Henderson
description
Transcript of Henderson
Introducing
Henderson New StarOctober 2009
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Henderson New Star
Agenda
Introduction of Henderson New Star
Market Overview
What we like!
Summary
Source: Henderson Global Investors, as at 30 June 2009
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A history of Henderson New Star
De-merged from AMP. HHG PLC returns to being
an independent asset management company
Bought by AMP and merged with AMP Asset
Management
Acquired Touche Remnant, establishing Henderson as the UK’s
leading investment trust manager
Listed on the London Stock Exchange
Henderson starts managing pension funds
Founded to administer the estate of Alexander
Henderson
2003
1998
1934
1975
1983
1992
2008The company is
incorporated in Jersey and tax-resident in the
Republic of Ireland
2009Henderson buy New Star
Asset Management
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Seven stages of scepticism
“The economy won’t recover”
“The recovery will be weak”
“A second dip is coming”
“Medium-term growth will be slow”
“Price stability won’t last”
“It’s all priced in”
“Higher rates will kill the rally”
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G7 industrial output
78
80
82
84
86
88
90
92
94
96
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100
102
2008 2009 2010 2011
Actual"Zarnowitz" ForecastIMF - Consistence Forecast
Fe
bru
ary
20
08
= 1
00
The Zarnowitz forecast - deep recessions have strong recoveries
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Will there be a second dip?
0
2
4
6
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12
14
16
18
0 - 18 18 - 36 36 - 54 54 - 72 72 - 90 90 - 108 108 - 126
Number of occurances
Source: Henderson Global Investors
Double dips uncommon
Only 5 out of 33 expansions ended within 18 months
Duration (in months) of US business cycle expansions since 1854
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FED doesn’t raise rates...
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1981 1982 1983 1984
5
10
15
20US UnemploymentFed Funds Rate (RHS)
1981 - 1984
%
2002 - 2005
Source: Datastream, Henderson Global Investors, as at 3 September 2009
1991 - 1994
5.0
5.5
6.0
6.5
7.0
7.5
8.0
1991 1992 1993 1994
2
3
4
5
6
7US UnemploymentFed Funds Rate (RHS)
%
4.0
4.5
5.0
5.5
6.0
6.5
2002 2003 2004 2005
0
1
2
3
4
5
US UnemploymentFed Funds Rate (RHS)
%
2007 -
4
5
6
7
8
9
10
2007 2008 2009 2010
0
1
2
3
4
5
6
US UnemploymentFed Funds Rate (RHS)
%
Source: Datastream, Henderson Global Investors, as at 3 September 2009
Source: Datastream, Henderson Global Investors, as at 3 September 2009Source: Datastream, Henderson Global Investors, as at 3 September 2009
...until some time after unemployment has peaked
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Is the recovery already priced in?
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10
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60
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
S&P 500 (Graham & Dodd P/E)
S&P 500 (Graham & Dodd P/E) average
S&P 500 (Graham & Dodd P/E) -1sd
S&P 500 (Graham & Dodd P/E) +1sd
Graham & Dodd P/E (Current price against a 10 year moving average of reported earnings)
Source: Henderson, S&P, Datastream, as at 31 July 2009sd = standard deviation
Graham & Dodd P/E (Current price against a 10 year moving average of reported earnings)
0
10
20
30
40
50
1945
1955
1965
1975
1985
1995
2005
FTSE All-Share (Graham & Dodd P/E)
FTSE All-Share (Graham & Dodd P/E) mean
FTSE All-Share (Graham & Dodd P/E) -1sd
FTSE All-Share (Graham & Dodd P/E) +1sd
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Still value in equities...
0
1
2
3
4
5
6
7
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
0
1
2
3
4
5
6
7
US 10 Year ILG Yield
FTSE All-Share DY
FTSE All-Share Dividend Yield and ILG yield
Source: Henderson Global Investors, Datastream, as at 3 September 2009
...even with expected dividend cuts
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*Source: Morningstar at 31 August 2009, based on cumulative performance, on a mid to mid basis (excluding initial charge), with net income reinvested for a basic rate taxpayer.
Henderson New Star Multi-Manager
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Identifying attractive investments
Focus on valuation (buy cheap assets)
Consider unfashionable assets
Avoid popular/crowded trades
Be patient (invest over a longer horizon than most)
Look for asymmetric outcomes
Applications
Buying UK Mid-Cap (Q1 2009)
Technology (Actively traded through 2006-2007)
Alternatives (2007)
Short Sterling (2007-2009)
Government bonds (2008)
We want to find investments that maximise upside/minimise downside (asymmetrical trades)
Asset allocation is a key driver of returns
Investment approach
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Investment grade spreads by sector - Still like corporate bonds
0
200
400
600
800
1000
1200
Jan
-97
Jul-
97
Jan
-98
Jul-
98
Jan
-99
Jul-
99
Jan
-00
Jul-
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Jan
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Jul-
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Jan
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Jul-
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Jan
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Jul-
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Jan
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Jan
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Jul-
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Jan
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Jul-
07
Jan
-08
Jul-
08
Jan
-09
Jul-
09
Financials
Industrials
Utilities
Corporate Index
Telecoms
Indices breakout
Source: Merrill Lynch, at 31 August 2009
bp Wide 1012
Currently 442
Value is in financials
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Threat - huge forecast increase in UK gilt issuance
-150
-100
-50
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150
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300
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-14
Net issuance
Quantitative easing - buyback
Enormous increase in gilt issuance partially offset by near-term quantitative easing
No
min
al a
mo
un
t is
sue
d £
bn
Source: UK Debt Management Office (DMO), at April 2009
Actual Forecast
‘Elephant is about to leave the room’
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Seven stages of scepticism
“The economy won’t recover” Already under way
“The recovery will be weak” Usually strong after deep recessions
“A second dip is coming” “Double dip” recessions unusual – watch money trends
“Medium-term growth will be slow” “Structural drags” possibly overstated
“Price stability won’t last” Medium-term inflation risk
“It’s all priced in” Equities inexpensive assuming return to “normality”
“Higher rates will kill the rally” Limited impact while below “neutral”
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Please see us at the Exhibition……
New fund launch – Richard Pease’s European Special Situations
Multi Manager range – performance and process
Fixed Income range
Fund Range and Managers
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Important InformationThis document is solely for the use of professionals and is not for general public distribution.
This document is issued and approved by Henderson New Star and is solely for the use of professionals, defined as Eligible Counterparties or Professionals in the Glossary of the Financial Services Authority’s Handbook of Rules and Guidance for Authorised Firms made under the Financial Services and Markets Act 2000, and is not for general public distribution. Any other persons who receive this document should not rely on or act upon its contents.
This document may not be reproduced in any form without the express permission of Henderson New Star and to the extent that it is passed on care must be taken to ensure that this reproduction is in a form which accurately reflects the information presented here. No responsibility or liability is accepted by Henderson New Star or by any of its directors for any action taken on the basis of the content of this document.
This document has been produced based on Henderson New Star’s research and analysis and represents our house view. The information is made available to clients only incidentally. Unless otherwise indicated, the source for all data is Henderson New Star. Any reference to individual companies is purely for the purpose of illustration and should not be construed as a recommendation to buy or sell or advice in relation to investment, legal or tax matters. This document does not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase any investment, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract for the same.
Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. Tax assumptions may change if the law changes and the value of tax relief will depend upon individual circumstances.
Issued in the UK by Henderson New Star. Henderson New Star is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management plc (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no.1795354), New Star Asset Management Limited (reg no. 3984658) and New Star Investment Funds Limited (reg no. 4033107) (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE and authorised and regulated by the Financial Services Authority) provide UK retail investment products and services. Telephone calls may be recorded and monitored.
Henderson Global Investors201 Bishopsgate, London EC2M 3AETel: 020 7818 1818 Fax: 020 7818 1819