Download - 06.12.16 Andy Ivory Corr
Investment in a complex world
Andy Ivory-Corr, QFA, Grad Dip, CFP®
Head of Investments
New Ireland Assurance
Listowel Arms Hotel, Co. KerryTuesday 6th December, 2016
Since March 2009, investment recovery has been strong!
Warning: Past performance is not a reliable guide to future performance.
Equity volatility 2012 to 2014 – what is that?!
Source: SSGA. Developed Market Equity returns
2016: Volatility is back!
What has made us money in 2016……….
Currency
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 termSource: 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
7
2017 will witness a number of issues for markets to deal with!
OilPolicy
Policy distortions: QE = EPO for equities?!
Warning: Past performance is not a reliable guide to future performance.
A simple perspective on returns!
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.
Government Bond yields offer little upside!
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Ireland: 10yr 0.83% Germany: 10yr 0.28% UK: 10yr 1.38%
Source: Bloomberg and Davy asset management 04/12/16
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
Germany: 10yr 0.05%
Germany: 10yr 1.05%
2015 demonstrated how volatile bonds can be!
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
2016……The end of the bond bull run?
What can we do to navigate this market in 2017?
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1. Be aware of your exposures to Bonds within your portfolio and be realistic about future returns.
2. Know why you might hold bonds -Annuity/diversification/return?
3. Remain well diversified.
“The only certainty about the future is the fact
that it will be different from the past”……Sir John Templeton
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
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%
17Warning: Past performance is not a reliable guide to future performance.
Investment Offers no Free Lunch: More Return = More Risk
Cash Deposits
Stocks &
Shares
Return
Ris
k
18Warning: 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!
19Warning: 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
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‘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.
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
Investing……3 key considerations!
Risk Profile:How much risk can/will you take
to try to achieve it?
Timeframe: How long do you have to achieve
it?
Objectives: What do
you want to achieve?
Blank
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Primary objective – generate a real return
Irish Inflation (CPI) = -0.30% Source: Inflation.eu end Oct 16
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Can anyone guess the commonality of these Items?
Current interest rates offer limited growth opportunity!
2011
> 5%
2012
> 4%
2013
<2%
2015
<1%
2016
<0.5%
Warning: Past performance is not a reliable guide to future performance.
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
Generating returns probably requires some measured risk taking!
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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
CashBonds
Real Estate
26Warning: 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
BondsEquities
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 for 2017?
Markets are more volatile (normalise?).
Deposit rates, lower for longer!
Bond markets remain expensive, little upside, plenty downside.
Generating returns, likely to require taking some level of risk.
Greater diversification to achieve the same result!
Risk Management remains a priority and vital investment
ingredient.
Good advice will be key, ABM financial advisers will be there to
support you.
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