State Street Global Advisors A presentation to 2009 FIAP International Seminar 28 May 2009 Brett Collins, CFA.

Slides:



Advertisements
Similar presentations
Time to Invest in Short-Term Bonds? First Quarter 2010.
Advertisements

Hedge fund flows on pace to nearly double 2012
For Professional Investors only – Not for public distribution The illiquidity argument – ways in which an inflation-plus return can be achieved using illiquid.
Power Income Fund For more information call: PWRINC NLD-9/29/2010.
TM. Tactical Asset Management How it could work for you… TM.
AI-36904© 2013 American Funds Distributors, Inc. Figures are past results and are not predictive of results in future periods. Investments are not FDIC-insured,
Not FDIC Insured May Lose Value No Bank Guarantee Investors should carefully consider a fund’s investment goals, risks, charges and expenses before investing.
Investment and Financial Services: What Every Financial Educator Should Know.
Track Record Weyland Capital Management employs a tax-sensitive, globally-diversified investment approach.  The firm’s “all-weather” investment approach.
© 2012 Cengage Learning. All Rights Reserved. May not scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter.
Copyright ©2005 Ibbotson Associates, Inc. Stocks and Bonds Securities offered through Lincoln Financial Advisors Corp., a broker/dealer, 1300 S. Clinton.
A NexGen Tax Primer: Life Insurance & Tax Efficient Wealth Planning With Dale Durand, VP, Estate & Tax Planning.
CLIENT INVESTMENT UPDATE Superannuation Products Appendix 31 March 2015.
Hedge Through the Future January 2007 The information contained in this material is subject to change without notice.
ADP Retirement Services Review your account Determine the asset allocation that is right for you Asset allocation the easy way Rebalance.
The search for income in a low interest rate world J.P. Morgan Investment Academy Series Accessible investment education from a trusted source FOR INSTITUTIONAL.
Asset Allocation and the Efficient Frontier: Optimizing a portfolio’s risk/return profile J.P. Morgan Investment Academy SM FOR INSTITUTIONAL USE ONLY.
TM. Step 1 Selecting your Benchmark Asset Allocation Step 1 Selecting your Benchmark Asset Allocation.
(0415) © 2015 Morningstar. All Rights Reserved. By accessing this presentation, you agree to the following terms. If you do not agree to these.
Exploring Complementary Investment Opportunities: Real Estate Investment Trusts 1.
New Perspectives on Asset Class Investing © 2015 LWI Financial Inc. All rights reserved. LWI Financial Inc. (“Loring Ward”) is an investment advisor registered.
Power Income Portfolio For more information call:
The Episcopal Church Foundation Growth and Income Pooled Funds 2 nd Quarter 2015 Endowment Management Solutions.
1 DECEMBER 5, 2008 WEATHERING VOLATILE TIMES BRETT HAMMOND CHIEF INVESTMENT STRATEGIST.
Stock Market Volatility and Your Plan. 1 It is important that you understand the ways in which we conduct business and the applicable laws and regulations.
For Dealer Use Only. 2 Key Features Tactical Asset Allocation Benefits of Indexing, Convenience of ETFs Experienced Portfolio Management Low Cost, Managed.
EO /13 | 1 Not FDIC Insured May Lose Value No Bank Guarantee.
For institutional investors and professional advisers only. This information has not been approved for use with customers. THE CASE FOR EUROPEAN COMMERICAL.
The 7Twelve ® Portfolio Craig L. Israelsen, Ph.D
Creating Sustainable Retirement Solutions A Global Perspective Ghalid Bagus, FIA FSA CFA Principal March 2013.
EO /11 | ‹#› Not FDIC Insured May Lose Value No Bank Guarantee EO /11 | 1.
BEYOND INVESTMENT ILLUSIONS 1 When it comes to your financial future, perception is everything.
Equity income: a niche asset class Neil Margolis, Portfolio Manager May 2007.
ASSET ALLOCATION SLIDES The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy.
The Montgomery Institute Investment Proposal December 2013.
CI Investment Consulting Neal Kerr, Senior Vice-President Alfred Lam, Vice-President & Portfolio Manager Yoonjai Shin, Director.
For Dealer Use Only. 2 Key Features Tactical Asset Allocation Benefits of Indexing, Convenience of ETFs Experienced Portfolio Management Low Cost, Managed.
Will You Outlive Your Retirement Income?. 2 Everyone is Living Longer 1340 BC 1400 AD 1800 AD 1900 AD 2000 AD 2040 AD Source: “The Exponent of Life Expectancy”
© 2009 Morningstar, Inc. All rights reserved. 3/1/2009 Portfolio Diversification.
The Episcopal Church Foundation As of June 30, 2015 and Trailing Time Periods 70/30 and 60/40 Equities to Fixed Income Standard and Socially Screened Endowment.
Written by Michael Karagianis, Senior Investment Strategist, MLC ‘With returns from cash and bonds falling, investors need to look for other ways of generating.
Your Journey Toward Retirement. 2 We are a coordinated team of trusted, experienced professionals working toward your success!
Copyright ©2005 Ibbotson Associates, Inc. Investing for Retirement Securities offered through Lincoln Financial Advisors Corp., a broker/dealer, 1300 S.
City of Hallandale Beach DB Plan Update November 17, 2014.
2 Benefits: Multi-Manager Approach Proven Investment Managers Disciplined Selection and Monitoring Process Complementary asset allocation service Four.
Enrollment Form Basics. 2 Enrollment Form – Page 1.
© 2014 Morningstar. All Rights Reserved. The images contained in the Presentations and Education modules are provided as a single user license (‘Authorized.
Surviving A Wild Ride: The Impact of College and University Endowment Performance on College and University Budgets-- Today and Tomorrow Ken Redd Director,
Iimia plc. “Working with you to meet your clients’ needs” Richard Scott Senior Investment Manager.
Copyright ©2005 Ibbotson Associates, Inc. Principles of Investing Securities offered through Lincoln Financial Advisors Corp., a broker/dealer, 1300 S.
Kevin M. Wilson, PhD Chairman/CEO 1405 Medical Arts Building 324 W. Superior Street Duluth, MN Office: Toll Free: Fax:
The Episcopal Church Foundation As of September 30, /30 Equities to Fixed Income Standard and Socially Screened Endowment Management Solutions Following.
PIA Dimensions 40/60 Portfolio ℠ Moderate Portfolio The PIA Dimensions 40/60 Portfolio℠ was constructed for investors with a moderate tolerance for risk.
Suffolk County Council Securities Finance Date: 19 th January, 2009 Location: Ipswich.
Presenter Name Title MFS Investment Management ® Keep more of what you earn Tax-efficient MFS municipal bond funds © 2009 MFS Investment Management.
1 After the Fall: Asset Allocation and Rebalancing Craig L. Israelsen, Ph.D. Brigham Young University April
The Only Returns that Matter are the Returns You Keep Strategic Methodology 102.
PRUDENTIAL INVESTMENTS >> MUTUAL FUNDS STRATEGIES FOR INVESTORS Speaker name Title Date WHAT IS A MUTUAL FUND?
STRIKING A BALANCE How balanced funds may help investors to stay the course toward achieving their long-term goals Name Title Firm The views expressed.
Presented by StanCorp Equities, Inc., member FINRA
Presented by StanCorp Equities, Inc., member FINRA
How Do ETFs Fit into investment portfolios?
Senior Research Consultant, NEPC
The Third Quarter in Review
The Episcopal Church Foundation
Fixed Income performance results are not reflective of a stand-alone, dedicated fixed income investment strategy. Performance is that of the fixed income.
Cambria Armor Dividend Strategy Cambria Armor Growth Strategy
Beyond Investment Illusions
“The time has come for folklore to be replaced with reality.
Core Portfolio Series KEY PORTFOLIO ATTRIBUTES INVESTMENT APPROACH
Presentation transcript:

State Street Global Advisors A presentation to 2009 FIAP International Seminar 28 May 2009 Brett Collins, CFA

Innovative Solutions for Managing Risk in Volatile Times

Lessons Learned Drive Investor Trends in 2009 Behavior of asset class correlations during a crisis  Re-evaluate portfolio diversification assumptions  Challenging the CAPM return/risk theory Fear of prolonged recession and market illiquidity  Higher cash balances  Greater strategic asset allocation drift Innovations in risk management strategies  Non traditional approaches to portfolio construction  Focus on diversification and downside protection  How to mitigate market liquidity issues

4 No Place to Hide 2008 Index Returns Source: SSgA, Factset Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. Investors cannot invest directly in an index. Past performance is not a guarantee of future results.

5 Historical Drawdown – S&P 500 Can we reduce these drawdowns? Source: Ibbotson, SSgA, February Past performance is not a guarantee of future results.

6 Market Volatility Can Be Dampened over Long Time Horizon Source: Ibbotson, SSgA, February Past performance is not a guarantee of future results. Historical return of the S&P 500 ® since 1926

Lessons Learned: Market Volatility Can Rise Dramatically World volatility indices spiked in the Q under weight of the deepening financial crises and fear of a prolonged global recession The CBOE VIX has declined since Q4, though remains elevated vs. historical average VIX futures remain significantly elevated vs historical average in 2009 Source: SSgA, Factset January 27, 2009

8 Correlation is Not as Stable as Market Volatility… Source: Ibbotson, SSgA, December Past performance are not guarantee of future results. Historical correlation between S&P 500 and US Government Bond 30 year10 year5 year Jul-27Jul-31Jul-35Jul-39Jul-43Jul-47Jul-51 Jul-55 Jul-59Jul-63Jul-67Jul-71Jul-75Jul-79Jul-83Jul-87Jul-91 Jul-95 Jul-99 Jul-03 Jul-07 median for 5 and 10 year median for 30 year

9 … Especially Over a Short-Term Period During crisis periods, swings in correlation are typically more severe Source: Ibbotson, SSgA, December Past performance are not guarantee of future results.

Lessons Learned: Global Markets Re-Couple in Crises Source: SSgA, Morningstar January 2009 Index returns are unmanaged and do not reflect the deduction of any fees or expenses. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income. Investors cannot invest directly in an index. Past performance is not a guarantee of future results. Index Return Correlation with S&P 500 ® 2004—2008

Lessons Learned: Uncertainty Drives Investors to Cash Source: Barclays Capital, Haver, ICI As of December 17, 2008 Yields near zero should eventually cause cash to seek a home in riskier assets

Lessons Learned: Re-Balancing Costs Rise Widening credit spreads have driven bid/ask spreads to historical wides making it cost prohibitive to re-balance portfolios Global equity bid/ask spreads also widened sharply Deviations from asset allocation targets may lead to sub-par returns when markets recover Annual Returns of Stocks and Bonds from 1990 to 2008* Source: Ibbotson December 2008 Past performance is not a guarantee of future results.

13 Several Key Risk Factors Have Emerged 1. Volatility Risk Ensuring portfolio is positioned to weather most market movements 2. Liquidity Risk Providing enough near term liquidity 3. Downside Risk Protecting portfolio from capital erosion 4. Funding Risk Minimizing the asset/liability funding gap 5. Asset Allocation Risk Maintaining portfolio’s target policy mix

14 Addressing Portfolio Risk Lessons Learned Investors need new ways to diversify their portfolios and more effectively manage total portfolio risk We also believe they need innovative ways to gain exposure to uncorrelated asset classes They should manage against 5 key risk factors to improve the LT success of their investment programs Strategy Level Investors should focus on outcome-oriented strategies that are designed around minimizing volatility and downside risk, while providing liquidity These strategies should be innovative, risk-controlled and not benchmark-focused We believe there is an opportunity for investors to utilize one or more strategies for implementation or as part of a broader investing framework

15 Investment Strategies to Address Portfolio Risk Volatility Risk Downside Risk Funding Risk Asset Allocation Risk Liquidity Risk Managed Volatility Hedge Fund Replication Risk Parity Hedged Equity Exposure Management LDI

Thank You!

17 Disclaimer State Street Global Advisors Limited. Authorised and regulated by the Financial Services Authority. Registered in England. Registered No VAT No Registered office: 20 Churchill Place, London E14 5HJ Telephone: Facsimile: web: This material is for your private information. The information we provide does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. We encourage you to consult your tax or financial advisor. All material has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy of, nor liability for, decisions based on such information. Past performance is no guarantee of future results. This document should be read in conjunction with its prospectus. All transactions should be based on the latest available prospectus which contains more information regarding the charges, expenses and risks involved in your investment. This communication is directed at professional clients (this includes eligible counterparties as defined by the Financial Services Authority) who are deemed both knowledgeable and experienced in matters relating to investments. The products and services to which this communication relates are only available to such persons and persons of any other description (including retail clients) should not rely on this communication. © 2009 State Street Corporation - All Rights Reserved