Perpetual Limited · ASX:PPT
Perpetual — Investor Presentation (May 2009)
29 slides from Perpetual's investor presentation, May 2009
Slide 1: Perpetual's diversified funds: Balanced Growth Fund
Perpetual’s diversified funds Balanced Growth Fund Presented by Michael Blayney, Portfolio Manager & Adam Curtis, Portfolio Specialist Income and Multi-sector May 2009
Slide 2: Overview
Overview Single manager versus multi-manager Performance Portfolio positioning
Slide 3: Single manager versus multi-manager
Single manager versus multi-manager
Slide 4: Investment philosophy
Investment philosophy We believe better portfolio construction is achieved by focusing on the fundamental drivers of returns from investments, rather than broad definitions of asset classes themselves. We believe that equity markets are semi-efficient, and that opportunities exist for adding value t
Slide 5: The key investment beliefs you need to buy a multi-manager
The key investment beliefs you need to buy a multi-manager Markets are inefficient and it is possible to add value through active management It is possible for multi-managers to identify and have access to ‘best in class’ managers, and hire and fire managers in a value-adding way Using a multi-manag
Slide 6: Performance: multi managers vs single managers vs Balanced Growth Fund
Performance Multi managers vs single managers vs Perpetual’s Balanced Growth Fund Cumulative excess return since inception Excess return in IDPS multi-sector balanced growth from Nov 1997 to Mar 2009 PER0063AU, SM average, MM average, before tax and after fees Cumulative 30.0% excess return (%) 20.0
Slide 7: Performance on a sector-by-sector basis
Performance on a sector-by-sector basis Tracking Australian equities 1 year 3 years pa 5 years pa error 3 yrs pa Implemented consulting average -27.6% -6.8% 6.0% 2.7% Single manager median -26.5% -5.6% 7.0% 4.2% Benchmark -29.8% -7.4% 5.4% - Perpetual’s Australian Share Fund -25.6% -6.3% 7.4% 4.2% T
Slide 8: Considering risk, single manager products have on average done better than multi-managers
Considering risk, single manager products have on average done better than multi-managers Comparison with the Mercer IDPS Multi-Sector Balanced Growth Universe Annualised risk and return for 5 years ended March 2009, before tax and after fees - - - - Median 6.5 PER0063AU SM average MM average 5.5 4.
Slide 9: With a similar picture over seven years
With a similar picture over seven years … Comparison with the Mercer IDPS Multi-Sector Balanced Growth Universe Annualised risk and return for 7 years ended March 2009 before tax and after fees - - - - Median 4.8 PER0063AU SM Average MM Average 4.2 3.6 Annual return (% pa) 3.0 2.4 1.8 1.2 0.6 7.5 8.
Slide 10: And over 10 years
And over 10 years Comparison with the Mercer IDPS Multi-Sector Balanced Growth Universe Annualised risk and return for 10 years ended March 2009 before tax and after fees - - - - Median 5.3 PER0063AU SM Average MM Average 4.9 4.5 Annual return (% pa) 4.1 3.7 3.3 2.9 2.5 7.0 8.0 9.0 10.0 11.0 12.0 An
Slide 11: Why might this be the case?
Why might this be the case? Most of the risk is from the market, not from active management – put simply there is little value in ‘over- diversification’ of managers BGF Index Excess Year 7 Return 4.14% 3.29% 0.85% Risk 8.32% 7.95% 0.37% Year 8 Return 4.42% 3.33% 1.09% Risk 8.25% 7.81% 0.44% Year 9
Slide 12: Performing well in down markets is important in reducing risk
Performing well in down markets is important in reducing risk – a style bias can sometimes be a good thing Source: Mercer MAP. Past performance is not indicative of future performance. 11
Slide 13: Perpetual's Balanced Growth Fund: a consistent focus on quality and value
Perpetual’s Balanced Growth Fund A consistent focus on quality and value Excess Returns in Rising/Falling Markets Excess Return in IDPS Multi-Sector Balanced Growth from Nov 1997 to Mar 2009 PER0063AU versus MSWITMSG (before tax and after fees) 2.5% 30.0% 2.0% 20.0% 1.5% 1.0% 10.0% Monthly Excess Re
Slide 14: A spectrum of different risks
A spectrum of different risks Manager business risk – provides an incentive to stay style neutral and have a low tracking error Manager risk – an investor picks Market risk – explains most of the the wrong organisation(s) and volatility. Balanced portfolios can’t underperforms the benchmark avoid th
Slide 15: Blending analysis
Blending analysis Risk vs Return - 5 years to 31/3/2009 5.0% More return, 4.5% lower volatility 4.0% Return Net of Fees (% per annum) 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 6.5% 7.5% 8.5% 9.5% 10.5% 11.5% 12.5% Volatility of returns (% per annum) Source: Mercer. Past performance is not indicative o
Slide 16: Points to consider
Points to consider Finding a large number of skilled managers in a range of asset classes is hard, and the multi-manager results prove this Most of an investor’s risk comes from the market, so focusing in on a smaller number of high quality sources of outperformance is a better approach in our view
Slide 17: Performance
Performance
Slide 18: Perpetual's Balanced Growth Fund: consistently delivered relative to competitors
Perpetual’s Balanced Growth Fund Consistently delivered relative to competitors 1 year 3 years pa 5 years pa 7 years pa 10 years pa Balanced Growth Fund -17.7% -6.0% 3.5% 3.1% 4.6% Median -21.1% -6.4% 2.9% 2.6% 3.8% Excess +3.4 +0.4% +0.6% +0.5% +0.8% Rank 7/46 19/46 7/43 7/37 5/24 Quartile 1 2 1 1
Slide 19: Benefits from Perpetual's investment style across multiple asset classes
Perpetual’s Balanced Growth Fund Benefits from Perpetual’s investment style across multiple asset classes Perpetual One year index or Main asset classes return (after median manager Excess fees) return Australian shares1 -26.4% -29.8% + 3.4% International shares2 -19.2% -24.5% + 5.3% Balanced fund3
Slide 20: Australian equity allocation
Australian equity allocation Net performance as at 31 March 2009 Fund* % Index % Excess % 3 months 0.22 -1.85 +2.07 1 year -26.43 -29.80 +3.36 3 years pa -7.25 -7.37 +0.11 5 years pa 6.37 5.36 +1.01 7 years pa 7.12 5.09 +2.03 10 years pa 9.22 6.07 +3.15 Since inception pa (26/02/1997) 9.86 7.28 +2.5
Slide 21: Global equity portfolio
Global equity portfolio Relative performance (AUD) v MSCI World Ex Australia Index % relative 6% 4% 2% 0% -2% -4% 3 months 6 months 1 year 2 years pa 3 years pa 3 months 6 months 1 year 2 years pa 3 years pa Perpetual’s International Share Fund -14.6% -21.2% -19.2% -16.5% -11.5% MSCI World ex Aust I
Slide 22: Tactical asset allocation and portfolio positioning
Tactical asset allocation and portfolio positioning
Slide 23: TAA process: bond cycle
TAA process: bond cycle 9.0 1.50 8.0 1.00 7.0 6.0 0.50 5.0 0.00 4.0 3.0 -0.50 Current Raw Score = 20 2.0 -1.00 Aust Short Term Rates (LHS) 1.0 US 10 yrs (LHS) Domestic Growth Indicator (RHS) 0.0 -1.50 Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07 May-07 Aug-07 Nov-07 F
Slide 24: TAA process: bond value
TAA process: bond value 5.0 Current Ra w Sc ore = -40 Bonds a re no w e xpe nsive , both in a bso lu te terms a nd also relativ e to th e US. 4.0 Mo re Expe n sive 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 Che aper Aus t Re al Yield Ind ica to r -4.0 US-Aus t R ea l Sp re ad In dic ator Bon d Va lue In dica to
Slide 25: TAA bond positions 2007-2009
TAA Bond score 01 -J 15 un- -100 -80 -60 -40 -20 0 20 40 60 80 100 -J 07 29 un- -J 07 u 13 n-0 -J 7 27 ul-0 - 7 10 Jul -A -07 24 ug -A -07 07 ug -S -07 21 ep -S -07 05 ep- -O 07 19 ct- -O 07 02 ct -N -07 16 ov -N -07 03 ov -D -07 17 ec -D -07 31 ec -D -07 14 ec- -J 07 29 an- -J 08 11 an -F -08 25 eb
Slide 26: TAA process: equity cycle
TAA process: equity cycle 1.80 Current raw score = 0 9 Earnings revisions = falling 1.60 Short term interest rates = Falling aggressively 8 1.40 7 1.20 6 1.00 5 0.80 4 0.60 3 0.40 Earnings revisions (LHS) 2 Short term interest rates (RHS) 0.20 1 0.00 0 May- Aug- Nov- Feb- May- Aug- Nov- Feb- May- Au
Slide 27: TAA process: equity value
TAA process: equity value 14.0% Current raw score = 40 2000 Equities become very undervalued in 2008. Earnings yields spike while long bond rates fall 1500 12.0% 1000 10.0% 500 0 8.0% -500 6.0% -1000 -1500 4.0% -2000 2.0% Earnings yield (LHS) -2500 10 yr bond yield (LHS) Degree of relative valuation
Slide 28: TAA equity positions 2007-2009
TAA – equity positions 2007 - 2009 ASX300 accumulation index and TAA equity model scores June 2007 to 2009 100 45000 80 60 40000 40 ASX300 accumulation index 20 35000 TAA equity score 0 -20 30000 -40 -60 25000 -80 -100 20000 07 07 -0 7 -0 7 -0 7 -0 7 -0 7 -0 7 -0 7 -0 7 -0 7 08 08 r-08 r-08 r-08 08
Slide 29: Important information
This presentation was prepared by Perpetual Investment Management Limited (PIML), ABN 18 000 866 535, AFSL 234426. It is general information only and is not intended to provide advice to particular investors, or take into account an individual's investment objectives, circumstances or needs for inve