Agenda 12.00 13.00 Registration and lunch 13.00 13.10 Introduction by Julian Marr 13.10 13.35 Presentation by Robin McDonald Cazenove Capital Management 13.35 13.55 Presentation by Tony Lanning Gartmore 13.55 14.10 Tea /coffee break 14.10 14.35 Presentation by Chris Forgan Henderson Global Investors 14.35 15.00 Presentation by James Millard Skandia Investment Group 15.00 15.25 Q&A session 15.25 Close 1
Delivering Income and Preserving Capital For professional advisers only 3
Contents Demand for income Importance of maintaining real capital value Cazenove Capital s pedigree Cazenove Capital s solution 4
Demand for income 5
Collapse of interest rates UK bank and building society deposit rates: notice accounts % 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2005 2006 2007 2008 2009 2010 Source: Thomson Datastream to September 2010 6
Real wage deflation (since mid 2008) UK average earnings (excluding bonuses) vs CPI 6 5 Average earnings (excl. bonuses) CPI 3mm/yy % change 4 3 2 1 0 2001 2003 2005 2007 2009 Source: Thomson Datastream to October 2010 7
Is there inflation? Source: Telegraph Website/Evening Standard website Jan 2011 8
Persistent low rates reversing savings ratio? UK savings ratio % 16 14 12 10 8 6 4 2 0-2 1980 1985 1990 1995 2000 2005 2010 Source: Thomson Datastream to August 2010 9
UK Equity Income Headlines High % level of income Compound effect of income beats market Income from market largest contribution to growth Fact: Some investors investing in income funds do so for income 10
Behind the headlines.capital loss after income 10 year cumulative capital return of the median fund in the IMA UK Equity Income Sector and adjusted for real purchasing power (using CPI) 40 30 Median fund -9.9% Median fund adjusted for real purchasing power -27.2% Cumulative capital return (%) 20 10 0-10 -20-30 -40-50 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 11
Importance of maintaining real capital value 12
Income is derived from capital Year 1 Year 2 Year 3 Year 4 Year 5 Capital 100,000 100,000 100,000 100,000 100,000 Income 4,000 4,000 4,000 4,000 4,000 Inflation 2.5% Real Capital 97,500 95,062 92,686 90,368 88,109 Real Income 3,803 3,707 3,614 3,525 3,436 Maintain real value Real Capital 102,500 105,062 107,689 110,381 113,140 Real Income 4,100 4203 4,308 4,416 4,526 Effect on income Income diff 100 203 308 416 526 % Loss -2.5% -5% -7.7% -10.4% -13.2% Source: Cazenove Capital 13
Cazenove Capital s pedigree 14
Cazenove MM Diversity Fund: since launch Percentage growth total return, tax default, in LC 35.0 35.0 32.0 = CPI +4% pa over 5 years 32.5 32.5 30.0 Cazenove Multi-Manager Diversity A Acc (MF) FTSE All Share TR (IN) 30.0 27.5 IMA Cautious Managed (IN) 27.5 25.0 25.0 22.5 22.5 20.3 20.0 20.0 17.5 17.5 15.0 15.0 12.5 12.5 10.0 10.0 7.5 7.5 5.0 5.0 2.5 2.5 0.0 0.0 1825 Days From 01/09/05 To 31/08/10 11.6 Source: Lipper 15
Cazenove MM Diversity Fund risk/return 12 10 Performance (Ann) 8 6 4 2 0-2 IMA Cautious Managed Cazenove Multi-Manager Diversity A Acc -4 0 5 10 15 20 Volatility (Ann) Source: Lipper 16
Cazenove Multi-Manager Diversity Fund 1/3 Equities 1/3 Fixed Income & Cash 1/3 Alternatives Example of groups with funds in held at 4.10.2010. Logo permissions received 17
Cazenove Capital s solution 18
The fund Cazenove Diversity Income Fund Launched 15 December 2010 Follows our proven multi-asset approach Targets 4% income pa, paid quarterly Targets capital in line with inflation (CPI) 19
Back testing data - disclaimer The back tested data is for illustration purposes only Assumptions have been made about portfolio positions to provide a representation of how the Cazenove Diversity Income Fund may perform in different market conditions This is shown for indicative purposes only and is not a guarantee of the likely future performance or volatility of the Cazenove Diversity Income Fund 20
Using indices and passive allocation 5 year rolling real residual value of 100 (multi-asset blend vs 100% UK Equity allowing for 4% real income distribution) 250 200 Real residual fund ( ) 150 100 50 Multi-asset blend 100% UK Equity Target 0 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 5 years ending FTSE avg return: 7.8% FTSE volatility: 14.9% Blend avg return: 8.0% Blend volatility: 7.3% Source: Cazenove Capital/Lipper to October 2010 Illustrative purposes only 21
Total return: 2008-2009 Percentage growth total return, tax default, in GBP 10 5 0-5 -10-15 -20-25 -30-35 -40 Cazenove Multi-Manager Diversity A Acc (MF) 5.1% Cazenove Diversity Income - Model 4 (MP) 10.4e% IMA UK Equity Income (IN) -12.7% IMA Cautious Managed (IN) -3.2% Apr- 08 Jul- 08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Source: Lipper 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 GBP Sterling US Dollar 47.6% 13.63% 8.55% 6.39% 6.45% 4.7% 4.7% 3.17% Equities Invesco Perpetual Income CF Walker Crips Equity Income J O Hambro Cap Mgt UK Opps M&G Global Dividend Schroder Asian Income Maximiser 40.8% 13.75% 9.29% 8.54% 4.08% 5.17% Alternative Eclectica Jupiter Absolute Return Cazenove UK Absolute Target 11.6% 3.23% 6.76% 1.59% Source: Cazenove Capital at 4.1.2011 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% (Income and accumulation share classes for both) 24
Access: Cazenove Diversity Income Fund 25
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. 3017060) and Cazenove Investment Fund Management Limited (registered No. 2134680) each authorised and regulated by the Financial Services Authority and of 12 Moorgate London EC2R 6DA provide investment products and services. 26