Transcript Onshore Multi Asset Range Presentation

The Post Financial
Crisis World
Neil Kerry
Associate Director,
Strategic Relationships
November 2013
For investment professional use only and should not be relied upon by private investors
Big Picture Themes
Beyond Risk On/Risk Off
Global Debt Crisis
Lessons from the 1930s say countries able to foster recovery with easy fiscal and
monetary policy stand the best chance growing or inflating their way out of debt. The
US is reaching escape velocity first. Japan is following suit.
The Return of Monetary Divergence
Monetary policy is diverging with higher US rates in prospect. A prolonged trend of
dollar strength will be negative for bonds, commodities and the emerging markets
but positive for Japan. Bernanke’s failure to taper creates a tactical back step.
Euro Crisis Here to Stay
Further deleveraging is required but there is a contradiction between the need to
inflate away debt and pressure to restore competitiveness with Germany. Only
political union will ensure the euro survives. We prefer the UK.
Source: FIL Limited, September 2013. This represents the opinion of the Portfolio Manager.
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A Welcome Return of Longer Business Cycles
Global growth re-accelerating
Global growth scorecard, forward 6 months
4
6
3
4
2
0
0
-1
-2
-2
-4
-3
-4
-6
90
92
94
96
98
G7 real GDP growth yoy%(R.H.SCALE)
00
02
04
06
08
10
12
Growth score (forward 6 months)
Source: Datastream. GDP % to Q1 2013 (ISG calculations). Note: the Lead Indicator (global growth score) is a diffusion index which level varies between +4 and -4. It is pushed
forward 6 months on this chart.
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% G7 GDP
Growth Scorecard Index
2
1
Inflation Pressures Still Muted
Looks more like the 1990s – EM take note
4
6
3
5
2
4
1
3
0
2
-1
1
-2
0
-3
-1
-4
% G7 CPI
Inflation Scorecard Index
Global inflation scorecard, forward 6 months
-2
90
92
94
96
98
00
G7 headline CPI yoy%(R.H.SCALE)
02
04
06
08
10
12
Global CPI scorecard
Source: Thomson Reuters Datastream
Source: Datastream. CPI% to August 2013 (ISG calculations). Note: the Lead Indicator (global growth score) is a diffusion index which level varies between +4 and -4. It is pushed
forward 6 months on this chart.
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Fed QE to raise asset prices, offset fiscal risk
QE3 is different… The market smells the exit
Source: Datastream. This represents the opinion of the Portfolio Manager.
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QE1
QE2
QE3
Announcement Date
25-Nov-2008
27-Aug-2010
13-Sep-2012
Programme End Date
31-Mar-2010
30-Jun-2011
???
Copper
+112%
+26%
-12%
EM Equities
+108%
+21%
+3%
Crude Oil
+67%
+27%
+5%
US High Yield
+79%
+11%
+7%
Australian dollar
+51%
+25%
-11%
Global Equities
+50%
+24%
+15%
Gold
+37%
+22%
-24%
Japan Equities
+26%
+11%
+32%
US TIPS
+18%
+6%
-6%
US CPI
+2%
+3%
+1%
US 3 month money
+2%
0%
0%
US 10 year Treasury
-1%
-1%
-5%
USD Index
-7%
-9%
+8%
Investment Clock Video
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Multi Asset: Overweight Stocks vs Bonds
Marginal trades into commodities out of property,
--
-
=
+
++
Equities
Commodities
Property (REITs)
Bonds
Cash
Source: FIL Limited, this represents the opinion of the Investment Solutions Group. Positions for principal multi asset institutional and retail funds are as of October 2013. Individual
fund positions may vary.
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Global Equity: Favouring USA & Japan
--
-
=
+
++
N. America
Europe ex UK
UK
Japan
Pacific ex Japan
Emerging Markets
Source: FIL Limited, this represents the opinion of the Investment Solutions Group. Positions for principal multi asset institutional and retail funds are as of October 2013. Individual
fund positions may vary
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Summary
• Overweight equities, good opportunities
• Longer economic cycles
• North America to escape first
• Dollar to strengthen
• Japan offers good value
• Europe still needs to get rid of the debt
• Taper...the market smells the exit
• Underweight bonds
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Not all managed funds are the same
3 Year Risk / Return
(IMA) Mixed Investment 40-85% Shares
(IMA) Mixed Investment 20-60% Shares
50
Cumulative Return (%)
40
30
20
10
0
-10
3
5
7
9
11
13
Ann. Volatility (%)
A fund labelled as ‘balanced’ may not be suitable for a
customer assessed as having a ‘balanced’ attitude to risk
Source: Morningstar Direct: Basis: bid-bid, net income reinvested at UK basic rate of tax to 31/10/2013
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FSA FG11 05
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The Navigator Proposition
1. Choose from 5 risk levels
Defensive
Strategic
25% 5%
5%
75%
35%
50%
40%
50%
Adventurous
5%
10%
15%
25%
Growth
10%
20%
25%
15%
50%
50%
10%
5%
10%
World
75%
15%
 Store of Value Assets
 Bonds
 Cash
100%
75%
100%
100%
 Growth Assets
 Equities
 Commodities
 Real Estate
2. Choose from 3 types of architecture
Multi Asset Allocator
Index-Tracking
Source: FIL Limited. For illustrative purposes only.
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Multi Asset
Best of Fidelity
(Internal Architecture)
Multi Asset Open
Best of the Market
(Open Architecture)
Fidelity Multi Asset Strategic Fund performance in major
up/down equity markets
FTSE All Share
Fidelity Multi Asset Strategic
IMA Mixed Investment 20-60% Shares Sector Average
76.3%
80%
60%
Absolute Return
45.4%
38.6% 36.6%
40%
20%
17.1%
21.6%
10.6%
3.8% 3.2%
0%
-20%
-10.3%
-7.1% -6.2%
-14.5%
-21.6%
-40%
-41.1%
-60%
Jan 2007 to Oct 2007 Oct 2007 to Feb 2009 Feb 2009 to Apr 2011 Apr 2011 to Sep 2011 Sep 2011 to Oct 2013
Source: Morningstar Direct. Basis: bid-bid, net income reinvested at UK Basic rate of tax to 31/10/2013. FTSE All Share is not the index of the Fidelity Multi Asset Strategic Fund
but is intended to define major up and down periods in equity markets since the fund was launched (22/01/2007)
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Keeping you and your clients informed
Annual review pack to check ongoing suitability
Regular live webcasts
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What makes us different?
1
Fidelity’s Investment Solutions Group has 295 years’ combined experience in
multi asset investing and manages over £28bn*
2
All of our multi asset funds are actively managed using models developed over
20 years and enhanced by in-house global research
3
Proprietary strategic and tactical asset allocations
4
We understand that your clients want to achieve their investment goals without
being exposed to undue risk or short-term performance fluctuations
5
Proven experience in most market conditions
* Source: Assets and resources as at 30/9/13 are those of FIL Limited except combined experience which is at 29/7/13
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Important information
This presentation is for Investment Professionals only and should not be relied upon by private investors. It may not be
reproduced or circulated without prior permission. No statements or representations made in this presentation are legally binding on
Fidelity or the recipient. The value of investments and the income from them can go down as well as up and clients may get back
less than they invest. Past performance is not a guide to the future. The price of bonds is influenced by movements in interest rates,
changes in the credit rating of bond issuers, and other factors such as inflation and market dynamics. In general, as interest rates
rise the price of a bond will fall (and vice versa). Bonds with a longer time to maturity are generally affected to a greater degree. The
risk of default is based on the issuer's ability to make interest payments and to repay the loan at maturity. Default risk may therefore
vary between different government issuers as well as between different corporate issuers. Investments should be made on the basis
of the current prospectus, which is available along with the Key Investor Information Document, current annual and semi-annual
reports free of charge on request by 0800 368 1732. Issued by FIL Investments International, authorised and regulated by the
Financial Conduct Authority. Fidelity, Fidelity Worldwide Investment, the Fidelity Worldwide Investment logo and F symbol are
trademarks of FIL Limited. RM1113/2427/SSO/0214
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