ASSET ALLOCATION SLIDES The information herein is believed to be reliable but SunGard Online...
20
ASSET ALLOCATION SLIDES The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights Total Investable Capital Market Dollar Bonds 25.6% Other Bonds 25.1% Other Equity 17.6% U.S. Equity 17.0% U.S. Real Estate 5.1% Emerging Mkt Equities 1.1% Cash Equivalents 3.9% Emerging Mkt Debt 3.1% High Yield Bonds 1.1% Private Markets 0.3% Source: UBS Global Asset Management. December 31, 200 USD 87.0 Trillion
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Transcript of ASSET ALLOCATION SLIDES The information herein is believed to be reliable but SunGard Online...
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Total Investable Capital Market
Dollar Bonds 25.6%
Other Bonds 25.1%
OtherEquity 17.6%
U.S. Equity 17.0%
U.S. Real Estate 5.1%Emerging Mkt Equities 1.1% Cash Equivalents 3.9% Emerging Mkt Debt 3.1% High Yield Bonds 1.1% Private Markets 0.3%
Source: UBS Global Asset Management. December 31, 2004
USD 87.0 Trillion
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Comparing Returns Between Investments
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000 Inflation $34,288Cash $55,280Bonds $120,810Stocks $346,560
Initial Investment $10,000
1976 1980 1984 1988 1992 1996 2000 2005
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Inflation and Purchasing Power
1976 1981 1986 1991 1996 2001$0.00
$1.00
29¢
2005
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Investing in International Stocks
0%
100%
200%
300%
400%
500%
600%
700%
800%
Int'l. Developed Markets
United States
Int'l. Emerging Markets
Compound Return
1977 1981 1985 1989 1993 1997 2005
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Power of Tax Deferral
$0
$10,000
$20,000
$30,000
$40,000
$50,000
5 Years 10 Years 15 Years 20 Years 25 Years
Currently TaxableTax Deferred
$35,514
$48,015
InitialInvestment $10,000
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Benefit of Long-Term Saving
Accumulated Savings
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
25 20 15 10 5 0
Years Until Savings Goal
$1,052 per month $1,698 per month $2,890 per month $5,466 per month$13,610 per month
Savings Goal $1,000,000
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Power of Compounding
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
5 Years 10 Years 15 Years 20 Years 25 Years
$68,485
$108,347
InitialInvestment $10,000
$26,658
8%
Assumed Annual Return:
4% 10%
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Growth/Value Style Investing
-30%
-20%
-10%
0%
10%
20%
30%
1980 1985 1990 1995 2000
Growth Style Value Style
Excess Return
2004
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Risk of Poor Market Timing
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$23.33
$89.60
7.42%Average Return
10.51%Average Return
Monthly Stock Returns from 1960 through 2004
Bad Market Timing(Miss 12 Best Months)
Buy and Hold (Fully Invested At All Times)
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Advantage of Long-Term Investing
Holding Period LongShort-40%
Any 1Year
Over 3 Years
Over 5 Years
Over 10 Years
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
Stocks Bonds CashAnnual Returns 1976 - 2004
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Long Holding Periods Reduce Risk
-30%
-15%
0%
15%
30%
3-Year Stock Returns 1-Year Stock Returns
Average Return
1962 1967 1972 1977 1982 1987 1992 1997 2004
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
What Drives Portfolio Performance
Asset Allocation 91.5%
Other Factors 2.1%
Market Timing 1.8%
Security Selection 4.6%
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Relationship Between Risk and Return
Risk HighLow
Expected Return
High
Low Cash
Equivalents
Bonds
Int’l Bonds
Real Estate
Stocks
Int’l Stocks
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Uncertainty and Investment Risk
-30% -20% -10% 0% 10% 20% 30% 40%
Annual Stock Returns
1974 1973 1975198019851989199119951997
1961196319671976198219831996
196219661969197719811990
1960197019781984198719921994
196419651968197119721979198619881993
200319991998
2000
20012002
2004
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Diversification from Combining Investments
Investment A
Investment B
Portfolio 1
No Diversification
Investment C
Investment D
Portfolio 2
Complete Diversification
Investment EPortfolio 3
Investment F
Some Diversification
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Combining Investments Creates Stability
-25%
-15%
-5%
5%
15%
25%
35%
45%
AnnualReturn
1976 1982 1988 1994 2000
50% Bonds, 50% Stocks 100 % Bonds 100% Stocks
2004
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Identifying Efficient Portfolios
InefficientPortfolio
Same Risk,More Return
Same Return,Less Risk
EfficientFrontierExpected
Return
High
Low
Risk HighLow
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Selecting a Suitable Portfolio
Expected Return
High
Low
Risk HighLow
Large Cap Stocks
Europe Stocks
Pacific Stocks
Small Cap Stocks
Cash Equivalents
Gov’t/Corp Bonds
Int'l Bonds
Real Estate
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Market Segment Performance
BestPerformer
WorstPerformer
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
US Large Cap
Stocks
US Real Estate
US Large Cap
Stocks
US Large Cap
Stocks
Emerging Mkts.
Commodi-ties
US Real Estate
Commodi-ties
Emerging Mkts.
US Real Estate
US Small Cap
Stocks
Commodi-ties
US Small Cap
Stocks
Intern'l. Stocks
Commodi-ties
US Real Estate
US BondsIntern'l. Bonds
US Small Cap
Stocks
Emerging Mkts.
Commodi-ties
US Large Cap
Stocks
US Real Estate
Intern'l. Bonds
Intern'l. Stocks
US BondsUS Small
Cap Stocks
US BondsIntern'l. Stocks
Intern'l. Stocks
Intern'l. Bonds
US Small Cap
StocksUS Bonds US Bonds
US Small Cap
Stocks
US Inflation
US Inflation
US Real Estate
US Real Estate
US Small Cap
Stocks
US BondsIntern'l. Stocks
Intern'l. Stocks
US Inflation
US Large Cap
Stocks
Intern'l. Bonds
Emerging Mkts.
US Inflation
US Large Cap
Stocks
Commodi-ties
US Real Estate
Emerging Mkts.
US Inflation
US Small Cap
Stocks
US Inflation
US Small Cap
Stocks
Intern'l. Bonds
Emerging Mkts.
Commodi-ties
Intern'l. Bonds
Intern'l. Stocks
Intern'l. Bonds
Intern'l. Bonds
US Real Estate
US BondsUS Large
Cap Stocks
US Large Cap
Stocks
Intern'l. Stocks
Intern'l. Bonds
US Large Cap
Stocks
US Inflation
US BondsEmerging
Mkts.Emerging
Mkts.Intern'l. Bonds
Intern'l. Stocks
Intern'l. Stocks
US Small Cap
StocksUS Bonds US Bonds
Emerging Mkts.
US Inflation
Commodi-ties
Commodi-ties
US Real Estate
Emerging Mkts.
Commodi-ties
US Large Cap
Stocks
US Inflation
US Inflation
ASSET ALLOCATION SLIDES
The information herein is believed to be reliable but SunGard Online Investment Systems does not warrant its completeness or accuracy. Past performance is not indicative of future results. This does not constitute an offer or solicitation of any security or product, nor constitute a recommendation of the suitability of any investment strategy for a particular investor. Copyright 1997-2005 SunGard Expert Solutions. All rights reserved.
Importance of Rebalancing Strategy
TargetAllocation
TargetRange
RebalancingRequired
RebalancingRequired
Time25%
50%
75%
100%
