Review of IOOF MultiMix Trusts
September quarter 2012
Presented by
IOOF Investment Management Limited
29 October 2012
Disclaimer
Issued by IOOF Investment Management Limited (IIML), ABN 53 006 695 021, AFSL 230524. Client Services 1800 002 217. Website
www.ioof.com.au . IIML is a company within the IOOF Group of companies, consisting of IOOF Holdings Limited ABN 49 100 103 722
and its related bodies corporate.
This is general advice only and does not take into account, your financial circumstances, needs and objectives. Before making any
decision based on this document, you should assess your own circumstances or seek advice from a financial adviser. You should
obtain and consider a copy of the Product Disclosure Statement available from us or your financial adviser, before you acquire a
financial product.
IIML, its employees and directors may receive remuneration up to 0.3% of the amount invested. Further details are available in the
PDS.
Ratings are only one factor to be taken into account when deciding whether to invest. For more information on the meaning of these
ratings and the rating scales used, please refer to the Lonsec websites at www.lonsec.com.au
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 rating (assigned as follows: IOF0092AU-November 2011; IOF0098AUNovember 2011; IOF0094AU- November 2011; IOF0095AU-November 2011; UFM0051AU-November 2011; IOF0093AU- November
2011; IOF0097AU- November 2011; IOF0090AU-November 2011) presented in this document is limited to “General Advice” and
based solely on consideration of the investment merits of the financial product(s). It is not a recommendation to purchase, sell or hold
the relevant product(s), and you should seek independent financial advice before investing in this product(s). The rating is subject to
change without notice and Lonsec assumes no obligation to update this document following publication. Lonsec receives a fee from
the fund manager for rating the product(s) using comprehensive and objective criteria.
Review of IOOF MultiMix Trusts September 2012
2
Agenda
1. Financial markets review – September 2012
2. Market outlook
3. MultiMix single-sector trusts review – September 2012
4. MultiMix diversified trusts review – September 2012
5. Strategic tilting
6. Appendices
Review of IOOF MultiMix Trusts September 2012
3
Financial markets review
September 2012
Investment returns for major asset
classes
Total return
Major listed asset classes
Australian shares
Year to 30
Sep 2010
%
Year to 30
Sep 2011
%
Year to 30
Sep 2012
%
Quarter to Month to 30
30 Sep 2012
Sep 2012
%
%
0.65
-8.71
14.46
8.75
2.18
-2.79
-4.52
13.59
5.05
2.11
International shares (hedged)
8.97
-1.26
24.61
6.28
2.44
Australian bonds
7.34
9.04
9.56
1.98
0.97
Global bonds (hedged into $A)
11.02
7.79
10.06
2.86
0.67
Australian listed property trusts
-4.52
-6.29
28.90
6.68
1.20
Global listed property trusts (hedged)
20.57
0.00
30.17
3.77
-0.06
International shares (in A$ unhedged)
Past performance is not indicative of future performance. Source: IRESS
Review of IOOF MultiMix Trusts September 2012
5
Short term returns have improved
SuperRatings Fund Crediting Rate
Survey
3 Months
1 Year
3 Years
Return
Quartile
Return
Quartile
Return
Quartile
IOOF MultiMix Australian Shares Trust
7.7
3rd
10.6
4th
0.9
3rd
IOOF MultiMix International Shares Trust
5.3
2nd
7.7
4th
0.1
3rd
IOOF MultiMix Diversified Fixed Interest
Trust
2.7
1st
8.6
2nd
7.8
3rd
IOOF MultiMix Hi Growth Trust
5.5
1st
9.2
4th
1.3
4th
IOOF MultiMix Balanced Growth Trust
5.0
1st
9.0
4th
3.2
4th
IOOF MultiMix Moderate Growth Trust
3.8
2nd
8.5
3rd
3.9
3rd
IOOF MultiMix Conservative Growth Trust
3.2
1st
8.4
2nd
5.1
3rd
IOOF MultiMix Capital Secure Trust
2.0
1st
6.6
1st
5.9
1st
1.3
2nd
4.7
2nd
4.4
2nd
IOOF MultiMix Cash Enhanced Trust
Past performance is not indicative of future performance. Source: SuperRatings
IOOF 'Corporate 100' performance and quartile ranking
Review of IOOF MultiMix Trusts September 2012
6
Financial markets review
• S&P/ASX 300 Accumulation Index closed the period 8.75% higher,
continued to be volatile
• Driven in part by further bond purchases announced by European and US
central banks
• Actions of policy makers in Europe, US, and China are key
• Investors remained cautious, preferring defensive stocks
• MSCI All Countries World ex-Australia Index ($A) appreciated 5.19% in
unhedged AUD terms
• Emerging markets performed even better with a return of 6.20%
Review of IOOF MultiMix Trusts September 2012
7
Financial markets review
• Australian bonds returned 1.98%
• International bonds returned 2.86%
• Government bond markets benefited in part from the promise of further
quantitative easing in the US and the UK, as well as the introduction of the
ECB’s new bond-buying initiative
• Softer economic data globally also helped although gains were limited by a
marked improvement in risk sentiment
• The recent sustained run of strong fixed interest performance suggests
further gains may be more difficult to come by
• Australian property gained 6.68% over the September quarter,
underperforming the broader market
• AREITs outperformed Global REITs which were up 3.48%
Review of IOOF MultiMix Trusts September 2012
8
Market outlook
• European crisis: positive action taken but structural issues still persist.
Ongoing focus on Spain, Portugal and Italy
• United States: housing improving which is important but corporate earnings
turning over and what about ‘fiscal cliff’?
• China: slowdown occurring but still high base growth. Will stimulus
measures work?
• Australia: possible further rates cuts anticipated as strong dollar impacts
domestic economy
• Equity Markets: remain cheap relative to bonds and fair value relative to
own metrics
• Global fixed income: remains an expensive safe haven but what is the
catalyst for an increase in yields?
• Currency markets remain volatile and are hostage to macroeconomic
events
Review of IOOF MultiMix Trusts September 2012
9
IOOF MultiMix single-sector trusts review
September 2012
IOOF MultiMix Australian Shares
Trust
Sep 2012
IIML
3.91%
Vinva
16.69%
Alliance Bernstein
14.92%
Boutique Manager Portfolio
3.56%
Integrity
13.52%
Solaris
17.84%
Legg Mason
7.36%
Perennial
15.09%
Merlon
7.11%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF MultiMix Australian Shares Trust
7.45
11.53
-0.66
S&P/ASX 300 Accumulation Index
8.75
14.46
1.69
-1.30
-2.93
-2.35
Excess return
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
Review of IOOF MultiMix Trusts September 2012
11
IOOF MultiMix International Shares
Trust
Sep 2012
TT International 12.22%
Credit Suisse Asset
Management 6.27%
Esemplia 5.34%
Neuberger Berman
14.50%
Wellington
9.85%
Perennial
4.76%
LSV Asset Management
18.09%
SSGA
28.97%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF MultiMix International Shares Trust
6.08
9.67
0.42
MSCI All Countries World ex Australia $A Index *
5.19
13.01
1.61
Excess return
0.89
-3.34
-1.19
*International shares benchmark changed from MSCI World ex Australia $A Index (unhedged) from October 2011. Figures shown here are a
composite of both indexes.
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
Review of IOOF MultiMix Trusts September 2012
12
IOOF MultiMix Diversified Fixed
Interest Trust
Sep 2012
Western Asset Management
4.91%
Perennial (Cash) 9.44%
Perennial
(Aust fixed interest) 15.83%
IIML (Cash) 5.56%
Loomis Sayles 12.16%
IIML (Income)
12.61%
PIMCO (Aust fixed interest)
11.76%
Brandywine
12.95%
PIMCO (Intl fixed interest)
14.80%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
MultiMix Diversified Fixed Interest Trust
3.04
10.36
9.15
50% UBS Comp Bond Index /
50% Barclays Capital Global Agg Index
2.42
9.83
9.13
Excess return
0.62
0.53
0.02
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
Review of IOOF MultiMix Trusts September 2012
13
IOOF MultiMix Cash Enhanced Trust
Sep 2012
IIML
64.59%
Perennial
35.41%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF MultiMix Cash Enhanced Trust
1.59
5.75
5.79
UBSA Bank Bill Index
0.91
4.36
4.55
Excess return
0.68
1.39
1.24
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
Review of IOOF MultiMix Trusts September 2012
14
MultiMix Wholesale Trusts review
September 2012
MultiMix Wholesale Australian
Property Trust
Sep 2012
Cash 1.89%
Colonial First State
22.96%
Challenger
75.16%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
MultiMix Wholesale Australian Property Trust
6.54
28.96
5.75
S&P/ASX 300 Property Trust Accum Index
6.68
28.88
4.86
-0.14
0.08
0.89
Excess return
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
Review of IOOF MultiMix Trusts September 2012
16
MultiMix Wholesale International
Property Trust
Sep 2012
Cash
0.94%
Cohen &
Steers
20.53%
Perennial
54.45%
BT Global
24.08%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
MultiMix Wholesale International Property Trust
4.80
31.13
12.82
UBS Global Investors ex Aust AUD hedged net TR
3.48
30.54
18.09
Excess return
1.32
0.59
-5.27
Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IIML
Review of IOOF MultiMix Trusts September 2012
17
MultiMix Wholesale Alternative –
Defensive Trust
Sep 2012
Cash
49.49%
Infrastructure
25.57%
Subordinated debt
13.26%
Credit opportunities
11.68%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
MultiMix Wholesale Alternative – Defensive Trust
1.43
7.81
6.29
Composite benchmark*
2.42
9.83
9.32
-0.99
-2.02
-3.03
Excess return
Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IIML
*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement
available from our website www.ioof.com.au
Review of IOOF MultiMix Trusts September 2012
18
MultiMix Wholesale Alternative –
Growth Trust
Sep 2012
Private equity
17.78%
Cash
13.49%
Special situations
5.41%
Discretionary hedge funds
11.67%
Systematic hedge funds
51.65%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
MultiMix Wholesale Alternative – Growth Trust
3.62
4.03
8.17
Composite benchmark*
5.19
13.01
8.23
-1.57
-8.98
-0.06
Excess return
Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IIML
*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement
available from our website www.ioof.com.au
Review of IOOF MultiMix Trusts September 2012
19
IOOF Trusts review
September 2012
IOOF Wholesale Income Trust
Sep 2012
Cash
0.93%
Perennial
Income Fund
99.07%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF Wholesale Income Trust
3.33
9.91
9.41
UBS Credit FRN Index (from 31/12/10)*
1.99
6.54
5.35
Excess return
1.34
3.37
4.06
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
*Performance figure is a composite of UBSA Bank Bill Index and the UBS Credit FRN Index.
Review of IOOF MultiMix Trusts September 2012
21
IOOF Cash Management Trust
• FUM: $1.4b
• Weighted average duration: 55 days
• Term deposits: 48%
• Maximum exposure: CBA 28%
• A1+ exposure: 66%
• A1 exposure: 21%
• A2 exposure: 13%
Total return for periods ending
30 September 2012
1 Month
%
3 Months
%
1 Year
%
3 Years
% pa
5 Years
% pa
IOOF Cash Management Trust
0.32
1.00
4.54
4.58
5.00
UBSA Bank Bill Index
0.31
0.91
4.36
4.55
5.12
Excess return
0.01
0.09
0.18
0.03
-0.12
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
Review of IOOF MultiMix Trusts September 2012
22
IOOF MultiMix diversified trusts review
September 2012
IOOF MultiMix Balanced Growth
Trust
Sep 2012
Alternatives
9.80%
Cash
5.74%
Fixed
interest
17.16%
Property
7.90%
Australian
shares
29.70%
International
shares
29.71%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF MultiMix Balanced Growth Trust
5.26
10.57
3.23
Composite benchmark*
5.40
14.63
5.24
-0.14
-4.06
-2.01
Excess return
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available
from our website www.ioof.com.au
Review of IOOF MultiMix Trusts September 2012
24
IOOF MultiMix Balanced Growth
Trust
Attribution for September quarter:
•
•
•
•
•
•
The bulk of the underperformance was a result of the underperformance within
the Australian shares portfolio
Low levels of hedging contributed negatively to performance
The Alternatives – growth portfolio contributed negatively to performance as it
underperformed its equities benchmark
Positive performance from the international equities portfolio contributed to
performance
Positive performance from the diversified fixed interest portfolio contributed to
performance
Positive performance from the international listed property portfolio contributed
to performance
Review of IOOF MultiMix Trusts September 2012
25
Asset allocation update
IOOF MultiMix Balanced Growth Trust
Asset class
Target allocation
(%)
Range
(%)
Cash & short-term securities
3
0-15
5.74
Diversified fixed interest
22
10-35
17.16
Alternative – defensive
3
0-15
2.61
Property
10
0-20
7.90
Australian shares
30
20-40
29.70
International shares
25
15-35
29.71
Alternative – growth
7
0-20
7.19
100
100
Review of IOOF MultiMix Trusts September 2012
Actual as at
September 2012
(%)
26
IOOF MultiMix Moderate Trust
Sep 2012
Alternatives
8.78%
Fixed
interest
27.07%
Cash
22.71%
Australian
shares
18.30%
International
shares
14.85%
Property
8.29%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF MultiMix Moderate Trust
4.01
10.04
4.50
Composite benchmark*
4.57
13.69
5.59
-0.56
-3.65
-1.09
Excess return
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available
from our website www.ioof.com.au
Review of IOOF MultiMix Trusts September 2012
27
IOOF MultiMix Moderate Trust
Attribution for September quarter:
•
•
•
•
•
The bulk of the underperformance was a result of an overweight allocation to
cash
Poor performance from the underlying Australian equities managers detracted
from performance
An underweight to equities, particularly Australian equities also contributed to
the underperformance
Positive performance within the fixed interest and cash asset classes
contributed the bulk of value
Positive performance from the international equities asset class also
contributed to performance
Review of IOOF MultiMix Trusts September 2012
28
Asset allocation update
IOOF MultiMix Moderate Trust
Asset class
Target allocation
(%)
Range
(%)
Cash & short-term securities
5
0-25
22.71
Diversified fixed interest
35
25-45
27.07
Alternative – defensive
5
0-15
3.86
Property
10
0-20
8.29
Australian shares
22
10-35
18.30
International shares
18
5-30
14.85
Alternative – growth
5
0-15
4.92
100
100
Review of IOOF MultiMix Trusts September 2012
Actual as at
September 2012
(%)
29
IOOF MultiMix Capital Stable Trust
Sep 2012
Australian shares 10.53%
Property 5.08%
Cash 42.22%
Diversified fixed
interest
42.17%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF MultiMix Capital Stable Trust
2.99
9.01
7.11
Composite benchmark*
2.56
8.88
6.96
Excess return
0.43
0.13
0.15
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available
from our website www.ioof.com.au
Review of IOOF MultiMix Trusts September 2012
30
IOOF MultiMix Conservative Trust
Sep 2012
Alternatives 7.31%
Australian shares
10.38%
International
shares 7.24%
Property
9.27%
Cash 29.95%
Diversified
fixed interest
35.84%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF MultiMix Conservative Trust
3.32
9.84
6.42
Composite benchmark*
3.16
10.87
6.90
Excess return
0.16
-1.03
-0.48
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available
from our website www.ioof.com.au
Review of IOOF MultiMix Trusts September 2012
31
IOOF MultiMix Growth Trust
Sep 2012
Cash 2.87%
Alternatives 8.08%
Diversified fixed
Interest 4.99%
Property 6.96%
Australian shares
47.39%
International
shares 29.71%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF MultiMix Growth Trust
5.74
10.32
2.10
Composite benchmark*
6.30
15.84
4.21
-0.56
-5.52
-2.11
Excess return
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available
from our website www.ioof.com.au
Review of IOOF MultiMix Trusts September 2012
32
IOOF MultiMix Growth Trust
Attribution for September quarter:
•
•
•
•
Positive performance from the international equities portfolio contributed to
performance
The bulk of the underperformance was a result of underperformance within the
Australian shares portfolio
Low levels of hedging contributed negatively to performance
The Alternatives - growth portfolio contributed negatively to performance as it
underperformed its equities benchmark
Review of IOOF MultiMix Trusts September 2012
33
IOOF Multi Series Balanced Trust
Sep 2012
Cash 5.35%
Diversified fixed
interest
25.23%
Australian
shares
34.55%
International
shares
30.02%
Australian property
4.84%
Allocations may not sum to 100% due to rounding
Total return for periods ending
30 September 2012
3 Months
%
1 Year
%
3 Years
% pa
IOOF Multi Series Balanced Trust
5.50
11.27
3.08
Composite benchmark*
5.77
13.25
4.04
-0.27
-1.98
-0.96
Excess return
Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML
*For further information on the composite benchmark, please refer to a copy of the IOOF Multi Series Balanced Trust Product Disclosure
Statement available from our website www.ioof.com.au
Review of IOOF MultiMix Trusts September 2012
34
IOOF Multi Series Balanced Trust
Attribution for September quarter:
•
•
•
•
•
Strong performance from Legg Mason/Brandywine in international fixed
interest contributed to performance
Strong performance from Credit Suisse Holt in international shares contributed
to performance
Strong performance from Colonial First State in Australian fixed interest
contributed to performance
Credit Suisse Holt’s Australian shares portfolio detracted from performance
Societe Generale’s emerging markets portfolio detracted from performance
Review of IOOF MultiMix Trusts September 2012
35
Strategic tilting update
Currency/overseas assets
• Asset allocation committee decided to put more money offshore
(AEQ to OEQ) 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 four main catalysts for Australian dollar weakness:
•
•
•
•
Increased risk aversion from the ongoing debt crisis in Europe
RBA easing
Fiscal tightening
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, A$ fall – GFC example
• Tilt has outperformed by 2.7% as at 30 September 2012
Lonsec Investment Review – August 2012
37
AUD/USD
USD per AUD & PPP Value
1.1
1
PPP +/- 2 standard deviation
PPP +/- 1 standard deviation
Tilt entered
USD/AUD
0.9
0.8
0.7
0.6
0.5
0.4
Date
Source: Datastream
Lonsec Investment Review – August 2012
38
Global fixed interest/cash tilt
• August 2010, 20% allocated to cash funded from global bonds within the
IOOF MultiMix Diversified Fixed Interest Trust
Rationale
• US Gov’t bonds yields unsustainably low at around 1.5%
• 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 7.0% as at 30 September 2012
Lonsec Investment Review – August 2012
39
40
Lonsec Investment Review – August 2012
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Yield (%)
US 10 year government
bond yield
US 10 year Govt Bond Yield
6
5
4
3
Tilt entered
2
1
0
Source: Bloomberg