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Wealth management Australia Investment Strategies Of Self-Directed Investors David Sokulsky, PhD Head of Investment Strategy UBS Wealth Management Australia This presentation has been prepared by UBS Wealth Management Australia Limited. Please see important disclaimers and disclosures at the end of the document. Past performance and forecasts are no indication of future performance. This applies to all performance charts and tables in this presentation. February 2015 Introduction Self–directed investors are becoming increasingly sophisticated in terms of how they invest and what they demand of service providers 1. HNW often have complex needs 2. More focus on cashlow 3. The world has changed with lower interest rates 4. The world is their oyster 5. Need guidance and access 6. Risk has become increasingly important Misconception about HNW investors Self–directed investors rarely come with a blank slate and have complex needs – Excess property exposure – Capital gains concerns – Concentrated holdings – Philanthropic intentions – Family / estate considerations Investing has become more difficult The economy is transitioning, yields are at record lows and markets have rallied strongly – Australian economy has historically been great for local investors but is transitioning – Cash no longer provides an adequate return – Central bank policy is dominating markets – Australian property and equity markets are no longer 'cheap' Technology has opened up the world Investing has become global as the opportunity offshore grows and risk at home increases – Australian equity market is very concentrated – Geographic concentration is becoming risker – Need to look offshore for global leaders and innovators – Need the technology and platform to allow global access Need guidance to help them navigate the options HNW investors often prefer to go direct but need a variety of access options and support – Fee sensitive as they have often built businesses from the ground up – See value in a differentiated offering with niche ideas – ETFs, Managed Funds, Direct Investments, Structured Products – Increased interest in hedge funds and private investments The need to manage risk becomes important Many wealthy investors are approaching retirement and are focused on risk – The GFC has shown baby-boomers that volatility needs to be managed – Cash flow in a low rate environment needs to be balanced with growth – Diversification is the key to managing risk when most have historically had concentrated portfolios – Need to provide the tools to manage and communicate risk For illustration purposes only What’s the difference HNW investors still have a focus on Australian assets but this is changing fast – Typically have had a higher allocation to Australian equities but global allocations are growing – More focused on high yielding equities and hybrids for cashflow – Open to adopt alternatives but still via small allocations due to perceived risk – Absolute return focused not +CPI orientated Conclusions There is very little difference between what an institution and a self-directed investor expects but their needs differ – Their needs are often more complex than an institutional investor – A sophisticated global offering tailored to an investors specific risk profile is now expected – Portfolios have grown increasingly diversified with higher offshore allocations – They expect global opportunities and non-traditional offerings to be available and accessible Source: UBS WM Global Chief Investment Office (CIO), UBS Wealth Management as at 3 February 2015 Required Disclosures This presentation is prepared and distributed by UBS Wealth Management Australia Ltd ABN 50 005 311 937, holder of AFSL No. 231127. 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