Spring Partner Forum – Return of the bears? 1. Since we last met: Exuberance turned fearfulness - again 2. Portfolio activity 3. Portfolio returns 4. Outlook 5. Business news Lothar Mentel CEO & Chief Investment Officer April 2018 For professional use only Source: Hedgeye, 5 April 2018 1
Big picture (30 years since 1987) 2018 stock markets – overdue correction? 2017 ’08 -09 2016 GFC & Eurozone Crisis ’00 -03 + recovery Dot-com Bubble+Iraq Crash ‘98 Russia Crisis Source: Morningstar, 10 April 2018 Note: Past Performance is no guarantee for future returns. Index returns do not take into account the cost of advice and the cost of investing 2
Since we last met: Exuberance turns into fearfulness - again 2017 / 2018 Stock market melt-up and correction 3
‘Short’ picture (2 years since Q1 2016) Trend channel breakout and return Source: Bloomberg, 12 April 2018 4
What led to the Q1 2018 correction? From overheating fears to slow down fears Strong growth momentum + Trump’s tax reform = January’s equity ‘melt - up’ 1. US inflation concern triggered sell-off – exacerbated by volatility short sellers 2. 3. Volatility return triggers debate of valuation levels under ‘old normal’ 4. Macro economic data shows growth ‘coming off the boil’ 5. Second wave sell-off on slowing fears, rather than overheating and inflation! 6. Since then: Big Tech rethink; Trade wars; Middle East real war? 5
2. Portfolio activity 6
Mid Dec: US-$ bounce back on the cards – EM vulnerable Rebalance & Swap of trackers for active in US Mid Sep: and UK Mar 6th: US equity neutral EM equity Mid Feb 2017: to close USD short June 2016: Mid Oct: reduction US underweight Sell down of UK June 2017 UK underweight EZ overweight Comm. Property 5% equity Asia overweight Bond duration for UK gilts underweight Bond duration lengthened back And UK small cap shortened to benchmark for large cap Apr 2016: Rebalance back to neutral Feb 2016: Rebalance back to neutral Bond duration underweight End Aug 2016: Rebalance back to neutral Source: Morningstar, 24 Oct 2017 Note: Past Performance is no guarantee for future returns. Index returns do not take into account the cost of advice and the cost of investing
Tatton IM Risk Ratings of Portfolios 100 Protecting long term asset allocation benefits 90 20 80 40 55 70 69 60 83 51 91 Equities 50 Bonds 40 40 Cash 26 Alternatives 30 14 20 26 3 17 16 10 14 11 2 4 3 3 3 3 3 3 Current positioning
Tatton IM Risk Ratings of Portfolios Relative Bonds ‒ Underweight Fixed Income ‒ Underweight Equities Equities Cash ‒ Overweight Cash ‒ Overweight Alternatives Alternatives -30 -20 -10 10 20 30 8 7 6 5 4 3 Current positioning
Regional Exposure Relative EQ GEM ‒ Underweight Global Emerging Markets EQ APxJ ‒ Underweight Asia Pacific ex Japan ‒ Overweight Japan EQ Japan ‒ Underweight North America EQ NAm ‒ Overweight Europe EQ Europe ‒ Underweight UK EQ UK Current positioning -30 -25 -20 -15 -10 -5 5 10 15 20 8 7 6 5 4 3
3. Portfolio returns 11
2018 returns – Volatile as expected (sorry but we did say…!) Source: Morningstar, 14 April 2018 Note: Past Performance is no guarantee for future returns. Shown returns do not take into account the cost of advice and the cost of investing 12
Tatton Balanced 2018 year to date Source: Morningstar, 12 April 2018; Note: Past Performance is no guarantee for Falling less then others usually only future returns. Index returns do not take into account the cost of advice and the cost of investing appreciated once valuation turn positive
2017 -2018 returns – More adequate perspective (Tracker) Source: Morningstar, 10 April 2018 Note: Past Performance is no guarantee for future returns. Shown returns do not take into account the cost of advice and the cost of investing 14
Investment returns – Tatton Managed vs. IA peers Tatton Managed Year-to-Date Since Launch 1 Jan 2013 3 yr Relative to Relative to Tatton IA Sector Tatton IA Sector Annualised IA IA Volatility Defensive -1.7% -2.2% 0.5% 32.1% 25.7% 6.4% 4.3 Cautious -2.5% -3.2% 0.7% 46.7% 36.0% 10.7% 5.2 Balanced -3.1% -3.7% 0.6% 57.6% 43.9% 13.7% 6.1 Active -3.4% -4.1% 0.7% 68.6% 52.0% 16.6% 7.5 Aggressive -3.9% -4.0% 0.1% 75.7% 54.1% 21.6% 8.6 Global Equity -3.4% -4.0% 0.6% 45.5% 34.4% 11.1% 9.8 Note: To 31 Mar 2018; Tatton returns after DFM charge and underlying fund costs; Global Equity portfolio strategies only launched Nov 2013
Investment returns – Tatton Tracker vs. IA peers Tatton Tracker Year-to-Date Since Launch 1 Jan 2013 3 yr Relative to Relative to Tatton IA Sector Tatton IA Sector Annualised IA IA Volatility Defensive -1.4% -2.2% 0.8% 33.5% 25.7% 7.8% 4.1 Cautious -2.3% -3.2% 0.9% 43.3% 36.0% 7.3% 5.4 Balanced -3.0% -3.7% 0.7% 53.3% 43.9% 9.4% 6.5 Active -3.6% -4.1% 0.5% 65.9% 52.0% 13.9% 7.8 Aggressive -3.9% -4.0% 0.1% 76.7% 54.1% 22.6% 8.8 Global Equity -3.7% -4.0% 0.3% 45.0% 34.4% 10.6% 9.8 Note: To 31 Mar 2018; Tatton returns after DFM charge and underlying fund costs; Global Equity portfolio strategies only launched Nov 2013
Investment returns – Tatton Blended vs. IA peers Tatton Blended / Core Year-to-Date Since Launch 1 Jan 2013 3 yr Relative to Relative to Tatton IA Sector Tatton IA Sector Annualised IA IA Volatility Defensive -1.6% -2.2% 0.6% 33.8% 25.7% 8.1% 4.2 Cautious -2.4% -3.2% 0.8% 46.4% 36.0% 10.4% 5.2 Balanced -3.1% -3.7% 0.6% 56.6% 43.9% 12.7% 6.2 Active -3.5% -4.1% 0.6% 68.5% 52.0% 16.5% 7.5 Aggressive -3.9% -4.0% 0.1% 75.5% 54.1% 21.4% 8.6 Global Equity -3.5% -4.0% 0.5% 45.3% 34.4% 10.9% 9.7 Note: To 31 Mar 2018; Tatton returns after DFM charge and underlying fund costs; Global Equity portfolio strategies only launched Nov 2013
Investment returns – Tatton Income vs. IA peers Tatton Income Year-to-Date Since Launch December 2014 3 yr Relative to Relative to Tatton IA Sector Tatton IA Sector Annualised IA IA Volatility Defensive -1.9% -2.2% 0.3% 23.6% 13.8% 9.8% 4.8 Cautious -1.9% -3.2% 1.3% 23.6% 18.1% 5.5% 4.8 Balanced -2.4% -3.7% 1.3% 26.7% 21.8% 4.9% 5.7 Active -2.9% -4.1% 1.2% 31.9% 25.4% 6.5% 6.7 Aggressive -3.4% -4.0% 0.6% 35.4% 27.1% 8.3% 7.5 Note: To 31 Mar 2018; Tatton returns after DFM charge and underlying fund costs; Global Equity portfolio strategies only launched Nov 2013
Investment returns – Tatton Ethical vs. IA peers Tatton Ethical Year-to-Date Since Launch 3 yr Relative to Relative to Tatton IA Sector Tatton IA Sector Annualised IA IA Volatility Defensive Performance available on request - This cannot be publically distributed until it meets its one year track record Cautious Balanced -3.2% -3.7% 0.5% 31.5% 25.9% 5.6% 6.1 Active Performance available on request - This cannot be publically distributed until it meets its one year track record Aggressive Note: To 31 Mar 2018; Tatton returns after DFM charge and underlying fund costs; Global Equity portfolio strategies only launched Nov 2013
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