go global as a viking! · 2013-11-06 · risk diversification by spreading your investments 4...

Go Global as a Viking!

Thomas Fischer

October, 2013

Thomas Fischer

• MBA

• 38 years in financial services

• Currency trader 1978-2000

• Jyske Bank/JGAM 2000 -2013

• Editor Currency Cross Trader

• Consultant ENR Asset Management

• Golf

• Copenhagen Marathon 05 4:10

• Copenhagen Marathon 07 4:08

Invest globally and you gain on both risk and return

Risk

Return

Efficient front with and without global investments

Lower risk at a given level of return

Higher return at a given level of risk

Risk diversification by spreading your

investments

4

“Why Not Diversify Internationally Rather Than Domestically?” Solnik

(1974)

1. The greater the number of securities, the less the portfolio is likely to lose as the result of one company’s misfortune

2. An internationally diversified portfolio is likely to carry a much smaller risk than a domestic portfolio

1

2

Model Portfolio Theory

• Diversification reduce unsystematic risk

• Best level of diversification – efficient frontier

• Global diversification – currency overlay

• Systematic risk cannot be diversified away.

5

US Efficient Frontier

6

Global Efficient Frontier Active Currency Overlay

7

Global Diversification

• Individual Stocks, Bonds & Currencies (no currency hedging)

• Global Funds (hedging within Fund)

• Regional Funds (hedging within Fund)

• Emerging Market Funds (hedging within Fund)

• Country Funds (hedging within Fund)

8

The size of the FX Market 2013

• 5.3 Trillion US dollars every day!

• US dollar 87% of all trades

• UK (41%) & USA (19%) largest jurisdictions

Purchasing-Power-Parity

• Long term measurement based on inflation

• Fundamentals always right in the long run but….

• Currency rates affected by short term traders

• Currency risk needs to be watched 24-7

10

Factors affecting currency rates

• Macroeconomic factors – GDP/Unemployment/Growth

• Interest rate differential

• Market trends – momentum/relative strength index

• Central banks

11

Analyzing Currencies like stocks

• GDP

• Interest rates

• Employment rate

• FDI

• Sentiment

• Charts

12

EURO

• 11 member states introduced EUR January 1999

• Notes and coins were launched on 1 January 2002

• Today 17 member states

• 33% of all currency trades

• 27% of world foreign exchange reserves

Member States using Euro

• Belgium

• Germany

• Estonia

• Ireland

• Greece

• Spain

• France

• Italy

• Cyprus

• Luxembourg

• Malta

• The Netherlands

• Austria

• Portugal

• Slovenia

• Slovakia

• Finland

Euro Statistics

• GDP: 12,4 trillion USD (17 countries)

• Population: 332 million (17 countries)

• Government debt: 85% of GDP

• Unemployment: 12.1%

• 10 year bond: 1.76%

Eurozone alphabet soup!

ECB alphabet soup - explained!

• EFSF = European Financial Stability Facility created 2010 EUR 440 Billion

• EFSM = European Financial Stabilisation Mechanism created 2010 – EUR 60 billion

• SMP = Securities Markets Programme – ECB purchase in secondary bond markets – discontinued 2012 now OMT

• ESM = European Stability Mechanism created 2012 EUR 500 Billion

• LTRO = Long-Term Refinancing Operations existed since 1999 but Mario Draghi introduced 3 year lending in 2011 EUR 489 Billion in 2012 EUR 529 Billion

• OMT = Outright Monetary Transacions 2012 – ECB purchase secondary sovereign bond markets

The EURO Source: BCA

USD

• GDP 15, 6 trillion

• Population 316 million

• 50 states

• 87% of all currency trades

• 63% of World foreign exchange reserves

USD Statistics

• GDP: 15,720,000,000

• Population: 316 million

• National debt of GDP: 100%

• Unemployment: 7.30%

• 10 year Government bond 2.62%

EUR/USD

• All time high: 1.6038 (07/18/08)

• All time low: 0.8230 (10/26/00)

• Average since introduction: 1.2024

• Current: 1.3450

• Daily turnover: 1.3 trillion

Source: Jyske Markets

ENR offers Global Investments

to US persons

Unique global investments for US investors

• SEC registered Investment Adviser

• ENR invest your money as a non-US person

• A world of opportunities

• Increased diversification and potentially higher returns

Asset allocation and diversification

• Top-down investment decision process

• Time horizon

– Short term; 0-3 months, market sentiments, 10%

– Medium term; 3-12 months, (three indicators), 60%

• Valuation; what asset classes/sectors/regions are over-/under-valued?

• Liquidity; free liquidity available for investments in financial assets

• Economic momentum; the business cycle, growth and output gap

– Long term; 1-5 years, structural fundamentals, 30%

Products An overview

• Managed Accounts

(Discretionary Portfolio Management)

• Advisory Account

(non-Discretionary)

• IRA pension plans

• Leveraged investments

• Minimum funds

Risk Profiles Horizon in years

Low Risk Medium Risk High Risk Speculative

+3 +5 +7 +10

AUM

100t USD Managed Account 250t USD Advisory Account

• Client segmentation

ENR Viking Portfolios

• Minimum USD 100,000 • Jyske Bank Denmark your custodian • Monthly Market Outlook from ENR • Global Investments • Management fee inclusive of custodian fees

Viking Low Risk Allocation

Asset class Min. % Max. % Neutral weight%

Fixed income 0 100 75

Equities 0 40 15

Alternatives 0 20 5

Cash 0 100 5

Viking Medium Risk Allocation

Portfolio risk profile: Medium risk

Asset class Min. % Max. % Neutral weight %


Equities 0 80 45

Alternatives 0 40 5

Cash 0 100 5

Viking High Risk Allocation

Portfolio risk profile: High risk

Asset class Min. % Max. % Neutral weight %


Equities 0 100 75

Alternatives 0 60 5

Cash 0 100 5

Performance after ENR fee

LOW RISK MEDIUM RISK HIGH RISK

2009 18.3% 23.2% 27.9%

2010 7.4% 10.3% 8.0%

2011 -1.3% -4.8% -8.6%

2012 8.1% 11.2% 12.4%

year-to-date 4.2% 9.1% 9.1%

Low Risk Portfolio Fixed Income:

USD

5,8% E.ON International Finance

BV 30.4.2018 5,90%

USD ArcelorMittal Var. 05.08.2015 6,65%

USD 3,75% Best Buy Co 15.03.2016 5,17%

USD

6,221% Telefonica Emisiones

03.07.2017 6,91%

USD

6,25% Vale Overseas Ltd

23.01.2017 5,47%

USD 5,55% Alcoa 01.02.2017 4,65%

MXN 8% Mexico 19.12.2013 6,37%

NZD

6,5% European Investment Bank

10.09.2014 4,93%

Subtotal 46,05%

Equities:

USD Apple Inc (US) 4,05%

USD PepsiCo Inc (US) 5,86%

USD Sherwin-Williams 5,28%

USD

WisdomTree Japan Hedged Equity

Fund 4,95%

EUR SAP AG (DE) 4,85%

CHF Nestle SA (CH) 3,28%

CHF Roche Holding Ltd (CH) 6,81%

HKD

China Railway Construction

Corporation (HK) 4,39%

Subtotal 39,47%

Alternatives:

GBP British Land Co PLC (GB) 4,77%

Subtotal 4,77%

Cash:

USD US Dollar 9,71%

Total: 100,00%

Medium Risk Portfolio

Asset Type Model%

Fixed Income:

USD 3,75% Best Buy Co 15.03.2016 4,47%

USD ArcelorMittal Var. 05.08.2015 4,91%

USD 6,221% Telefonica Emisiones 03.07.2017 4,83%

MXN 8% Mexico 19.12.2013 4,21%

NZD 6,5% European Investment Bank 10.09.2014 4,44%

Subtotal 22,86%

Equities:



USD BorgWarner 6,72%


USD WisdomTree Japan Hedged Equity Fund 6,73%


EUR Prysmian (IT) 5,62%

GBP Vodafone Group PLC (GBP) 5,31%



HKD

China Railway Construction Corporation

(HK) 4,26%

SEK Swedbank A (SE) 3,91%

Subtotal 62,99%

Alternatives:


Subtotal 4,56%

Cash:

USD US Dollar 9,59%

Total: 100,00%

High Risk Portfolio Fixed Income:

MXN 8% Mexico 19.12.2013 4,30%

NZD

6,5% European Investment Bank

10.09.2014 5,07%

Subtotal 9,37%

Equities:



USD Qualcomm Inc (US) 5,09%

USD BorgWarner 6,71%


USD

WisdomTree Japan Hedged Equity

Fund 6,63%


EUR Prysmian (IT) 5,67%

GBP Diageo PLC (GB) 5,25%

GBP Vodafone Group PLC (GBP) 5,31%



USD iShares FTSE China 25 Index Fund 4,99%

HKD

China Railway Construction

Corporation (HK) 4,26%

SEK Swedbank A (SE) 3,77%

Subtotal 76,40%

Alternatives:


Subtotal 4,56%

Cash:

USD US Dollar 9,67%

Total: 100,00%

ENR Advisory Extra Accounts

• Minimum investment USD 250,000 • Jyske Bank Denmark your custodian • Self-direction • Monthly Market Outlook from ENR • Advisory Investment cases from ENR • Fee 1% inclusive of custodian fees to Jyske Bank

Strong Danish banks in EU stress test

• New capital requirement of 9% (before 7%)

• Major Danish banks show strong resilience in EU stress tests (European Banking Authority’s test)

• Jyske Bank’s core capital is 13.8% and was never below 12.3% in the stress test

Denmark

• Trade balance surplus

• Low unemployment

• Highly regulated banking industry

• Active democracy (voting participation +85%)

• Least corrupt nation

• Member of EU but not part of the euro

5 easy steps to become a client

1. Complete custodian bank application forms

2. Choose ENR investment product

3. Sign ENR contracts

4. Wire transfer funds

5. Go!

E-mail: [email protected]

Free-call: 1-877-989-8027

Fax: 1-514-989-7060

Website: www.enrasset.com

ENRs contact details

ENR Asset Management Inc.

1 Westmount Square, Suite 1400

Westmount Quebec

Canada

mailto:[email protected]

Thomas Contact Details

• [email protected]

• [email protected]

• 011-45-3880 0011

• 011-45-2526 9239



go global as a viking! · 2013-11-06 · risk diversification by spreading your investments 4...

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