Pioneer Funds U.S. High Yield

Transcription

1 Pioneer Funds U.S. High Yield Investment Conference, Boston, March 2010 Tracy Wright Portfolio Manager For Broker/Dealer Use Only and Not to be Distributed to the Public

2 Agenda Firm Overview US Fixed Income Overview US Fixed Income Research Process Pioneer Funds U.S. High Yield Appendix For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 2

3 Firm Overview Introduction to Pioneer Investments Wholly-owned asset management company of UniCredit Group Founded in 1928 Over 2,000 employees worldwide US$252 billion AUM* *AUM data as of 31 December For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 3

4 Global Presence Local Insight Global presence Breadth of business Strong parentage Source: Pioneer Investments as at July 2008 For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 4

5 Firm Overview Assets Under Management in USD (bn) Global Assets Under Management US$252 Money Market 10.1% Alternative 1.2% Equity 20.3% Balanced 19.0% Fixed Income 49.4% Source: Pioneer Investments as at 31 December 2009 For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 5

6 Agenda Firm Overview US Fixed Income Overview US Fixed Income Research Process Pioneer Funds U.S. High Yield Appendix For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 6

7 Pioneer Investments US Fixed Income Capabilities and AUM Credit Opportunities $0.27 *Other $3.14 Bank Loans $0.58 Opportunistic Core $1.64 Money Market/Short Term $2.03 Core Plus $5.65 Global High Yield $2.87 Long Duration Credit $0.30 High Yield $4.88 US$21.4 Billion in US Fixed Income Assets Under Management as of 31 December 2009 *Comprised of Municipals, US Government, Intermediate Maturity, Limited Maturity, Global Fixed Income, Short Term Income, Credit Recovery, Mortgage Credit Opportunity, and Investment Grade Source: Pioneer Investment as of 31 December 2009 For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 7

8 Team-Based Approach Multi-Disciplinary Global Team Dedicated to Alpha Generation EUROPEAN FIXED INCOME Raffaele Bertoni US FIXED INCOME Ken Taubes QUANTITATIVE FIXED INCOME Diego Franzin GLOBAL EMERGING & HIGH YIELD Hakan Aksoy Zeke Diwan Colm D'Rosario Gregorio Saichin Yerlan Syzdykov INVESTMENT GRADE Pierre Andre Klein Raffaele Bertoni GOVT. BONDS Derek Arnold Marco Cecchi Alberto Fontana Andreas Konig Adam Laux Tanguy Le Saout Cosimo Marasciulo Marco Meijer Semin Soher CREDIT RESEARCH GLOBAL ex US Andriy Boychuk Silvia Clarkson Brian Farrell Alison Harvey Majella Healy Gavin McKeown Virna Valenti Garrett Walsh As of 31 December 2009 HIGH YIELD DEBT & LOANS Andrew Feltus Jonathan Sharkey Tracy Wright INVESTMENT GRADE Charles Melchreit Seth Roman Richard Schlanger TAX EXEMPT David Eurkus Tim Pynchon MORTGAGES / ABS Steve Bernhardt Ali Haghighat Nicholas Pauwels Larry Zeno CREDIT RESEARCH Michael Temple David Brecht Joanne Fisher Jessica Frattura Daniel Gilbert Keith Hogan Bradley Komenda Will Taylor Richard Stevens Andrey Demidov Grainne Dooley Akvile Janeliunaite Tugrul Kolad Chin Liu Vladimir Popov Robert Urie Mark Scrowston For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 8

9 Pioneer Investments US Fixed Income Investment Philosophy We believe that a value approach to fixed income investing combined with careful assessment of risk can identify opportunities for above-average total return. Our fixed income strategies are based on extensive in-house fundamental and quantitative research. Pioneer Investments fixed income organisation is built on the premise that a tightly knit group of highly-experienced fixed income portfolio managers and research analysts working collaboratively can produce competitive investment results. For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 9

10 Pioneer Investments US Fixed Income Investment Process Integrated Investment Process Buy Discipline Top-Down: Economic and market analysis Bottom-Up: Fundamental and absolute value Qualitative Research Quantitative Research Generate investment ideas Review investment cases frequently Leverage Analysts expertise worldwide Portfolios Sell Discipline Change in fundamentals More attractive alternatives Bond screening tools Risk control tools Performance and risk measurement For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 10

11 High Yield Market Spread Comparison 31 December December 2009 Percent (%) BofA ML High Yield Master II Index Yield to Maturity BofA ML U.S. Current 10-Year Treasury Index Yield to Maturity % % 0 31/12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/ /12/2009 The performance data quoted represents past performance, which is no guarantee of future results. Investments in high-yield securities involve substantially greater credit risk than investments in US treasuries. It is not possible to invest directly in an index. The Bank of America Merrill Lynch High Yield Master II Index measures the performance of high yield fixed-income securities. The Bank of America Merrill Lynch US Current 10-Year Treasury Index tracks US 10-year treasury bond yields. Indices are unmanaged and their returns assume reinvestment of dividends and, unlike mutual fund returns, do not reflect any fees or expenses associated with a mutual fund. Source: Bloomberg. Last data point: 31 December 2009 For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 11

12 High Yield Bond Default Rates Have Been on the Rise Defaults Are a Lagging Indicator 15 Trailing 12-Month U.S. High Yield Bond Issuer-Based Default Rate Dec-75 Dec-80 Dec-85 Dec-90 Dec-95 Dec-00 Dec-05 Source: Moody s Investor Service. Chart prepared by Pioneer Investments. Last data point: December For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 12

13 Agenda Firm Overview US Fixed Income Overview US Fixed Income Research Process Pioneer Funds U.S. High Yield Appendix For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 13

14 Pioneer Funds U.S. High Yield Investment Philosophy We believe that a value approach to high-yield investing that combines US high-yield bonds and equity-linked securities provides a better opportunity to enhance total return than a strategy focused solely on seeking high current income. We employ a non-indexed approach seeking those securities that offer the most attractive risk/reward ratios. For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 14

15 Pioneer Funds U.S. High Yield Team Kenneth J. Taubes Head of Portfolio Management, U.S. Portfolio Management (PM) Credit Research Andrew Feltus, CFA, High Yield PM Tracy Wright, High Yield PM Michael P. Temple Director of Credit Research David Brecht, CFA Analyst Joanne Fisher, CFA Analyst Jessica Frattura Analyst Daniel Gilbert, CFA Analyst Keith Hogan, CFA Analyst Brad Komenda, CFA Analyst Richard Stevens Analyst Will Taylor Analyst Non-US Fixed Income Team Global Fundamental Equity Research Global Quantitative Research and Development Trading For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 15

16 Distinguishing Characteristics Utilise extensive original research Identify best values Substantial commitments to most compelling ideas Emphasise best thinking Integrated asset allocation and security selection Better performance and risk management For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 16

17 Benefits of Investing in Equity-Linked Securities Low Correlations May Provide Diversification Benefits January 2000 through December 2009 CORRELATION MATRIX US High Yield (BofA ML High Yield Master II) Return: 6.52% Convertibles (BofA ML Convertibles) Return: 2.41% US High Yield 1.00 Convertibles US Stocks US Stocks (S&P 500) Return: -0.95% Source: Zephyr. Performance data shown represents past performance. Past performance does not guarantee future results. High yield bonds are represented by the Bank of America Merrill Lynch High Yield Master II Index, which is a commonly accepted measure of the performance of high yield securities. Convertible securities are represented by the Bank of America Merrill Lynch Convertibles Index, which is a commonly accepted measure of the performance of convertible securities. US stocks are represented by the Standard & Poor's 500 Stock Index (the S&P 500) which is a commonly used measure of the broad US stockmarket. It is not possible to invest directly in an index. Diversification does not guarantee a profit or protect against a loss. For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 17

18 Benefits of Investing in Equity-Linked Securities Convertible versus High Yield Bond Prices Bond Price Convertible Security High Yield Bond $100 par Stock Price Past performance does not guarantee future results. Source: Pioneer Investments. For illustrative purposes only. For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 18

19 Pioneer Investments Credit Research Intensive, fundamental credit analysis is the bedrock of security selection Rigorous relative value focus underpins disciplined buy/sell strategy Technology and quantitative support systems enable a streamlined process Experienced credit staff with broad responsibilities facilitate a creative, interdisciplinary investment process For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 19

20 Pioneer Investments Credit Research Process Investment ideas are winnowed from a vast universe of investments and potential problems are identified Quantitative Screens Relative Value Comparisons A unique value approach allows for global benchmarking of all owned and potential investments Investment Decision Ignore/Buy/Sell Sector and risk allocations are determined through an analysis of interest rates, economic and credit cycles, currency and political trends Macro Considerations Fundamental Research Detailed industry and company assessments of past and future trends are distilled into investment thesis For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 20

21 Quantitative Screens Quant screens distill opportunities or identify problems Opportunity Identifier Distress Alert ATTRACTIVE OPPORTUNITY Potential Problem Fundamental Spotlight Relative Value Comparison For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 21

22 Fundamental Corporate Research Relative Value Framework SPL vs FCF % TD Our framework assesses risk per unit of spread and free cash flow expectations and can identify both long and short opportunities. SPL Long Opportunity Set 150 Avoidance Set Source: Pioneer Investments as at 30 September HY Average -20% -15% -10% -5% 0% 5% 10% 15% 20% FCF % Total Debt For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 22

23 Fundamental Research Robust Analysis Begins with Industry Investigation Competition Investment Discipline Growth Cyclicality Prospective Industry Concentration Asset Intensity Entry Barriers Valuation Multiples For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 23

24 Fundamental Research Then Requires an Understanding of Competitive Dynamics Across Multiple Sectors and an Interdisciplinary Team Approach Telephony Industry Internet Industry Technology Industry Cable Industry EXAMPLE US Cable Industry companies are impacted by a number of forces outside of traditional competition Satellite Industry Broadcasting Industry For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 24

25 Pioneer Investments Credit Research Organisation Experienced Analysts with Market Wisdom are Required to Uncover Hidden Inefficiencies in a Complex Marketplace Limits in management disclosure Analysts must know how to read between the lines Waning broker commitment to research Analysts must be able to undertake all of their own work Increasing investment complexity, capital structures, new investment vehicles, and global competition Analysts are required to have more expansive knowledge of a variety of disciplines For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 25

26 Agenda Firm Overview US Fixed Income Overview US Fixed Income Research Process Pioneer Funds U.S. High Yield Appendix For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 26

27 Pioneer Funds U.S. High Yield Sector Allocation and Characteristics as of 31 December 2009 US High Yield 50% Maturity Distribution % 0 to 1 Year 8.8 Characteristics Average Credit Quality B US Convertible 17% 1 to 3 Years 12.8 Effective Duration 4.10 Years Common Stock 15% 3 to 4 Years to 6 Years 46.9 Average Life 5.61 Years Non-US High Yield 9% 6 to 8 Years 3.1 Quality Distribution % 8+ Years 5.0 A & Above 0.0 Cash Equivalents 4% BBB 3.4 US Investment Grade 3% BB 26.3 Convertible Preferred Stock 3% Portfolio % B 46.4 CCC & Lower % 10% 20% 30% 40% 50% 60% Not Rated 6.3 The portfolio is actively managed, and current characteristics may be different. The holdings listed should not be considered recommendations to buy or sell any particular security listed. Portfolio sector allocations will vary over other periods and do not reflect a commitment to an investment policy or sector. Average Credit Quality is an asset weighted average of the higher rating of the fixed income securities, cash, and cash equivalents in the Sub-Fund as provided by Moody s or S&P. The rating also includes securities that have not been rated by either of the rating agencies, which has the effect of reducing the overall average. Source: Wilshire Axiom as at 31 December For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 27

28 Pioneer Funds U.S. High Yield Performance (annualised) as of 31 December 2009 Percent 60 Pioneer Funds - U.S. High Yield Class A USD Non-Distributing ML High Yield Master II Index Q Year 3 Year 5 Year Since Inception (27 Dec 01) Source: Pioneer Investments as at 31 December Performance figures are in USD and have been converted from the Sub-Fund s base currency, the euro. Performance data provided refers to Class A units only, and is based upon NAV net of fees. For details of other unit Classes available, please refer to the prospectus. For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 28

29 Pioneer Funds U.S. High Yield Calendar Year Returns Percent Pioneer Funds - U.S. High Yield Class A USD Non-Distributing ML High Yield Master II Index Source: Pioneer Investments as at 31 December Performance figures are in USD and have been converted from the Sub-Fund s base currency, the euro. Performance data provided refers to Class A units only, and is based upon NAV net of fees. For details of other unit Classes available, please refer to the prospectus. For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 29

30 Agenda Firm Overview US Fixed Income Overview US Fixed Income Research Process Pioneer Funds U.S. High Yield Appendix For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 30

31 Pioneer Funds U.S. High Yield Strategy Overview as of 31 December 2009 Investment Category Benchmark Investment Universe Investment Approach Portfolio Managers Inception Date July 2000 High Yield Fixed Income ML High Yield Master II Index US high yield debt and equity-linked securities (including common stock, preferred stock and convertibles) Takes an integrated top-down and bottom-up approach investing primarily in US high yield and equity-linked securities to find the best value opportunities. Top Down: Assess market conditions and macroeconomic factors including GDP growth, credit spreads and default rates to help determine which sectors offer the best value. Bottom Up: Completes rigorous research leveraging both the Fixed Income Credit Research team and Equity Research team to find the most compelling investment deal. Tracy Wright Portfolio Manager since April 2007 Industry Experience since 1996 Andrew Feltus Portfolio Manager since April 2007 Industry Experience since 1991 Assets Under Management US$313.9 Million as of 31 December 2009 The Portfolio is actively managed and current holdings and characteristics may be different. The Bank of America Merrill Lynch High Yield Master II Index measures the performance of high yield fixed income securities. Indices are unmanaged and their returns assume reinvestment of dividends and, unlike mutual fund returns, do not reflect any fees or expenses associated with a mutual fund. It is not possible to invest directly in an index. For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 31

32 Pioneer Funds U.S. High Yield Strategy Overview as of 31 December 2009 (continued) Average Credit Quality Typical Duration Range Typical Holding Period Typical Issuers Range Historical Turnover Range B 4 to 6 years 3 to 5 years issuers 30% to 50% annually The Portfolio is actively managed and current holdings and characteristics may be different. Average Credit Quality is an asset weighted average of the higher rating of the fixed income securities, cash, and cash equivalents in the Sub-Fund as provided by Moody s or S&P. The rating also includes securities that have not been rated by either of the rating agencies, which has the effect of reducing the overall average. Source: Wilshire Axiom as at 31 December For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 32

33 An Active Approach to Management Sector Allocations as of 31 December 2009 Percent (%) Pioneer Funds - U.S. High Yield BofA ML High Yield Master II Index Capital Goods Energy Telecommunications Basic Industry Health Care Consumer Cyclicals Services Utility Cash Technology & Electronics Real Estate Media Other Non-Consumer Cyclicals Finance Services Auto Banking Mortgage Backed Agency/Local Auth/Sov/Foreign Sov Brokerage Source: Pioneer Investments and Bank of America Merrill Lynch. The portfolio is actively managed; sector allocations will vary over other periods and do not reflect a commitment to an investment policy or sector. The Bank of America Merrill Lynch High Yield Master II Index measures the performance of high yield fixed-income securities. Indices are unmanaged and their returns assume reinvestment of dividends and, unlike mutual fund returns, do not reflect any fees or expenses associated with a mutual fund. It is not possible to invest directly in an index. For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 33

34 Pioneer Funds U.S. High Yield Summary Primary investment goal of total return, not solely high current income Unique investment strategy, which allocates among high yield and equity-linked securities (i.e. convertibles, preferreds and common stock) Integrated top-down and bottom-up approach, which seeks the most attractively valued securities with strongest growth potential For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 34

35 Biographies Pioneer Funds U.S. High Yield Tracy Wright Vice President and Portfolio Manager Ms. Wright has specialised in high yield and distressed companies for eleven years. She is currently portfolio manager of the Pioneer High Yield Fund and assistant portfolio manager of Pioneer Global High Yield Fund. Before joining Pioneer Investments, she worked at State Street Global Advisors as a senior high yield research analyst covering basic materials, industrials and energy, among other sectors. Earlier, she worked as a high yield investment banker in Merrill Lynch s Leveraged Finance Division. Ms. Wright began her career in 1996 at PricewaterhouseCoopers L.L.P. where she provided consulting services to distressed companies undergoing reorganizations. Andrew Feltus, CFA Senior Vice President and Portfolio Manager Mr. Feltus has been with Pioneer since 1994 and has over 17 years of investment experience, managing investment grade bond, foreign currency and global high yield assets, including emerging markets. He is currently portfolio manager of Pioneer Global High Yield Fund which he has managed since He also manages Pioneer High Yield Fund, Pioneer High Income Trust and additional separately managed institutional accounts, totalling $9 billion of dedicated high yield assets. He is also part of the team that runs Pioneer Strategic Income Fund and our core plus assets. Mr. Feltus joined Pioneer Investments as a fixed income analyst and became a portfolio manager in He has been quoted regularly in the press including The Wall Street Journal, Barron s, Bloomberg, Reuters, and appeared on the cover of Credit magazine in February Investment Advisor recently profiled his successful strategy for Pioneer Global High Yield Fund in the March 2007 issue. Mr. Feltus has also appeared as a guest on CNBC and Bloomberg TV. Before joining Pioneer, he worked on the bond desk of Massachusetts Financial Services. Mr. Feltus graduated from Tufts University with a B.A. in quantitative economics and philosophy. For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 35

36 Pioneer Funds U.S. High Yield Important Information Unless otherwise stated all information contained in this document is from Pioneer Investments and is as at 31 December /2009. Pioneer Funds U.S. High Yield is a sub-fund (the Sub-Fund ) of Pioneer Funds (the Fund ), a fonds commun de placement with several separate sub-funds established under the laws of the Grand Duchy of Luxembourg. Past performance does not guarantee and is not indicative of future results. Unless otherwise stated, all views expressed are those of Pioneer Investments. These views are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected. Investments involve certain risks, including political and currency risks. Investment return and principal value may go down as well as up and could result in the loss of all capital invested. More recent returns may be different than those shown. Please contact your local sales representative for more current performance results. This material is not a prospectus and does not constitute an offer to buy or a solicitation to sell any units of the Fund or any services, by or to anyone in any jurisdiction in which such offer or solicitation would be unlawful or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation. For additional information on the Fund, a free prospectus should be requested from Pioneer Global Investments Limited ( PGIL ), 1 George s Quay Plaza, George s Quay, Dublin 2, Ireland. Call Fax This information is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities or services in the United States or in any of its territories or possessions subject to its jurisdiction to or for the benefit of any United States person (being residents and citizens of the United States or partnerships or corporations organized under United States laws). The Fund has not been registered in the United States under the Investment Company Act of 1940 and units of the Fund are not registered in the United States under the Securities Act of This document is not intended for and no reliance can be placed on this document by retail clients, to whom the document should not be provided. The content of this document is approved by PGIL. In the UK, it is directed at professional clients and not at retail clients and it is approved for distribution by Pioneer Global Investments Limited (London Branch), 123 Buckingham Palace Road, London SW1W 9SL, authorised by the Financial Regulator in Ireland and regulated by the Financial Services Authority for the conduct of UK business. The Fund is an unregulated collective investment scheme under the UK Financial Services and Markets Act 2000 and therefore does not carry the protection provided by the UK regulatory system. Pioneer Funds Distributor, Inc., 60 State Street, Boston, MA ( PFD ), a U.S.-registered broker-dealer, provides marketing services in connection with the distribution of Pioneer Investments products. PFD markets these products to financial intermediaries, both within and outside of the U.S. (in jurisdictions where permitted to do so) for sale to clients who are not United States persons. Pioneer Investments is a trading name of the Pioneer Global Asset Management S.p.A. group of companies. Date of First Use: 11 March 2010 For Broker/Dealer Use Only and Not to be Distributed to the Public March 2010 Page 36