risk managed funds – quarterly update hector kilpatrick, chief investment officer 27 th january...

Risk Managed Funds – quarterly update

Hector Kilpatrick, Chief Investment Officer27th January 2016

for professional advisers only

Welcome

The objectives of this session are to explain:

• why we see echoes of 2007 & Q1 2008 in the markets

• why we are becoming less bullish on Japanese equities

• why a US ‘goldilocks’ economy is essential to support market levels

US Manufacturing & Services ISM

Services ISM in Green

Source: ISM, BloombergTime (1999 => 2015)

US Manufacturing ISM & recessions

ISM <45…… 13x since WW2, 11x recession

US manufacturing and trade inventories/sales

Time (2006 => 2015)Source: Bloomberg, US Census Bureau

US credit cycle – lending to corporates

Time (2001 => 2015)Source: Bloomberg, Fed. Reserve

Barclays US High Yield spread index

Time (2006 => 2016)Source: Bloomberg, Barclays

UK saving rate

Time (1980 => 2015)Source: Bloomberg, ONS

UK Halifax Residential Prices (all dwellings, NSA)

Time (1996 => 2015)Source: Bloomberg, Lloyds

Japanese Yen vs USD

Time (2006 => 2016)Source: Bloomberg

10 year Japanese Gov. debt yield (%)

Time (2006 => 2016)Source: Bloomberg

BoJ’s holdings in Japanese equity ETFs

US Bank sector rel performance vs S&P500

Time (2014 => 2015)Source: Bloomberg, KBW

Portfolio positioning

Heavy: Light:Absolute return Equities

Strategic bond Gilts

Cash Property

Source: Cornelian

Risk Managed Funds

* The Managed Income Fund has not been rated by Distribution Technology but is managed by Cornelian to sit below upper limit of DT5. Managed Income Fund was launched on 20th March 2015 and it has not yet been included into the Defaqto Risk Targeted Fund Family. ** The investment team constructs the portfolio to ensure that the expected volatility of each fund stays below the maximum expected volatility level ascribed, in normal circumstances.*** Net of fees, over the investment cycle.

Source: Cornelian, DT, Defaqto

Performance to end December 2015

Risk Warning

17

Cornelian Asset Managers Limited is authorised and regulated by the Financial Conduct Authority. This material is directed at professional financial advisers only.

You should remember that the value of investments and the income derived there from may fall as well as rise and you may not get back the amount that you invest. Past performance is not a guide to future returns. Fund performance figures do not include any initial charge; if this is paid it will reduce performance from that shown.

Opinions expressed whether in general or both on the performance of individual securities and in a wider economic context represent the views of Cornelian Asset Managers Limited at the time of preparation. They are subject to change and should not be interpreted as investment advice. Cornelian Asset Managers Limited and connected companies, clients, directors, employees and other associates, may have a position in any security, or related financial instrument, issued by a company or organisation mentioned in this document.