Harmony funds update
James Klempster, CFA
February 2012
1
global investment management
Contents
1. Market update
2. Fund focus
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1. Market update
3
global investment management
Asset class returns 2011 – local currency terms
10%
8.5%
8.2%
7.2%
5.0%
5%
0%
-5%
-5.5%
-6.9%
-10%
-12.7%
-15%
Gold
Investment
grade
fixed income
Global
Government
bonds
High yield
Global
developed
market
equities
Commodities
Global
emerging
market
equities
Source: Bloomberg, February 2012
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Asset class returns YTD 2012 – local currency terms
14%
12.5%
11.3%
12%
10%
8.6%
8%
5.6%
6%
4.2%
4%
2.0%
2%
0%
-0.2%
-2%
Gold
Global
emerging
market
equities
Global
developed
market
equities
Commodities
High yield
Investment
grade
fixed income
Global
Government
bonds
Source: Bloomberg, February 2012
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Sector returns since 19 December 2011
20%
17.8%
18%
17.6%
15.9%
16%
15.3%
14.3%
13.7%
14%
12.0%
12%
10%
8%
6.9%
6%
5.0%
3.7%
4%
2.6%
2%
0%
Financials Consumer
discretionary
IT
Industrials Materials
MSCI
World
Energy
Health
care
Consumer
staples
Utility
Telecoms
Source: Bloomberg, February 2012
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Global equities back to 2008 levels
110
Performance rebased to 100
100
90
80
70
60
50
40
30
Nov 07
May 08
Nov 08
May 09
MSCI Daily TR Net World USD
Nov 09
May 10
Nov 10
May 11
Nov 11
MSCI Daily TR Net Emerging Markets USD
Source: Bloomberg, February 2012
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What is worrying investors?
•
•
•
•
•
•
Instability in the Middle East and North Africa
Global imbalances
Unsustainable growth in China
Fiscal consolidation
Weak growth in the US, rising risks of recession
Europe
Source: Bloomberg, February 2012
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global investment management
Global imbalances
5,000
Developing national reserves
3,000
1,000
-1,000
-3,000
-5,000
US Treasury borrowing
-7,000
-9,000
Source: Old Mutual,/ Bloomberg. November 2011 (for illustrative purposes)
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The weakest US recovery on record
Nominal US GDP recoveries…….
%
Source: Deutsche Bank,/ Bloomberg. November 2011 (for illustrative purposes)
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10 year Treasury yields close to all time 220 year lows
US 10 year Treasury yields since 1790
Source: Bloomberg, February 2012
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US 10 year yields versus equities
10.0
3300
9.0
3200
8.0
3100
7.0
Yield (%)
5.0
2900
4.0
Index level
3000
6.0
2800
3.0
2700
2.0
2600
1.0
0.0
Oct 11
2500
Nov 11
Dec 11
US 10 year government yield
Jan 12
Feb 12
MSCI World USD
Source: Bloomberg, February 2012
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Is there anyone left that thinks Greece won’t default?
100.0
90.0
80.0
Price
70.0
60.0
50.0
40.0
30.0
20.0
Mar 10
Jun 10
Sep 10
Dec 10
Mar 11
Jun 11
Sep 11
Dec 11
Mar 12
Greece 10 year government bond
Source: Bloomberg, February 2012
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Europe continues to fuel concerns
“Greece will remain a unique
case”
Source: Mario Draghi
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10 year government bond spreads over Bunds
4000
3500
Spread (basis points)
3000
2500
2000
1500
1000
500
0
-500
Nov 01
Nov 02
Nov 03
Nov 04
Italy
Nov 05
France
Nov 06
Nov 07
Greece
Nov 08
Spain
Nov 09
Nov 10
Nov 11
Ireland
Source: Bloomberg, February 2012
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Greece – austerity bites
Source: The Economist
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The European debt mountain update
94.9%
79.9%
Debt to GDP
-10.3%
Budget deficit to
GDP
83.2%
-31.3%
82.3%
-4.3%
-7.1%
118.4%
93.2%
61.0%
-9.8%
-9.3%
144.9%
-4.6%
-10.6%
Source: Bloomberg. November 2011 (for illustrative purposes)
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global investment management
Loss of competitiveness in the periphery
140
Spain
Italy
Index level rebased to 100
130
Greece
Portugal
France
120
Ireland
Germany
110
100
90
80
Dec
99
Dec
00
Dec
01
Dec
02
Dec
03
Dec
04
Dec
05
Dec
06
Dec
07
Dec
08
Dec
09
Dec
10
Source: Bloomberg, February 2012
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Jean Claude Trichet
“The Governing Council will, in early
[May] take decisions on the continued
implementation of the gradual
phasing-out of the extraordinary
liquidity measures that are not
needed to the same extent as in the
past”
MAY 2010
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Mario Draghi
“We see no stigma attached to
the use of central banking credit
provisions; our facilities are
there to be used”
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EU base rate
5.0
4.5
4.0
3.5
Yield (%)
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Sep 05
Mar 06
Sep 06
Mar 07
Sep 07
Mar 08
Sep 08
Mar 09
Sep 09
Mar 10
Sep 10
Mar 11
Sep 11
ECB Main Refinancing Rate
Source: Bloomberg, February 2012
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European brands benefitting from global growth
Source: Intebrand Top 100 Global Brands, December 2011. Third party trademark, copyright and other intellectual property rights are and remain the property of their respective owners.
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Chinese inflation
10.0
8.0
Yield (%)
6.0
4.0
2.0
0.0
-2.0
-4.0
Dec 99
Dec 00
Dec 01
Dec 02
Dec 03
Dec 04
Dec 05
Dec 06
Dec 07
Dec 08
Dec 09
Dec 10
Dec 11
China CPI YoY
Source: Bloomberg, February 2012
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Monetary policy
22.0
Yield (%)
17.0
12.0
7.0
2.0
Oct 07
Apr 08
Oct 08
China 1 Year Best Lending Rate
Apr 09
Brazil Selic Target Rate
Oct 09
Apr 10
Oct 10
Reserve Bank of India REPO Cut
Apr 11
Oct 11
China Required Deposit Reserve
Source: Bloomberg, February 2012
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Equity market valuations
Price/Earnings
Dividend yield
10-year Government
bond yields
United States
14.1
2.0%
2.0%
Eurozone
12.7
4.6%
1.9%
United Kingdom
11.0
3.6%
2.2%
Germany
11.4
3.7%
1.9%
Japan
24.5
2.1%
0.9%
9.7
3.0%
1.4%
14.0
4.6%
4.0%
Hong Kong
Australia
Source: Bloomberg, February 2012
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Key themes for 2012
•
•
•
•
•
•
‘New normal’ is now the consensus
Global rebalancing set to continue for several years
Subdued GDP growth now widely expected
Eurozone sovereign debt remains a tail risk
Recent data suggests economic thawing in DM
Current deflationary environment will ultimately turn inflationary
as governments resort to the printing presses – but not yet
• 2012 started strongly, remain positive but do not let expectations
become outlandish
• Diversification and dynamic asset allocation key to performance
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2. Fund focus
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Harmony Balanced fund strategic allocation
Cash
10%
Global Equity
10%
Global Property
10%
Local Equity
30%
Local Government
Debt
30%
Global Bonds
10%
January 2012
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Harmony Growth fund strategic allocation
Cash
5%
Global Property
10%
Global Equity
15%
Local Government
Debt
15%
Global Bonds
5%
Local Equity
50%
January 2012
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Harmony US Dollar Balanced asset allocation
100%
Cash
8.0%
90%
Property
11.0%
80%
Cash
4.0%
Cash
15.0%
Property
4.0%
Property
11.0%
Alt. Investments
6.0%
Cash
13.5%
Cash
13.0%
Property
9.5%
Property
9.6%
Alt. Investments
3.9%
70%
Alt. Investments
24.0%
Alt. Investments
2.5%
Cash
16.6%
Cash
10.0%
Cash
18.4%
Property
10.0%
Property
10.8%
Property
10.2%
Alt. Investments
25.0%
60%
Fixed Income
48.0%
Fixed Income
40.0%
Fixed Income
34.6%
Fixed Income
31.3%
Fixed Income
29.5%
Equity
40.3%
Equity
41.3%
Equity
41.8%
Equity
40.0%
Jun-11
Dec-11
Jan-12
Benchmark
Fixed Income
40.0%
50%
40%
Fixed Income
31.0%
Fixed Income
34.0%
30%
20%
10%
Equity
26.0%
Equity
31.0%
Equity
33.1%
Equity
22.0%
0%
Dec-07
Dec-08
Dec-09
Dec-10
January 2012.
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global investment management
Harmony US Dollar Balanced currency allocation
100%
Other 3.0%
Other 8.0%
90%
80%
JPY 5.0%
GBP 1.0%
EUR
7.0%
GBP 4.0%
EUR
1.0%
Other 10.0%
Other 4.7%
Other 6.4%
Other 10.6%
Other 9.6%
JPY 4.4%
JPY 7.0%
GBP 3.0%
GBP 3.0%
EUR
7.2%
EUR
9.0%
Other 9.2%
JPY 4.4%
JPY 2.3%
GBP 3.2%
JPY 2.2%
GBP 3.1%
GBP 5.4%
EUR
7.1%
EUR
6.7%
USD
77.8%
USD
78.7%
Dec-11
Jan-12
JPY 3.2%
GBP 3.1%
EUR
6.3%
EUR
9.1%
70%
60%
50%
USD
92.0%
40%
USD
79.0%
USD
71.0%
USD
78.9%
USD
70.5%
USD
82.8%
30%
20%
10%
0%
Dec-07
Dec-08
Dec-09
Dec-10
Jun-11
Benchmark
January 2012.
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Harmony US Dollar Balanced performance
1 month
3 months
2011
2010
2009
2008
2007
2006
2005*
Harmony US Dollar Balanced Peer Rank
11/19
7/19
7/19
8/17
4/16
9/13
3/12
2/12
4/12
Fund Performance
2.8%
1.3%
-1.5%
5.6%
20.0%
-27.2%
6.7%
13.2%
4.7%
Peer Max
5.8%
3.3%
1.6%
12.2%
25.2%
-6.7%
7.8%
13.5%
14.2%
Peer Min
0.0%
-3.5%
-18.8%
-2.6%
-0.7%
-36.2%
2.1%
5.0%
0.7%
Peer Median
3.2%
0.8%
-3.7%
5.5%
15.9%
-21.2%
5.1%
8.8%
3.3%
100%
Harmony fund percentage rank
80%
60%
40%
20%
0%
1 month
3 months
2011
2010
2009
2008
2007
2006
2005*
Average
2005-2011†
Source: Lipper Hindsight, Momentum Global Investment Management, January 2012.
Past performance is not indicative of future returns. *30/06/2005 to 30/12/2005. †Harmony fund average percentage rank over discrete years shown.
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global investment management
Harmony US Dollar Balanced manager performance
Returns in US dollar
3 months
6 months
12 months
Artisan Global Value
-0.3%
0.4%
-
Momentum IF Global Equity
1.3%
-6.2%
-4.3%
Morgan Stanley Global Brands
-1.4%
-2.4%
11.4%
BlackRock US Index
5.3%
2.6%
3.9%
Momentum IF Global Emerging Markets
0.2%
-13.3%
-13.5%
Old Mutual Global Bond
-1.6%
5.3%
3.3%
RWC Global Convertibles
0.9%
-1.8%
-1.7%
BlackRock US Dollar High Yield Bond
3.1%
0.7%
3.5%
BlackRock US Corporate Bond Index
1.8%
3.5%
8.2%
iShares USD Treasury Bond 1-3
0.2%
0.4%
1.4%
iShares USD Treasury Bond 7-10
3.7%
9.1%
16.3%
2.8%
-7.9%
-3.6%
Equity
Fixed Income
Property
Cohen & Steers Global Real Estate
Source: Lipper January 2012
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global investment management
Harmony US Dollar Growth asset allocation
100%
Cash
2.0%
Property
9.0%
Cash
9.0%
Property
4.0%
90%
80%
Alt. Investments
25.0%
Cash
2.0%
Cash
4.4%
Property
13.0%
Property
9.9%
Alt. Investments
7.0%
Alt. Investments
7.2%
Cash
7.0%
Cash
30.4%
Alt. Investments
24.0%
Property
10.3%
Fixed Income
17.4%
Cash
5.7%
Cash
5.0%
Property
9.9%
Property
10.0%
Fixed Income
16.8%
Fixed Income
20.0%
70%
Fixed Income
27.0%
Fixed Income
25.2%
60%
Fixed Income
15.0%
Property
5.9%
Alt. Investments
3.2%
Fixed Income
13.0%
Fixed Income
28.0%
50%
40%
Equity
65.3%
30%
Equity
51.0%
Equity
49.0%
20%
Equity
53.3%
Equity
67.5%
Equity
65.0%
Equity
47.5%
Equity
35.0%
10%
0%
Dec-07
Dec-08
Dec-09
Dec-10
Jun-11
Dec-11
Jan-12
Benchmark
January 2012.
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global investment management
Harmony US Dollar Growth currency allocation
100%
90%
Other
4.0%
JPY
4.0%
GBP
2.0%
EUR
10.0%
Other
4.0%
GBP
7.0%
EUR
1.0%
80%
Other
12.0%
JPY
5.0%
GBP
5.0%
EUR
9.0%
70%
Other
13.7%
JPY
5.1%
GBP
6.5%
Other
9.1%
JPY
3.2%
GBP
4.4%
EUR
7.1%
EUR
10.6%
Other
13.6%
Other
13.3%
JPY
3.4%
GBP
4.8%
JPY
3.3%
GBP
4.8%
EUR
9.6%
EUR
9.5%
USD
68.6%
USD
69.1%
Dec-11
Jan-12
Other
5.4%
JPY
4.6%
GBP
4.4%
EUR
8.9%
60%
50%
40%
USD
80.0%
USD
88.0%
USD
69.0%
30%
USD
76.2%
USD
64.2%
USD
76.8%
20%
10%
0%
Dec-07
Dec-08
Dec-09
Dec-10
Jun-11
Benchmark
January 2012.
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global investment management
Harmony US Dollar Growth performance
1 month
3 months
2011
2010
2009
2008
2007
2006
2005*
Harmony US Dollar Growth Peer Rank
11/19
6/19
3/19
6/17
3/16
11/13
3/12
1/12
4/12
Fund Performance
3.0%
1.4%
-0.1%
7.8%
23.0%
-30.1%
6.5%
15.2%
6.3%
Peer Max
5.8%
3.3%
1.6%
12.2%
25.2%
-6.7%
7.8%
15.2%
14.2%
Peer Min
0.0%
-3.5%
-18.8%
-2.6%
-0.7%
-36.2%
2.1%
5.0%
0.7%
Peer Median
3.2%
0.8%
-3.7%
5.5%
15.9%
-21.2%
5.1%
8.8%
3.3%
100%
Harmony fund percentage rank
80%
60%
40%
20%
0%
1 month
3 months
2011
2010
2009
2008
2007
2006
2005*
Average
2005-2011†
Source: Lipper Hindsight, Momentum Global Investment Management, January 2012.
Past performance is not indicative of future returns. *30/06/2005 to 30/12/2005. †Harmony fund average percentage rank over discrete years shown.
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global investment management
Harmony US Dollar Growth manager performance
Returns in US dollar
3 months
6 months
12 months
Artisan Global Value
-0.3%
0.4%
-
Momentum IF Global Equity
1.3%
-6.2%
-4.3%
Morgan Stanley Global Brands
-1.4%
-2.4%
11.4%
BlackRock US Index
5.3%
2.6%
3.9%
Heptagon Yacktman US Equity
3.0%
4.4%
7.0%
Firth Asian Smaller Companies
1.2%
-13.4%
-10.9%
Momentum IF Global Emerging Markets
0.2%
-13.3%
-13.5%
Old Mutual Global Bond
-1.6%
5.3%
3.3%
RWC Global Convertibles
0.9%
-1.8%
-1.7%
BlackRock US Dollar High Yield Bond
3.1%
0.7%
3.5%
BlackRock US Corporate Bond Index
1.8%
3.5%
8.2%
2.8%
-7.9%
-3.6%
Equity
Fixed Income
Property
Cohen & Steers Global Real Estate
Source: Lipper Hindsight, 2012
37
global investment management
110.0
110.0
100.0
100.0
Performance rebased to 100
Performance rebased to 100
Harmony funds protecting capital in 2007/08
90.0
80.0
70.0
60.0
50.0
40.0
90.0
80.0
70.0
60.0
50.0
40.0
Harmony Asian Growth
MSCI AC Asia Ex Japan Index (NR)
MSCI World (NR)
Harmony Sterling Growth
FTSE 100 Index (TR)
MSCI World (NR)
Source: Lipper Hindsight, January 2012. Past performance is not indicative of future returns.
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global investment management
105.0
105.0
100.0
100.0
Performance rebased to 100
Performance rebased to 100
…and again in recent weak markets
95.0
90.0
85.0
80.0
75.0
70.0
95.0
90.0
85.0
80.0
75.0
70.0
Harmony Asian Balanced
MSCI AC Asia Ex Japan Index (NR)
MSCI World (NR)
Harmony Asian Growth
MSCI AC Asia Ex Japan Index (NR)
MSCI World (NR)
Source: Lipper Hindsight, January 2012. Past performance is not indicative of future returns.
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global investment management
Harmony 2011 performance vs. peers
100%
Harmony fund percentage rank
80%
60%
40%
20%
0%
Harmony US
Dollar Balanced
Harmony US
Dollar Growth
Harmony AUD
Growth
Harmony Sterling Harmony Sterling Harmony Asian
Balanced
Growth
Balanced
Harmony Asian
Growth
Harmony Euro
Balanced
2011 average
Source: Lipper Hindsight, January 2012. Past performance is not indicative of future returns
40
global investment management
Thank you
41
global investment management
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© Momentum Global Investment Management Limited 2012
42
global investment management
Contact: Lucy Richardson
Marketing Manager
Momentum Global Investment Management
Lucy.richardson@momentumGIM.com
T: +44 207 939 1725
www.momentumgim.com
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global investment management