY3.2%

JPY3.4%

JPY3.3%

JPY4.6%

Other4.0%

Other4.0%

Other12.0%

Other13.7%

Other9.1% Other

13.6%Other13.3%

Other5.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


January 2012.


Harmony US Dollar Growth performance

1 month 3 months 2011 2010 2009 2008 2007 2006 2005*

Harmony US Dollar Growth Peer Rank 11/19 6/19 3/19 6/17 3/16 11/13 3/12 1/12 4/12

Fund Performance 3.0% 1.4% -0.1% 7.8% 23.0% -30.1% 6.5% 15.2% 6.3%

Peer Max 5.8% 3.3% 1.6% 12.2% 25.2% -6.7% 7.8% 15.2% 14.2%

Peer Min 0.0% -3.5% -18.8% -2.6% -0.7% -36.2% 2.1% 5.0% 0.7%

Peer Median 3.2% 0.8% -3.7% 5.5% 15.9% -21.2% 5.1% 8.8% 3.3%

0%

20%

40%

60%

80%

100%

1 month 3 months 2011 2010 2009 2008 2007 2006 2005* Average2005-2011†

Har

mo

ny

fun

d p

erce

ntag

e ra

nk

Source: Lipper Hindsight, Momentum Global Investment Management, January 2012.

Past performance is not indicative of future returns. *30/06/2005 to 30/12/2005. †Harmony fund average percentage rank over discrete years shown.


Harmony US Dollar Growth manager performance

Source: Lipper Hindsight, 2012

Returns in US dollar 3 months 6 months 12 months

Equity

Artisan Global Value -0.3% 0.4% -

Momentum IF Global Equity 1.3% -6.2% -4.3%

Morgan Stanley Global Brands -1.4% -2.4% 11.4%

BlackRock US Index 5.3% 2.6% 3.9%

Heptagon Yacktman US Equity 3.0% 4.4% 7.0%

Firth Asian Smaller Companies 1.2% -13.4% -10.9%

Momentum IF Global Emerging Markets 0.2% -13.3% -13.5%

Fixed Income

Old Mutual Global Bond -1.6% 5.3% 3.3%

RWC Global Convertibles 0.9% -1.8% -1.7%

BlackRock US Dollar High Yield Bond 3.1% 0.7% 3.5%

BlackRock US Corporate Bond Index 1.8% 3.5% 8.2%

Property

Cohen & Steers Global Real Estate 2.8% -7.9% -3.6%


Harmony funds protecting capital in 2007/08

40.0

50.0

60.0

70.0

80.0

90.0

100.0

110.0

Harmony Asian Growth MSCI AC Asia Ex Japan Index (NR) MSCI World (NR)

40.0

50.0

60.0

70.0

80.0

90.0

100.0

110.0

Harmony Sterling Growth FTSE 100 Index (TR) MSCI World (NR)

Per

form

ance

reb

ased

to

100

Per

form

ance

reb

ased

to

100

Source: Lipper Hindsight, January 2012. Past performance is not indicative of future returns.


…and again in recent weak markets

70.0

75.0

80.0

85.0

90.0

95.0

100.0

105.0

Harmony Asian Growth MSCI AC Asia Ex Japan Index (NR) MSCI World (NR)

70.0

75.0

80.0

85.0

90.0

95.0

100.0

105.0

Harmony Asian Balanced MSCI AC Asia Ex Japan Index (NR) MSCI World (NR)

Per

form

ance

reb

ased

to

100

Per

form

ance

reb

ased

to

100

Source: Lipper Hindsight, January 2012. Past performance is not indicative of future returns.


Harmony 2011 performance vs. peers

Source: Lipper Hindsight, January 2012. Past performance is not indicative of future returns

0%

20%

40%

60%

80%

100%

Harmony US Dollar Balanced

Harmony US Dollar Growth

Harmony AUD Growth

Harmony Sterling Balanced

Harmony Sterling Growth

Harmony Asian Balanced

Harmony Asian Growth

Harmony Euro Balanced

2011 average

Har

mo

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fun

d p

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ntag

e ra

nk


Thank you


Disclaimer

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© Momentum Global Investment Management Limited 2012


Contact: Lucy RichardsonMarketing ManagerMomentum Global Investment Management [email protected]: +44 207 939 1725www.momentumgim.com

1 global investment management harmony funds update james klempster, cfa february 2012

Documents

global growth source

global brands

economist slide

equities source

market update slide

illustrative purposes

record source

bunds source