EARNING SUSTAINABLE YIELD
Bob Swanson
Principal & Portfolio Manager
Cambridge Global Asset Management
October 2013
WHEN ECONOMIES RECOVER …
'08 '09 '10 '11 '12 '1375
80
85
90
95
100
105
110 Composite Index Of 10 Leading Indicators (2004=100), Index - United States Recession Periods - United States
Source: Factset
Composite index of 10 leading indicators
RATES SHOULD GO HIGHER
2.71
'08 '09 '10 '11 '12 '131.0%1.0%
1.5%1.5%
2.0%2.0%
2.5%2.5%
3.0%3.0%
3.5%3.5%
4.0%4.0%
4.5%4.5%
5.0%5.0%US 10Y Treasury Yield
Source: Factset
U.S. 10-year Treasury yield
WHEN RATES GO HIGHER … “SAFE ASSETS” BECOME LESS SAFE
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
SPRTRE (CdnREIT Index)
SPRTCM (CdnIncome trust
Index)SPTSUT (CdnUtilities Index)
STTELS (CdnTelecom Index)
DEX BONDINDEX
Year-to-date returns to August 28, 2013
Source: Factset
AND EQUITIES BENEFIT
0%
5%
10%
15%
20%
25%
S&P/TSXComposite
Index
SPTXDV*(Cdn
Aristocrats)
S&P500 Index SPHYDA*(S&P500
Aristocrats)
MSCI WorldIndex
MSCI EAFE MSCI ACWIHigh DividendYield Index*
Year-to-date returns to August 30:
*Year-to-date to August 28, 2013Source: Factset, Bloomberg
THE BEGINNING OF THE GREAT ROTATION? THIS WILL SUPPORT EQUITY PRICES
Source: EPFR Global, Citi Research
OVERWEIGHT EQUITIES/UNDERWEIGHT INCOME SUBSTITUTES ACROSS ALL INCOME-ORIENTED MANDATES
High Income Fund Asset Allocation FundGlobal Dividend
Fund
Bonds (investment-grade, high-yield, convertibles) 18 9 0
Preferreds 2 4 0
Real assets – REITs and infrastructure (includes pipes, telcos, utilities)
18 11 0
Total income instruments 38 24 0
Equities 47 60 85
Total equities 47 60 85
Cash 15 16 15
Total 100 100 100
Current positioning:
Source: CI Investments, August 30, 2013
GEOGRAPHIC DIVERSIFICATION WITH SIGNIFICANT EXPOSURE OUTSIDE CANADA
Cash
Canada
U.S.
InternationalCanada
U.S.
Cash
International
Canada
U.S.
Cash
International
Cambridge Canadian Asset Allocation Corporate Class:
Cambridge Global Dividend Fund:
Cambridge High Income Fund:
Source: CI Investments
WHEN INVESTORS ARE CAUTIOUS, DIVIDEND STOCKS DO BEST
S&P 500
S&P Aristocrats
'09 '10 '11 '12 '1340
60
80
100
120
140
160
180 (INDEX) S&P 500 - Price Index (INDEX) S&P 500 Dividend Aristocrats - Price Index
TSX Aristocrats
TSX
'09 '10 '11 '12 '1340
60
80
100
120
140
160
180 (INDEX) S&P/TSX Dividend Aristocrats - Total Return Index (INDEX) Canada S&P/TSX Composite - Total Return Index
Source: Factset
IT’S HAPPENING GLOBALLY
ACWI High Div
Yld
MSCIACWI
'09 '10 '11 '12 '1350
60
70
80
90
100
110
120
130
140
150 (INDEX) MSCI ACWI High Dividend Yield - Total Return Index (INDEX) MSCI Kukje (ACWI ex Korea) - Total Return Index
Source: FactSet
MORE DIVIDEND OPPORTUNITIES EXIST OUTSIDE CANADA
0
50
100
150
200
250
300
350
400
5 years 10 years 25 years
U.S. Europe Canada
# of
com
pani
es
Number of companies with consecutive years of dividend growth
Source: Factset
DIVIDEND GROWERS ARE THE BIG WINNERS
Source: Ned Davis Research
AND PAYOUT RATIOS ARE LOW SO DIVIDENDS HAVE ROOM TO GROW
A SOURCE OF INFLATION PROTECTION: 3M – 54 YEARS OF CONSISTENT DIVIDEND GROWTH
Source: FactSet Fundamentals
BENEFITS OF DIVIDEND GROWTH
• Lower volatility
• Attractive total returns
• Income growth over time – inflation protection
CAMBRIDGE GLOBAL DIVIDEND FUND
• Seeks stable companies with consistent performance
• Focus on dividend growing companies
• Global diversification
• Active currency management to mitigate exchange rate risk and reduce volatility
• A reliable source of monthly income when purchased in the trust structure
GEOGRAPHIC AND SECTOR DIVERSIFICATION
Consumer disc.
Consumer staples
Energy
FinancialsHealthcare
Industrials
Tech & Telecom
Materials
Utilities
Cash
Canada
Americas
Europe/Asia
Sector allocation: Geographic allocation:
Source: CI Investments
As at August 30, 2013:
FUND CHARACTERISTICS
Cambridge Global DividendTop holdings
as of August 31, 2013
Roche Holding 4.5%
Croda International 4.4%
Volkswagen 4.0%
Modern Times Group 3.4%
Johnson & Johnson 3.2%
Brinker 3.0%
Smith & Nephew 2.9%
Becton Dickinson 2.9%
Ahold 2.9%
Cap Gemini 2.7%
Total 33.9%
Source: CI Investments
CONSISTENT OUTPERFORMANCE WITH CAMBRIDGE
Year-to-date 1 year 2012 3 year 5 year Since inception
Cambridge Canadian Asset Allocation Corporate Class 11.7% 14.3% 3.5% 9.8% 4.4% 4.5%*
Cambridge Income Fund 6.5% 8.4% n/a n/a n/a 6.8%***
Cambridge High Income 4.1% 7.0% 6.2% 8.7% 7.5% 10.1%****
Cambridge Canadian Equity Corporate Class 17.1% 25.5% 16.7% 16.1% 6.3% 6.6%*
Cambridge Global EquityCorporate Class 19.8% 26.0% 15.1% 12.4% 4.0% 4.9%*
Cambridge Canadian Growth Companies Fund 25.0% 41.5% 40.5% n/a n/a 27.0%†
Cambridge American Equity Corporate Class** 25.1% 28.1% 8.2% 13.5% 3.4% -4.2%**
Source: RBC Dexia, August 31, 2013
*December 31, 2007***January 9, 2012
****July 2, 2004†February 15, 2011
**Cambridge Global Asset Management took over management of Cambridge American Equity Corporate Class in June 2011, inception date of fund is February 24, 2000**
FundFund Code
Assets(million)
Foreign Content
Cambridge Canadian Equity Corporate Class CIG2321 $2,461.7 maximum 49%
Cambridge Canadian Asset Allocation Corporate Class CIG2322 $1,141.9 maximum 49%
Cambridge Global Equity Corporate Class CIG2323 $1,158.5 no restrictions
Cambridge Income Corporate Class CIG2261 $423.4 no restrictions
Cambridge Income Fund CIG635 $168.7 no restrictions
Cambridge High Income Fund CIG6803 $476.1 no restrictions
Cambridge American Equity Corporate Class* CIG294 $508.0 no restrictions
Cambridge American Equity Fund* CIG 212 $152.0 no restrictions
Cambridge Canadian Growth Companies Fund CIG11108 $365.5 maximum 49%
Cambridge Canadian Pure Fund CIG11109 $47.4 maximum 10%
* Effective June 5, 2011 funds were renamed from CI American Equity Corporate Class and CI American Equity Fund.
Source: RBC Dexia at August 31, 2013
CAMBRIDGE OFFERS A VARIETY OF MANDATES
EXPANDING THE CAMBRIDGE TEAM
FROM $2 BILLION TO $8 BILLION IN JUST TWO YEARS
• Added two Canadian equity mandates that are now two of the best performing funds in Canada
• Launched Cambridge Income Fund and subsequently adopted Cambridge High Income Fund to satisfy investor demand for income
• Added numerous mandates outside of Canada to diversify asset base including Cambridge American Equity Fund and Cambridge Global Dividend Fund
• Expanded the team, which now consists of nine members • Successful on the macro and micro level
– Bonds vs. equities– Commodities – U.S. equity market
Thank you
FOR ADVISOR USE ONLY
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise indicated and except for returns for periods less than one year, the indicated rates of return are the historical annual compounded total returns including changes in security value. All performance data assume reinvestment of all distributions or dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Cambridge Global Asset Management is a business name of CI Investments Inc. used in connection with its subsidiary, CI Global Investments Inc. Certain portfolio managers of Cambridge Global Asset Management are registered with CI Investments Inc.
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