BetaShares Managed Risk Global Share Fund · ASX:WRLD
BetaShares Managed Risk Global Share Fund — BetaShares — Investor Presentation (February 2017)
46 slides from BetaShares Managed Risk Global Share Fund's investor presentation, February 2017
Slide 1: The New World Order: Implications for Australian Investors
The New World Order: Implications for Australian Investors
Slide 2: Important Information
Important Information The information contained in this document is general information only and does not constitute personal financial advice. It does not take into account any person’s financial objectives, situation or needs. It has been prepared by BetaShares Capital Limited (ABN 78 139 566 868,
Slide 3: David Bassanese, Chief Economist
David Bassanese Chief Economist, BetaShares Formerly with: AFR Macquarie Bank OECD Treasury Author of “The Australian ETF Guide” Confidential – may not be distributed without the consent of BetaShares capital
Slide 4: Contents
Contents International economic outlook Australian economic outlook Investment outlook and favoured themes Confidential – may not be distributed without the consent of BetaShares capital
Slide 5: Contents
Contents International economic outlook Australian economic outlook Investment outlook and favoured themes Confidential – may not be distributed without the consent of BetaShares capital
Slide 6: We seem to getting "bad Trump"
We seem to getting “bad Trump” Confidential – may not be distributed without the consent of BetaShares capital
Slide 7: But for investors, it's important to focus on what's market relevant
But for investors, it’s important to focus on what’s market relevant Trump is divisive but decisive. Still plans to: cut taxes boost instrastructure reduce regulation bring home profits Confidential – may not be distributed without the consent of BetaShares capital
Slide 8: S&P 500 has pushed on to new record highs
After some consolidation, S&P 500 has pushed on to new record highs Source: Incredible Charts Confidential – may not be distributed without the consent of BetaShares capital
Slide 9: U.S. bond yields have consolidated somewhat
But U.S. bond yields have consolidated somewhat reflecting uncertainty Source: Incredible Charts Confidential – may not be distributed without the consent of BetaShares capital
Slide 10: The U.S. Dollar has also pulled back
The U.S. Dollar has also pulled back... Source: Incredible Charts Confidential – may not be distributed without the consent of BetaShares capital
Slide 11: The Fed still plans to hike rates
The Fed still plans to hike rates "I can't tell you which meeting it would be, …whether it's March or May or June." Janet Yellen, February 14, 2017 Confidential – may not be distributed without the consent of BetaShares capital
Slide 12: US valuations close to fair-value given bond yields
US valuations close to fair-value given bond yields US Interest Rates & Stock Valuations 25 Dec-99 20 Jan-17 S&P 500 Forward PE Ratio 15 Sep-87 10 Sep-11 Dec-08 Sep-81 5 Sep-74 0 0 2 4 6 8 10 12 14 16 18 Source: Bloomberg, MSCI, BetaShares US 10-year Govt. Bond Yield Confidential – may not be distri
Slide 13: Earnings expectations improving
Earnings expectations improving... Expected S&P 500 Year-End Forward Earnings Revision cycle through the year 5% 0% -5% -10% -15% -20% -25% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Recessions Average ('89-'16) Recovery years 2017 Source: Bloomberg Confidential – may not be distributed wit
Slide 14: Modest growth in forward earnings possible in the US this year
Modest growth in forward earnings possible in the US this year Market Market Anticipated "miss” Forecast Expectation result (Dec-16) S&P 500 11% -5% 6.0% Source: BetaShares, Investment Analysts Confidential – may not be distributed without the consent of BetaShares capital
Slide 15: Contents
Contents International economic outlook Australian economic outlook Investment outlook and favoured themes Confidential – may not be distributed without the consent of BetaShares capital
Slide 16: RBA optimistic (perhaps overly) on the economy
RBA optimistic (perhaps overly) on the economy Economic Growth Outlook Dec-16* Dec-17** Dec-18** GDP Growth 2.0% 3.0% 3.25% Consumer 2.7% Steady spending Business -11% Lessening drag investment Housing 9.5% Steady Public demand 4.4% Steady Net Exports 0.3% Rising *BetaShares estimates **RBA forecast
Slide 17: Solid lift in business conditions bodes well for growth
Solid lift in business conditions bodes well for growth Confidential – may not be distributed without the consent of BetaShares capital
Slide 18: Building approvals still trending down
Building approvals still trending down Confidential – may not be distributed without the consent of BetaShares capital
Slide 19: Pipeline of housing activity to support the economy
But pipeline of housing activity to support the economy Confidential – may not be distributed without the consent of BetaShares capital
Slide 20: House price trends divergent across the country
House price trends divergent across the country Confidential – may not be distributed without the consent of BetaShares capital
Slide 21: Consumer spending seems to be holding up
Consumer spending seems to be holding up Confidential – may not be distributed without the consent of BetaShares capital
Slide 22: End of the mining investment slump looming
End of the mining investment slump looming Confidential – may not be distributed without the consent of BetaShares capital
Slide 23: Non-mining investment rising in non-mining States
Non-mining investment rising in non-mining States at least Confidential – may not be distributed without the consent of BetaShares capital
Slide 24: Export volumes expected to rise further
Export volumes expected to rise further Confidential – may not be distributed without the consent of BetaShares capital
Slide 25: Commodity outlook dependent on China's tolerance of a housing bubble
Commodity outlook dependent on China’s tolerance of a housing bubble Confidential – may not be distributed without the consent of BetaShares capital
Slide 26: Underlying inflation may struggle to push back above 2%
Underlying inflation may struggle to push back above 2% Underlying Inflation: March 2007 – December 2016 YoY% 6 5 4 3 2 Trimmed mean Weighted median 1 - Mar-07 Mar-09 Mar-11 Mar-13 Mar-15 Source: ABS Confidential – may not be distributed without the consent of BetaShares capital
Slide 27: RBA likely on hold unless unemployment pushes through 6%
But RBA likely on hold unless unemployment pushes through 6% Confidential – may not be distributed without the consent of BetaShares capital
Slide 28: The economy: where we're possibly going
The economy: where we’re possibly going… Dec-15 Dec-16 Dec-17 (f) Dec-18 (f) GDP Growth 2.6% 2.0% 2.2% 2.5% Core CPI 2.0% 1.5% 1.75% 2.25% Unemployment 5.7% 5.8% 6.0% 5.75% rate Source: ABS (f) BetaShares forecast Confidential – may not be distributed without the consent of BetaShares capital
Slide 29: Contents
Contents International economic outlook Australian economic outlook Investment outlook and favoured themes Confidential – may not be distributed without the consent of BetaShares capital
Slide 30: The markets: where we're possibly going
The markets: where we’re possibly going… Dec-15 Dec-16 Dec-17 (f) Cash Rate 2.0% 1.5% 1.5% $A/US US72.9c US72.1c US70c 10-year bonds 2.88% 2.76% 3.0% S&P/ASX 200 5295.9 5665.8 5840 • PE ratio 15.6 16.1 15.8 • Earnings 339.4 351.9 (3.7%) 369.5 (5.0%) Source: Bloomberg (f) BetaShares Confidential – ma
Slide 31: We expect the $US to rise further
We expect the $US to rise further Real US Dollar Index 140 130 120 110 100 90 80 70 60 Jan-73 Jan-78 Jan-83 Jan-88 Jan-93 Jan-98 Jan-03 Jan-08 Jan-13 Source: Federal Reserve, BIS Confidential – may not be distributed without the consent of BetaShares capital
Slide 32: Market valuations fair given current bond yields
Market valuations fair given current bond yields Interest Rates and Forward PE Ratio: March-74 to Dec-16 25 Jan-17 Jun-99 20 Sep-87 Forward PE Ratio 15 Jun-12 10 Dec-08 5 Sep-74 Jun-82 0 0 2 4 6 8 10 12 14 16 18 10-year Govt. Bond Yield Source: Bloomberg, MSCI, BetaShares Confidential – may not be d
Slide 33: Earnings expectations improving, thanks to the resources sector
Earnings expectations improving, thanks to the resources sector Expected S&P/ASX 200 Year-End Forward Earnings Revision cycle through the year 15% 10% 5% 0% -5% -10% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 Average ('89-'16) Commodity boom years 2004-06 2017 Source: Bloomberg Confide
Slide 34: Modest growth in forward earnings possible in Australia
Modest growth in forward earnings is possible in Australia this year also Market Market Anticipated “miss” Forecast result Expectation (Dec-16) S&P 500 11% -5% 6.0% S&P/ASX 200 6.5% 0% 6.5% Source: BetaShares, Investment Analysts Confidential – may not be distributed without the consent of BetaShare
Slide 35: More potential upside in resources, through earnings upgrades
More potential upside in resources, through earnings upgrades Performance relative to S&P/ASX 200 Index S&P/ASX 200 Resources Source: Bloomberg. Past performance not indicative of future performance Confidential – may not be distributed without the consent of BetaShares capital
Slide 36: Financials look better placed to withstand rise in bond yields
Financials look better placed to withstand rise in bond yields Performance relative to S&P/ASX 200 Index Financials Relative Forward PE Valuation 1.3 1.2 vs. S&P/ASX 200 1.1 vs 'Defensives' 1.0 0.9 0.8 0.7 0.6 0.5 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Source: Bloomberg. Past performance i
Slide 37: Global banks also benefitting from Trump/Fed policy action
Global banks also benefitting from Trump/Fed policy action Performance relative to MSCI World Index Global Banks Source: Bloomberg. Past performance not indicative of future performance Confidential – may not be distributed without the consent of BetaShares capital
Slide 38: Profit repatriation may benefit Nasdaq tech and health care stocks
Profit repatriation may benefit Nasdaq tech and health care stocks Confidential – may not be distributed without the consent of BetaShares capital
Slide 39: Japan (and possibly Europe) to benefit from $US strength
Japan (and possibly Europe) to benefit from $US strength Performance relative to MSCI World Index Japan Source: Past performance not indicative of future performance Confidential – may not be distributed without the consent of BetaShares capital
Slide 40: Gold Miners as a "port in the storm" source of diversification
Gold Miners as a “port in the storm” source of diversification Gold Spot Price (US$) v MNRS’ Index: January 2006- January 2017 $US/tonne Index $2,000 200 $1,800 180 160 $1,600 140 $1,400 120 $1,200 100 $1,000 80 $800 60 $600 40 $US Gold Spot [LHS] $400 MNRS [RHS] Index = 100 1 Jan-2006 20 $200 0 Jan
Slide 41: BetaShares Product Range
BetaShares Product Range: we have options for most market conditions Australian Managed Risk/ Equities Global Equities Equity Income Defensive Equity Cash QOZ NDQ WRLD HVST AUST AAA QFN UMAX HEUR YMAX WRLD QRE QUS HJPN HVST EX20 FUEL MNRS DRUG FOOD BNKS ETHI Short Geared Currency Commodities Active
Slide 42: Summary: Opportunities with BetaShares Funds
Summary: Opportunities with BetaShares Funds Investment theme Available exposures ASX Code Rising bond yields/sector Australian Financials QFN rotation away from “bond Global Banks BNKS proxies” Nasdaq 100 NDQ Australian Resources QRE Trump stimulus, profit Nasdaq 100 NDQ repatri
Slide 43: Value is back! Fundamental indexing has again demonstrated its ability to outperform
Value is back! Fundamental indexing has again demonstrated its ability to outperform over the long-term FTSE RAFI Australia 200 vs S&P/ASX 200 Total Return Indices=$10,000 invested at 31-May-1992 $160,000 FTSE RAFI Australia 200 Index $140,000 Outperformance of S&P/ASX 200 Index Index v S&P/ASX 200
Slide 44: Things to keep in mind
Things to keep in mind Investment risk: Investment returns are uncertain and will be influenced by the fluctuations of the markets as a whole and other risks. Investors should seek professional financial advice before investing Past performance is not an indication of future performance. See
Slide 45: Conclusion
Conclusion Low bond yields and rising earnings expectations are the major market positives Trump presents both risks and opportunities, overall I remain “cautiously optimistic” RBA seems less likely to cut rates unless unemployment breaks above 6% Confidential – may not be distributed without
Slide 46: Stay informed
Stay informed Visit our new website Sign up for regular Follow us on insight LinkedIn and Twitter Confidential – may not be distributed without the consent of BetaShares capital