1. Global Strategy
Guy Monson
CIO & Managing Partner
September 2010 1

2. Correlations are rising again as the “risk-on/risk-off” trade starts to dominate asset allocation thinking…
Market-implied probability disruptions of S&P 500 (a)
Option-implied volatilities
Source: Bank of England, June 2010
Source: Bank of England, June 2010 2

3. Triggering an unprecedented rush into ‘safe assets’ driving bond-equity valuations close to 40 year lows
Source: Ned Davis, September 2010

4. With retail investors jumping from zero-yielding cash to bonds…with equities still perceived as a risk asset
Source: Ned Davis, September 2010

5. Investment-grade corporate bond spreads (a)
Rising G7 debt offers little long-term attraction in govt. bonds, corp. yields are low and EM overbought?
Investment-grade corporate bond spreads (a)
Net inflows into emerging market debt mutual funds (a)(b)
Source: IMF, April 2010
Source: Bank of England, June 2010 5

6. Advanced Economies’ Gross Financing Needs, 2010
The consequence has been soaring debt, and over-inflated, property-linked tax revenues in the West…
Advanced Economies’ Gross Financing Needs, 2010
Source: IMF, April 2010 6

7. By comparison, with corporate cash flow very strong globally, our income strategy is based on global equity
Deloitte asked the CFOs to select their top 3 priorities for The score is the percentage of CFOs that have included each factor in their top 3 priorities.
Source: Ned Davis, September 2010
Source: The Deloitte CFO Survey, Q2.2010 7

8. Equity market outlook and real asset perspective
Investment Implications
2008’s simultaneous collapse in global equity, corporate bond and listed real estate markets in the face of the economic crisis is almost unprecedented, as is the high degree of real asset correlation – a similarly correlated rebound is possible today.
Equity and listed real estate still offer attractive yields today… although the recent market rally has been extraordinary.
Corporate cash holdings are exceptionally high. Such levels are usually very supportive for asset prices…
Key Opportunities
The equity rally seen since March 9th, more than a year ago, is in our view part of a longer-term, low volatility uptrend that should last well into The surge in volatility and market sell off last month has not altered the long-term value in global ‘blue chips’.
Global equity income is a highly attractive alternative to bonds, with corporate bonds fully valued. Super-normal cash flow promises ongoing dividend rises…BP shows the value of global diversification.
Chinese and BRIC market valuations are high though, and inflationary challenges are emerging… 8 8 8

9. This document has been issued by Sarasin & Partners LLP which is authorised and regulated by the Financial Services Authority. It has been prepared solely for information purposes and is not a solicitation, or an offer to buy or sell any security. The information on which the document is based has been obtained from sources that we believe to be reliable, and in good faith, but we have not independently verified such information and no representation or warranty, express or implied, is made as to their accuracy. All expressions of opinion are subject to change without notice.
Please note that the prices of shares and the income from them can fall as well as rise and you may not get back the amount originally invested. This can be as a result of market movements and also of variations in the exchange rates between currencies. Past performance is not a guide to future returns and may not be repeated.
For your protection, telephone calls may be recorded. Sarasin & Partners LLP and/or any other member of the Bank Sarasin group accepts no liability or responsibility whatsoever for any consequential loss of any kind arising out of the use of this document or any part of its contents. The use of this document should not be regarded as a substitute for the exercise by the recipient of his or her own judgment. Sarasin & Partners LLP and/or any person connected with it may act upon or make use of the material referred to herein and/or any of the information upon which it is based, prior to publication of this document.
If you are a private investor, you should not act or rely on this document but should contact your professional advisor.
Client & Broker Support: Tel: +44 (0) , Fax: +44 (0) ,
Marketing Enquiries: Tel: +44 (0) , Fax: +44 (0) ,
8th September 2010 9 9

10. Sarasin & Partners LLP Juxon House St Paul's Churchyard London EC4M 8BU Tel. No: +44 (0)