Standard Life Investment Update September 2019 For financial advisers only
Agenda • Market outlook • Focus on Global Property • MyFolio update • Vanguard
Market Outlook
The House View Remains pro-risk but expects further volatility Key questions for investors to ask: • Will the global economy fall into recession? No, Manufacturing is in a modest recession, other sectors are expected to remain firm • Will central bank actions be effective? We think rate cuts plus easier fiscal policy will support moderate growth • Will political and geopolitical tensions die down? No. This is the new normal • What is priced into the markets? Slow growth in equities, recession in bonds • What do valuations and investor sentiment tell us? Valuations are relatively attractive, sentiment is rather depressed • How should investors prepare portfolios for volatility? 4
What does it all mean for markets? House View tactical asset allocation Tactical funds Yen FX European High Yield Bonds Overweight Emerging Market Local Debt US High Yield Bonds US TIPS US Equity Australian Bonds Emerging Market $ Debt Japanese Equity Emerging Market Equity UK Gilts Core & Peripheral European Bonds UK Corporate Bonds Neutral European Corporate Bonds UK Equity UK, US, & European Real Estate Sterling FX US Dollar FX UK Inflation-Linked Debt US Corporate Bonds Pacific ex-Japan Equity European Equity Cash Underweight Euro FX Japanese Bonds US Treasuries 5
Expected asset risk and return 2019 ASI long-term return forecasts - 5Y horizon EUR hedged, % pa 5 UK Equities EM Sovereign Debt (Local)* Europe ex UK Commercial Property Infrastructure Social Europe ex UK REIT Europe ex UK Equities Infrastructure Renewables 4 Emerging Markets Equities* Global Commercial Property 3 Expected return Pacific ex Japan Equities Japan Equities Global Equities EM Sovereign Debt (Hard) 2 US Equities US High Yield Bonds 1 Euro Inflation-Linked Govt Bonds Euro IG Bonds 0 Euro Govt Bonds EUR Cash 3M LIBOR Global IG Bonds Global DM Govt Bonds -1 1 3 5 7 9 11 13 15 17 19 21 23 25 27 Expected volatility Equities Rates Credit Alternatives Cash *EUR Unhedged Source: ASI, 2H2019 Note: Returns are over five years (EUR hedged) on a per annum basis. Return projections are estimates and provide no guarantee of future results. 6
Conclusions Focus on change in a fast changing world • We have moderate levels of risk in our portfolios across a variety of asset classes • These are supported by valuations, by investor positioning and by profits growth • 2019-20 is unlikely to see a recession, but the efficacy of stimulus measures has yet to be seen • Volatility could be triggered by further trade tensions, policy errors or political risks • Portfolios remain in tactical mode and continue to look for diversifiers 7
For professional clients only – Not for public distribution Past performance is not a guide to future results. The value of investments, and the income from them, can go down as well as up and clients may get back less than the amount invested. Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments The views expressed in this presentation should not be construed as advice or an investment recommendation on how to construct a portfolio or whether to buy, retain or sell a particular investment. The information contained in the presentation is for exclusive use by professional customers/eligible counterparties (ECPs) and not the general public. The information is being given only to those persons who have received this document directly from Aberdeen Asset Managers Limited or Standard Life Inves tments Limited (together “Aberdeen Standard Investments”) and must not be acted or relied upon by persons receiving a copy of this document other than directly from Aber deen Standard Investments. No part of this document may be copied or duplicated in any form or by any means or redistributed without the written consent of Aberdeen Standard Investments. The information contained herein including any expressions of opinion or forecast have been obtained from or is based upon sources believed by us to be reliable but is not guaranteed as to the accuracy or completeness. The MSCI information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from marketing) any kind of investment decision and may not be relied on as such. Historical data and analysis, should not be taken as an indication or guarantee of any future performance analysis forecast or prediction. The MSCI information is provided on an ‘as is’ basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the ‘MSCI’ Parties) expressly disclaims all warranties (including without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (www.msci.com). Any data contained herein which is attributed to a third party ("Third Party Data") is the property of (a) third party supplier( s) (the “Owner”) and is licensed for use by Standard Life Aberdeen*. Third Party Data may not be copied or distributed. Third Party Data is provided “as is” and is not warranted to be accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, Standard Life Aberdeen* or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to which Third Party Data relates. * Standard Life Aberdeen means the relevant member of Standard Life Aberdeen group, being Standard Life Aberdeen plc together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time. Aberdeen Asset Managers Limited, registered in Scotland (SC108419) at 10 Queen’s Terrace, Aberdeen, AB10 1XL. Standard Life I nvestments Limited registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Both companies are authorised and regulated in the UK by the Financial Conduct Authority. DK-100919-98704-1 8
For financial advisers only Property
Property options with Standard Life 1. UK Property ▪ Invests mainly in UK commercial properties across the retail, office and industrial sectors 2. Access to Global direct property – Global Real Estate Fund ▪ The Global Real Estate fund invests in global direct and indirect property 3. Property Shares – Global REIT Fund ▪ Invests in listed property investment trusts (REITs) and quoted property companies 4. Residential Property ▪ Clients can buy residential property in Ireland, England or Wales through our pension and approved retirement funds
Historically traditional asset classes have delivered
Ten year returns forecast 5 EM LOCAL SOV DEBT EM EQUITIES 4 GLOBAL EQUITIES GLOBAL COMMERCIAL PROPERTY Expected return p.a. (%) 3 2 1 EUR CASH GLOBAL IG BONDS US TREASURIES EURO GOVT BONDS 0 0 5 10 15 20 25 30 GLOBAL DM GOVT BONDS -1 Expected volatility p.a. (%) Note: The cash-equity line serves to illustrate risk-adjusted relative performance. Assets above the line are expected to outperform a portfolio of equivalent risk containing only cash and equities; assets below are expected to underperform. Returns projections are estimates and provide no guarantee of future results. Equities are unhedged . All other asset classes are hedged to Euro. 12 Source: Aberdeen Standard investments, August 2019
Why global property make sense? ▪ Can provide further diversification to a multi-asset portfolio ▪ Can provide much needed diversification to Irish or UK focused property portfolio ▪ Irish & UK Property markets are both late in the cycle ▪ Exposure to a single property market can expose investors to significant single- country risk, e.g. the Irish commercial property market saw capital values fall by more than 2/3rd during the financial crisis ▪ Investing globally gives rise to the potential for higher risk-adjusted returns than a domestic only property portfolio. A global property portfolio outweighs a domestic-only property portfolio in terms of return per unit of risk.
Risk and reward: Global property markets Source: IPD / MSCI, Aberdeen Standard Investments Regional aggregates in USD Fixed exchange rate, all other data in local currency
Aberdeen Standard Investments - global property capabilities Global property powerhouse €47bn of property assets under management Managed by an experienced global property team (270 professionals) with a proven investment process Foot-on-the-ground approach 19 international offices Source: Aberdeen Standard investments, 30 June 2019
Recommend
More recommend
