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TOM STEINERT-THRELKELD
Editorial Director
Money Management Group
The New Alternatives
Diversification Gains Currency
In 2012
Mutual Funds
Worldwide assets held
EOQ3 2011: $23.1 trillion
EO2007: $26.1 trillion
SOURCE: Investment Company Institute
Mutual Funds
U.S. assets held
EOQ3 2011: $11.1 trillion
EO2007: $12.0 trillion
SOURCE: Investment Company Institute
Mutual Funds
Equity Funds
2011: $125.4 billion out
2010: $36.7 billion out
SOURCE: Investment Company Institute
Mutual Funds
Bond Funds
2011: $128.5 billion in
2010: $241.4 billion in
SOURCE: Investment Company Institute
Mutual Funds
Hybrid Funds
2011: $29.3 billion in
2010: $23.1 billion in
SOURCE: Investment Company Institute
The New Alternatives
 Exchange-traded funds
 Gold
 Currencies
Exchange-Traded Funds
U.S. assets held
EO2011: $1.1 trillion
EO2008: $539.0 billion
SOURCE: Investment Company Institute; ETF Association
Active versus Passive
The newest star in exchange-traded funds:
Bill Gross.
Investors pull out of his PIMCO Total Return Fund for first
time.
$5 billion redeemed from the world’s largest mutual fund in
2011.
Launching March 1: PIMCO Total Return ETF.
Active versus Passive
Index funds outperformed Morningstar’s
highest-rated funds, 2002-2005.
(Pace University study)
Volatility: Here to Stay
Reasons:
Speed of systems
Double & triple leveraging
Uncertain fundamentals
Gold
Price
EO2011: $1,531.0 an ounce
EO2008: $869.8 an ounce
SOURCE: World Gold Council
Gold
Overall demand: 1,053.9 tons (3Q11)
Jewelry demand: 465.6 tons
Investment demand: 468.1 tons
SOURCE: World Gold Council
Gold
ETF demand: 77.6 tons (3Q11)
Up: 58%
SOURCE: World Gold Council
GLD
State Street Global Advisors Gold
Shares
Return
Since 2004: 18.72% a year
S&P 500: 0.53% a year
SOURCE: State Street Global Advisors, Dow Jones market data
GLD
Assets on August 19
$76.7 billion
SPY: $74.4 billion
(S&P 500 ETF)
Next: Currency
Currencies act as de facto
referendum on economies around
the world.
Next: Currency
Most widely traded financial asset in
the world.
Next: Currency
Daily turnover in 2010:
$4.0 trillion worldwide
Daily turnover in 2007:
$3.3 trillion worldwide
SOURCE: Bank of International Settlements
Currency as Proxy
If you want to invest in China, buy its
currency (renminbi).
If you want to bolt on Italy and Greece,
get out of euros.
Indicators Reflected in Currency Prices
Interest rates
Gross Domestic Product
Unemployment
Retail sales
Housing starts
Consumer Prices
Producer Prices
Commodity Prices
Stock Prices
Why Currency Fits the Times
Huge liquidity
Geographical dispersion
(all parts of the world covered)
Continuous operation of markets
(24 hours a day except weekends)
Incorporates any effects on any economy
Low transaction costs
Leverage enhances profits
Industry Compensation:
Satisfactory
6% of money management executives are very
satisfied.
71% are satisfied or somewhat satisfied.
22% are not very satisfied.
SOURCE: 2011 MONEY MANAGEMENT EXECUTIVE
COMPENSATION SURVEY
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Thank you.
TOM STEINERT-THRELKELD
Editorial Director
Money Management Group