Top Banner
2010 ECONOMIC SEMINAR 2010 ECONOMIC SEMINAR Active Asset Management Active Asset Management Methodology Methodology Presented by Presented by Neil Cox, Neil Cox, CFP CFP Director & Head of Investment Research Director & Head of Investment Research
17

2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Jan 15, 2016

Download

Documents

Stephon Rencher
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

2010 ECONOMIC SEMINAR2010 ECONOMIC SEMINAR

Active Asset Management Active Asset Management MethodologyMethodology

Presented byPresented by

Neil Cox, Neil Cox, CFP CFP

Director & Head of Investment ResearchDirector & Head of Investment Research

Page 2: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

General Advice Warning

Today’s presentation may contain some general advice.This means that individual objectives and needs have NOT been considered in providing this advice. This information is general in nature and does not constitute comprehensive advice.

Before acting on this advice, you should give consideration to the appropriateness of the advice for you. You should seek proper personal financial advice.

While the information given in the presentation is in good faith and is believed to be accurate and reliable, Financial Foundations Australia does not give any warranty as to the reliability for any errors or omissions.

Page 3: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Active Asset MethodologyActive Asset Methodology

Gradual implementation to this point due to Gradual implementation to this point due to GFC, frozen funds and human resourcesGFC, frozen funds and human resources

94% of the return generated in a portfolio relate to 94% of the return generated in a portfolio relate to the asset class selection.the asset class selection.

Monitor asset classes for signals of overselling and Monitor asset classes for signals of overselling and overbuying. overbuying.

Tactical asset allocations changes to take Tactical asset allocations changes to take advantage of any opportunities that develop.advantage of any opportunities that develop.Develop a low cost core component to our asset Develop a low cost core component to our asset

classesclasses

Low cost core componentLow cost core component

+

Complimented with low-correlated active management

=Best blend of investments whilst maintaining a

competitive low cost structure

Page 4: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Goals Goals overall performance

responsiveness to market changes

overall investment costs for clients

Page 5: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

The PastThe Past

specialist managers

active managers – all target “alpha returns”

conservative changes to asset allocation

switching dependant on client response to letter

- no change if not returned

- delayed changes if client overseas,

interstate, changed address etc…..

Page 6: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Important Factors Affecting ReturnsImportant Factors Affecting Returns

1.Asset Allocation - between sectors

2.Market Returns – “Beta”

3.Brain Power – “Alpha” returns

Page 7: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Maximising these FactorsMaximising these Factors

1.1.Asset AllocationAsset AllocationResearch

- objective

- timely

- long term focus

Page 8: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Speed of ChangesSpeed of Changes

L A M A

Limited Asset Management Authority

Automatically updated at same time

- never miss a switch even if overseas etc…

- assumes your Risk Profile stays same.

- “Limited” means you must still provide written request for changing address, bank details or to withdraw funds.

Page 9: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Processing SpeedProcessing Speed

Commonwealth Bank (CFS) buying power allows

- mandate structure

- internal processing

- switches at T + 1

Page 10: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

2. Market Returns2. Market Returns

– Large active funds provide over 70% market return (beta) versus value added, alpha type returns

- still charge active fee on whole balance

- market returns available at low cost via index and enhanced index funds this becomes our portfolio ‘CORE’

Facts

Page 11: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

3. Alpha Returns3. Alpha Returns

Active Managers

- index unaware, don’t just track markets

- smaller managers can target higher alpha

- we must be able to switch quickly

LAMA of T + 1 processing is essential

- e.g. Platinum International - very big here,

but minnows overseas - very nimble and index unaware.

- Fidelity Australian Shares - huge overseas but small to medium here.

Page 12: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Core - SatelliteCore - Satellite

CORE

Satellite 1

Satellite 3

Satellite 2

Core portfolio (indexed investments)

Low Cost

Index and Semi Active Index Fund

Close tracking to benchmark performance

Satellite portfolio (active investments)

Enhanced returns (high alpha)

Decorrelation (index unaware)

Requires strong selection skills

Page 13: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

ResultsResults

more responsive portfolios

active asset allocation

never again be concerned about missing a switch

no charge to implement changeover from current portfolios

FFA guarantee that total investor costs reduce

Page 14: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

2010 Federal Budget2010 Federal Budget

Nothing like a good rumour….

increase deductible limits from last years “knee jerk” ridiculous lows

- maybe higher entry tax

CGT – could change to curb rampant housing market

- apply to Super transfers to Pension phase

tax deductibility of fees for financial planning

Page 15: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Government’s response to Government’s response to Henry reviewHenry review

The key Government proposals announced include:

• The superannuation guarantee (SG) rate will increase gradually from 9% to 12% from July 2013

• A Government super contribution of up to $500 pa will be made for people earning up to $37,000 pa from 1 July 2012 to effectively refund contributions tax

• The CC cap will be reinstated to $50,000 pa from 1 July 2012 for people aged 50 or over with super balances below $500,000

• The company tax rate will gradually reduce to 28% by 1 July 2014 (and two years earlier for eligible small businesses) very generous depreciation rules will apply to small businesses from 1 July 2012, and

• A 40% Resource Super Profit Tax will be introduced from 1 July 2012.

• The SG contribution age limit will increase from 70 to 75 from 1 July 2013

Page 16: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

FeedbackFeedback

Please complete the feedback form in order for us to continually Please complete the feedback form in order for us to continually improve the service to clients;improve the service to clients;

In order for us to communicate in the most timely manner, please In order for us to communicate in the most timely manner, please provide your email address on the form located on your seat. provide your email address on the form located on your seat.

Page 17: 2010 ECONOMIC SEMINAR Active Asset Management Methodology Presented by Neil Cox, CFP Director & Head of Investment Research.

Questions ??Questions ??