- 1. THE UK FUND MANAGEMENT INDUSTRYRoundtable on investment
trusts & fund management Seoul, Korea 16 April, 2002 SYD BONE
Managing Director Baring Asset Management, Asia
2. Agenda
3. The UK Market Today 4. The UK Market Today 1995 1997 1999
2001 Pension Funds 522 815 907 859 Insurance 507 744 935 1097 Unit
& Investment Trusts 167 240 283 360 Private clients 65 131 341
410 Others 62 125 89 49 Total 1,323 2,055 2,555 2,775* * 79% UK
clients, 21% overseas clients Source : ONS, Com Reer, Fund
Managers' Asso, Moneynet Funds under management havedoubled over
the last six years GBP Bn 5. The UK Pension System Three Tier
Approach 6. Spending on State Pension Systems Less dependence on
tier one thanother European countries Source :
PricewaterhouseCoopers UK 7. Investment Freedom 8. Asset Allocation
of European Pension Funds Prudent man approach UK 9. Pension Fund
Holdings of International Securities Investment freedom UK 10.
Performance of Pension Funds Excellent long-term results UK 11.
Global Equity Risk Map 94 - 99 Source: Baring Asset Management
Germany France Denmark Austria Switzerland UK New Zealand Spain
Netherlands Finland Italy Japan Norway Hong Kong Singapore Eire
Australia Canada Belgium Portugal Sweden USA Indonesia Taiwan
Brazil Venezuela China Thailand Mexico Korea Korean investors have
significantdiversification opportunities 12. Taxation Incentives
13. Taxation of Pension Funds Taxation incentives work! 14.
Protection of Assets 15. Protection of Assets
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- separate the pension fund from the employer
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- Occupational Pensions Regulatory Authority (OPRA)
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- Financial Services Regulations
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- Fund managers, lawyers, actuaries & investment
consultants
16. Challenges Faced 17. Challenges Faced
- Pension mis-selling Personal pensions introduced in 1988
- Theft Maxwell case led to the Pensions Act 1995 and to OPRA
being formed
- Annuities Conversion rates are low, sopensions may less than
desirable
- Myners Report Broad based review of
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- 1.Investment process for pension schemes
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- 2. Security of pension fund promise, and
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- 3. Other collective investment vehicles
- AccountingMay be the last straw for defined Standard
FRS17benefit plans.IAS 19 preferred
18. BAM as an example 19. Baring Asset Management
- US$34.6 billion assets under management
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- 4 main investment offices
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- Hong Kong office set up in 1975;launched first ever Korean
equitymutual fund for foreign investors
- 125 investment professionals
Taiwan Isle of Man Tokyo LONDON Boston Toronto San Francisco
Hong Kong Dublin Frankfurt Guernsey Bahrain Jersey Paris Assets as
at 28 thFebruary 2002, Investment Professionals as at 31 stMarch
2002 20. Client Base Clients By Mandate Clients Assets Invested
Fixed Income Equities Balanced 40% 33% 27% 28 thFebruary 2002
United Kingdom 16% Continental Europe North America Emerging Asia
Pacific Intl Fixed Interest UK Fixed Interest Cash/Near Cash 12% 9%
4% 8% 33% 13% 3% 2% Japan 21. Client Base Clients By Type Clients
Assets By Origin 28 thFebruary 2002 *Middle East,Africa, Latin
America Pension Funds Others Governments Private Clients Pooled
Vehicles 52% 11% 11% 9% 13% 4% Charities/Foundations United Kingdom
North America Continental Europe Offshore Pacific MEALA* 40% 25% 9%
4% 14% 8% 22. InvestmentOrganisation 125 Investment Professionals
AsiaPacific 6 Hong Kong 31 stMarch 2002 Director of Investment
Process 17 London, Boston,Tokyo ASSETALLOCATION REGIONAL EQUITY
FIXED INCOME& CURRENCY Fixed Income & Currency Strategic
Policy Group& Investment Management Teams 21 London, Boston
Tokyo Hong Kong Number of investment managers.All teams share some
resources. RESEARCH Global Sector Teams Quantitative Research Team5
UK & Europe 13 London Japan 7 Tokyo North America 9 Boston
PRIVATE CLIENTS Emerging Markets 13 London Boston Hong Kong CHIEF
INVESTMENT OFFICER Healthcare Industrials Telecoms Media Consumer
Goods Natural Resources Technology Financials 23. Investment
Philosophy Inflation & Credit Fundamentals Applying rigorous
fundamental research to identifyunrecognised value in real yields
and credit spreads ValuationHIGH LOW Growth CHEAP EXPENSIVE Equity
Deteriorating Value Torpedoes Recognised Value Unrecognised Value
Fixed Income IMPROVING DETERIORATING Real Yield & Spread HIGH
LOW Torpedoes Value Traps Growth at a Reasonable Price We seek
under-recognised growth companies that will deliver positive
surprise 24. Four Step Investment Process A Structured Investment
Process Global Model Portfolio Model Stock Portfolios Stock
Research & Selection 1 Global Strategy 2 Client Portfolio
Portfolio Construction 3 Client Portfolio Implementation 4 25.
Portfolio Construction & Risk Control Note: From time to time,
broad characteristics may be outside these limits/ranges.This is
closelymonitored and adjustments made when appropriate, to avoid
unnecessary portfolio turnover.
- (using IBES FY1 earnings)