Transcript 4-Natives-of-Kodiak-Shareholders-Presentation

Natives of Kodiak
Shareholders Meeting
September 20, 2014
Presented by:
Keith Forslund, Senior Portfolio Manager
Highmark Capital Management, Inc. is a wholly owned subsidiary of MUFG Union Bank, N.A.
AGENDA
• Past Results
• Current Results
• Economic Outlook
• Investment Forecast
CAPITAL MARKET REVIEW - August 31, 2014
Total Return
1-Month
S&P 500
4.00
NASDAQ Composite
4.99
Non-US (EAFE)
-0.15
Emerging Markets
2.29
REITS
3.27
High Yield Bonds
1.51
BarCap Aggregate Bond
1.10
Cash (T-Bills) Euro: .23
0.00
3-Month
4.68
8.30
-1.13
7.18
4.41
1.01
0.90
0.01
6-Month
8.84
6.72
1.57
14.80
11.06
2.87
2.73
0.02
YTD
9.89
10.48
2.93
10.95
20.09
5.72
4.80
0.03
1-Year
25.25
29.25
16.92
20.40
24.01
10.51
5.66
0.04
3-Year
20.61
22.46
11.87
4.70
14.91
10.31
2.92
0.06
5-Year
16.88
19.15
8.69
8.24
18.98
12.07
4.49
0.08
10-Year
8.38
10.63
7.50
12.52
9.16
8.50
4.73
1.47
Russell Value-Growth
S&P 500-Russell 2000
US Dollar (TWI)
-0.91
-0.96
-0.42
0.83
2.50
8.90
0.87
8.13
-1.86
7.56
1.62
1.61
-1.20
-0.15
-0.97
-0.99
0.87
1.94
1.79
1.69
1.85
5.13
1.07
-0.93
CRB Commodity Index
-0.64
-5.68
-6.04
1.73
-1.29
-7.92
4.49
6.46
WTI Oil
-0.38
-5.36
-4.88
-0.31
-9.37
3.29
6.94
8.80
0.15
3.48
-2.85
6.63
-7.85
-10.99
6.31
12.12
Gold
Source: HighMark Capital Management and Thomson Datastream as of August 31, 2014. Performance longer than 1-year is annualized.
PAST RESULTS
Natives of Kodiak Performance
Average Annual Returns (8/31/14)
2 Years
3 Years
4 Years
5 Years
13.22%
11.66%
11.92%
10.57%
Blended Benchmark** 13.77%
11.10%
11.18%
9.87%
Permanent Fund
**75% MSCI All Country World Index 23% BC Intermediate US Govt/Credit Index 2% Citigroup 3 Mo T-Bill Index
PAST RESULTS
• Stock market returns since bottom (3/6/2009)
•
•
•
•
•
 US Stocks > 200%, including dividends
 Developed International +150%, including dividends
 Emerging Markets +130%, including dividends
Worldwide economic conditions stabilized but slow growth remained
Sovereign debt crisis ebbing
Real estate values stabilizing
Banks reluctant to lend
Corporate earnings strong
EQUITY MARKET
S&P 500 Large Cap Index – Price Changes Last 5 Years
September 2, 2009 – August 31, 2014
Source: Bloomberg
BOND MARKET
30-Year Treasuries – Price Changes Last 30 Years
September 2, 1984 – August 31, 2014
Source: Bloomberg
BOND MARKET
30-Year Treasuries – Price Changes Last 5 Years
September 2, 2009 – August 31, 2014
Source: Bloomberg
CURRENT RESULTS
Natives of Kodiak Account
YTD
12 Months
2013
Permanent Fund
6.58%
16.07%
11.08%
Blended Benchmark**
6.07%
16.40%
11.23%
**65% MSCI All Country World Index 23% BC Intermediate US Govt/Credit Index 2% Citigroup 3 Mo T-Bill Index
10% HFRI FOF Market Defensive Index
As of 8/31/14
CURRENT RESULTS
• US stock market rallying on Central Bank activities, improving economic conditions
• Foreign stock markets are improving
• Bond market declining (yields rising from historic lows)
• Dollar up on global anxiety (hurts foreign investments)
• Economic Concerns
– Federal Reserve bond purchase uncertainty
– Consumer spending
– Economic data indicate slow global growth
– Geopolitical concerns
• Economic Positives
– Unemployment improving
– Corporate earnings strong
– Strong corporate balance sheets
– Pent up demand
– Housing starts deficit
– Fiscal / monetary stimulus
ECONOMIC OUTLOOK
• Economy
Improving growth
• Consumer
Less of a concern
(unemployment, spending, reducing debt)
• Housing
Improving
• Inflation
Not an issue through 2014 + foreseeable
future
• Global Economy(non U.S.)
Europe - A Concern
• Uncertainties
Unwinding global government intervention,
underemployment, Eurozone stability,
Federal Reserve actions
INVESTMENT FORECAST
• Corporate earnings strength / peaking margins?
• Limited inflationary pressures
• Stock market valuation is reasonable in a low interest rate
environment
• Stocks favored over bonds
HighMark Capital Management, Inc. (HighMark), an SEC-registered investment adviser, is a subsidiary of MUFG Union Bank, N.A (MUB). HighMark manages institutional
separate account portfolios for a wide variety of for-profit and non-profit organizations, public agencies, public and private retirement plans, and personal trusts of all sizes. It may
also serve as sub-adviser for mutual funds, common trust funds, and collective investment funds. MUB, a subsidiary of MUFG Americas Holdings Corporation, provides certain
services to HighMark and is compensated for these services. Past performance does not guarantee of future results. Individual account management and construction will vary
depending on each client’s investment needs and objectives. Investments employing HighMark strategies are NOT insured by the FDIC or by any other federal government agency,
are NOT deposits of or guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal.
Benchmarks presented are used for comparative purposes only and is provided to represent the market conditions during the period shown. Benchmark returns do not reflect the
deduction of advisory fees, custody fees, transaction costs, or other investment expenses, but the returns assume the reinvestment of dividends and other earnings. An investor
cannot invest directly in an unmanaged index.
Some information provided herein was obtained from third party sources deemed to be reliable; HighMark and its affiliates make no representations or warranties with respect to
the timeliness, accuracy, or completeness of the information provided. Any information provided is subject to change without notice.
© HighMark Capital Management, Inc. 2014. All rights reserved.