review of ioof multimix trusts december quarter 2011
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Review of IOOF MultiMix Trusts December Quarter 2011. Presented by: IOOF Investment Management Limited. Date: . Disclaimer. - PowerPoint PPT PresentationTRANSCRIPT
Review of IOOF MultiMix Trusts December Quarter 2011
Presented by:<IOOF Investment Team>
IOOF Investment Management Limited
Date: <Enter Date>
2
DisclaimerThis presentation is issued by IOOF Investment Management Limited (IIML) ABN 53 006 695 021 AFSL 230524. IIML is a company within the IOOF group of companies, consisting of IOOF Holdings Limited ABN 49 100 103 722 and it's related bodies corporate.
This presentation is of a general nature only and is not intended to represent or be a substitute for specific financial or investment advice. The information presented does not take into account any investor's objectives, financial situation or investment needs. You should obtain and consider a copy of the Product Disclosure Statement available from our website www.ioof.com.au before you acquire a financial product.
To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Neither IIML nor any company in the IOOF group guarantees the performance of any fund or the return of an investor's capital.
Past performance is not indicative of future performance.
The Lonsec Limited (‘Lonsec’) ABN 56 061 751 102 ratings (assigned as follows: IOF0092AU – November 2011; IOF0098AU – November 2011; IOF0094AU – November 2011; IOF0095AU – November 2011; UFM0051AU – November 2011; IOF0093AU – November 2011; IOF0097AU – November 2011; IOF0090AU – November 2011) presented in this document are limited to ‘General Advice’ and based solely on consideration of the investment merits of the financial products. They are not a recommendation to purchase, sell or hold the relevant products, and you should seek independent financial advice before investing in these products. The ratings are subject to change without notice and Lonsec assumes no obligation to update the relevant documents following publication. Lonsec receives a fee from the Fund Manager for researching the products using comprehensive and objective criteria.
Review of IOOF MultiMix Funds Dec 2011
Agenda
1. Financial markets review – December 2011
2. Market outlook
3. MultiMix sector trusts review – December 2011
4. MultiMix diversified trusts review – December 2011
5. Strategic tilting
6. Appendices
3Review of IOOF MultiMix Funds Dec 2011
Financial markets review – December 2011
Investment returns for major asset classes
Source IRESS
5Review of IOOF MultiMix Funds Dec 2011
Total return
major listed asset classes
Year to 31
December
2009
%
Year to 31
December
2010
%
Year to
31
December
2011
%
Quarter to
31 December
2011
%
Month to
31
December
2011
%
Australian shares 37.59 1.90 -10.98 2.05 -1.44
International shares (in A$ - unhedged) -0.30 -2.04 -5.34 2.00 0.21
International shares (hedged) 26.71 13.13 -1.91 8.69 0.98
Australian bonds 1.73 6.04 11.37 1.94 0.78
International bonds (hedged into $A) 8.03 9.28 10.51 2.04 1.90
Australian listed property trusts 9.56 -0.68 -1.56 3.81 -2.55
International listed property trusts (hedged) 27.41 22.54 1.43 8.31 2.15
Financial markets – quarter in review
• All major asset classes posted positive returns for December 2011 quarter
• Australian dollar rebounded in December quarter from US$0.97 to US$1.03
• Hedged international shares returned 8.7% while unhedged returned 2.0%
• Developed markets outperformed emerging markets
• Best performing asset class was hedged international listed property with a return of 8.3%
• Solid returns from fixed interest as a result of softer global growth expectations and two interest rate cuts from 4.75% to 4.25%
6Review of IOOF MultiMix Funds Dec 2011
Market outlook
• European crisis: some positive signs emerging though structural issues still persist
• United States: some positive economic signs emerging
• China: continuing to grow but some concerns emerging
• Australia: further rates cuts anticipated
• Equity Markets: positive start to 2012, remain cheap but susceptible to shocks
• Global fixed income: an expensive safe haven
• Currency markets remain volatile and are hostage to macroeconomic events
7Review of IOOF MultiMix Funds Dec 2011
MultiMix sector trusts review – December 2011
MultiMix Australian Shares Trust
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF
December 2011
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Australian Shares Trust 1.05 -13.01 6.32
S&P ASX 300 Accumulation Index 2.05 -10.98 7.67
Excess return -1.00 -2.03 -1.35
9Review of IOOF MultiMix Funds Dec 2011
Integrity 15.8%
Perennial16.4%
Alliance Bernstein 16.2%
Merlon8.1%
Solaris18.4%
Vinva16.4%
Legg Mason8.7%
MultiMix International Shares Trust
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix International Shares Trust 0.86 -7.57 -2.70
MSCI All Countries World ex Australia $A Index * 1.60 -5.71 -2.71
Excess return -0.74 -1.86 0.01
December 2011
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF
10Review of IOOF MultiMix Funds Dec 2011
SSGA 36.6%
LSV Asset Management24.1%
Neuberger Berman
19.9%Wellington9.3%
Perennial4.3%
Credit Suisse Asset Management
5.8%
* International shares benchmark changed from MSCI World ex Australia $A Index (unhedged) from October 2011. Figures shown here are a composite of both indexes
MultiMix Diversified Fixed Interest Trust
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Diversified Fixed Interest Trust 1.94 8.32 9.22
50% UBS Comp Bond Index /50% Barclays Capital Global Agg Index 2.00 10.95 7.79
Excess return -0.06 -2.63 1.43
PIMCO (Aust fixed interest)
11.3%
Loomis Sayles 11.7%
December 2011
PIMCO (Intl fixed interest)
26.5%
IIML CMT 11.3%
IIML Income 7.0%
Perennial Enhanced 9.4%
Cash 1.7%
Perennial Australian Fixed Interest 21.1%
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF
11Review of IOOF MultiMix Funds Dec 2011
MultiMix Cash Enhanced Trust
Perennial32.1%
Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IOOF
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Cash Enhanced Trust 1.33 5.45 5.99
UBSA Bank Bill Index 1.22 5.00 4.38
Excess return 0.11 0.45 1.61
IIML66.8%
December 2011
12Review of IOOF MultiMix Funds Dec 2011
Cash1.1%
IOOF Wholesale Income Trust
Total Returns for period ending 31 December 2011
3 Months %
1 Year %
3 Years% pa
IOOF Wholesale Income Trust 2.14 7.18 13.13
UBS Credit FRN Index (from 31/12/10) 1.15 5.13 4.42*
Excess return 0.99 2.05 8.71
Cash0.9%
Perennial Income Fund 99.1%
December 2011
Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IOOF*Performance figure is a composite of UBSA bank bill index and the UBS Credit FRN Index.
13Review of IOOF MultiMix Funds Dec 2011
IOOF Cash Management Trust
Total Returns for period ending 31 December 2011
1 Month%
3 Months%
1 Year %
3 Years
% pa
5 Years % pa
IOOF Cash Management Trust 0.39 1.20 5.12 4.30 5.28
UBSA Bank Bill Index 0.39 1.21 4.99 4.37 5.48
Excess return 0.00 -0.01 0.13 -0.07 -0.20
• FUM: $1.5b
• Weighted average duration: 60 days
• Term deposits: 50%
• Maximum exposure: CBA 33%
• A1+ exposure: 84%
• A1 exposure: 16%
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF
14Review of IOOF MultiMix Funds Dec 2011
MultiMix Wholesale Australian Property Trust
Total Returns for periods ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Wholesale Australian Property Trust 4.95 -0.51 5.52
S&P ASX 300 Property Trust Accum Index 3.81 -1.56 2.32
Excess return 1.14 1.05 3.20
Colonial First State22.4%
Challenger77.6%
December 2011
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF
15Review of IOOF MultiMix Funds Dec 2011
MultiMix Wholesale International Property Trust
Total Returns for periods ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Wholesale International Property Trust 7.25 -5.18 11.37
UBS Global Investors ex Aust AUD hedged net TR
8.86 1.94 18.82
Excess return -1.61 -7.12 -7.45
Cohen & Steers30.8%
Perennial67.6%
December 2011Cash1.6%
Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IOOF
16Review of IOOF MultiMix Funds Dec 2011
MultiMix Wholesale Alternatives Trust
Alternative Debt
Alternative Equity
Strategy Weight %
Private Equity 15.3
Special Situations 2.3
Discretionary Hedge Funds 10.2
Systematic Hedge Funds 43.6
Cash 28.6
Strategy Weight %
Infrastructure 22.7
Subordinated Debt 14.7
Credit Opportunities 11.3
Cash 51.3
17Review of IOOF MultiMix Funds Dec 2011
December 2011
MultiMix diversified trusts review – December 2011
MultiMix Balanced Growth Trust
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF*For further information on the strategic benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Balanced Growth Trust 1.32 -3.89 4.70
Strategic benchmark* 2.18 -2.62 5.26
Excess return -0.86 -1.27 -0.56
December 2011
19Review of IOOF MultiMix Funds Dec 2011
Property7.1%
International shares30.0%
Cash 6.8%
Australianshares29.1%
Fixed interest 16.6%
Alternatives10.4%
IOOF MultiMix Balanced Growth Trustdetractions (Quarter to December 2011)
Zero hedged benchmark
• Zero hedged benchmark detracted from performance (US $0.97 to $1.03)
• Hedged international shares returned 8.7% while unhedged returned 2.0%
• Trust had unhedged stance over the December quarter and past 12 months
Rationale for continued zero hedged benchmark
•Our view:• AUD remains overvalued
• Commodity prices may be weaker
• Australian interest rates are likely to fall
• AUD classified as a risk asset
• Historically, markets fall, so too does A$
• AUD a natural hedge
20Review of IOOF MultiMix Funds Dec 2011
Fixed income
•Tilt away from global bonds to cash hurt as US Treasuries rallied
•US 10 year government bond yield unsustainably low at 1.88% at end of December, so we are maintaining tilt
Underperformance of sector trusts
•Australian equities
•International equities
•International listed property
•Alternatives – growth
•Property Plus Fund
21Review of IOOF MultiMix Funds Dec 2011
IOOF MultiMix Balanced Growth Trustdetractions (Quarter to December 2011)
Overweight international versus Australian equities
• Australian equities outperformed unhedged international equities for the quarter
• However, over the 12 month period, unhedged international equities has outperformed Australian equities
22Review of IOOF MultiMix Funds Dec 2011
IOOF MultiMix Balanced Growth Trustdetractions (Quarter to December 2011)
IOOF MultiMix Balanced Growth Trustpositive contributions (Quarter to December 2011)
• Outperformance of Australian Listed Property sector
• Outperformance of Alternative – Debt Trust
• Fixed interest managers generally outperformed
23Review of IOOF MultiMix Funds Dec 2011
Asset allocation update
IOOF MultiMix Balanced Growth Trust
Asset class Target allocation
(%)
Range(%)
Actual as at
December 2011
(%)
Cash & short-term securities 3 0-15 6.8
Diversified fixed interest 22 10-35 16.6
Alternative – defensive 3 0-15 3.3
Property 10 0-20 7.1
Australian shares 30 20-40 29.1
International shares 25 15-35 30.0
Alternative – growth 7 0-20 7.1
100 100
24Review of IOOF MultiMix Funds Dec 2011
MultiMix Moderate Growth Trust
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF *For further information on the strategic benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Moderate Growth Trust 1.76 -1.35 5.42
Strategic benchmark* 2.41 -0.18 5.76
Excess return -0.65 -1.17 -0.34
December 2011
25Review of IOOF MultiMix Funds Dec 2011
Property7.0%
International shares14.9%
Cash 25.4%
Australianshares17.4%
Fixed interest 25.3%
Alternatives10.0%
IOOF MultiMix Moderate Growth Trustdetractions (Quarter to December 2011
Zero hedged benchmark
• Zero hedged benchmark detracted from performance ($A0.97 to $1.03)
• Hedged international shares returned 8.7% while unhedged returned 2.0%
• Trust had unhedged stance over the December quarter and past 12 months
Rationale for continued zero hedged benchmark
•Our view:• AUD remains overvalued• Commodity prices may be weaker• Australian interest rates are likely to fall • AUD classified as a risk asset• Historically, markets fall, so too does A$• AUD a natural hedge
26Review of IOOF MultiMix Funds Dec 2011
Fixed income
•Tilt away from global bonds to cash hurt as US Treasuries rallied
•US 10 year government bond yield unsustainably low at 1.88% at end of December, so we are maintaining tilt
Underperformance of sector trusts
•Australian equities
•International equities
•International listed property
•Alternatives – growth
•Property Plus Fund
27Review of IOOF MultiMix Funds Dec 2011
IOOF MultiMix Moderate Growth Trustdetractions (Quarter to December 2011)
IOOF MultiMix Moderate Growth Trustpositive contributions (Quarter to December 2011)
Underweight equities (early December)
•Australian and international equities underperformed cash for the month of December
Outperformance of some sector funds
• Outperformance of Australian Listed Property sector
• Outperformance of Alternative – Debt Trust
• Fixed interest managers generally outperformed
28Review of IOOF MultiMix Funds Dec 2011
Asset allocation update
IOOF MultiMix Moderate Growth Trust
Asset class Target allocation (%)
Range(%)
Actual as at
December 2011
(%)
Cash & short-term securities 5 0-25 25.4
Diversified fixed interest 35 25-45 25.3
Alternative – defensive 5 0-15 5.0
Property 10 0-20 6.9
Australian shares 22 10-35 17.4
International shares 18 5-30 14.9
Alternative – growth 5 0-15 5.1
100 100
29Review of IOOF MultiMix Funds Dec 2011
MultiMix Capital Enhanced Trust
December 2011
30Review of IOOF MultiMix Funds Dec 2011
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF*For further information on the strategic benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Capital Enhanced Trust 1.67 4.96 7.82
Strategic benchmark* 1.89 6.27 6.67
Excess return -0.22 -1.31 1.15
Diversifiedfixed
interest39.1%
Australian shares 9.1%
Cash and short term securities 46.7%
Property 5.1%
MultiMix Conservative Growth Trust
December 2011
31Review of IOOF MultiMix Funds Dec 2011
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF*For further information on the strategic benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Conservative Growth Trust 1.83 3.16 7.11
Strategic benchmark* 2.08 4.45 6.41
Excess return -0.25 -1.29 0.70
Diversifiedfixed interest
33.3%
International shares 7.1%
Australian shares 9.8%
Cash andShort term securities 33.3%
Alternative 7.9%
Property8.6%
MultiMix Hi Growth Trust
December 2011
32Review of IOOF MultiMix Funds Dec 2011
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF*For further information on the strategic benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
MultiMix Hi Growth Trust 1.02 -6.55 3.74
Strategic benchmark* 2.16 -5.83 4.14
Excess return -1.14 -0.72 -0.40
Diversified fixed Interest 4.7%
International shares 39.3%
Australian shares 39.5%
Cash and short term securities 2.9%
Alternatives 8.1%
Property 5.5%
Multi Series Balanced Trust
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IOOF*For further information on the strategic benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au
Total Returns for period ending 31 December 2011
3 Months%
1 Year%
3 Years% pa
Multi Series Balanced Trust 1.52 -4.20 4.49
Strategic benchmark* 2.14 -2.64 4.44
Excess return -0.62 -1.56 0.05
December 2011
33Review of IOOF MultiMix Funds Dec 2011
Australian listed property 5.1%
International shares30.2%
Cash and short term securities 5.5%
Australianshares33.9%
Diversifiedfixed interest 25.3%
Strategic tilting update
Currency/overseas assets
• Asset allocation committee decided to put more money offshore (Australian Equities to International Equities) for the Balanced Growth and Hi Growth Trusts (November 2010). All funds maintain a zero hedge target benchmark.
• The AUD is trading at historically high levels
• We see the following three main catalysts for Australian dollar weakness:
• increased risk aversion from the ongoing debt crisis in Europe• RBA easing• decline in commodity prices prompted by the economic slowdown in China
• Valuation on overseas shares was attractive – especially in the US
• The natural hedge – if markets fall, AUD falls – GFC example
• Tilt has outperformed by 4.3% as at 31 December 2011
35Review of IOOF MultiMix Funds Dec 2011
AUD/USD
Source: Datastream
36Review of IOOF MultiMix Funds Dec 2011
Global fixed interest/cash tilt
37
• August 2010, 20% allocated to cash funded from global bonds within IOOF’s MultiMix Diversified Fixed Interest Trust
Rationale
• US Gov’t bonds yields unsustainably low at 1.88%
• Cash and term deposits currently have a high running yield with no duration risk
Status/Outcome
• Since implemented, global bonds outperformed cash
• Tilt has underperformed by approximately 2% as at 31 December 2011
Review of IOOF MultiMix Funds Dec 2011
US 10 year government bond yield
Source: IRESS
Review of IOOF MultiMix Funds Dec 2011
US 10 year Govt Bond Yield
0
1
2
3
4
5
6
Jan
-07
Ap
r-0
7
Jul-
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-07
Jan
-08
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r-0
8
Jul-
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-08
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-09
Ap
r-0
9
Jul-
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Oct
-09
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-10
Ap
r-1
0
Jul-
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-10
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-11
Ap
r-1
1
Jul-
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Oct
-11
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-12
Date
Yie
ld (
%)
Tilt entered
38
United diversiAAppendices
MultiMix sector funds review – September 2011• Chant West ratings confirmed January 2012
• Multi Series Balanced Trust Enhancements and Research House Feedback
40Review of IOOF MultiMix Funds Dec 2011
News update