Handling RecoveryQ4 2009 :Handling RecoveryQ4 2009


Handling the Recovery: Four-Pronged Allocation :Handling the Recovery: Four-Pronged Allocation 1. Global stockmarkets 2. Credit: Corporate and Emerging Market bonds 3. Hedge funds for portfolio defense 4. Inflation defense via Commodities and Energy


Slide 3:Four Pronged Allocation Asset Class Current Allocation Current Allocation 40% 25% 25% 10% Current Allocation Asset Class Equity Credit Hedge Inflation Defense


Global Stockmarkets July 04 to Present :Global Stockmarkets July 04 to Present


1. Global Equity Fundamentals :1. Global Equity Fundamentals a. Credit Crunch abated b. Improved macro conditions (GDP, Retail, home sales) c. Companies making profits again


2. Credit :2. Credit Corporate and Emerging Market Bonds


Credit at Selloff Prices :Credit at Selloff Prices


Gains as strong as Equity :Gains as strong as Equity


Corporate and Emerging Market Credit :The Credit Sweet Spot: a. Huge bond issuance at double digit yields b. Prices still way below historical norms Corporate and Emerging Market Credit


Slide 10:Four Pronged Allocation Asset Class Current Allocation Current Allocation Current Allocation Asset Class Equity Credit Hedge Inflation Defense 26% YTD Return 40% 25% 25% 10% 26%


3. Defensive Hedge :3. Defensive Hedge


Slide 12:Four Pronged Allocation Asset Class Current Allocation Current Allocation Current Allocation Asset Class Equity Credit Hedge Inflation Defense 28% YTD Return 40% 25% 25% 10% 25% 8%


4. Inflation Defense(Commodities and Energy) :a. Long term demographic demand b. Defense against stimulus-induced inflation 4. Inflation Defense(Commodities and Energy)


4. Commodities Sept 07 to Present :4. Commodities Sept 07 to Present


Slide 16:Four Pronged Allocation Asset Class Current Allocation Current Allocation Current Allocation Asset Class Equity Credit Hedge Inflation Defense 28% YTD Return 40% 25% 25% 10% 25% 8% 13%


Cash and Currencies :Overlay a Currency Diversification across the portfolio Cash and Currencies Neutralise adverse or sudden currency movements


USD 7 Year Decline :USD 7 Year Decline


Panicked rush to USD During Crisis :Panicked rush to USD During Crisis


Now USD Weak Again :Now USD Weak Again


Cash and Currencies :Very low interest rates Cash is not an option Cash and Currencies


Slide 22:Asset Class Current Allocation Current Allocation Current Allocation Asset Class Equity Credit Hedge Inflation Defense Maintain Adjusting Allocation 40% 25% 25% 10% INCREASE Maintain/ trim Accumulate Positioning Your Assets Going Forward


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