Investec Plc · LSE:INVP

Investec — Investec Wealth & Investment (UK) — Investor Presentation (March 2024)

47 slides from Investec's investor presentation, March 2024

1. Slide 1: Investment Update: Keeping Your Balance

   INFORMATION FOR FINANCIAL ADVISERS ONLY Investment Update Keeping Your Balance Speaker: John Wyn-Evans, Head of Investment Strategy March 2024 Investec

2. Slide 2: Keeping Your Balance

   1 UK Politics – Budget & Election 2 A Quick Look Back Keeping 3 Key Themes For 2024 Your 4 Balance Portfolio Building 5 US Election 6 Conclusions 2 Confidential | Investec Wealth & Investment (UK)

3. Slide 3: UK Politics: Spring Budget & General Election

   UK Politics Spring Budget & General Election 3 Confidential | Investec Wealth & Investment (UK)

4. Slide 4: Hunt's Headroom £12.2bn

   Hunt’s Headroom £12.2bn Source – Freepik 4 Confidential | Investec Wealth & Investment (UK)

5. Slide 5: Hunt's Headroom £8.9bn

   Hunt’s Headroom £8.9bn Source – Freepik 5 Confidential | Investec Wealth & Investment (UK)

6. Slide 6: Spring Budget Headlines

   Spring Budget Headlines • OBR Forecasts – Growth ↑ Inflation↓ • National Insurance ↓ 2p => +£450 p.a. on average • Fuel Duty Frozen – reduces CPI by 0.2% • Taxes ↑ Vapes/Tobacco, APD, Non-Doms, Holiday Lets • British ISA ↑ £5,000 • Not mentioned – Frozen Allowances / Fiscal Drag • Very little market

7. Slide 7: Spot The Difference

   Spot The Difference Source – Universal Pictures 7 Confidential | Investec Wealth & Investment (UK)

8. Slide 8: Major UK Parties Are Hard To Tell Apart

   Major UK Parties Are Hard To Tell Apart Spot The Difference Source – Sky News 8 Confidential | Investec Wealth & Investment (UK)

9. Slide 9: Except In The Opinion Polls

   Except In The Opinion Polls Latest Opinion Polls Source – YouGov (13-14 March 2024) 9 Confidential | Investec Wealth & Investment (UK)

10. Slide 10: A Quick Look Back

    A Quick Look Back A Tough Two Years – But Patience Rewarded 10 Confidential | Investec Wealth & Investment (UK)

11. Slide 11: The Post-Covid Equity Market

    The Post-Covid Equity Market MSCI ACWI (GBP) 2021 to Present Still Waiting… More Underweight Equities Underweight Equities Less Underweight Equities Source – Bloomberg – 15/03/2024 11 Confidential | Investec Wealth & Investment (UK)

12. Slide 12: The Post-Covid Bond Market – The Worst Is Over

    The Post-Covid Bond Market – The Worst Is Over Bloomberg Global Aggregate Bond Index (Hedged GBP) 2021 to Present Source – Bloomberg – 15/03/2024 12 Confidential | Investec Wealth & Investment (UK)

13. Slide 13: The Post-Covid Balanced Portfolio

    The Post-Covid Balanced Portfolio FTSE Private Investor Balanced Index 2020 to Present – Two Years Of Going Nowhere Since December 2021 Source – Bloomberg – 15/03/2024 13 Confidential | Investec Wealth & Investment (UK)

14. Slide 14: Narrow Market Leadership

    Narrow Market Leadership Selected Global Indices Source – Bloomberg – 15/03/2024 14 Confidential | Investec Wealth & Investment (UK)

15. Slide 15: Passive Funds Have Become Dominant

    Passive Funds Have Become Dominant Source – Bianco Reseacrh / Bloomberg (December 2023) 15 Confidential | Investec Wealth & Investment (UK)

16. Slide 16: But Concentrated Leadership Is a Global Phenomenon

    But Concentrated Leadership Is a Global Phenomenon Weight of Top 10 Holdings in MSCI Index-Based Index ETFs Source – Creative Planning (February 2024) 16 Confidential | Investec Wealth & Investment (UK)

17. Slide 17: Although Dispersion Is Increasing…

    Although Dispersion Is Increasing… The Magnificent 7 6 5…? Performance YTD Source – Bloomberg – 15/03/2024 17 Confidential | Investec Wealth & Investment (UK)

18. Slide 18: Leading To Better Fund Manager Performance

    Leading To Better Fund Manager Performance Source – Goldman Sachs – 21/02/2024 18 Confidential | Investec Wealth & Investment (UK)

19. Slide 19: Market Drivers

    Market Drivers 19 Confidential | Investec Wealth & Investment (UK)

20. Slide 20: Market Drivers – It's Mainly About Inflation

    Market Drivers – It’s Mainly About Inflation Headline Inflation % Change Year-on-Year Source – JP Morgan Asset Management – 15/03/2024 20 Confidential | Investec Wealth & Investment (UK)

21. Slide 21: Market Drivers – It's Mainly About Inflation

    Market Drivers – It’s Mainly About Inflation What Central Banks Fear Most – Sticky Inflation Or A Second Wave Source – Bloomberg Opinion 21 Confidential | Investec Wealth & Investment (UK)

22. Slide 22: Market Drivers – Interest Rate Expectations

    Market Drivers – Interest Rate Expectations Market Implied Interest Rates December 2024 Current Base Expected Base Expected Base Rate Rate Rate 1/1/24 US 5.5% 4.6% (-0.9%) 4.0% (-1.5%) UK 5.25% 4.6% (-0.65%) 4.15% (-1.1%) Europe 4% 3.0% (-1.0%) 2.6% (-1.4%) Source – Bloomberg – 15/03/2024 22 Confide

23. Slide 23: Market Drivers – What Happens Next?

    Market Drivers – What Happens Next? Probability Of US Recession – Bank of America Client Survey & Economists’ Forecasts Source – Bank of America Fund Manager Survey (February 2024) / Bloomberg (15/03/2024) 23 Confidential | Investec Wealth & Investment (UK)

24. Slide 24: Market Drivers – Growth Forecasts

    Market Drivers – Growth Forecasts GDP Growth By Country 2022 – 2025 (Bloomberg Consensus) Source – Bloomberg / IW&I – 7/03/2024 24 Confidential | Investec Wealth & Investment (UK)

25. Slide 25: Geopolitics & Macro – Key Events/Concerns

    Geopolitics & Macro – Key Events/Concerns • China / Taiwan • Middle East / Red Sea • Russia / Ukraine • Elections Source – Investec Wealth & Investment (UK) 25 Confidential | Investec Wealth & Investment (UK)

26. Slide 26: Building Portfolios

    Tactical Asset Allocation Recommendations Building Portfolios Please note that these are recommendations and will not necessarily have been implemented in all portfolios owing to various constraining factors and individual preferences 26 Confidential | Investec Wealth & Investment (UK)

27. Slide 27: Potential Outcomes Matrix

    Equity Bull Market Resilient Growth Immaculate Disinflation Equities Equities Bonds Bonds 20% 26% Potential Bond Bear Bond Bull Outcomes Matrix Market Tightening 2.0/ Mild Market “Higher For Longer” Recession Equities Equities Bonds Bonds Alternatives We Are Still Here Cash 22% 32% Equity Bear Marke

28. Slide 28: Market Valuations Favour Non-US Equities

    Global Indices Price/Earnings Ratios Market Valuations Favour Non-US Equities Source – Goldman Sachs 28 Confidential | Investec Wealth & Investment (UK)

29. Slide 29: There Is A Good Reason Why US Equities Have Done Well

    There Is A Good Reason Why US Equities Have Done Well Price Return and EPS – World ex-US vs US Source – Goldman Sachs (11/03/2024) 29 Confidential | Investec Wealth & Investment (UK)

30. Slide 30: And We Have To Look Beyond PE Ratios

    And We Have To Look Beyond PE Ratios S&P 500 and MSCI Europe – 12m Forward Price to Book Value vs Return on Equity (ROE) Source – Goldman Sachs (11/03/2024) 30 Confidential | Investec Wealth & Investment (UK)

31. Slide 31: What's The Right Yield For A 10-Year Sovereign Bond?

    What’s The Right Yield For A 10-Year Sovereign Bond? Real GDP + Inflation = Nominal GDP = 10-Year Yield Real Nominal Inflation Today GDP GDP US 1.5% - 2% 2% - 3% UK 3.5% - 5% 4.30% 0.5% - 1.5% 2% - 4% UK 0.5% - 1.5% 2%2.5% - 4%- 5.5% 2.5% - 5.5% 4.10% EU 0.5% - 1.5% 2% - 3% 2.5% - 4.5% 2.65% Source

32. Slide 32: But Valuation Is A Dreadful Market Timing Tool

    But Valuation Is A Dreadful Market Timing Tool R Squared of Valuations for Subsequent Returns Source – Goldman Sachs / Robert Shiller 32 Confidential | Investec Wealth & Investment (UK)

33. Slide 33: Current Tactical Asset Allocation Tilts

    Current Tactical Asset Allocation Tilts Source – IW&I – 20/02/2024 33 Confidential | Investec Wealth & Investment (UK)

34. Slide 34: Cash Is Not King

    Cash Is Not King Key Portfolio Asset Class Component Returns And Inflation 2000 - Present Source – Bloomberg – 15/03/2024 34 Confidential | Investec Wealth & Investment (UK)

35. Slide 35: The Balancing Act

    The Balancing Act The Asset Return “Quilt” 2000-2024 Source – Bank of America (15/03/2024) 35 Confidential | Investec Wealth & Investment (UK)

36. Slide 36: 2024 Presidential Election

    2024 Presidential Election Biden vs Trump – Round 2 Source - Bloomberg 36 Confidential | Investec Wealth & Investment (UK)

37. Slide 37: A Polarised Country

    A Polarised Country Difference in Presidential Approval Rating By Party Source – Deutsche Bank/Gallup October 2023 37 Confidential | Investec Wealth & Investment (UK)

38. Slide 38: A Polarised Country

    A Polarised Country 1-Year Inflation Expectations By Party Allegiance – Rep (Red); Dem (Blue); Ind (White) Source – University of Michigan / Bloomberg (February 2024) 38 Confidential | Investec Wealth & Investment (UK)

39. Slide 39: Falling Confidence In Political and Social Institutions

    “What is your confidence in…” Falling Confidence In Political and Social Institutions Source – Gallup 39 Confidential | Investec Wealth & Investment (UK)

40. Slide 40: Latest Betting

    Latest Betting Source – PredictIt – 15/03/2024 40 Confidential | Investec Wealth & Investment (UK)

41. Slide 41: Stock Market Returns by Party

    Stock Market Returns by Party Source – Liberum (March 2024) 41 Confidential | Investec Wealth & Investment (UK)

42. Slide 42: Value Added by President

    Value Added by President Source – Yosef Bonaparte, University of Colorado 42 Confidential | Investec Wealth & Investment (UK)

43. Slide 43: A Cautionary Tale

    A Cautionary Tale Invesco Wilderhill Clean Energy ETF Biden Arrives in White House Source – Bloomberg (15/03/2024) 43 Confidential | Investec Wealth & Investment (UK)

44. Slide 44: Expect Increasing Volatility

    Expect Increasing Volatility Expected S&P 500 1-Day Move On Election Day S&P 500 Forward Volatility Curve Source – Goldman Sachs 44 Confidential | Investec Wealth & Investment (UK)

45. Slide 45: Conclusions

    Conclusions Prepare for all weathers Inflation has peaked… but might be slower to fall from here Interest rates have peaked… but how fast will they be cut? We should be leaving behind a long period of flat returns… …But it’s difficult to take strong market views today More alpha generation from stoc

46. Slide 46: Thank You

    Thank You Access more insights for Advisers at Investecwin.co.uk/financial-advisers 46 Confidential | Investec Wealth & Investment (UK)

47. Slide 47: Important information and disclaimer

    The information in this document is for private circulation and is believed to be correct but cannot be guaranteed. Opinions, interpretations and conclusions represent our judgement as of this date and are subject to change. The Company and its related Companies, directors, employees and clients may

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