Transcript 2014 State of the Economy

Global Perspectives
2Q2014 | for the period ended 04/30/14
Voya Global Perspectives
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Markets. Insights. Opportunities.
2014 MARKET OUTLOOK:
BROADENING GLOBAL ECONOMIC EXPANSION
Presented by:
Karyn Cavanaugh, CFA
Senior Market Strategist
ING Investment Management U.S.
voyainvestments.com
VoyaTM Investment Management was formerly ING U.S. Investment Management
Voya Global Perspectives
Markets. Insights. Opportunities.
Disclosure
This presentation has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to
sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions
expressed herein reflect our judgment and are subject to change. Certain of the statements contained herein are statements of future expectations and other
forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may
differ materially from those in such statements due to, without limitation, (1) general economic conditions, (2) performance of financial markets, (3) interest rate
levels, (4) increasing levels of loan defaults (5) changes in laws and regulations and (6) changes in the policies of governments and/or regulatory authorities.
The opinions, views and information expressed in this commentary regarding holdings are subject to change without notice. The information provided regarding
holdings is not a recommendation to buy or sell any security.
Past performance is no guarantee of future results.
2
Voya Global Perspectives
Markets. Insights. Opportunities.
2014 State of the Economy
Global Consumer & Manufacturing
Global Risks
Tectonic Shifts
Forecasts and Investing
3
Voya Global Perspectives
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Markets. Insights. Opportunities.
2014 State of the Economy
4
World Economy — Gross Domestic Product (GDP)
Global economic growth has nearly doubled in the last decade and increased by nearly one
third since the peak just before the Great Recession and credit crisis.
2003
$37.9 Trillion
2007
$56.4 Trillion
2013
$73.4 Trillion
United States
30
26
23
Emerging and
Developing Economies
20
28
38
% of World GDP
Source: International Monetary Fund (IMF) as of 2013
5
Washington Politics
Washington-Proofing a Portfolio is Folly – Despite Volatility
Political Brinkmanship and Unintended Volatility

Janet Yellen confirmed Fed Chairman; Taper continues likely end in 2014; Forward
Guidance preferred tool to keep rates low.

Federal Budget and Debt –Ceiling resolutions passed clearing Washington shutdown
risk

2014 Mid-term elections promises news-worthy headlines
Source: Voya Investment Management/Global Perspectives
6
Fundamentals Drive the Market
Advancing earnings drive markets up, and negative earnings drive markets down, albeit with
a reporting lag.
140%
2,200
2014
S&P 500 Price Target: 2020
S&P 500 Earnings Per Share Target: $121
120%
Earnings growth changed to positive
Earnings growth changed to negative
1,900
S&P 500 Index (right scale)
80%
1,600
60%
40%
1,300
20%
1,000
0%
-20%
700
S&P 500 EPS growth (left scale)
-40%
-60%
400
2000
2001
2002
2003
2004
2005
2006
2007
Source: Standard & Poor’s, First Call, FactSet, Voya Investment Management
7
2008
2009
2010
2011
2012
2013
2014
S&P 500 Price
S&P 500 EPS Growth
100%
Earnings Per Share vs. S&P 500 Prices
Since 1999, earnings have grown 280% — from $39 to $110 in 2013 — and are on track to
reach even higher levels for 2014 while the price level is only 18% higher.
2
2,200
105
S&P 500 EPS (left scale)
1,600
S&P 500 Index (right scale)
65
1,300
45
1,000
25
700
5
400
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: FactSet
8
S&P 500 Price
S&P 500 EPS
85
1,900
Voya Global Perspectives
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Markets. Insights. Opportunities.
Global Consumer and Global Manufacturing
The health and prosperity of the world, a region, or a country depends
on whether its consumption and manufacturing are marching forward.
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Global Consumer
Household wealth is a pillar of consumer spending, and its growth can spawn a virtuous cycle
in tandem with economic activity. Global household consumption and U.S. household wealth
have achieved all-time highs.
Global and U.S. Consumption
U.S. Household Wealth (data as of 12/31/13)
90
$ trillions
45
$80.6
80
World
$41.6
40
70
35
50
$ Trillions
60
Household
wealth increased
74% in the
last decade.
40
30
30
25
Global consumption
increased 100% in the
last decade
20
U.S. consumption
increased 50% in the
last decade
15
10
U.S.
$11.1
5
20
0
10
1992
1990
1994
1998
2002
2006
2010
2014
Source: The World Bank, OICA
10
1996
2000
2004
2008
2012
Global Manufacturing
Manufacturing has the highest multiplier effect of any economic sector. U.S industrial
production is at the highest level ever. China, U.K. and Eurozone have all been above the
expansionary mark of 50 recently.
Global Manufacturing
Industrial Production – United States
110
65
Highest
level ever
Euro Zone PMI
60
100
55
53.4
90
52.4
50
80
45
70
40
60
U.S.
recessionary
periods
50
1990
1994
1998
Global PMI
35
2002
2006
2010
2014
30
Source: FactSet
11
1998 2000 2002 2004 2006 2008 2010 2012 2014
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Global Risks
Rising Rates
Shadow Banking
Inflation/Deflation
Europe Recession
12
Equity Volatility (VIX)
Projected market volatility spikes in times of crisis then drops into the normal range as fear,
uncertainty and doubt subside — apparently the prevailing sentiment today.
85
Lehman Crisis
Euro Crisis
U.S. Credit
Downgrade
40
35
12/31/07 = 22.5
11/20/08 = 80.9
12/31/08 = 40.0
04/30/14= 13.4
30
25
20
15
10
5
2004
2005
2006
2007
2008
2009
Source: Standard & Poor’s, Chicago Board Option Exchange, FactSet
13
2010
2011
2012
2013
Voya Global Perspectives
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Tectonic Shifts
Catalysts for growth in the real global economy
14
Tectonic Shift - Energy
The 80% cost advantage in the U.S. of Natural Gas is fueling a renaissance in manufacturing;
Extraordinary new supplies of cheap energy increases exports and lowers trade deficit
Primary Energy Use by Fuel
Average Natural Gas Prices
18
16
100%
16.36
$/cubic foot
15.25
80%
14
60%
10
19%
20%
8
40%
1%
8%
8%
6
3.95
2%
9%
11%
20%
2
26%
28%
2011
2040
0%
0
U.S.

32%
11.42
12
4
36%
Europe
China
Japan
Natural Gas
Nuclear
Coal
Renewables
Liquid Biofuels
Oil & Other Liquids
Energy will drive the U.S. trade deficit to trade surplus by the end of 2015. This will double GDP growth
from an anemic 2% to 4% — well above its long-term trend.
Note: Average natural gas price for households over the period 2003-12 in U.S. cents/kWt (GCV) based on average exchange rates
for each year. Source: EIA, FERC
15
Tectonic Shift : Technology
E-M-B commerce is increasing global growth in ways that defy forecasting across all industries
Internet Users in World
Internet Penetration by Region
Oceania / Australia,
Oceania / Australia,
1%
1%
Africa, 7%
Africa, 7%
Latin America , 11% Latin America , 11%
Africa, 16%
Africa
Africa
Oceania / Australia,
68%
Asia
orth America, 11% North America, 11%
Asia
Europe
Europe
ddle East, 4%
Middle East
Latin America , 43%
Middle East
North America
North America
Europe, 22%
Middle East, 4%
Asia, 45%
Asia, 45%
Europe, 22%
Asia, 28%
Europe, 63%
Middle East, 40%
Latin America
North America, 79%
Oceania / AustraliaOceania / Australia
Latin America
Asia already has the most internet users in the world, but penetration is only 28% suggesting significant growth potential

Big Data and cloud-based networks are sparking revolutions in e-commerce (online), m-commerce
(mobile), and b2b-commerce (business to business) “E-M-B” on a global scale.

The dawn of the “smart factory” is here. Smart manufacturing integrates machines and technology
Source: Internetworldstats.com, data as of 2012
16
World Market Returns by Region — USD
Emerging market equity (EME) has often been a top performer but lagged in 2011-2013.
Japan, Europe Excluding the U.K. and the U.S. are leading this year, while emerging market
equity is a laggard.
2003
EME
56.3%
2004
2005
Pac
Ex-Japan
29.6%
34.5%
EME
Japan
EME
Pac
Ex-Japan
47.0%
.
Europe
Ex-UK
43.6%
26.0%
25.6%
Europe
Ex-UK
22.4%
Pac
Ex-Japan
14.8%
Japan
UK
36.2%
2006
Europe
Ex-UK
36.4%
2007
2008
2009
2010
2011
EME
Japan
EME
EME
S&P 500
39.8%
-29.1%
79.0%
19.2%
2.1%
Pac
Pac
Pac
Pac
S&P 500
Ex-Japan Ex-Japan
Ex-Japan Ex-Japan
-37.0%
17.1%
33.2%
31.7%
73.0%
32.6%
Europe
Ex-UK
17.5%
Europe
Ex-UK
-45.0%
EME
-2.5%
2013
Pac
S&P 500
Ex-Japan
21.7%
32.4%
2014
Europe
Ex-UK
5.5%
Europe
Ex-UK
18.7%
Europe
Ex-UK
28.7%
Pac
Ex-Japan
5.4%
S&P 500
Japan
UK
15.0%
27.3%
3.7%
UK
Japan
43.4%
15.6%
Pac
Ex-Japan
-12.7%
S&P 500
Japan
EME
UK
S&P 500
15.1%
-14.2%
13.1%
20.7%
2.6%
UK
UK
UK
19.6%
Europe
Ex-UK
11.3%
30.7%
8.4%
-48.3%
Europe
Ex-UK
33.9%
UK
Japan
UK
S&P 500
S&P 500
EME
S&P 500
UK
32.1%
16.0%
7.4%
15.8%
5.5%
-47.1%
26.5%
8.8%
S&P 500
S&P 500
S&P 500
Japan
Japan
28.7%
10.9%
4.9%
6.3%
-4.1%
Pac
Ex-Japan
-50.0%
UK
2012
Japan
6.4%
Europe
Ex-UK
2.4%
Europe
Ex-UK
-14.5%
13.0%
Pac
Ex5.6%
EME
Japan
EME
Japan
-18.2%
2.9%
-2.3%
-7.9%
UK
EME
0.0%
Think “P I V O T S” – Peru, Indonesia, Vietnam, Oman,
Turkey and Sub-Saharan Africa not just B R I C.
Note: All data are based on equity indexes for each regional or country index and are total returns including dividends for each calendar year or partial year.
Source: MSCI, Standard & Poor’s, FactSet
17
Tectonic Shift: Global Trade
The tectonic shifts of energy, technology, frontier markets meet in global trade and
linchpin for global growth.

China, world’s second largest economy with double U.S. growth rate, rivals the U.S. as the top trading
partner in the world on exports and imports. China is the key driver of South-South trade.

U.S. surpassed Russia as largest energy producer, while China surpassed the U.S. as the largest energy
importer. This is having unforeseen benefits in U.S. manufacturing
Source: Factset, Worldbank
18
Voya Global Perspectives
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Markets. Insights. Opportunities.
2014 Forecasts & Investing
19
Forecast for Year-End 2014
Fundamental Market Forecast
S&P 500 Price
$2,020
S&P 500 Earnings per Share
$121
S&P 500 Price/Earnings Ratio
16.7x
Auxiliary Market Forecast
U.S. Ten-Year Treasury Yield
3.25%
U.S. GDP Growth
3.0%
Euro Zone GDP Growth
0.5%
Global GDP Growth
3.75%
U.S. Unemployment Rate
6.25%
Crude Oil (NYM)
$80/barrel
Gold (NYM)
$999/troy oz
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Effective Diversification
Global Diversified Returns
Returns for a globally diversified strategy over the last 10 years refute the notion of a “lost
decade”.
Index
Wgt Apr-14
YTD
2013 2012 2011
2010
2009
2008
1 year 3 years 5 years 10 years 15 years
Worst 15 Year Return
Equity
S&P 500
10%
0.7
2.6
32.4
16.0
2.1
15.1
26.5
(37.0)
22.8
13.8
19.1
7.7
4.3
S&P Midcap
10%
(1.6)
1.4
33.5
17.9
(1.7)
26.6
37.4
(36.2)
19.3
11.8
21.1
10.3
10.0
S&P Smallcap
10%
(2.8)
(1.7)
41.3
16.3
1.0
26.3
25.6
(31.1)
24.2
13.9
21.5
10.2
10.4
Global REITs
10%
2.8
6.9
2.2
29.8
(8.1)
20.0
41.3
(48.9)
3.1
6.8
18.2
7.0
10.5
EAFE
10%
1.5
2.3
23.3
17.9
(11.7)
8.2
32.5
(43.1)
19.8
6.2
14.1
7.4
4.7
Emerging Mkts
10%
0.4
0.0
(2.3) 18.6
79.0
(53.2)
(0.5)
(3.4)
11.4
11.4
9.5
0.2
1.9
21.7
19.4
(6.1)
19.2
40.4
(41.6)
14.8
8.2
17.6
9.0
8.2
9.8
8.1
9.0
18.7
(4.9)
2.7
5.9
9.2
5.8
6.2
(21.4) 33.7
(2.4)
9.3
6.3
7.2
7.1
Average
(18.2) 19.2
Fixed Income
Corporate
10%
1.2
4.2
(1.5)
U.S. Treasury 20+
10%
2.2
10.1
(13.9) 3.4
33.8
9.4
Global Aggregate
10%
1.1
3.6
(2.6)
4.3
5.6
5.5
6.9
4.8
3.0
2.1
5.1
5.0
5.3
High Yield
10%
0.6
3.6
7.4
15.8
5.0
15.1
58.2
(26.2)
8.2
8.7
15.7
8.8
7.5
1.3
5.4
(2.6)
8.3
13.2
9.8
15.6
1.9
2.9
6.5
9.1
6.7
6.5
0.6
3.3
10.9
15.2
1.5
16.1
29.6
(29.9)
7.3
7.9
14.7
8.9
8.1
Average
Overall Average*
No Lost Decade
The Overall Average model allocation includes 10 asset classes, equally weighted: S&P500, S&P400 Midcap, S&P600 Smallcap, MSCI U.S. REIT Index/FTSE EPRA
REIT Index, MSCI EAFE Index, MSCI BRIC Index, Barclays U.S. Corporate Bonds, Barclays U.S. Treasury Bonds, Barclays Global Aggregate Bonds, Barclays U.S.
High Yield Bonds. Returns are annualized for periods longer than 1 year. Source: FactSet, FTSE NAREIT, Voya Investment Management.
21
Voya Global Perspectives
Markets. Insights. Opportunities.
2014 State of the Economy
Global Consumer & Manufacturing
Global Risks
Tectonic Shifts
Forecasts and Investing
22
Questions
23
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Thank You
24
Index Definitions
Barclays Capital U.S. Aggregate Bond Index is composed of U.S.
securities in Treasury, Government-Related, Corporate, and
Securitized sectors that are of investment-grade quality or better,
have at least one year to maturity, and have an outstanding par
value of at least $250 million.
The Chicago Board Options Exchange Volatility Index (CBOE
VIX) is a measure of the implied volatility of S&P 500 index options.
It is one measure of the market's expectation of volatility over the
next 30 day period.
JPMorgan Emerging Markets Bond Index Plus (EMBI+) tracks
total returns for actively traded emerging markets debt instruments
including U.S.-dollar denominated Brady bonds, Eurobonds, and
traded loans issued by sovereign entities.
Barclays Capital U.S. Corporate High-Yield Bond Index tracks
the performance of non-investment grade U.S. dollar-denominated,
fixed rate, taxable corporate bonds including those for which the
middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below,
and excluding Emerging Markets debt.
MSCI EAFE Index is a free float-adjusted market capitalization
weighted index designed to measure the developed markets’ equity
performance, excluding the U.S. & Canada, for 21 countries.
Barclays Capital Global Aggregate Bond Index measures a wide
spectrum of global government, government-related, agencies,
corporate and securitized fixed-income investments, all with
maturities greater than one year.
MSCI Europe Index is a free float-adjusted market capitalization
weighted index designed to measure equity performance of the
developed markets in Europe consisting of 16 country indices.
The Credit Suisse/Tremont Hedge Fund Index is an assetweighted hedge fund index covering over 5000 funds with at least
US$50 million under management, a 12-month track record, and
audited financial statements. It is calculated net of performance fees
and expenses. CS/Tremont sub-indexes track hedge fund strategies
according to the methods by which fund managers seek investment
opportunities such as by asset class and/or use of leverage.
MSCI Pacific Index is a free float-adjusted market capitalization
weighted index designed to measure developed markets’ equity
performance of the in the Pacific region consisting of 5 countries.
MSCI Emerging Markets Index is a free float-adjusted market
capitalization index that measures emerging market equity
performance of 22 countries.
Dow Jones Industrial Average is a price-weighted average
computed from the stock prices of 30 large, widely held public
companies in the U.S., adjusted to reflect stock splits and dividends.
The Municipal Bond Index is a bond index that includes
investment-grade, tax-exempt, and fixed-rate bonds with long-term
maturities (greater than two years) selected from issues larger than
$50 million.
FTSE NAREIT US Real Estate Index presents comprehensive
REIT performance across the U.S. economy, including all
commercial investment and property sectors.
NASDAQ Composite Index is a market capitalization weighted
index of the performance of domestic and international common
stocks listed on The NASDAQ Stock Market including over 2,800
securities.
FTSE EPRA/NAREIT Global Real Estate Index is designed to
represent general trends in eligible real estate equities worldwide.
25
Index Definitions
The NCREIF (National Council of Real Estate Investment
Fiduciaries) Property Index (NPI) is a market value-weighted index
of total rates of return for a large pool of commercial real estate
properties acquired in the private market for investment purposes.
For properties with leverage, returns are reported as if there were no
leverage.
Russell 3000 Index measures the performance of the largest 3000
U.S. companies representing approximately 98% of the investible
U.S. equity market.
Russell 1000 Index measures the performance of the large-cap
segment of the U.S. equity market and includes approximately 1000
of the largest securities based on market capitalization and
representing approximately 92% of the U.S. market.
Russell 1000 Growth Index measures the large-cap growth
segment of the U.S. equity market including Russell 1000
companies with higher price-to-book ratios and forecasted growth.
Russell 1000 Value Index measures the large-cap value segment
of the U.S. equity market including Russell 1000 companies with
lower price-to-book ratios and lower expected growth.
Russell Midcap Index measures the performance of mid-cap
stocks in the U.S. equity market including 800 of the smallest
securities in the Russell 1000® Index, based on market
capitalization.
Russell Midcap Growth Index measures the performance of the
mid-cap growth segment of the U.S. equity market including Russell
Midcap Index companies with higher price-to-book ratios and
forecasted growth.
Russell Midcap Value Index measures the performance of the
mid-cap growth segment of the U.S. equity market including Russell
Midcap Index companies with lower price-to-book ratios and
forecasted growth.
Russell 2000 Index measures the performance of the small-cap
segment of the U.S. equity market including approximately 2000 of
the smallest securities based on market capitalization.
Russell 2000 Growth Index measures the performance of smallcap growth stocks in the U.S. equity market including Russell 2000
companies with higher price-to-value ratios and forecasted growth.
Russell 2000 Value Index measures the performance of small-cap
growth stocks in the U.S. equity market including Russell 2000
companies with lower price-to-value ratios and forecasted growth.
S&P 500 Index is a widely regarded as the best single gauge of the
U.S. equities market, including 500 leading companies in major
industries of the U.S. economy.
S&P/LSTA (Loan Syndications and Trading Association) Leveraged
Loan Index (LLI) is a total return market value index that tracks fully
funded, senior secured, first lien term loans syndicated in the U.S.,
as well as dollar-denominated overseas loans, including 90-95% of
the institutional universe.
The S&P GICS (Global Industry Classification Standard) sectors
were developed by MSCI and Standard & Poor’s to provide
standardized industry definitions consisting (in the U.S.) of 10
sectors, 24 industry groups, and 68 industries.
Thomson VentureXpertTM is a database provided by Thomson
Venture Economics, a leading provider of industry data about
venture capital and private equity firms, which is regarded as the
industry-standard source for comprehensive information on venture
funds, private firms, venture-backed companies and limited partners,
as well as analytics for fund statistics and performance.
U.S. Treasury Index is a component of the Barclays Capital U.S.
Aggregate Index.
26
Important Disclosures
CA 9660
All indexes are unmanaged and an individual cannot invest directly in an index. Index returns do
not include fees or expenses. Past performance is no guarantee of future results
The views and judgments expressed are those of Voya Global Perspectives.
They are subject to change at any time. These views do not necessarily reflect
the opinions of any other firm.
All investing involves risks of fluctuating prices and the uncertainties of rates of
return and yield inherent in investing. All security transactions involve substantial
risk of loss.
You should consult your tax, legal, accounting or other advisors about the
matters discussed herein.
As indicated on each page, some information was obtained from outside
sources and is believed to be reliable, but ING does not guarantee its
completeness or accuracy.
Diversification does not guarantee against a loss and there is no guarantee that a diversified
portfolio will outperform a non-diversified portfolio.
27