Safe Secure Retirement Global Medium

Transcription

1 1 Safe Secure Retirement Global Medium

2 DEVELOPING A SOLUTION 6. Manage solution 1. Define client requirements 5. Quarterly Reporting 2. Analyse environment 4. Implement solution 3. Design client solution

3 CLIENTS REQUIREMENTS Sustainable risk adjusted growth of investment portfolio Portfolio should have limited geographical exposure to the South African markets Client has an moderate risk tolerance Returns that match the Global ModerateAllocation Sector in USD terms Investment objective to increase capital returns over a 5 year holding period while minimising downside risk Ability to adjust to market changes through active management Limit tax liability of global investments Implementation cost

4 INTERNAL AND EXTERNAL ENVIRONMENT International Investment environment Historical returns on global markets have been volatile, this has been fuelled by post recession influences and volatile commodity prices Global Markets present value in terms of undervalued asset classes and a larger investment universe Continued Stimulus by European Central Banks fuels continued growth in Global Markets Quantitative easing by the US Fed was reduced to zero, signals US Recovery, Stable Outlook Internal environment Client wishes to minimise exposure to domestic financial markets Client has a moderate risk tolerance level Money Market Problem: 100% Guaranteed to be poorer in real terms (inflation adjusted) No Wealth Legacy Creation

5 5 Core Satellite Approach

6 PHILOSOPHY: CORESATELLITE APPROACH Nedgroup Investments Global Equity Fund Investec Global Franchise Fund The Satellite portion of the portfolio ensures global diversification. The portion of the fund is more risky than the core and hence has only a smaller allocation. The Constituents: 1. Coronation Global Managed Fund 2. GCI Global Fund of Fund 3. M&G Episode Income Fund The Core Portion of the portfolio ensures the clients main objectives are achieved. Low volatility and stable growth are ensured by the local fund managers, therefore a large portion is allocated to these fund managers

7 PROPOSED SOLUTION Flexible Global Asset Allocation Portfolio with Medium Risk Returns exceed US inflation + 4% and are in line with Global Moderate Allocation Sector Minimise loss over a 5 year period through diversification Manager risk diversified across multiple managers Unsystematic risk is diversified through a multi asset allocation strategy Sovereign Risk mitigated through exposure to various economies

8 5 YEAR MAX RETURN VS RISK STRATEGIES US Medical Inflation US Inflation 8

9 9 Core Portfolio

10 GLOBAL MULTI ASSET CORE PORTFOLIO The Core Portion of the Portfolio is constructed to achieve US CPI+4% over a 5 year holding period The Core Portion of the Model Portfolio was constrained using following risk metrics: Maximum Drawdown Sortino Ratio Downside Risk Equal emphasis was placed on risk and return metrics to ensure that returns were maximised with managed volatility The Core Portion is therefore managed according to the following Mandate: Unlock Value over a 5 year investment period Focus predominately on maximising risk adjusted returns Add Alpha to create a Wealth Legacy the

11 GLOBAL MULTI ASSET MEDIUM RISK FUNDS Weight 0.00% % % % % 0.00% OK Name 6 Months 1 Year 3 Year 5 Year 7 Year 10 Year GCI Rating GCI Global FoF (USD) Proposed M&G Episode Income GBP A Acc Henderson Diversified Growth Y Nedgroup Inv Funds Global Cautious A Acc Coronation Global Capital Plus A Nedgroup Inv Funds Global Flexible A Acc Coronation Global Managed A Jupiter Merlin Intl Balanced E EUR Acc Jupiter Merlin Intl Equities E EUR Acc Ashburton Replica Dollar Asset Mgmt Acc Miton Optimal Offshore Spec SituUSD MFS Meridian Glbl Total Return A1 USD Foord International Trust PSG MultiManagement Glbl Flex Dollar BlackRock Global Allocation Inv B Templeton Global Balanced A Sarasin IE GlobalSar Income A Acc Miton Optimal Offshore Spec SituGBP STANLIB Global Balanced Cautious Fund Ashburton Replica Stlg Asst Mgmt R Acc KB Elite Mlt Asst Consv A GBP Inc Sanlam Global Balanced B Osmosis Investment SICAV STANLIB OUT Global Balanced Ashburton Replica Euro Asset Mgmt Miton Optimal Offshore Spec SituEUR

12 SAFE SECURE RETIREMENT CORE SOLUTION Investment Objective US CPI + 4% p.a Exceed inflation creating a Wealth Positive real return for client Very low chance of loss over a 5 year Legacy period Number of months objective is not reached is low Actual loss is low with quick recovery due to diversification Multi manager solution Coronation GCI Global Global Managed Fund Fund of Funds M&G Episode Income Fund All top rated funds with excellentprotection and returns

13 13 Satellite Portfolio

14 GLOBAL MULTI ASSET SATELLITE PORTFOLIO The Satellite Portion of the Portfolio is constructed to achieve US CPI+ 5% over a 7 year holding period The Satellite Portion of the Model Portfolio was constrained using following risk metrics: Maximum Drawdown Sortino Ratio Downside Risk Greater emphasis was placed on return metrics than risk to ensure that returns were maximised and Alpha is added to the Total Solution The Satellite Portion is therefore managed according to the following Mandate: Add alpha to the portfolio by investing in more aggressive asset classes Focus predominately on maximising risk adjusted returns Longer time period to unlock value and generate positive returns the

15 GLOBAL MULTI ASSET HIGHER RISK FUNDS Weight % % % % 0.00 % 0.00 % OK Name 6 Months 1 Year 3 Year 5 Year 7 Year 10 Year GCI Rating Investec GSF Global Franchise A Acc Melville Douglas EFL Glbl Emerg 0.00 Mkts JPMorgan Equity Income Select PSG Global Equity JPMorgan US Equity Instl Fidelity America AUSD Coronation Global Opps Equity A Fidelity Asian Special Sits AUSD Nedgroup Inv Funds Global Equity A Acc Fidelity Global Focus AEUR Marriott First World Equity FF Sanlam World Equity Tracker C USD Acc Fidelity International AUSD PictetWater I EUR Centre Global Equity E Investec GSF Asian Eq A Inc Grs USD Investec Global Strat Eq A Acc Net GBP Schroder Global Alpha Plus A Acc Melville Douglas Global Equity GBP Fidelity World AEUR GAM Star US All Cap Equity USD Acc Sarasin IE EquiSar Glbl Thematic $ A Acc Henderson Horizon Asian Div Inc A Sanlam World Equity A JPMorgan Global Dynamic A (dist)usd Sanlam Global Equity A Acc

16 SAFE SECURE RETIREMENT SATELLITE SOLUTION Investment Objective US CPI + 5% p.a Exceed inflation creating a Wealth Legacy Positive real return for client Very low chance of loss over a 5 7 year period Number of months objective is not reached is low Actual loss is low with quick recovery due to diversification Multi manager solution Nedgroup Investments Global Equity Fund Investec Global Franchise Fund All top rated funds with excellentprotection and returns

17 17 Portfolio Optimisation

18 CINNABAR OPTIMISATION PROCESS Each Model Portfolio is optimised using the Cinnabar Optimiser The portfolio weightings are rerun times in order to generate the most optimal solution Therefore each portfolio is tailormade to ensure the most optimal selection of fund managers is implemented in the solution

19 CINNABAR OPTIMISATION PROCESS Each dot represents a combination of the selected Fund Managers. The Optimisation process ensures that Return is Maximised for a given level of Risk

20 SAFE SECURE RETIREMENT GLOBAL MEDIUM MODEL PORTFOLIO Investment Objective Earn a return of US inflation + 4% Maximise Capital Growth over the Medium term, Downside Risk Enhance Capital to create Wealth Legacy Minimise Fund Allocation GCI Global Fund of Funds 30% Coronation Global Managed 20% M&G Episode Income 20% Investec Global Franchise 15% Nedgroup Global Equity 15%

21 21 Disclaimer

22 DISCLAIMER All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. As a result thereof, there may be limitations as to the appropriateness of any information given. The information set out above is a basic summary of the relevant principles and it is imperative that any proposed investor obtains detailed advice, in the context of his/her specific circumstances, prior to making an investment. It is therefore recommended that the client first obtain the appropriate legal, tax, investment or other professional advice and formulate an appropriate investment strategy that would suit the risk profile of the client prior to acting upon information. Cinnabar is not acting and does not purport to act in any way as an advisor or in a fiduciary capacity. Cinnabar endeavours to provide accurate and timely information but we make no representation or warranty, express or implied, with respect to the correctness, accuracy or completeness of the information and opinions. The information set out herein is based on enacted legislation at the time of publication, but it should be noted that the legislation and practices referred to are subject to change from time to time. Cinnabar does not undertake to update, modify or amend the information on a frequent basis or to advise any person if such information subsequently becomes inaccurate. Investors are therefore urged to ensure that they obtain independent, updated advice on an ongoing basis. Any representation or opinion is provided for information purposes only. Cinnabar Consulting Services & its subsidiaries will not be held liable or responsible for any direct or consequential loss or damage suffered by any party as a result of that party acting on or failing to act on the basis of the information provided in this document. 22