Fixed income workshop
This document is only intended for use by investment professionals in the United Kingdom.
The importance of fixed income
Workshop features
Global investment markets continue to exhibit
high levels of volatility against a difficult economic
recovery and a considerable degree of policy
stimulus. Inflation also remains a key consideration
for investors while the theme of sustainable yield
continues to be relevant. This is especially the case
given historically low interest rates and government
bond yields.
¬O
ffers a comprehensive overview of how
fixed income products can be used within
client portfolios
In this environment, fixed income assets remain
important building blocks of any investment
portfolio. This is confirmed by the continued strong
sales growth in the IMA Strategic Bond sector.
¬E
nhanced understanding of the key market
drivers, risk characteristics and valuation
criteria of each fixed income asset class
In addition, in the wake of developments around the
Retail Distribution Review (RDR) and Treating Customers
Fairly (TCF), the demand for investment transparency
has grown significantly. A clear understanding of the
intricacies of gilts, index-linked bonds, corporate bonds
and high-yield debt is necessary if investors are to meet
this demand and weather the economic headwinds that
undoubtedly remain.
Ready-made training solution
Standard Life Investments has designed an
interactive workshop that examines the key
elements of each of the main fixed income asset
classes - gilts, index-linked bonds, corporate bonds
and high-yield debt. The course offers a ready-made
solution to complement your in-house training for
no additional cost.
By the end of the day your firm will:
¬h
ave an in-depth understanding of the recent
drivers of performance across the main fixed
income asset classes
¬u
nderstand the role each fixed income asset
class can play in a diversified portfolio
¬ appreciate the merits of an allocation to
Strategic Bond funds
¬h
ave completed various simulations designed
to complement existing knowledge and build
lasting expertise
¬ be able to speak confidently with your clients
about fixed income investing in a way that meets
their need for clear and concise communications.
¬ Demonstrates a consistent approach that
can be adopted either across a firm or within
an individual office
¬ Online training modules offer easy accessibility
to pre-work
¬ Ideal as a form of CPD. In addition, the day is
a useful tool that covers some of the learning
outcomes required for the JO6 FPC module
¬A
udience Response Technology ensures
engagement is maintained throughout
the entire session
¬P
rovides an audit trail suitable for compliance
purposes, indicating which delegates have
received training.
Key issues facing adviser firms
Volatility has become an entrenched feature of
investment markets, as the long-term performance
of traditional asset classes deviates away from the
expected market return premiums established over
the last century. Astute investment stewardship
is essential.
The RDR and TCF principles developed by the
FSA are also changing the landscape by scrutinising
the uniformity and manner in which firms educate
their advisers. Many practitioners and firms believe
that their in-house training and competence
schemes are effective ways of ensuring that
knowledge acquired through qualification is built on
and that technical competence is maintained.
Following the implementation of the findings of
the RDR, benchmark standards of competence are
required through either an exam or CPD top-up route.
Our experience suggests that most advisers are
opting for the latter.
Our training is developed to complement your
existing in-house solution. It offers the opportunity
for your firm to develop a consistent approach to
recommending fixed income products, and thereby
developing efficiencies within your business model.
A half day out of contact with clients and prospects
is a significant commitment, but we sincerely believe
the benefits of the time spent at this workshop will
far outweigh any negatives.
7
6
5
4
3
2
1
Jan 09
Jan 10
Jan 11
Sector Market Share
of Industry Gross Sales (%)
8
0
Gross Sales Net Sales
Market Share of Total Gross Sales
Source: IMA as at 30/04/2011
Percentage of total net sales –
1 year to end 30/04/2011
14.0
12.0
10.0
8.0
8.7%
8.7%
7.4%
Cautious Managed
Absolute Return UK
Specialist
2.0
0.0
10.0%
4.0
Global Bonds
6.0
11.5%
Increased market uncertainty is clearly driving
the increase in demand for Strategic Bond products.
Our training programme is designed to provide not
only an overview of the market environment but also
unique insights into the key drivers of individual
fixed income asset classes that only specialist
houses are able to provide.
9
Strategic Bond
Net sales have remained predominately in positive
territory, with the last net outflow from the sector
recorded in October 2008. Indeed, the Strategic
Bond sector recorded the largest net sales in the
year to end-April 2011.
900
800
700
600
500
400
300
200
100
0
-100
-200
May 08
Gross & Net Sales (£m)
Since its launch, the IMA Strategic Bond sector has
gone from strength to strength, partly reflecting
the uncertain investment environment and also the
growth in the provision of fixed income investment
options from fund providers. The chart opposite
shows that gross sales of Strategic Bond products
represented 4.5% of total gross sales in May 2008.
By the end of April 2011, this had increased to 8.5%.
Strategic Bond - gross and net sales
% of industry net sales (£bn)
In the spotlight Strategic Bond funds
Source: IMA as at 30/04/2011
Preparation – web-based tutorials
Learning Gateway, our online portal containing a
wide array of tutorials is an accessible, easy-to-use
resource for delegates preparing for the session.
Developed by Intuition, the number one provider
of learning to the financial community, the bond
specific tutorials review the basic elements of fixed
income investing.
It is important to note that our training session is
not a simplified ‘all you ever need to know about
fixed income investing’ course. Instead, we assume
a certain level of knowledge which will be further
developed at the session. To get the most out of
the session, delegates will be expected to have
an understanding of a number of fixed income
topics including:
¬W
hat are bonds?
¬W
ho issues bonds and why?
¬W
ho buys bonds and why?
¬ T he basic differences between different
types of bonds
¬ T he relationship between price & yield.
Delegates who do not feel they have the required
level of knowledge are invited to familiarise
themselves with the basic fixed income concepts
ahead of the training session.
Given the onus placed on firms by the FSA
through the RDR and TCF principles, we believe
Learning Gateway is a valuable education resource
in its own right.
For more information please visit
standardlifeinvestments.com/training
Fixed income investing agenda
Introduction
¬ O
verview of fixed income markets
¬ H
istoric risk and return characteristics
¬ S
tandard Life Investments’ credentials and fixed income range
Government Bonds
¬ K
ey market drivers: interest rates
¬ G
enerating alpha: duration management
¬ S
trategy illustration from our UK Gilt Fund
Index-Linked Bonds
¬ K
ey market drivers: inflation
¬ G
enerating alpha: breakevens
¬ S
trategy illustration from our Global Index-Linked Bond Fund
¬ S
imulation: Round 1
Corporate Bonds
¬ K
ey market drivers: creditworthiness
¬ G
enerating alpha: credit ratings and seniority
¬ S
trategy illustration from our Corporate Bond Fund
¬ S
imulation: Round 2
High-Yield Debt
¬ K
ey market drivers: defaults
¬ G
enerating alpha: higher risk, higher reward
¬ S
trategy illustration from our Higher Income Fund
¬ S
imulation: Round 3
Strategic Bond Funds
¬ F ixed income portfolios: traditional solutions
¬ I ntroduction to Strategic Bond funds
Audit trail
Feedback
The interactive element incorporated into our
workshops has proven extremely popular with
delegates. This has helped to retain engagement
through what some might deem highly technical
subject matter.
At the end of the session, delegates are asked to rate
the training and invited to provide feedback.
Each delegate is provided with a remote wireless
device that allows them to communicate with the
presenter throughout the session. The presenter
is able to solicit input, to which the delegates
are invited to respond via the remote device. All
feedback is captured instantly and can be displayed
back to the audience. In addition, data is stored for
post-event evaluation, allowing the user to further
analyse the results.
This is particularly relevant from a compliance
perspective as it provides an audit trail that
demonstrates your team has received training to
understand fixed income investments and how they
can be used within your clients’ portfolios.
Here is a small sample of recent comments we have
received from delegates attending our fixed income
investing sessions.
“An absolutely fantastic session. Very impressed”
“Good session. Right level of information. Interaction good.”
“E xcellent, especially for gap fill / exam knowledge”
“Very good. All questions answered and presentation clear.”
“Rowan presented superbly. Very knowledgeable and very clear.”
Contact details
If you would like further details on our fixed income
workshop, please contact:
Michael Beveridge
Head of Intermediary Sales
Tel +44 (0)7712 485 431
michael_beveridge@standardlife.com
standardlifeinvestments.co.uk
Standard Life Investments Limited is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. The Standard Life Investments
group includes Standard Life Investments (Mutual Funds) Limited, SLTM Limited, Standard Life Investments (Corporate Funds) Limited, SL Capital
Partners LLP and Aida Capital Limited. Standard Life Investments Limited is authorised and regulated by the Financial Services Authority. Calls may
be monitored and/or recorded to protect both you and us and help with our training. www.standardlifeinvestments.com
© [2011] Standard Life, images reproduced under licence
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