Investment strategy in a fast changing environment

Sponsored by: Introduction 1.Initial lessons from the credit crises a.Inflation or disinflation b.Are we still in a low growth environment? 2.Applying the lessons learnt a.How have the fund strategies changed in the wake of the crisis? b.How does asset allocation protect against disasters? c.How do funds avoid negative return years? d.What should is the correct time horizon for investments?

Sponsored by: Initial lessons Post crises  Regulation  Light regulation does not work  Volcker Rule limits prop trading & exposure to hedge funds  Frank-Dodd regulates banks, rating agencies, buyout firms & hedge fund Financial market regulation on the increase

Sponsored by: Initial lessons Post crises (continued)  Lessons for monetary policy  Macro financial stability  An open capital account reduces effectiveness  Lessons for fiscal policy  Counter cyclical policy to mitigate booms  Save for rainy days Wider remit for monetary policy

Sponsored by: Source: OECD Fed Balance Sheet vs. US CPI growth  Banks can create 10X more money than central banks through fractional reserving Weighing in on the inflation, deflation or disinflation debate

Sponsored by: Source: OECD US Credit Market Debt vs. US GDP Rate of growth will slow as the supply of credit is restricted

Sponsored by: Applying the lessons learned from the financial crisis

Sponsored by: How has fund strategy changed in the wake of the crisis?

Sponsored by: Source: ICI, Deutsche Bank Research How has fund strategy changed in the wake of the crisis?

Sponsored by: Source: Haver Analytics, Deutsche Bank How has fund strategy changed in the wake of the crisis?

Sponsored by: Domestic Vs. International equity

Sponsored by: How asset allocation protects against disasters?

Sponsored by: Barclays US Aggregate Total Return Un-hedged USD versus S&P 500 Source: Bloomberg Bonds versus Equities

Sponsored by: S&P 500 Rolling 10 Year Return Equity returns were very poor between 2000 & 2008

Sponsored by: Source: BlackRock Do trustees and members have the correct time horizon for investments?

Sponsored by: Questions

Sponsored by: Global Interest Rates at Historical Lows 17 Source: Bloomberg, Futuregrowth

The Developed World Monetary versus fiscal policy, unemployment headwinds to growth 18 Brazil Too much government & consumption China Too much investment & not enough consumption India Large infrastructure and private sector backlog to overcome USA Fed steps back – can Treasury play its part? EU Structural impediments remain Japan Structural impediments remain The Emerging World Re-calibration for the BRICs (18% of global GDP)

Sponsored by: 19 EM Twin Deficits Sponsored by: Source: Bloomberg, Futuregrowth

Sponsored by: 20 A weakening rand trend The Rand has depreciated between 25% & 50% against its major trading partners since Jan 2011 Sponsored by: Source: Bloomberg, Futuregrowth

Sponsored by: Implications for investment JSE All Share Index at record levels Central Bank Policy rate at record low Bond yields at multi-decade lows Capital preservation as an investment strategy?

Sponsored by: Questions