review of ioof multimix trusts december quarter 2011 presented by: ioof investment management...

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


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%


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


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


Integrity 15.8%

Perennial16.4%

Alliance Bernstein 16.2%

Merlon8.1%

Solaris18.4%

Vinva16.4%

Legg Mason8.7%

MultiMix International Shares Trust


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



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


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


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%



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


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


Cash1.1%

IOOF Wholesale Income Trust


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*


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.


IOOF Cash Management Trust


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%



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


Colonial First State22.4%

Challenger77.6%

December 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


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


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


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


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)


• 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


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



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



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


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


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


3 Months%

1 Year%

3 Years% pa

MultiMix Moderate Growth Trust 1.76 -1.35 5.42


Excess return -0.65 -1.17 -0.34

December 2011


Property7.0%


Cash 25.4%


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)


• 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


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


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


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


MultiMix Capital Enhanced Trust

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


Diversifiedfixed

interest39.1%

Australian shares 9.1%

Cash and short term securities 46.7%

Property 5.1%

MultiMix Conservative Growth Trust

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


Diversifiedfixed interest

33.3%

International shares 7.1%


Cash andShort term securities 33.3%

Alternative 7.9%

Property8.6%

MultiMix Hi Growth Trust

December 2011




3 Months%

1 Year%

3 Years% pa

MultiMix Hi Growth Trust 1.02 -6.55 3.74


Excess return -1.14 -0.72 -0.40

Diversified fixed Interest 4.7%

International shares 39.3%



Alternatives 8.1%

Property 5.5%

Multi Series Balanced Trust



3 Months%

1 Year%

3 Years% pa

Multi Series Balanced Trust 1.52 -4.20 4.49



December 2011


Australian listed property 5.1%




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


AUD/USD

Source: Datastream


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


US 10 year government bond yield

Source: IRESS


US 10 year Govt Bond Yield

0

1

2

3

4

5

6

Jan

-07

Ap

r-0

7

Jul-

07

Oct

-07

Jan

-08

Ap

r-0

8

Jul-

08

Oct

-08

Jan

-09

Ap

r-0

9

Jul-

09

Oct

-09

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-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


News update

review of ioof multimix trusts december quarter 2011 presented by: ioof investment management...

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