Transcript Document

The Chaser
December 2009
General advice warning and disclaimer
•
Any opinions expressed in this presentation constitute our judgement at the time of issue and are subject to
change. We believe that the information contained in this presentation is correct and that any estimates, opinions,
conclusions or recommendations are reasonably held or made as at the time of compilation. However, no
warranty is made as to their accuracy or reliability (which may change without notice) or other information
contained in this presentation. To the maximum extent permitted by law, we disclaim all liability and responsibility
for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything
contained in or omitted from this presentation.
•
This presentation contains general information and may constitute general advice. It does not take into account
any person’s particular investment objectives, financial situation or individual needs. It should not be relied upon
as a substitute for financial or other specialist advice. It has been prepared solely as an information service for
financial advisers and should not be distributed to clients.
•
Before making any decisions on the basis of this presentation, you should consider the appropriateness of its
content having regard to your particular investment objectives, financial situation or individual needs.
•
Opinions expressed constitute our judgement at the time of issue and are subject to change. The presenter is a
representative of MLC Investments Limited. MLC Investments Limited ABN 30 002 641 661 105-153 Miller Street,
North Sydney NSW 2060 is a member of the National group of companies.
•
MLC Investments Limited is the issuer of the MLC MasterKey Unit Trust. Information about the MLC MasterKey
Unit Trust is contained in the current Product Disclosure Statement (‘PDS’), copies of which are available upon
request by phoning MLC on 131 831 or on our website at mlc.com.au.
Slide 2
Don’t react to short-term performance
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In times of negative returns, there is a natural temptation to chase the perceived
higher returns from other investment options. Studies show that investors who
switch funds to the best performing asset class of the previous year, chasing
higher returns, are often worse off than investors who maintain their investment in
a balanced portfolio. Say you invested $100,000 at the end of 1980:
– If you chased the best performing asset class from the previous year, your
investment today would be valued at $1,135,928. A compound return of 8.4%
p.a.
– But if you stay invested in a balanced portfolio, your investment would now
be worth $2,427,253. A compound return of 11.2% p.a.
Slide 3
The Chaser vs. a Strategic Balanced portfolio
December 1980 – 2009*
*Please refer to slide 7 for source data
Slide 4
The Chaser vs. a Strategic Balanced Portfolio*
Value of $100,000 Since December 1980
$2,427,253
$2,600,000
$2,100,000
$1,600,000
$1,100,000
$1,135,928
$600,000
*Please refer to slide 7 for source data
Slide 5
The Chaser
08
09
20
20
06
07
20
20
04
05
20
20
02
03
20
20
00
01
20
20
98
99
19
19
96
97
19
19
94
95
19
19
92
93
Strategic Balanced Portfolio
19
19
90
91
19
19
88
89
19
19
86
87
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19
84
85
19
19
82
83
19
19
19
19
80
81
$100,000
Don’t react to short-term performance
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Simply by chasing returns, you would have generated a lower return on your
original investment of over $1,200,000, and this does not even incorporate the
additional costs incurred (both fees and taxes) of switching between products.
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We often create more volatility in investments by switching course and trying to
catch the best performing asset class.
Slide 6
*Source information:

The strategic balanced portfolio is constructed using the following asset allocation
weightings:

Australian Shares:
37%

Global Shares:
24%

Australian Bonds:

Listed Property Securities:
8%

Cash:
0%
31%
All source data used in this presentation is based on the below listed indices used as a proxies
for each asset class :
Asset Class:
Australian Shares:
Global Shares:
Australian Bonds:
Listed Property Securities:
Cash:
Slide 7
Index/Proxy
All Ordinaries Accumulation Index,
MSCI World Gross Accumulation Index ($A) ,
Commonwealth Bank Bond Accumulation Index,
S&P/ASX200 Property Accumulation Index (Listed
Property Trust Accumulation Index prior to July 2000),
UBS Warburg Australia Bank Bill Index (RBA 13
Week Treasury April 1987).