ggb presentation citywire northern event 05 sept

For professional advisers only | www.sandwfunds.com

Smith & Williamson

Global Government Bond Fund Managed

by Chris Lynas

Fund adviser Robin Marshall

Citywire

North 2012 6-7 September 2012


2

The proposition

•

A fund of global government and investment grade bonds

Investing in mainly index-linked and conventional government bonds

Flexibility to protect against inflation and deflation

Targets protection of capital and lower volatility

Currency and portfolio diversification benefits

ISAble


3

Target audience

•

Designed for investors:

Seeking total returns greater than the FTSE UK Gilts All Stocks Index

Seeking to preserve capital by minimising

credit risk and seeking to avoid financial accidents

Investors with at least a two-year investment horizon

Investors wishing to complement equity exposure

Investors wishing to hedge sterling exposure


4

Why have we launched this fund?

•

Global financial background volatile and fraught with risk

•

Forecasting uncertainty high

•

Persistent low interest rates

•

2 -

4% annual current inflation rates in G20

•

Reduced supply of safe haven assets


5

Inflation / deflation history

UK Annual Rate of inflation %

Date

Source: Officer and Williamson, Credit Suisse Feb 2012


6

Both an inflation and deflation hedge•

Index linked government bonds offer most reliable inflation hedge

•

Inflation proofed bonds issued with a floor of par also offer a deflation hedge

•

Conventional bonds offer most reliable deflation hedge

Real bond and equity returns vs. inflation rates 1900-2011

Rate of return/inflation %

Percentiles of inflation across 2128 country-years

Real bond return Real equity return Inflation rate of at least %

Source: Dimson, Marsh and Staunton; Credit Suisse Feb 2012


7

Source: Shiller, Yale University as at 16.04.2012

Yield gap reversed with equities – heading back to early1950s levels

0

2

4

6

8

10

12

14

16

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

US Dividend Yield US long run interest rate

US 10-year yield


8

“Risk on”

/ “risk off”

examples

“Risk-on”

currencies protect capital during risk-on phases

Safe havens protect capital during “risk-off”

phases

Australia and Canada Singapore

Sweden Switzerland

Eurozone US and Canada

Norway Norway


9

•

Currencies can add diversification benefits to sterling-based investors

•

Hedging methodology

The Fund has the freedom to hedge the currency risk if appropriate

Opportunity to pick up yield from forward curve anomalies (eg

US$)

High yield currencies with strong fundamentals unlikely to be hedged

(eg

Australian $)

When will we hedge?


10

Portfolio construction

Instrument Range Current portfolio(31.07.2012)

Cash 0-10% 10.5%

Global Government Index Linked Bonds 30-70% 58.6%

Global Government Conventional Bonds 20-60% (including Cash above) 28.6%

Investment Grade Corporate Bonds 0-20% 2.36%

Average maturity variable 13.6

Average modified duration variable 11.5

% in any one Government Less than or equal to 30%Except UK which may be up to 100%

Canada –

10.7%UK –

49.2%

Number of holdings 20-40 21

Note: Index-linked bonds future global inflation rate assumptions; local prevailing rate continues to maturity (except UK bonds: Debt Management Office assumption of 3% to maturity)


11

Current portfolio characteristics:

Top ten holdings

1 UK Treasury Gilt 5.0% 2025 11.7% 6 Canadian Gov I-L 1.5% 2023 4.9%

2 UK Treasury Gilt 1.75% 2022 9.7% 7 US Treasury I-L Bond 0.125% 2029 4.8%

3 UK Treasury Gilt 4.25% 2027 8.9% 8 US TIP 1.75% 2022 4.8%

4 UK Treasury I-L Gilt 0.125% 2029 5.7% 9 UK Treasury Gilt 4.25% 2032 4.8%

5 UK Treasury I-L Gilt 1.25% 2027 5.6% 10 Denmark I-L 0.1% 2023 4.4%

Current effective currency

Source: Smith & Williamson Investment Management, 31.07.2012

Current underlying currency

GBPSGDCADNOKSEK

GBPUSDSGDDKKCADCHFNOKSEK

60.7%

12.7%

6.1%

4.4%

10.7%

2.4% 3.0%

70.5%

6.1%

10.7%

12.7%


12

Product features•

Dublin ICVC (UCITS) –

sub-fund of the existing Dublin umbrella company Smith & Williamson Investment Funds Plc

•

Settlement T+4•

Dealing: 5pm each Irish business day; Valuation: 11.59pm each Irish business day•

XD dates:

Interim:

31 March

Final: 30 September

•

Distribution within six weeks of the XD date

•

ISAable

•

Four single priced £

share classes:

A share class: retail (income and accumulation)

B share class: institutional (income and accumulation)

•

Charges A share class:

Initial

up to 5%

AMC

1% (charged to income)

•

Minimum Investment: Initial: £1,000,

Subsequent: £1,000

•

Charges B share class:

Initial

up to 5%

AMC

0.65% (charged to income)

•

Minimum Investment: Initial: £250,000, Subsequent: £1,000


13

Summary

•

Unusually low interest rates likely to persist

•

Aiming to protect capital in uncertain times

•

Minimising credit risk

•

Aiming to protect against inflation and deflation

•

Focusing on safe haven assets


14

Key risks•Investment does involve risk. The value of investments can go down as well as up and investors may not receive back the original amount invested.

•The Fund will invest in government bonds globally, but substantially in UK government bonds. It will therefore carry a lower degree of credit risk than funds investing in corporate fixed income or equity securities. However, please note that bond funds may not behave like direct investments in the underlying bonds themselves. By investing in bond funds the certainty of a fixed income for a fixed period with a fixed return of capital are lost.

•The Fund will be exposed to credit risk on parties with whom it trades and may also bear the risk of settlement default.

•Not all government securities are backed by the full faith and credit of the relevant national government. Some are backed only by the credit of the issuing agency which accordingly subjects the fund to additional credit risk.

•When investments are made in overseas securities, movements in exchange rates may have an effect on the value of that investment. The effect may be favourable or unfavourable.

•Past performance is not a guide to future performance.

•Investment is subject to documentation (Prospectus, Key Investor

Information Document (KIID) and Terms & Conditions), copies of which can be obtained free of charge in English from Smith & Williamson Investment Management Limited, 25 Moorgate, London EC2R 6AY or online www.sandwfunds.com

Key risks


Appendix


16

Smith & Williamson Short-Dated Corporate Bond Fund•

A short-dated corporate bond fund

Investing in £, $ and € bonds

•

Aims to provide investors with a higher yield than cash.

•

Current size £474million *

•

ISAable

•

Target audience:

Investors seeking a better yield than cash without excessive credit risk

With a 12 month+ investing horizon

Underlying yield** GRY**

Retail Share Class 3.8% 0.6%

Institutional Share Class 4.1% 0.9%

*As at 31.08.12. **The Underlying yield reflects the annualised income net of expenses of the Fund as a percentage of the mid-market unit price of the Fund as at the date shown. It is based on a snapshot of the portfolio on that day. It does not include any preliminary charge and investors may be subject to tax on distributions. GRY

stands for Gross Redemption Yield. The GRY is a forecast of the

total return on the Fund taking account of expected income receipts and capital charges if all holdings are held to redemption. Yield figures are unaudited as at 31.07.12. For a full description of the risks please read the risk section

of the Fund’s prospectus.


17

Performance –

A share class

Source: Morningstar. Data from launch, mid to mid, excluding initial charges, income reinvested at ex dividend dates, to 31.07.12. *Net of UK basic rate taxFor a full description of the risks please read the risk section


A share class TR daily gross A share class TR daily net*

96

98

100

102

104

106

108

110

112

114

116

118

120

122

Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12


18

Smith & Williamson Fixed Interest Trust

•

A bond fund with a strategic view that:-

Bonds are in a secular bull market due to global disinflationary

pressures

Western government yield curves are becoming more Japanese

Credit risk needs to be properly rewarded otherwise government debt is favoured

•

And a tactical view that:-

The steepness of the yield curve should be exploited

Non-sterling bonds can offer attractions either fully hedged or naked

For a full description of the risks please read the risk section



1919

Gross five year performance

Source: Morningstar direct, Mid to mid, excluding initial charges, including net income reinvested at ex dividend dates, to 31.07.12. For a full description of the risks please read the risk section


70

80

90

100

110

120

130

140

150

160

Jul -07 Jan -08 Jul -08 Jan -09 Jul -09 Jan -10 Jul -10 Jan -11 Jul -11 Jan -12 Jul -12

Smith & Williamson Fixed Interest Trust IMA OE £

Corporate Bond IMA OE £

Strategic Bond


20

Smith & Williamson Medium-Dated Corporate Bond Fund

•

A medium-dated corporate bond fund

Investing in £, $ and € bonds

•

Aims to provide investors with a positive return through investment predominantly in medium-dated investment grade corporate bonds (6-12 years maturity).

•

ISAable

•

Target audience:

Investors seeking to exploit a well defined and relatively steep part of the yield

curve in a disciplined and focused way.

With at least a one year investment horizon

Underlying yield* GRY*

Retail Share Class 3.2% 1.7%

Institutional Share Class 3.6% 2.0%

*The underlying yield reflects the annualised income net of expenses of the Fund as a percentage of the mid-market unit price of the Fund as at the date shown. It is based on a snapshot of the portfolio on that day. It does not include any preliminary charge and investors may be subject to tax on distributions. GRY stands for Gross Redemption Yield. The GRY is a forecast of the total return on the Fund taking account of expected income receipts and capital charges if all holdings are held to redemption. Yield figures are unaudited as at 31.07.12. For a full description of the risks please read the risk section



21

Portfolio characteristicsUnderlying currency breakdown

(hedged back to sterling)Credit rating breakdown

AAA AA A

BBB NR Cash

61.8%

38.2%

GBP USD

14.4%

24.3%

13.0%

34.1%

6.1%8.1%

6 - 7 Years 7 - 8 Years

8 - 9 Years -9 10 Years

10 - 11 Years 11 - 12 Years

Maturity breakdown

6.9%

20.2%

38.6%

30.3%

2.0% 2.0%

Source: Bloomberg and Smith & Williamson Investment Management, all data as at 31.07.12.For a full description of the risks please read the risk section



22

DisclaimerFor professional advisers only -

not for use by or distribution to retail investors. This document contains information believed to be reliable but no guarantee, warranty or representation, express or implied, is

given as to their accuracy or completeness. This is neither an offer nor a solicitation to buy or sell any investment referred to in this document. Smith & Williamson Investment Management (SWIM) documents may contain future statements which are based on our current opinions, expectations

and projections. Smith & Williamson Investment Management does not undertake any obligation to update or revise any future statements. Actual results could differ materially from those anticipated. Appropriate advice should be taken before entering into transactions. No responsibility can be accepted for any loss arising from action taken or refrained from based on this publication.

The opinions expressed are those held by SWIM at the time of going to print and are subject to change. This material should not

be considered by the recipient as a recommendation relating to the acquisition or

disposal of investments. This material does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any

investment.

There can be no assurance that the professionals currently employed by SWIM will continue to be employed by SWIM or that the past performance or success of any such professional serves as an indicator of such professional’s future performance or success.There can be no assurance that the Fund

will achieve its investment objective, the target return or any other objectives. Any target return shown is neither guaranteed nor binding on the Manager.

Any information about specific stocks or investments is given for illustrative purposes. It is considered to be accurate at the time of writing but no warranty of accuracy is given and no liability in respect of any

error or omission is accepted. Any examples of specific stocks

are included solely to illustrate the investment process and strategies which may be utilised by the Fund. These investments are not necessarily representative of future investments that the Fund will make.

The Smith & Williamson Global Government Bond Fund, Smith & Williamson Short-Dated Corporate Bond Fund and the Smith & Williamson Medium-Dated Corporate Bond Fund are sub-funds of Smith & Williamson Investment Funds PLC, a Dublin domiciled OEIC regulated by the by the Irish Financial Services Regulatory Authority. The Funds are a recognised scheme under section 264 of the Financial Services and

Markets Act 2000. The rules made under the Act for the protection of private customers (for example, those conferring rights to cancel or withdraw

from certain investment agreements) do not apply in connection with an investment in the Funds. In addition, the protections available under the Financial Services Compensation Scheme and the Financial Ombudsman Service

may not be available.

Smith & Williamson Fixed Interest Trust is a UK domiciled unit trust authorised by the UK’s Financial Services Authority.

Issued in the UK by Smith & Williamson Investment Management Limited which is authorised and regulated by the Financial Services Authority

(registration number is 131816).

Ref: 614/2012/db

ggb presentation citywire northern event 05 sept

Business