Allianz RiskMaster. Helping you tame risk Distribution Technology Roadshow. For professional investors only

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1 Allianz RiskMaster Helping you tame risk Distribution Technology Roadshow For professional investors only Source: Dynamic Planner Targeted, as at February Source: Rayner Spencer Mills, as at January A ranking, a rating or an award provides is not a indicator of future performance and is not constant over time.

2 Agenda Volatility targeting explained Our process Why choose RiskMaster? 2

3 1 Volatility targeting explained 3

4 The adviser s challenge New business model Advisers focus on where you can add value for clients; advice not fund management Desire for high quality and good value outsourced investment solutions Regulation Can you demonstrate suitability, in line with COBS 9? At point of initial advice On an ongoing basis Financial Repression Artificially depressed yields are creating negative real returns in safe haven investments A sustained Bull market in any asset class seems unlikely, with markets moving sideways Client concerns Natural loss aversion is magnified by recent equity volatility Hoarding of assets in cash, despite negative real yields Those approaching retirement faced with very expensive annuities Fund recommendations should deliver on clients expectations 4

5 Risk profiling is key RISK PROFILES Investor B High Risk Allow us to reconcile clients appetite and capacity for risk Return Enable us to profile the risk level of an investment Investor A Low Risk However, the are often backward looking relying on historical data Risk Risk profiling portfolios and investors is key to meeting the requirements of clients and the regulator 5

6 Reaching the risk profile Risk Targeting vs Traditional Multi Asset Return Multi Asset Fund A Multi Asset Fund B Risk Master Moderate Fund Multi Asset Fund C Multi Asset Fund D Client Risk Profile Risk When creating a portfolio from a group of funds is hard to survey the risk level at one point in time 6

7 Reaching the risk profile Risk Targeting vs Traditional Multi Asset Multi Asset Fund C Return Multi Asset Fund B Multi Asset Fund A Risk Master Moderate Fund Client Risk Profile Risk Multi Asset Fund D Over time traditional multi asset funds will change their risk profile; RiskMaster won t 7

8 Allianz RiskMaster A Smart Risk Approach Targeted Annualised Return Allianz RiskMaster Conservative Fund Allianz RiskMaster Moderate Fund Allianz RiskMaster Growth Fund Volatility Funds should be built to stay within client risk tolerances and expectations 8

9 Reducing volatility helps compounding Value of Investment Investor A Investor B Investor A and Investor B have the same growth rate 4% p.a. but Investor A has a smoother path. Therefore 50,000 invested by Investor A earns more over the course of the investment this is the power of compounding! Year Siegel s paradox tells us that reducing volatility is one way to grow returns over the long-term Source: Allianz Global Investors. Diagram for visual purposes only. 9

10 How is your risk-targeted fund range performing? Source: FE Analytics, 1 year to 1 August Risk bands are Distribution Technology s. Please note past performance is not a reliable indicator of future results. 10

11 What happens when a fund s risk profile changes? Portfolio Manager significantly changes asset allocation, because he does not follow a volatility constrained approach e.g. invests large Cash holding into Equities Market volatility is significant, which results in the funds risk profile moving from a balanced fund risk profile 5 to a much higher risk profile level 7 Is the clients investment in line with the risk the client is willing and able to take? Case for suitability will need to be reviewed in consultation with the client IMPACT: Time cost of re-advice RISK: Do you have processes in place to identify quickly if a fund s risk profile changes? INACTION: Compliance and complaint risk especially if excessive losses where portfolio unsuitable 11

12 Our solution New business model Outcome focused, designed to help you address specific client need Efficient outsourcing of investment solution Allianz RiskMaster Funds CONSERVATIVE MODERATE GROWTH Regulation Consistent approach, no surprises: risk-targeted approach ensures ongoing suitability, unless client needs change Financial Repression Well diversified funds to weather market falls and capture market rallies Forward looking Strategic Asset Allocation to take account of market distortions Client concerns Easy to understand riskbased outcomes Ability to generate real long term returns to help insure against low annuity rates Using our volatility targeted approach RiskMaster can deliver for you and your clients 12

13 2 Our process 13

14 Allianz RiskMaster Funds Portfolio Management Team Portfolio Management Team Dr. Herold Rohweder Global CIO Multi Asset 27 years experience Dr. Matthias Müller CIO Multi Asset - Active Allocation 26 years experience David Hollis Senior Portfolio Manager 18 years experience Armin Kayser Director, Multi-Asset 29 years experience Cordula Bauss Senior Portfolio Manager 21 years experience Source: AllianzGI, as at 30 June Part of an experience multi asset team who run over 135bn EUR 14

15 Allianz RiskMaster Funds Investment Process Overview Strategic Asset Allocation (SAA) Multi Asset & Global Economics & Strategy Dynamic Multi Asset Plus (DMAP) Multi Asset Risk Management Multi Asset Economic assumptions 3-5 year outlook. Use these assumptions as input to generate SAA. Perform dynamic active asset allocation across and within asset classes based on medium term views Manage asset allocation within the constraints of an explicit volatility bandwidth. Enhanced targeting of volatility Allianz RiskMaster Funds DEFENSIVE CONSERVATIVE MODERATE GROWTH 15

16 Allianz RiskMaster Funds The pros and cons Pros Rules based team approach removed behavioural bias and key man risk Monthly asset allocation to capture shorter term market movement Well diversified across many asset classes Proprietary strategic asset allocation from in house research Built with risk profile in mind and backed by our fee promise to ensure adherence to risk profile Uses mainly passive underlying investments to reduce cost Cons Diversification can hinder performance in a bull market A more active asset allocation add to the funds charges Doesn t seek out best in breed active fund managers Cannot take large tactical bets to maximise performance Allianz RiskMaster Funds A new approach to risk 16

17 3 Why choose RiskMaster? 17

18 Volatility: RiskMaster s Best Friend? Volatility Targeted Funds Performance Minimising downside, yet still participating in the upside. 10.0% 8.0% YTD% Return 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Fund 6 Fund 7 Fund 8 Allianz RiskMaster Mod. Non-Vol. Targeted Max Drawdown YTD % Past performance is not a reliable indicator of future returns. Source: Lipper as at 30/06/16, Funds 1 to 8 are peer group for RiskMaster within Distribution Technology Dynamic Planner 6 that are targeting volatility i.e. Risk Target Managed rated. Non-Volatility Targeted Funds represent remainder of peer group in Dynamic Planner 6 who do not target volatility i.e. are not Risk Target Managed. 18

19 Allianz RiskMaster Performance Market leading returns Allianz RiskMaster Conservative Allianz RiskMaster Moderate Allianz RiskMaster Growth Cautious Balanced Growth Annualised Performance: 7.0% 3 Annualised Performance: 8.1% 3 Annualised Performance: 9.0% 3 Expected volatility range: 8 10% 1 Expected volatility range: 10 13% 1 Expected volatility range: 13 15% 1 Past performance is not a reliable indicator of future results. 1 These voluntary bandings may be breached 2 Morningstar, annualised from 16/05/2012 to 30/09/2016, 4 Dynamic Planner Targeted, as at February Rayner Spencer Mills, as at January Morningstar as at 28/02/2015. A ranking, a rating or an award provides is not a indicator of future performance and is not constant over time. 19

20 Allianz RiskMaster Performance Maximising Returns BREXIT SAA Update % Return /15 11/15 12/15 01/16 02/16 03/16 04/16 05/16 06/16 07/16 08/16 09/16 Allianz RiskMaster Cnsrv Mlt Asst C Acc Allianz RiskMaster Growth Mlt Asst C Acc Allianz RiskMaster Mod Mlt Asst C Acc FTSE 100 TR GBP Past performance is not a reliable indicator of future results. Source: Morningstar 01/01/2015 to 30/09/2016, Allianz RiskMaster Conservative, Moderate and Growth C Acc Share class in GBP. 20

21 Allianz RiskMaster Performance Minimising Drawdowns % Drawdown Allianz RiskMaster Cnsrv Mlt Asst C Acc Allianz RiskMaster Mod Mlt Asst C Acc Allianz RiskMaster Growth Mlt Asst C Acc FTSE 100 TR GBP Past performance is not a reliable indicator of future results. Source: Morningstar 01/01/2015 to 30/09/2016, Allianz RiskMaster Conservative, Moderate and Growth C Acc Share class in GBP. 21

22 Allianz RiskMaster Funds Key Features 1 Strong performance The funds have produced top decile performance over one year¹. 2 Outcome oriented The funds are designed to deliver a specific outcome based on a level of volatility in line with your clients risk profile. 3 Consistent process We implement a consistent investment approach in order to maintain a stable level of risk and potential return. Past performance is not a reliable indicator of future results. ¹Morningstar; 01/10/2015 to 30/09/2016; Allianz RiskMaster Moderate Multi Asset Fund C Acc vs IA Mixed Investment sector. 22

23 CPD Learning Outcomes The differences between a Risk Targeted approach and traditional Multi Asset The benefits of reducing volatility The importance of risk profiling The prospects for volatility controlled products in a post Brexit world 23

24 Disclaimer Allianz RiskMaster Conservative, Moderate and Growth Funds are a sub-fund s of ALLIANZ INTERNATIONAL INVESTMENT FUNDS, an open-ended investment company with variable capital with limited liability organised under the laws of England and Wales. Past performance is not a reliable indicator of future results. If the currency in which the past performance is displayed differs from the currency of the country in which the investor resides, then the investor should be aware that due to the exchange rate fluctuations the performance shown may be higher or lower if converted into the investor s local currency. This is for information only and not to be construed as a solicitation or an invitation to make an offer, to conclude a contract, or to buy or sell any securities. The products or securities described herein may not be available for sale in all jurisdictions or to certain categories of investors. This is for distribution only as permitted by applicable law and in particular not available to residents and/or nationals of the USA. The investment opportunities described herein do not take into account the specific investment objectives, financial situation, knowledge, experience or specific needs of any particular person and are not guaranteed. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail. For a free copy of the sales prospectus, incorporation documents, daily fund prices, key investor information, latest annual and semiannual financial reports contact the authorised corporate director Allianz Global Investors GmbH in the fund s country of domicile or the issuer which is available from Please read these documents, which are solely binding, carefully before investing. This is a marketing communication issued by Allianz Global Investors GmbH, www. allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht ( Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, 199 Bishopsgate, London, EC2M 3TY, which is subject to limited regulation by the Financial Conduct Authority ( Details about the extent of our regulation by the Financial Conduct Authority are available from us on request. 24

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