Andy Ivory Corr - Brexit - Cork - 14th April 2016
-
Upload
abm-ireland -
Category
Business
-
view
48 -
download
0
Transcript of Andy Ivory Corr - Brexit - Cork - 14th April 2016
Slide Title
EDUCATING
SUPPORTING
REPRESENTING
www.charteredaccountants.ie
title goes here
“Investment in a
complex world!”
April 2016
Andy Ivory-Corr, QFA, Grad Dip, CFP®
Head of Investments
New Ireland Assurance
+15%
-4%
2015 saw a return to volatility with Q1 providing all returns!
Global Equity Markets
+11% Q1
Q2 – Q4
Warning: Past performance is not a reliable guide to future performance.
To Hedge or not to Hedge…that is the question!
Scenario 1: Weak Euro
$ Company Share Price + 10%
$ vs € + 10%
€ Return with Currency Hedging
Scenario 2: Strong Euro
$ Company Share Price + 10%
$ vs € - 10%
€ Return without Currency Hedging
We believe that currency adds additional risk to equity market
investing which is not rewarded with additional returns over
the long term Source: SSGA
+10% +10%
+20% 0%
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
Source: Citi Research, Datastream (YoY Perf means year-over-year performance, which is a way of measuring results from one time period to another on an annualised basis.)
Warning: Past performance is not a reliable guide to future performance.
Policy distortions: QE = EPO for equities!
Warning: Past performance is not a reliable guide to future performance.
Lowest rates in UK in over 300yrs of history!
Warning: This information does not constitute investment advice or a recommendation. It has been provided for discussion purposes only. You should
seek professional investment advice with your financial advisor
Leading to the great Migration – in search of yield!
Investors have been encouraged to go on a hunt for yield … Source: Shutterstock, February 2015.
0
1
2
3
4
5
6
0
1
2
3
4
5
6
Dec
-99
Dec
-00
Dec
-01
Dec
-02
Dec
-03
Dec
-04
Dec
-05
Dec
-06
Dec
-07
Dec
-08
Dec
-09
Dec
-10
Dec
-11
Dec
-12
Dec
-13
Dec
-14
Dec
-15
Euro-Treasury Euro-Treasury (AAA)
Source: Barclays, SSGA, as of 31 December 2015. Past performance is not a guarantee of future results.
Bond yields as low as they’ve been in a generation!
Proportion of total return from yield
declines
Ireland: 10yr 0.78% Germany: 10yr 0.10% US: 10yr 1.72%
With 2015 demonstrating the extent of duration risk facing investors!
Volatility Gilt Fund 9.0% Volatility ARB 1.4% Source: Moneymate Dec 15
Germany: 10yr 0.05%
Germany: 10yr 1.05%
Warning: Past performance is not a reliable guide to future performance.
Short term noise, shouldn’t impact long term objectives!
“The Stock Market is a device for transferring money from the impatient to the patient”
- Warren Buffett
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
Managing the emotions of Investment!
Source: Carl Richards
9%
5%
15
Warning: Past performance is not a reliable guide to future performance.
The power of stable returns…..
Year 1 Year 2 Year 3 Total return
A +20% +20% -10% +29.6%
B +35% -10% +5% +27.6%
C +10% +10% +10% +33.1%
Source: Newton
A +20% +20% -10% +29.6%
B +35% -10% +5% +27.6%
C +10% +10% +10% +33.1%
“I have two basic rules to investment, Rule no1: Never lose money.
Rule no 2: Never forget rule no 1”!! …… Warren Buffett
Warning: Past performance is not a reliable guide to future performance. 16
Investment Offers no Free Lunch: More Return = More Risk
Cash
Deposits
Stocks &
Shares
Return
Ris
k
17
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
Risk profiling will help but we can’t define risk as a single number!
18
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
19
‘Volatility and risk are not the same thing’ Annual letter to Berkshire Hathaway shareholders - 2015
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
Property REIT v Direct – volatility and short term risk!
REIT
26.9%
DIRECT
3.6%
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
IREPRS-0516
Risk Profile: How much risk can/will you take to achieve it?
Timeframe: How long do you have to achieve it?
Objectives: What do you want to
achieve?
3 key considerations for every investor!
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
Primary investment objective – generate a real return
The information contained above is for illustrative purposes only.
But your bills are increasing at a greater pace…..
Irish Inflation (CPI) = 0.10% Source: Inflation.eu Dec 15.
22
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
Current interest rates don’t offer us much opportunity for growth!
2011
> 5%
2012
> 4%
2013
<2%
2014
<1%
2015
<0.5%
Warning: Past performance is not a reliable guide to future performance.
Generating returns probably requires some measured risk taking!
24
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
Diversification of assets: a better long term solution!
Equity
Commodities Infrastructure
Cash Bonds
Real Estate
25
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
Alternative Components can vary but typically will include the following options
Alternatives
Cash
Bonds Equities
Property
Commodities/Gold
Infrastructure
Emerging Mkt Debt
Hedge Funds
Private Equity
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor
Where to from here?
Markets are likely to become more volatile (normalise?).
Deposit rates, lower for longer!
Duration and illiquidity remain a real risk in Bond markets.
Generating returns, likely to require taking some level of risk.
Objectives need to be realistic and achievable.
Risk Management remains a priority and vital ingredient within iFunds.
2016 know what you own, know why you own it!
Warning: This information does not constitute investment advice or a recommendation. It has been provided for
discussion purposes only. You should seek professional investment advice with your financial advisor