AMP Capital Wholesale Australian Bond Fund Access top quality government bonds from a well-diversified, actively managed portfolio. The AMP Capital Wholesale Australian Bond Fund ( the Fund ) offers: > > a blend of quality fixed income assets to give your clients a well-diversified fund. We utilise our experience and expertise to do the diversifying for you. >active > management. Our approach is to identify value and manage risk through active management, combining interest rate and credit-specific research. > > an experienced fixed income investment team. AMP Capital and its parent AMP have a continuous track record of more than 40 years of fixed income investment management with a depth of experience across government and corporate bond sectors. For AMP financial planners May 2013
Why bonds? Why Australian bonds? A well-diversified bond fund is critical in a balanced portfolio Bonds are considered a defensive asset class. A well-blended portfolio of bonds across sectors, issuers and securities acts as a good diversifier within a balanced portfolio. Unlike investments such as term deposits, a diversified bond portfolio gives investors the opportunity for capital gains in an economic downturn through duration management, and higher yields in more positive economic conditions. Active management in fixed income can add value and manage risk To get the most out of your clients fixed income investment, we believe active management is essential. Our view is that significant performance can be generated by actively allocating between various fixed income sectors and managing through investment cycles, across sovereign, investment grade and high yield markets. We constantly search for ways to identify value and manage risk through an active approach that combines interest rate and credit-specific research utilising both quantitative and qualitative techniques. AMP Capital s Wholesale Australian Bond Fund is a well-diversified, actively managed bond fund The AMP Capital Fixed Income team takes the hard work out of diversifying your clients fixed income exposure by providing access to a well-diversified range of fixed income securities across a variety of sectors and industries via a single fund. The Fund invests mainly in Australian government and semi-government bonds and investment grade credit securities plus a range of cash and cash-like securities such as bank bills. Australian government bonds currently offer higher yields than most mainstream international bonds A favourable outlook for Australian government bonds Australian government bonds are now considered to be one of the world s most attractive and secure assets. Uncertainties around resolving the European debt crisis and its ongoing impact on global debt markets have made Australian government bonds more appealing. The Australian economy is well-placed for a number of reasons: > > The outlook for the economy is relatively stable. > > Australia has a low level of public debt and an overall budget position that is close to surplus. > > Compulsory superannuation contributions have also meant a large private savings pool. Higher yield potential than international bonds Australian government bonds have continued to provide investors with higher yields than most mainstream international bonds. For example, 10 year Australian government bonds are currently returning 4.0% in comparison to 2.4% in the UK, 2.5% in the US, Germany s 2.0% and Japan s 1.2%*. If economic conditions improve, although capital values are likely to fall, Australian bonds are expected to provide a better buffer from their higher yields than international government bonds. If an economic downturn should occur, Australian bonds are less likely to deliver zero yields should the Reserve Bank of Australia decide to cut interest rates further to stimulate the domestic economy. Active management can identify investment opportunities We believe the Australian fixed income market is inefficient, which helps us identify value-adding investment opportunities. We take a top-down and bottom-up view on credit spreads, industries and individual issuers and make sure these views are reflected in the Fund. We also aim to add value from individual securities by assessing the credit worthiness of each issuer through extensive financial analysis. *Source: Bloomberg; AMP Capital; As at December 2012
AMP Capital Wholesale Australian Bond Fund AMP Capital s Wholesale Australian Bond Fund provides: > > a blend of fixed income assets to give your clients a well-diversified fund. We use our depth of experience in fixed income to do the diversifying for you. We invest primarily in Commonwealth and semi-government bonds but also allocate to investment grade credit sectors, cash and cash-like securities giving investors exposure to securities and issuers across a range of industries. For added diversification and income, we also invest in specially-selected global fixed income securities. > > active management. Our approach is to identify value and manage risk through active management, combining interest rate and credit-specific research. We apply a strong valuation framework and quantitative approach including assessment of influences such as sentiment and technical indicators, and government policy making. > > an experienced fixed income investment team. AMP Capital and its parent AMP have a continuous track record of fixed income management of over 40 years, with a significant depth of experience across government and corporate bond sectors. We are backed by an experienced well-resourced team and gain insights from being one of the largest fixed income managers in Australia. Key risks The key risks of the Fund include: > > interest rates the risk of capital loss in a rising interest rate environment > > credit the risk that a credit issuer or counterparty defaults on interest payments, the repayment of capital or both > > derivatives which carry the risk of default by the counterparty, losses may be magnified and their valuation may not move in line with the underlying asset. These risks are outlined in more detail in the Product Disclosure Statement (PDS) which all investors should read before applying to invest in the Fund. Our investment process Our investment process is quantitatively-based and stems from our investment philosophy: > > markets can overshoot fundamentals > > bubbles and cycles always end > > valuations are critical for generating conviction in investments > > neither top-down nor bottom-up analysis is right all the time. Asset allocation as at 28 February 2013 Corporate Semi-government Governement Cash
The three main elements of our investment process are: Interest rate process Credit investment process Risk management > > Combines robust quantitative framework with market analysis > > Aim is to develop duration and yield curve strategies > > Combines top-down research with bottom-up credit analysis > > Top-down focuses on global credit spreads in key credit sectors > > Bottom-up looks at individual securities > > We monitor and control three main sources of bond risk and return: - credit exposure - duration - yield curve risk We also recognise that not all information is quantifiable. Our investment professionals use the breadth of research from the fixed income team and across the firm to assess the importance of factors common to all areas. The main forum for this information exchange is our weekly macro markets meeting where the fixed income team discusses and debates the trends shown by the latest data, news and markets. Our credit analysts, as well as the equities, property and economics teams contribute to this debate, allowing us to capture broad trends and sentiment and gain a deeper understanding of events. Our approach to risk mitigation An important part of our risk management strategy is diversification. Typically, individual holdings of lower-rated securities will be smaller than for higher-rated ones. In higher-rated credit exposures, it is important for the portfolio to benefit from any strong individual issuer views by having overweight and underweight positions that provide the necessary level of risk/return from this activity. Interest rate risk is managed using a combination of physical bonds and futures. Interest rate options can also be used. Our systems allow us to drill down to the risk features of individual securities within the portfolio. Growth of $10,000: AMP Capital Wholesale Australian Bond Fund vs Benchmark $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 AMP Capital Wholesale Bond Fund Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 UBS Composite Bond (All maturities) Index Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Past performance is not an indicator of future performance.* Inception date of the Wholesale Australian Bond Fund is 1 December 2004. Total returns are calculated on an annualised basis to the last day of each month using the net asset value price. They are calculated net of tax, after wholesale management fees and costs, and assume distributions are reinvested.
One of the largest investment managers in Asia Pacific AMP Capital is one of the largest investment managers in Asia Pacific. As part of the AMP Group we share a heritage that spans over 160 years. Our asset class specialists, investment strategists and economists work together to deliver stronger investment outcomes for clients. In fixed income, we were one of the earliest investors in the Australian corporate bond market and have a demonstrated 40 year track record of fixed income management. Our size and presence in the Australian market means we re considered for participation in many new bond issues. In addition, our broader corporate knowledge about global fixed income trends and markets means we re able to make stronger and better informed investment decisions. As a company, our home strength in Australia and New Zealand has enabled us to grow internationally and today we have offices in Bahrain, China, Hong Kong, India, Japan, Luxembourg, Singapore, the UK and the US. We also collaborate with a network of global investment partners, leveraging our shared capabilities to provide greater access to new investment opportunities. These benefits are available through a range of single sector and diversified funds, and institutional investment solutions. That is why clients trust us to invest over $128 billion* on their behalf. * AMP Capital as at 31 December 2012. The offer at a glance Investment objective To provide total returns (income and capital growth) after costs and before tax, above the Fund s performance benchmark on a rolling 12 month basis. Benchmark UBS Composite Bond (All Maturities) Index Suggested minimum investment timeframe 2 years Distributions The Fund aims to pay distributions monthly Buy/sell spread Under normal market conditions no buy/sell spread applies. Outside of normal market conditions, the buy and/or sell spread may be up to 0.25%. Investment limits The Fund has a maximum of 5% of the Fund to any one issuer, and 10% of the Fund to government guaranteed issuers, as well as a maximum of 10% to sub-investment grade credit. Hedging policy Exposure to global credit securities are principally hedged back to Australian dollars. Duration The duration of the total assets of the Fund is normally within 1.5 years of the duration of the Fund s performance benchmark. More information For more information on this fund, please visit our website at ampcapital.com.au
Important note Investors should consider the Product Disclosure Statement ( PDS ) available from AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) ( AMP Capital ) for the Wholesale Australian Bond Fund ( Fund ) before making any decision regarding the Fund. The PDS contains important information about investing in the Fund and it is important investors read the PDS before making a decision about whether to acquire, continue to hold or dispose of units in the Fund. AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) ( AMPCFM ) is the responsible entity of the Fund and the issuer of units in the Fund. Neither AMP Capital, nor any other company in the AMP Group guarantees the repayment of capital or the performance of any product or any particular rate of return referred to in this document. Past performance is not a reliable indicator of future performance. While every care has been taken in the preparation of this document, AMP Capital makes no representation or warranty as to the accuracy or completeness of any statement in it including without limitation, any forecasts. This document has been prepared for the purpose of providing general information, without taking account of any particular investor s objectives, financial situation or needs. You and your client should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor s objectives, financial situation and needs. Contact us AMP financial planners To find out more about the AMP Capital Wholesale Australian Bond Fund, or how your clients can access this investment opportunity, please contact your AMP Capital Account Manager or call our Client Services team on 1300 139 267. Personal investors To find out more about the AMP Capital Wholesale Australian Bond Fund, please talk to your financial planner or call us on 1800 188 013. Or visit our website ampcapital.com.au