©2016 Morningstar, Inc. All rights reserved.

Asset Allocation - Finding Value in Volatile Markets

Brad Bugg, Head of Multi-Asset Income, Morningstar Investment Management

Simon Stevenson, Head of Strategy, Multi-Asset, Schroder Investment Management Australia

Michael Karagianis, Head of Private Investment Consulting (NAB), MLC Investment Management

Moderator: Grant Kennaway, Director, Global Manager Research Practice Morningstar

The asset class that represents the best opportunity for my clients currently is:

1. Cash/term deposits

2. Australian and/or global fixed interest

3. REITs and/or Infrastructure

4. Australian Equities

5. Global Equities

6. Alternatives

Live Poll

The asset class that represents the best opportunity for my clients currently is:

Live Poll Responses

The asset class that represents the best opportunity for my clients currently is:

Asset Allocation - Finding Value in Volatile Markets

Source: 2015 Morningstar Investment Conference

2015 Live Polling Result

One Year Asset Class returns to 30 April 2016:

1. REITs and/or Infrastructure 15.6%

2. Australian and/or global fixed interest 5.2%

3. Cash/term deposits 2.2%

4. Global Equities -0.8%

5. Alternatives -2.9%

6. Australian Equities -4.9%

How did last year’s predictions fare?

Within equities, in the last 12 months for my clients I have preferred:

1. Australian equities

2. Global equities

3. Higher yielding stocks

4. Other, like emerging markets or smallcaps

Live Poll

Within equities, in the last 12 months for my clients I have preferred:

Live Poll Responses

What’s your view on the Australian dollar?

1. Undervalued - it’s going back up from here

2. Fair value – it seems about right at current levels

3. Overvalued – it’s just paused, and will fall further

Live Poll

What’s your view on the Australian dollar?

Live Poll Responses

Asset Allocation - Finding Value in Volatile Markets

Source: Morningstar Direct

Q1 2016 returns did not reflect the very volatile start to 2016

1.77

-0.10.1

2.41

-1

1

3

5

7

9

11

Apr-96 Aug-98 Dec-00 Apr-03 Aug-05 Dec-07 Apr-10 Aug-12 Dec-14

US 10yr Japan 10yr Euro 10yr Aust 10yr

Key developed market interest moves over the last 20 years

Asset Allocation - Finding Value in Volatile Markets

Source: Factset

Most government bonds have performed well

The asset class that represents the best opportunity for my clients currently is:

1. Cash/term deposits

2. Australian and/or global fixed interest

3. REITs and/or Infrastructure

4. Australian Equities

5. Global Equities

6. Alternatives

Live Poll

The asset class that represents the best opportunity for my clients currently is:

Live Poll Responses

Important Information

14

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