Transcript Product - CommBank

First State UK
Business Overview
July 2003
Agenda
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1
Company history
Current position
Strategic drivers
Core strategies
Appendix: Investment approach
Company history
Colonial First State UK
 Legacy of Colonial Life UK
 Established in 1998
 1998 - acquired Co-op Investment Mgt
 Mar 1999 - offered first external fund range in
 May 1999 – combined investment teams
 Investment/ business management separation
 At SICO acquisition:
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£6.0bn FUM
45 staff (ex investments)
Poor external assets, profile and performance
Strong life company links
Company history
Stewart Ivory & Co
 Management origins from 1873 (SAINTS)
 Quasi-partnership in need of capital
 Diverse business:
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Private clients
Listed trusts
UK pension funds
Small retail presence
US institutional accounts
 At SICO acquisition:
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£3.0 bn FUM
110 staff
Poor external assets, profile and performance
Lack of investment across the business
Current position
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Focused business and investment entity
Funds under management £5.3B (May 03)
180 staff, 59 investment staff
Single product range
Strengthened investment team, and improving
investment performance
Investment in systems, brand and distribution
Increasing brand awareness
Robust distribution development
Strong asset flow in a difficult environment
First State UK FUM breakdown May 03
Client Type:
Product Type:
Retail
27%
Fixed Interes t
UK Equity
European Equity
2%
3%
& Cas h
US Equity
26%
4%
As ia Pac ific
ex J apan / GEM
20%
Balanc ed
8%
Institutional
73%
Global Equity
37%
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Colonial First State Investments Group
£ 34.9bn*
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First State Investments (UK)
£ 5.3bn
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Global Equity Assets
£ 1.9bn
All figures as at 30 May 2003 except Group figure which is as at 31 Mar 2003.
As at Mar 2003
Fund ratings
Feri Trust
6
Forsyth
OBSR
Fund
Rating
Standard &
Poor's Fund
Manager
Rating
Standard &
Poor's
Fund Stars
Bluerating
Citywire
Wassum
Investment
Network
Asia Pacific
A
AAA
AAA

AAA
5 WRating
Global Emerging
Markets
A
AAA
AAA

AAA
5 WRating
4 WRating
European Smaller
Companies
A
AA
A

Global Growth
-
A
A

Global Health &
Biotechnology
-
-
A
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Global Opportunities
-
A
-

-
A
-
British Mid-Cap
-
-
A
-
-
-
-
British Smaller
Companies
-
-
A

-
-
-
Corporate Bond
-
-
-

-
-
-
UK Gilt
As at 30 May 2003
-
-
A

-
-
-
A
4 WRating
-
Brand : Awareness of Competitors (Total)
% Yes
38
40
32
30
26
22
18
20
14
10
9
14
7
6
0
Pre Wave
FSI
7
M&G
Post Wave
Jupiter
Investec
Source : Continental Research, Ashes research 2003
New Star
Pounds £m
Strong asset flow in a difficult environment
1,400
1,200
1,000
800
600
400
200
0
-200
-400
-600
-800
Inflows
Outflows
Jun-01
Jun-02
Retail
8
Jun-03 est
Institutional
Strategic drivers
1.
2.
3.
4.
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Advent of compulsion
Shift from “balanced” to “specialist” mandates
Growing demand for “global” approach
Asset management for Group entities
1. Advent of compulsion
The UK
 £27 bn “savings gap” (source:ABI Sept ’02)
 No consumer take-up (mistrust/understanding)
 Failure of ‘Stakeholder’
 Poor standards of retail intermediation
 Scheme deficits
 Move from DB to DC
France & Germany
 Proportionately similar savings gaps
 Growing occupational pension sector
 Same demographic profiles.
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2. Shift from balanced to specialist mandates
 Single manager, asset allocator model
unsuccessful
 Development/results of specialist houses
 Role of asset consultants
 “Core” and “satellite” approach
 Loss of mandates from traditional managers:
 Schroders – lost 40% of balanced mandates in ‘02
 Merrill Lynch – lost 25% of balanced mandates in ‘02
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3. Growing demand for global approach
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3. Growing demand for global approach
 Views of the global consulting firms
 Fewer regional diversification opportunities:
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Technology
Communications
Cross-border investment
Continued opening of markets
 Increased analytical focus on global industries
 Lack of consistent results in asset allocation
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4. Investment mgt for Group entities
 One centre of excellence:
 Global equities
 Global fixed income
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Consistency of approach
Leverage infrastructure
Economies of scale
Future avenue of growth for Investment and
Insurance Services (IIS)
‘Local’ leverage opportunity
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Expected development of intermediation
Growth in consumer awareness
Growth in platforms
Alignment of retail and institutional markets
Poor local standards of business management
Restrictions of legacy products and systems
Proven business model, refined for UK/Europe.
Core strategies
1.
Drive pan European distribution
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Low cost of incremental business flows
Solid margins
Improved market accessibility
Relative ease of distribution
Core strategies
2. Focus on institutional & mezzanine distribution
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Leverage global consultant recommendations
Low cost of incremental business
Limited registry needs
Solid margins
First State operational strength
Core strategies
3. Develop institutional distribution in the US
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GEM market US$3.7bn, Global market $25bn (2002)
Quality of our key funds
Growing demand for global equity strategies
Solid margins
Babson acquisition
Leverage global consultant recommendations
Core strategies
4. Focused manufacturing
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Strong support of prime funds/teams
Build skills over medium term
Investment environment attracts talent
Summary
 Four key strategic drivers:
 compulsion; specialist funds; global approach; Group.
 Competitive advantages:
 business management; Group; heritage; global; use of
technology.
 Robust business structure
 Growing market recognition
 Key growth opportunity for IIS
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Appendix: Investment Philosophy
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EPS GROWTH
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QUALITY
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determines the sustainability of EPS growth
VALUATION
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21
drives long term share prices
is all important. Everything has a price
Equity Investment Team
Global Teams
Chief Investment
Officer
Global Asset Management
Stuart Paul
Equity Dealing
Ian Firth
Jeremy Campbell
Stephen Petersen
Matthew McKeith
Investment
Operations
Shaun Forster
Michael Summers
22
As at 30th June 2003
Global/International
Equities
David Leary
Andrew Dalrymple
Tom Mermagen
Alistair Staddon
Nicole Mardell
Trent Koch
Global Emerging Markets
Angus Tulloch
Alan Nesbitt
Charles Heenan
Susie Rippingall
Alistair Thompson
David Gait
Vijay Tohani
Millar Mathieson
Glen Finegan
Scott McNab
Global Sector
Analysts
Technology
&Communications
Graham Hay
Nigel Masding
Health &
Biotechnology
Dr Joe Anderson
Oliver Trefgarne
Lorenza Castellon
Financial
Services
Rob Grant
Vincent Houtteville
Consumer
Products
Neil Abbott
Lynne Braddick
Resources
David Whitten
Dr Joanne Warner
Dr Chris Baker
Todd Warren
Regional Teams
Asia Pacific
Angus Tulloch
Alistair Thompson
Susie Rippingall
David Gait
Vijay Tohani
Scott McNab
Continental
European
John Ewart
Jimmy Burns
North American
Susan O’Brien
Julian Bishop
United Kingdom
Derek Lygo
Dr Paul Jourdan
Adam White
Mikhail Zverev
Global Fixed Interest Team
Head of Global
Fixed Interest
Kevin Colglazier
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Head of Global
Credit
Malcolm White
Senior Portfolio
Manager - Global
Steven Murphy
Sydney
Credit Team
Staff: 8
Hong Kong
Credit Team
Staff: 4
Head of UK
Fixed Interest
John Creet
Portfolio Manager
Cash
Murray Collis
Dealer
Stuart Doyle
FS Global Growth Fund
Performance since inception to 30/05/03
60
40
20
0
-20
-40
Source: Reuters Hindsight, bid to bid, net income reinvested, in £ sterling
May-03
AUTIF/IMA Global Grow th (IN)
MSCI World
24
Dec-02
Jul-02
Feb-02
Sep-01
Apr-01
Nov-00
Jun-00
Jan-00
Aug-99
Mar-99
First State Global Grow th A (MF)