Cazenove Capital. Inflation & income: the importance of capital. Marcus Brookes & Robin McDonald Fund Managers

Transcription

1 Cazenove Capital Inflation & income: the importance of capital Marcus Brookes & Robin McDonald Fund Managers

2 Contents Demand for income Importance of maintaining real capital value Cazenove Capital s pedigree Cazenove Capital s solution Q&A

3 Demand for income

4 Collapse of interest rates UK bank & building society deposit rates: Notice accounts % Source: Thomson Datastream to September 2010

5 Real Wage Deflation (since mid 2008) 3mm/yy % Change UK average earnings (excl. bonuses) vs CPI 6 5 Average earnings (excl. bonuses) CPI Source: Thomson Datastream to October 2010

6 Inflation Source: Telegraph Website/Evening Standard website Jan 2011

7 Persistent low rates reversing savings ratio? UK Savings Ratio % Source: Thomson Datastream to August 2010

8 UK Equity Income Headlines High % level of income Compound effect of income beats market Income from market largest contribution to growth Not relevant if investor requires the income

9 Behind the headlines.capital loss after income Cumulative capital return (%) year cumulative capital return of the median fund in the IMA UK Equity Income Sector and adjusted for real purchasing power (using CPI) Median fund -9.9% Median fund adjusted for real purchasing power -27.2% Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Source: Cazenove Capital/Lipper to August 2010

10 Importance of maintaining real capital value

11 100,000 and inflation Ideal scenario Year 1 Year 3 Year 5 Capital 100, , ,000 Income 4,000 4,000 4,000

12 100,000 and inflation 2.5% inflation Year 1 Year 3 Year 5 Capital 97,500 92,686 88,110 Income 3,900 3,707 3,524

13 100,000 and inflation Maintained in line with 2.5% inflation Year 1 Year 3 Year 5 Capital 102, , ,141 Income 4,100 4,308 4,526

14 Income is derived from capital Year 1 Year 2 Year 3 Year 4 Year 5 Capital 100, , , , ,000 Income 4,000 4,000 4,000 4,000 4,000 Inflation 2.5% Real Capital 97,500 95,063 92,686 90,369 88,110 Real Income 3,900 3,803 3,707 3,615 3,524 Maintain real value Real Capital 102, , , , ,141 Real Income 4,100 4,203 4,308 4,415 4,526 Effect on income Income Diff % Loss -2.5% -5.1% -7.7% -10.4% -13.1% Source: Cazenove Capital

15 Cazenove Capital s pedigree

16 Our process in one slide Internal resources Cazenove Capital strategy team Multi-manager team Marcus Brookes, Robin McDonald, Joe Le Jehan & Daniel Pippard 47 years combined investment experience Asset allocation views External resources Broker research External Fund managers Cazenove Capital fund managers: - Chris Rice - Peter Harvey - Paul Marriage - Julie Dean Strategy fund selection (5,000 funds) Portfolio construction Independent strategists Review

17 Cazenove Multi-Manager Diversity Fund 1/3 Equities 1/3 Fixed Income & Cash 1/3 Alternatives Example of groups with funds in held at Logo permissions received.

18 Cazenove MM Diversity Fund risk/return Performance (Ann) IMA Cautious Managed Cazenove Multi-Manager Diversity A Acc Volatility (Ann) Source: Lipper 01/09/05 to 31/08/10

19 Cazenove MM Diversity Fund: Five year anniversary Percentage Growth Total Return, Tax Default, In LC = CPI +4% pa over 5 years Cazenove Multi-Manager Diversity A Acc (MF) IMA Cautious Managed (IN) FTSE All Share TR (IN) Days From 01/09/05 To 31/08/10 Source: Lipper

20 Cazenove Capital s solution

21 The Fund Cazenove Diversity Income Fund Launched 15 December 2010 Follows our proven multi-asset approach 4% income target, paid quarterly CPI pa capital target * *over the medium term. Not guaranteed

22 Cazenove Diversity Income Fund: the portfolio Fixed Income and Cash M&G Optimal Income Old Mutual Global Strategic Bond Aegon Strategic Global Bond Invesco Tactical Bond Cazenove Strategic Bond Cash Equities Invesco Perpetual Income Invesco Perpetual High Income CF Walker Crips Equity Income J O Hambro Cap Mgt UK Opps M&G Global Dividend Schroder Asian Income Maximiser Alternative Eclectica Jupiter Absolute Return Cazenove UK Absolute Target Majedie Tortoise 48.0% 13.18% 5.11% 8.58% 6.92% 7.87% 6.34% 42.3% 7.83% 7.40% 8.64% 8.24% 4.78% 5.36% 9.8% 2.06% 3.65% 2.12% 1.96% Source: Cazenove Capital at 29/04/2011

23 RDR ready share classes Cazenove Multi-Manager Diversity Fund: AMC 1% or 0.5% pa. Yield 1.7% Cazenove Diversity Income Fund: AMC 1% or 0.5% pa. Yield target 4% * over the medium term. Not guaranteed (Income & Accumulation share classes for both)

24 Keeping you informed: NEW! Cazenove Multi-Manager dashboard Updated monthly: Snapshot view of all asset classes Monthly by monthly allocation changes to: Cazenove MM Diversity Fund Cazenove Diversity Income Fund

25 Access: Cazenove Diversity Income Fund

26 Disclaimer The stated target yield for the Cazenove Diversity Income Fund is not guaranteed. This document is issued by Cazenove Capital Management Limited (Cazenove Capital). It is for information purposes only and does not constitute an offer to enter into any contract/agreement nor a solicitation to buy or sell any investment or to provide any services referred to therein. This document is solely for the use of professional intermediaries and is not for general public distribution. The contents of this document are based upon sources of information believed to be reliable, however, save to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to its accuracy or completeness, and Cazenove Capital or connected companies, directors, officers and employees do not accept any liability or responsibility in respect of the information or any recommendations expressed herein which, moreover, are subject to change without notice. This document has been produced based on Cazenove Capital Management s research and analysis and represents our house view. Unless otherwise stated all views are those of Cazenove Capital Management. It may not be reproduced in any form without the express permission of Cazenove Capital Management and to the extent that it is passed on, care must be taken to ensure this is in the form which accurately reflects the information given here. Unless otherwise indicated, the source for all data is Cazenove Capital. Past performance should not be seen as an indication of future performance. The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested and may be affected by fluctuations in markets and exchange rates. Cazenove Capital Management is the name under which Cazenove Capital Management Limited (registered No ) and Cazenove Investment Fund Management Limited (registered No ) each authorised and regulated by the Financial Services Authority and of 12 Moorgate London EC2R 6DA provide investment products and services.