Bentley Capital Ltd. · ASX:BEL
Bentley Capital — Constellation Capital Management — Investor Presentation (September 2003)
26 slides from Bentley Capital's investor presentation, Sep 1, 2003
Slide 1: Launch of HomeGlobal Method
CONSTELLATION CAPITAL MANAGEMENT Launch of HomeGlobal™ Method Doug Little, Managing Director, Constellation Capital Management TM –”HomeGlobal” is a trademark of Constellation Capital Management Ltd
Slide 2: Agenda
CONSTELLATION HomeGlobal™ Method Agenda • History & Current equity investment approach • Current alternative solutions • Constellation HomeGlobal™ method • Implementation • FTSE/CONSTELLATION CONSTELLATION CAPITAL MANAGEMENT 2
Slide 3: History & where now
CONSTELLATION HomeGlobal™ Method History & where now International Ratio Domestic ? Past Present Future Relaxation: International offers: Current/future issues: international - diversification - Stock-industry concentrations investing - opportunities - Impact of globalisation but home country bias -
Slide 4: Globalisation
CONSTELLATION HomeGlobal™ Method Globalisation • Globalisation: • reduces relative importance of country • increases relative importance of industries Relative Countries Importance Industries Time CONSTELLATION CAPITAL MANAGEMENT 4
Slide 5: Stock & Industry Concentration
CONSTELLATION HomeGlobal™ Method Stock & Industry Concentration Domestic Stock Concentrations Domestic Sector Concentrations Nokia Information Technology Hardware FINLAND Teva Pharmaceutical Pharmaceuticals & Biotechnology ISRAEL Telecom Corp. Of Nz Banks IRELAND Royal Dutch Petroleum Information Te
Slide 6: Summary of Current Approach
CONSTELLATION HomeGlobal™ Method Summary of Current Approach • Delivers some diversification benefits, but • Does not respond to globalisation • Does not address stock and industry imbalances • Does not address size of home country bias CONSTELLATION CAPITAL MANAGEMENT 6
Slide 7: Alternatives
CONSTELLATION HomeGlobal™ Method Alternatives • Multinational-local country paradigm, e.g. • FTSE Multinational + FTSE Local Indexes • One world paradigm – A world of global sectors • Managed by global managers (regional/sector/stock) or specialist managers (regional fixed weights/sector fixed weigh
Slide 8: Solution
CONSTELLATION HomeGlobal™ Method CONSTELLATION Solution • New and relevant country specific global benchmarks Australia HomeGlobalTM Index “Weigh globally – invest locally” • Provides relevant home bias • Resolves home country stock/industry concentration • Responds to globalisation TM –”HomeGlobal”
Slide 9: Industry Group Imbalances
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Industry Group Imbalances Pharmaceuticals & Biotechnology Information Technology Hardware Software & Computer Services Australia Weight Oil & Gas World Weight Media & Photography Real Estate Mining Banks 0% 5% 10% 15% 20% 25% 30% 35% S
Slide 10: Current Paradigm Imbalances
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Current Paradigm Imbalances Pharmaceuticals & Biotechnology Information Technology Hardware Software & Computer Services Oil & Gas Current Paradigm Media & Photography World Weight Real Estate Mining Banks 0% 5% 10% 15% 20% 25% 30% 35%
Slide 11: HomeGlobal Method: Resolves Imbalances
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally HomeGlobal™ Method: Resolves Imbalances • Consider exposure to each industry from domestic listed companies • Is it Adequate? • If yes, invest domestically in that industry • Otherwise invest shortfall internationally • Australia has v
Slide 12: HomeGlobal Method: Resolves Home Bias
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally HomeGlobal™ Method: Resolves Home Bias Industry Group World Australia HomeGlobal HomeGlobal Weight Weight Australia International Allocation Allocation Banks 13.4% 31.2% 13.4% 0.0% Mining 1.0% 10.9% 1.0% 0.0% Real Estate 1.7% 7.4% 1.7%
Slide 13: HomeGlobal Method: Responds to Globalisation
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally HomeGlobal™ Method: Responds to Globalisation 0% 5% 10% 15% Pharmaceuticals & Biotechnology Information Technology Hardware Software & Computer Services Oil & Gas Media & Photography Australia HomeGlobal - International Real Estate Wor
Slide 14: Stock Weight Changes
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Stock Weight Changes • Which stocks have the biggest increase/decrease from current 60/40 paradigm to HomeGlobalTM method Current Paradigm Stock Country Weight HomeGlobal Weight Change Microsoft Corp USA 0.6% 1.4% 0.9% Telstra Corp AUS
Slide 15: Characteristics of new Benchmark
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Characteristics of new Benchmark • Supports local industry where exposure adequate • Relevant home country bias • Overcomes stock/industry dominance in local benchmark • Robust to globalisation & changes in importance of industry vs co
Slide 16: Simulated Portfolio Performance
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Simulated Portfolio Performance 350 FTSE World Australia HomeGlobal Index 300 Current Paradigm FTSE Australia 250 200 150 100 50 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Jun-94 Jun-95 Jun-96 Jun-97 Jun-98 J
Slide 17: Simulated Portfolio Performance
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Simulated Portfolio Performance Dec 93 to Jun 03 Return * (pa) Vol (pa) FTSE World 6.0% 13.6% FTSE Australia HomeGlobal™ Index 8.7% 11.3% Current Paradigm 7.2% 11.3% FTSE Australia Index 8.1% 12.3% Source:FTSE World Index, Mercer, Cons
Slide 18: Compare with Current Paradigm (1)
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Compare with Current Paradigm (1) Rolling 12 month difference FTSE Australia HomeGlobal(tm) Index less Current Paradigm 20% 15% 10% 5% 0% Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 -5% -10% Source:FTSE World Index,
Slide 19: Compare with Current Paradigm (2)
CONSTELLATION HomeGlobal™ Method Compare with Current Paradigm (2) HomeGlobal Performance vs Current Paradigm in various counrties 10% USA 8% Historical Return (% p.a.) 6% UK 4% Hong Kong Taiwan 2% Japan 0% 0% 10% 20% 30% 40% -2% -4% Volatility (% p.a.) Source:FTSE World, Mercer, Watson Wyatt, Pensi
Slide 20: Implementation for Typical Australian Fund (1)
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Implementation for Typical Australian Fund (1) Asset Class Benchmark % allocation Australian Equities ASX300 Down International Equities MSCI ex Australia Down Global Equities FTSE Australia HomeGlobal Index Up Total Equities No Change
Slide 21: Implementation for Typical Australian Fund (2)
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Implementation for Typical Australian Fund (2) Pension funds, mutual funds, retail financial services companies Appoint investment managers to manage around HomeGlobal™ index Fund Managers Sub-license use of method and trademark, and p
Slide 22: Implementation for Typical Australian Fund (3)
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Implementation for Typical Australian Fund (3) • No change to process to appoint investment managers • Only your benchmark changes CONSTELLATION CAPITAL MANAGEMENT 22
Slide 23: Benefits to Investors (1)
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Benefits to Investors (1) • A solution to the home country benchmark industry imbalances • Provides relevant exposure to industry sectors not available domestically • Captures trend of increased influence of global industries • Consist
Slide 24: Benefits to Investors (2)
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Benefits to Investors (2) • Avoids wasteful allocation of risk budget to industries already adequate in domestic market • Captures global growth industries • pharmaceutical and biotech, health, IT software and some old economy well est
Slide 25: Summary
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Summary • Constellation’s HomeGlobalTM method: • addresses globalisation • provides a relevant home country bias • provides more relevant global equity exposure to stocks/industries • More aligned to investor objectives “Weigh globally
Slide 26: Appendix: Australia HomeGlobal Index
CONSTELLATION HomeGlobal™ Method Weigh globally – invest locally Appendix: Australia HomeGlobal™ Index Market weights HomeGlobal™ Weights Industry Global Domestic Domestic International Aerospace & Defence 1.1% 0.0% 0.0% 1.1% Automobiles & Parts 2.2% 0.3% 0.3% 1.9% Banks 13.4% 31.2% 13.4% 0.0% Bever
Constellation Capital Management — Investor Presentation (September 2003) on 6ix