pioneer global asset management new york – february 2003
TRANSCRIPT
Pioneer Global Asset Management
New York – February 2003
2
2002 Overview
Structure and Governance
Future Perspectives
3
Structure and Governance
Pioneer Investments is part of UCI group, whose structure has been designed to exploit all the existing business potential and to drive future growth
UCI
RetailBank
Retail division
Corporate division
Private & AM division
New Europe division
Corporate bank
Privatebank
Xelion
New Europe Banks
4
Structure and Governance
Strong Senior Management Team
PGAMDario Frigerio
(CEO)
Dublin
Milan
Momentum Intl
USA
Canada
Mexico
Italy
Cont. Europe
Latin America
Asia
Poland
Czech Rep.
Turkey
Slovakia
COO
Angelo Forloni
CIO
Giordano Lombardo
USA
Dan Geraci
(CEO PIM Inc.)
INTERNATIONAL
Matteo Perruccio
(CEO PIM Sgr & Head of Intl.)
NEW EUROPE
Dan Kingsbury
(CEO N.E.)
ALTERNATIVE INV.
Alberto La Rocca
(CEO Alt. Inv.)
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Total number of employees: 1,632(as of 31 December 2002)
Audit
Structure and Governance
A lean Holding Company: strong Investment, Distribution and Operations structures
OperationsDistribution Investment
Boston
Milan Dublin
Singapore390
240
958
Pioneer Global AssetManagement
Risk Management
Global Finance
Strategic Planning
Compliance & Org.
44
Holding Company
Human Resources
Inform. Technology
Research Unit
UCI
6
Singapore
WarsawPrague
Boston
Dublin
Hong KongMiami
Buenos Aires
Paris
Madrid MilanMunichLondon
Structure and Governance
A Global Presence …
7
Pioneer IM Inc
Boston
Pioneer IM Ltd
Dublin
Pioneer IM SgrpA
Milan
Pioneer IM
Singapore
Structure and Governance
… leveraging on four Manufacturing Centres
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Structure and Governance
The four pillars of Pioneer as a “Best Practice Company”
Consistency in Communication: Performance Presentation Standards - GIPS /AIMR Compliant
Risk Control: Segregated Investment and
Operational Risk Management
Asset Management: Disciplined investment
process and client oriented philosophy
Corporate Governance: Active role of
Independent Directors, Self Regulation Code
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Investment Risks are controlled within the Investment Division and are reported ultimately to the
Global Chief Investment Officer. Independent monitoring is run by Risk Management function which
reports to the Board of Directors
Operational Risks are controlled by the Risk Management function, providing guidance and support
to employees and executive management. All Pioneer employees have responsibilities for managing
operational risks.
Risk Management
Risk Management
* Portfolio Risk
DimensionsDimensions
CategoriesCategories
Structure and Governance
Focus on Risk Management
InvestmentInvestment RiskRisk * *InvestmentInvestment RiskRisk * * Operational Risk Operational Risk Operational Risk Operational Risk
OrganisationalOrganisationalOrganisationalOrganisational
MarketMarketMarketMarket CreditCreditCreditCreditBusinessBusinessBusinessBusiness EventEventEventEvent
LiquidityLiquidityLiquidityLiquidity
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2002 Overview
Structure and Governance
Future Perspectives
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EBITA in line with 2001 thanks to: Good revenue stream, due to:
product innovation in Italy strong sales in USA, New Europe and International
business areas cost control
Strong relative performance of leading funds
Higher Third Party penetration and Brand Awareness
2002 Overview
Most important achievements
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145
408597
1.376
2.863
220
579
973
3.211
1.342
-
500
1.000
1.500
2.000
2.500
3.000
3.500
US International Italy New Europe AlternativeInvestments
(1) Excluding Proprietary Funds(2) Net Sales already included in the other divisions; AuM including Momentum (acquired in Nov. 2002)
TOTAL PIONEER
Italy
(Euro mln)
USA
International
Net Sales 2001(1)
Net Sales2002(1)
5,242.3
1,375.7
2,862.6
6,045.4
3,211.1
972.7
1,342.2
17,659
2,754
103,474
New Europe 578.7
Alternative Investment(2) 145.2
407.5
596.5
220 1,520
1,522
80,655
PGAM Net Sales (Mln EUR)
2001 2002
2002 Overview – Focus on Sales
Record net sales in the US, New Europe and International business areas; positive sales in Italy
AuM31.12.’02
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Innovative Capital Guaranteed Products:
WrapAccounts
Unit Linked
Adaptable to several risk profiles
Guarantee of capital
Flexible segregated accounts, invested in Pioneer funds and securities linked to a 5-year put option
Guarantee: 100% of the investment including entry fees, plus the option cost
Maximum weight of equities: 60% of total assets
Hedge Funds
Single Strategy Hedge Funds
Funds of Hedge Funds (Momentum)
Structured products on Hedge Funds
2002 Overview – Analysis by business area
Italy - Shift towards high value added products: Capital Guaranteed, Unit Linked and Hedge Funds
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Hedge Funds:
20.18% Mkt. Share (as of 31.12.2002)
Unit Linked:
17.72% Mkt. Share (as of 30.06.2002)
Mutual Funds:
13.32% Mkt. Share (as of 31.12.2002)
UCI current accounts and other deposits:
9.50% Mkt. Share (as of 30.09.2002)
Source: Assogestioni for Mkt. Shares in Hedge and Mutual funds; IAMA for Unit Linked and ABI for UCI current accounts and other saving deposits
2002 Overview – Analysis by business area
Italy – Benefiting from a long tradition in innovation, Pioneer has gained leading market share in new products
Innovative Products
vs.
Traditional Products
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Signed agreements with major global platforms: UBS Paine Webber, Salomon Smith Barney, Lehman Private Clients, Standard Chartered, Crédit Suisse Fund Lab., Merrill Lynch, Prudential Bache
Agreement with Primary Spanish Bank New mandate from GIC (Singapore) Penetration into new markets (HK, Switzerland)
New Mandates
First launch of guaranteed notes Launch of guaranteed products
New products
Top ranking in Chilean Pension System (out of 59) Top ranking in Merrill Lynch offshore platform Top ranking in Prudential Bache platform # 1 foreign fund brand in Germany
High Ranking
2002 Overview – Analysis by business area
International – New mandates and new products
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Pioneer High Income Trust Lead underwriters: Merrill Lynch and UBS Paine-Webber Over $ 500 million raised in one-month offering
First closed-end mutual fund
2 asset-allocation concepts (for financial advisors)
Double Feature: combination of Pioneer Equity Income Fund and Pioneer High Yield Fund in a single portfolio offering competitive performance and low volatility through negatively correlated investments
Pioneer 4: a diversified mix of Pioneer Fund, Pioneer Mid Cap Value Fund, Pioneer Small Cap Value Fund and Pioneer High Yield Fund that outperformed the S&P 500 over the past 3+ years with significantly less volatility
Innovative principal-protected mutual fund
Over $160 million raised in less than 2 months
UNI-K: Innovative individual retirement account
2002 Overview – Analysis by business area
USA – 2002 Major initiatives/achievements
Co-branded with Merrill Lynch and H&R Block
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Poland
Continued shift from saving deposits to fixed income funds despite tax disadvantages (+75% AUM growth)
Launch of closed-end tax-advantaged products Launch of 2 USD fixed income products (clones of Pioneer US funds)
Czech Republic
Launch of a Luxembourg funds family
Slovakia Start of sales of international products
Croatia
First-move into the market and launch of a balanced fund jointly with Zagrebacka Banka
2002 Overview – Analysis by business area
New Europe: Leveraging on Euro-convergence and international products
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Revenues(2)
401.1
9M02 … revenues are in line with 9M01 …
107.8
Avg AuM(2)
Managerial EBITA(1)
120.7
Despite lower AuM due to market conditions …
… and EBITA improves thanks to cost control
(1) Accounting Gross Operating Inc. + Interest expenses + Non-cash Operating items. (2) Revenues from pure Asset Management business.
Good net sales trend outside Italy and related strong performance of underwriting fees (+69.4% y/y)
Confirmed commitment on cost reduction and monitoring, resulting in increased efficiency
9M01
403.9
110.3
113,8
‘02/’01% ch.
-2.3%
-0.7%
+6.1%
2002 Overview – Key Financial Indicators
Sustained profitability, despite difficult market conditions, …
9M02 9M01
9M02 9M01
Euro bn
Euro mln
Euro mln
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European Equities
Bonds
US Equities
Pioneer US High Yield Corporate Bond**
Pioneer Strategic Income**
Pioneer Euro Short Term***
Pioneer Fund*
Pioneer Small Cap Value*
Pioneer US Small Companies***
Pioneer US Mid Cap Value***
Pioneer US Value***
Pioneer Independence***
Pioneer French Equity**
Pioneer Top European Players***
Pioneer European Small Companies***
Pioneer Euro Select***
2002 Overview – Focus on Fund Performance
… coupled with strong relative fund performance in leading segments…
Note: * Over 5 years history – Comparison with peers universe for the last 5 years** Over 3 years history but less than 5 years – Comparison with peers universe for the last 3
years *** Over 1 year history but less than 3 years – Comparison with peers universe for the last 1 years
Top Quartile Funds
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2002 Overview – Focus on Fund Performance
… and on average overperforming benchmarks in bond and equity portfolios
0% 25% 50% 75% 100%
Balanced
Bond
Equity
Total
1 Year 3 Year 5 Year
% Funds outperforming Benchmark
1,3,5 years to December '02
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Period: January 1999 - December 2002
Italian domiciled
Pioneer Conservative Hedge
Pioneer Balanced Hedge
Pioneer High Risk Hedge
Dublin domiciled
Pioneer Global Opportunities
Pioneer Convertible Bond Arbitrage
Pioneer Global Equity Arbitrage
Pioneer Long Short European Equity
Pioneer Global Macro
Note: *Risk free rate for computing Sharpe Ratios at 4% ** Since inception (April 1999) *** Since May 1995
Momentum
All Weather Funds
Orbit Funds
Meteor Funds
Capital Guaranteed Funds
2002 Overview – Focus on Fund Performance
New Products: Hedge Funds
Morgan Stanley World Equity -31.1% 8.9% 16.6% -0.78%
JP Morgan Global Govt Bond
CSFB/Tremont HF Index
Pioneer Global Opportunities**
Momentum All Weather Fund***
15.0%
37.8%
26.4%
96.8%
3.6%
8.3%
6.5%
9.2%
6.9%
7.6%
4.9%
3.6%
-0.06%
0.57%
0.65%
1.19%
Annualised Volatility
Sharpe Ratio*
Annualised Return
Total Return
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2002 Overview
Structure and Governance
Future Perspectives
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ContinentalEurope
North America
New Europe
Further enhance leadership in Asset Management in
close cooperation with UCIBe the best in class
provider for UCI Group, while building international presence through selected
Third Party channels
Pioneer Investments
Position Pioneer for Market Share Growth and Introduce
Wealth Management Products
Future Perspectives – Strategic Guidelines
Leveraging on three business divisions with a clearly defined mission
Latin AmericaAsia
Mainly Bank/Insurance Captive Networks and Global Distribution
Open Platforms
Euro-convergence
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* Pertaining to Asset Managers only** The switch effect has been calculated assuming that in Europe in a 15 year time at least 45% of household financial
assets will be institutionally managed Source: PGAM Research
Medium-term sustainable AuM growth
28%28%
Disposable Income/Household financial assets
12%12%
Financial savings/Disposable Income
3.3%3.3%
0.5%0.5%
Risk premium effect
2%2%
Inflation
2.5%2.5%
Real GDP Growth
5%5%
Performance
++
xx
11%11%
AuM growth
2.7%
2.7%
Switch effect into retirement**
Net inflows
European Asset Management Revenue* and AuM growth (% Change)
7.9
-6.7
7.5
-10.9
17.6
35.6
1999-20001998-1999 2000-2001
Revenue
AuM
Is it realistic?
Financial saving
/HFA
Future Perspectives – Focus on Continental Europe
Still a positive medium-term scenario for Asset Managers in Europe ...
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Total Household managed assets*/Household financial assetsData as of 2000
* Calculated including mutual funds, pension funds, life insurance and segregated accounts** Germany, France, Italy, Spain
Source:PGAM Research on National statistics data
35%
24%30%
24%29%
59%55%
47%
France Italy Germany Spain Europe (4) **Netherlands UK US
45% target in 15 years
Penetrationpotential
Penetrationpotential
Future Perspectives – Focus on Continental Europe
... thanks also to the expected alignment of household portfolios to Dutch, UK and US standards
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Gain recognition as
independent manager Excellence in products
such as European equities,
US value, corporate bonds Focus on high growth
segments of open platforms Customization and client
servicing for selected
channels (A.I., Structured
Products)
DistinctiveDistinctiveMissionMission
One One platform, platform,
twotwo distribution distribution
modelsmodels
DistinctiveDistinctiveMissionMission
One One platform, platform,
twotwo distribution distribution
modelsmodels
Proprietary Model
Third Party Model
Synergies and cross- fertilization
Vertical integration with
distribution Continuous innovation Scalability Operational efficiency in risk
management Advice role Brand
Future Perspectives – Focus on Continental Europe
Our strategy: devising a winning combination of two distribution models
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Retail
Corporate
Private
Internationally recognised Brand
Best practice in client services
Ability to innovate and segment product and service offerings
“Pioneer Inside”
Cross–fertilization of global expertise
Personalised solutions/ Industrialised processes
Future Perspectives – Focus on Continental Europe/Italy
Our consolidated expertise in the proprietary model is a strong competitive advantage within UCI new organization
28
Pioneer(Manufacturing)
UniCredit Private A.M.
(Specialist)
UCI Private Banking
(Relationship)
Product Development
Packaging
Profiling
Personalization of strategies on single client portfolios “personalized model”
Client relationships
Sales effort
Asset management advice
Product Development and marketing strategies
Stock Picking Modelling
A/L Risk Modelling “industrial model”
Future Perspectives – Focus on Continental Europe/Italy
Two examples: one for the Wealth Management Division …
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Model returns on investment classesLiabilities model
Dynamic optimization model for assets-liabilitiesRisk preferences
Investment horizon
Dynamic Investment Decisions
The Pioneer/Cambridge model
Future Perspectives – Focus on Continental Europe/Italy
… and one across all client segments including mass/affluent and institutional
Long-term Retirement Products
Capital Guaranteed & VaR Constrained
Portfolios
Multi Manager
Target Portfolios
Since 1999 Pioneer has been engaged with the University of Cambridge-UK in a joint research on Asset Liability Management, that has now delivered the first operational models.
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Focus on strategic relationships
Excellence in key products Gaining Third Party Mandates proposing “non transactional” deals Focus on Funds of Funds, Structured Products, Institutional and Private Banking
Build Hedge Funds business
Focus on key partners and value added of being integrated provider with full range of Long, Alternative + Structured Products
Brand Recognition
“Pioneer Investments is the most distinguished brand in the financial services sector in Germany”*
* Source: Capital Corporate Branding survey – Sector Analysis 2002
Future Perspectives – Focus on Continental Europe (ex Italy), LatAm and Asia
Gaining even broader recognition as leading third party player in Europe, LatAm and Asia
31
Diversify Pioneer’s mix of equity and fixed income fund sales through multi-asset class fund packages (e.g., Pioneer Four, Double Feature)
Actively promote and distribute Pioneer’s hedge fund strategies (institutional and retail)
Close gaps in product range (investment styles; various disciplines)
Upcoming Initiatives
New Product Launches
Separate account strategies and capabilities
Enhanced variable annuity products now wrapped by Travelers Insurance Company
Tax deferred education savings program (i.e., 529 Plan)
Institutional mandates across all appropriate disciplines
Future Perspectives – Focus on USA
Position Pioneer USA for market share growth and introduce Wealth Management products
32
Launch clones of Pioneer Euro funds (fixed income, balanced, &equity) Launch Savings Plan program with Bank Pekao Work to shift emphasis from local fixed income to local balanced & equity
and to international strategies
Poland
Czech Republic Complete registration of fixed income portion of Luxembourg family product line Determine synergies with Zivnostenska Banka asset management
Slovakia
Croatia
Turkey
Launch a Luxembourg fund family
Launch guaranteed products
Explore and develop opportunities with new financial service joint venture between UCI and the Koc Group
Future Perspectives – Focus on New Europe
Further enhance leadership in Asset Management in close cooperation with UCI local banks
33
Indust
rialis
e
d Pro
cess
Pionee
r
Personalis
ed
Solutio
ns
/
Future Perspectives – Strategy Synopsis
Our Mission: Help distributors to best service their clients by optimising portfolio strategy and risk control