Download Access global equities with lower volatility

Access global equities
with lower volatility
Analytic Global Managed
Volatility Fund
Macquarie Professional Series
Aims to provide a low-volatility and long-term global investment option.
Most investors care about
preservation of capital
Many investors need equity
returns for growth but
don’t like equity volatility
Gain exposure to global
equities with potential for
lower risk and consistent
above index returns
1. Most investors care about preservation of capital
At the end of the day, investors receive compound returns, not
average returns and additional volatility creates a headwind.
The more a stock falls, the greater the return required to ‘catch
up’. While two stocks may have the same average return, the
more volatile stock will have a worse compound return. Higher
volatility creates what is sometimes called a ‘volatility tax’,
which depletes compounded returns.
The chart illustrates the potential impact of this headwind,
with a specific example. It compares two scenarios where the
market has fallen then risen by the same amount (that is, when
the simple average return over the same period is zero).
It shows that when the fall and rise is more severe (50 percent
as opposed to 10 percent), the impact on the compounded
return is also more pronounced. The portfolio that fell by less
preserved capital to a greater extent despite the same average
return.
With this example, it’s not hard to see why Albert Einstein
once famously stated that compound interest was the ‘eighth
wonder of the world’.
FOR FINANCIAL ADVISER USE ONLY
NOT FOR DISTRIBUTION TO RETAIL INVESTORS
Illustrates potential impact of ‘volatility tax’. Same average
return, vastly different compounded return
$990
$1000
$900
$800
$750
-1%
-25%
$600
$500
$400
$200
$0
Period I
Period II
Source: Macquarie. This chart is provided for illustrative purposes only and does not reflect actual
performance. Past performance is not a reliable indicator of future performance.
macquarie.com
Access global equities with lower volatility
Analytic Global Managed Volatility Fund
2. Many investors need equity returns for growth but don’t like equity volatility
While financial theory would suggest that the more risk an investor takes on the higher their return will be, the reality is that this has not
always played out in equity markets.
Various research studies have analysed decades of share market data and come to a similar conclusion as Analytic - a portfolio of low
volatility stocks has the potential to achieve the same or better returns than a portfolio of higher volatility stocks and can have significantly
lower risk than that of the market or index over the same period.
Analytic pioneered this approach to defy the conventional ‘higher risk = higher return’ investment mantra and since 2004, Analytic has
successfully managed low volatility global equities portfolios. The charts below illustrate the potential for returns which are comparable to
the index with a lower level of volatility experienced in achieving these returns.
Analytic has delivered comparable index return with lower volatility since inception of the strategy.
8%
7%
S&P 500
6%
5%
FTSE All Share
Analytic Composite
ASX 200
4%
MSCI World NR (USD)
3%
2%
1%
0%
10%
MSCI EAFE
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%
Source: Macquarie, Analytic, from August 2006 to June 2016. This chart is provided for illustrative purposes only. Past performance is not a reliable indicator of future performance. The inception date of the
Fund was 21 August 2012 and therefore the Fund has no meaningful performance history. The performance for the Analytic Global Low Volatility Strategy (in USD inception date of 1 August 2006) has been
used to demonstrate Analytic’s experience in managing low volatility strategy portfolios and does not reflect the performance of the Fund. Past performance by any other fund managed by Analytic, including the
performance for the Analytic Global Low Volatility Strategy, is not indicative of any future performance by the Fund. Periods greater than one year are annualized. Analytic performance is presented net of fees,
which reflects the deduction of transaction fees. Net returns also reflect the deduction of actual investment management fees, which may include performance-based fees, and no other fees. Actual management
fees negotiated may be lower than the representative fee schedule for this strategy. Performance returns reflect the reinvestment of dividends and other earnings. Policies for valuing portfolios, calculating
performance, and preparing compliant materials are available upon request. Past performance does not guarantee future results.
Access global equities with lower volatility
Analytic Global Managed Volatility Fund
Growth of $100,000 since inception of
the strategy
The growth of $100,000 for the Analytic strategy and the MSCI
World Index ($US) from August 2006 to June 2016 is shown
below. The main difference is the level of volatility experienced
in achieving the returns. The annualised volatility (measured by
the standard deviation of returns) of Analytic is two-thirds that
of global equities.
Analytic Composite
($US)
MSCI World
($US)
Return since inception
(Annualised %)
5.15
4.40
Volatility since inception
(Annualised %)
11.37
16.57
$180
Analytic Composite Net ($US)
MSCI World Net ($US)
Growth of $100,000
($000s)
$160
$140
$120
$100
$80
$60
Jan 16
Jul 15
Jan 15
Jul 14
Jan 14
Jul 13
Jan 13
Jul 12
Jan 12
Jul 11
Jan 11
Jul 10
Jan 10
Jul 09
Jan 09
Jul 08
Jan 08
Jul 07
Jan 07
Jul 06
$40
Source: Macquarie, Analytic, June 2016. This chart is provided for illustrative purposes only. Past performance is not a reliable indicator of future performance. The inception date of the Fund was 21 August
2012 and therefore the Fund has no meaningful performance history. The performance for the Analytic Global Low Volatility Strategy (in USD) has been used to demonstrate Analytic’s experience in managing
low volatility strategy portfolios and does not reflect the performance of the Fund. Past performance by any other fund managed by Analytic, including the performance for the Analytic Global Low Volatility
Strategy, is not indicative of any future performance by the Fund. Periods greater than one year are annualised. Analytic performance is presented net of fees, which reflects the deduction of transaction
fees. Net returns also reflect the deduction of actual investment management fees, which may include performance-based fees, and no other fees. Actual management fees negotiated may be lower than the
representative fee schedule for this strategy. Performance returns reflect the reinvestment of dividends and other earnings. Policies for valuing portfolios, calculating performance, and preparing compliant
materials are available upon request.
About Analytic
Analytic Investors, LLC (Analytic) aims to offer investors long-term returns by investing in a diverse portfolio of global equities
with low volatility. Founded in 1970 Analytic is based in Los Angeles, and is an independently operated subsidiary of Wells
Fargo Asset Management. Analytic provides quantitatively-driven investment management services to both institutional and
retail investors.
Access global equities with lower volatility
Analytic Global Managed Volatility Fund
Risks
All investments carry risk. Different investments carry different levels of risk, depending on the investment strategy and the
underlying investments. Generally, the higher the potential return of an investment, the greater the risk. The risks of investing in this
Fund include:
Investment risk: The Fund has exposure to share markets.
The risk of an investment in the Fund is higher than an
investment in a typical bank account or fixed income
investment. Amounts distributed to unitholders may fluctuate,
as may the Fund’s unit price. The unit price may vary by
material amounts, even over short periods of time, including
during the period between a redemption request being made
and the time the redemption unit price is calculated.
Market risk: Share markets can be volatile, and have the
potential to fall by large amounts over short periods of time.
The investments of the Fund are likely to have a broad
correlation with share markets in general, and hence poor
performance or losses in domestic and/or global share markets
are likely to impact negatively on the overall performance of
the Fund.
International investment risk: The Fund invests in a range of
international securities, and in companies that have exposure
to a range of international economies. Global and country
specific macroeconomic factors may impact the Fund’s
international investments. Governments may intervene in
markets, industries, and companies; may alter tax and legal
regimes; and may act to prevent or limit the repatriation of
foreign capital. Such interventions may impact the Fund’s
international investments.
More information on the risks of investing in the Fund is contained in the product disclosure statement, which should be
considered before deciding to invest in the Fund.
For more information speak to your financial adviser, call us on 1800 814 523
email [email protected], or visit macquarie.com.au/mim
Important information
This information has been prepared by Macquarie Investment Management Australia Limited (ABN 55 092 552 611 AFSL 238321) the issuer and responsible entity of the Fund
referred to above. This is general information only and does not take account of investment objectives, financial situation or needs of any person. It should not be relied upon in
determining whether to invest in the Fund. In deciding whether to acquire or continue to hold an investment in the Fund, an investor should consider the Fund’s product disclosure
statement. The product disclosure statement is available on our website at macquarie.com.au/pds or by contacting us on 1800 814 523.
Analytic Investors, LLC claims compliance with the Global Investment Performance Standards (GIPS) and has prepared reporting in compliance with the GIPS standards.
Analytic Investors has been independently verified for the periods October 1, 1996 through March 31, 2016. Verification assesses whether (1) the firm has complied with all the
composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in
compliance with the GIPS standards. The Global Low Volatility Equity Composite has been examined for the periods August 1, 2006 through December 31, 2015. The verification
and performance examination reports are available upon request. Past performance is no guarantee of future results.
BM-368 | 02/2017
macquarie.com