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A view on Financial Markets Barclays Personal Investment Management Darlington 14 July 2011 David Harbage. Investmen

2. dd month year. Agenda . The nature of stock marketsOur global viewTaking action . 3. dd month year. The economic cycle and the market cycle. Economic cycles - vary dramatically in cause and magnitudeStock markets

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A view on Financial Markets Barclays Personal Investment Management Darlington 14 July 2011 David Harbage. Investmen

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    1. A view on Financial Markets Barclays Personal Investment Management Darlington 14 July 2011 David Harbage. Investment Director

    2. 2 dd month year Agenda The nature of stock markets Our global view Taking action

    3. 3 dd month year The economic cycle and the market cycle Economic cycles - vary dramatically in cause and magnitude Stock markets – equity and bonds anticipate future events Market performance – this barometer may not be intuitive

    4. 4 dd month year Equity returns within the economic cycle

    5. 5 dd month year The FTSE100 index during the previous decade

    6. 6 dd month year Longer term returns ……….are intuitive and reassuring Annual, real, total returns over the past 50 years to 2010: Cash +1.7%, Gilts +2.5%, UK Equity +5.4% Credit outperforms gilts, index linked underperform conventional Source: Barclays Equity Gilt Study 2011

    7. 7 dd month year Longer term returns….the worst and best case Annual, real, total returns over the past 5, 10 and 20 years to 2010: Worst: Cash -9% -6% and -2%; Gilts -18%, -9% and -5% UK Equity -19%, -7% and -1% Best: Cash +12% +9% and +4%; Gilts +18%, +13% and +9%; UK Equity +20%, +17% and +11% Source: Barclays Equity Gilt Study 2011

    8. 8 dd month year No financial abyss… but recovery will be slow Asset and earnings write downs – comparatives get easier Banks pass stress tests – but country specific risks remain Financial authorities – will be careful to maintain stability

    9. 9 dd month year Expect polarised economic performance… Sluggish recovery in US & Europe; emerging economies stronger At home, an absence of the ‘feel good’ factor; unemployment to lag Leads to an environ of lower debt, growth, rates and returns

    10. 10 dd month year As evidenced in our economic forecasts…. 2011 GDP: US 2.8%, UK 1.7%, China 9.3%, Global 4.2% UK Base Rate 1.0% and CPI domestic inflation 4.5% 2012 GDP: US 3.6%, UK 2.3%, China 9.0%, Global 4.4% UK Base Rate 2.5% and CPI domestic inflation 2.5%

    11. 11 dd month year “Normal service resumed”……in research Asset allocation – ‘risky’ assets of equity & credit offer appealing valuations “ Business As Usual” for analysts – company profits beat expectations Growth drivers - public purse and consumer versus the healthy corporate

    12. 12 dd month year We expect appetite for risk assets to increase Cash balances seek higher yielding, inflation beating, assets Demand for ‘risk-free’ government bonds set to ease as rates rise Notwithstanding recent natural disaster and geo-political events

    13. 13 dd month year Our Recommendation is to diversify ….. Assets with differing attributes - correlate and compare Establish an informal benchmark for assessing performance Consider liabilities, appetite for risk and wider objectives

    14. 14 dd month year ………. and regularly review Build from the foundation of putting need before greed Consider taxation, but don’t compromise good fundamentals Review, with qualified advisors, on an ongoing basis

    15. Multi-Manager Update Barclays Personal Investment Management Darlington 14 July 2011 Bobby King, Product Manager

    16. 16 Agenda Constructing a Multi-Manager Portfolio Performance Changes to Multi-Manager and outlook Summary

    17. 17

    18. 18 Barclays Wealth Multi-Manager – Background Performance Changes to Multi-Manager and outlook Summary Constructing a Multi-Manager Portfolio

    19. 19 We group assets into nine key types

    20. 20 Creating five risk-adjusted portfolios

    21. 21 And seek to pick the best managers for each asset type

    22. 22

    23. 23

    24. 24

    25. 25

    26. 26 UK Alpha Fund - Top 10 Holdings

    27. 27 US Alpha Fund - Top 10 Holdings

    28. 28

    29. 29 Barclays Wealth Multi-Manager – Background Constructing a Multi-Manager Portfolio Changes to Multi-Manager and outlook Summary

    30. 30 Equity Market Returns – last 5 years

    31. 31 Fixed Income Returns – last 5 years

    32. 32 Multi-Manager Returns – last 5 years

    33. 33 Barclays Multi-Manager Performance

    34. 34 Underlying Fund Performance 2008

    35. 35

    36. 36

    37. 37 Manager Focus

    38. 38 Barclays Wealth Multi-Manager – Background Constructing a Multi-Manager Portfolio Performance Summary

    39. 39 Strategic Asset Allocation Changes Recent asset allocation changes = Reduced overall exposure to Equities  Reduced Developed Market (USA & UK) Equity exposure BUT increased exposure to Emerging Market Equities New allocation to Commodities (diversified blend of base & precious metals, energy, agriculture) Reduced exposure to UK Government Bonds. New allocation to Short Term Bonds. Exposure to diversified mix of Hedge Funds

    40. 40 Investment Manager Changes (last 12 months)

    41. 41 We currently favour heavily developed market equities. We believe valuations are attractive by historical standards whether you are looking at dividend yields or P/E levels. We also see that the balance sheet of companies are very strong right now with low levels of debt, therefore we expect M&A activity to pick up. We are underweight Investment Grade Bonds because they look relatively expensive given their strong run since early 2009. The asset class could also be hurt by the expected pickup in M&A activity. We currently favour heavily developed market equities. We believe valuations are attractive by historical standards whether you are looking at dividend yields or P/E levels. We also see that the balance sheet of companies are very strong right now with low levels of debt, therefore we expect M&A activity to pick up. We are underweight Investment Grade Bonds because they look relatively expensive given their strong run since early 2009. The asset class could also be hurt by the expected pickup in M&A activity.

    42. 42 Summary Discretionary investment portfolios managed on behalf of the investors Dedicated and experienced Barclays teams supports Multi-Manager – used across the Barclays Group globally and within Barclays Private Bank The most efficient way of accessing the best thinking within Barclays Investment Management Recent performance has been encouraging. The Multi-Manager Team are working hard to maintain this momentum. Significant, positive changes have been implemented, designed to improve medium to long-term performance

    43. 43 Disclaimer

    44. 44 Thank you for your time

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