Actively Navigating the Markets

Richard TemperleyHead of Investment Development

Zurich Life Assurance

Clayton Hotel, CorkThursday, 23rd February, 2017

Short term noise, shouldn’t impact long term objectives!

“The Stock Market is a device for transferring money from the impatient to the patient”

- Warren Buffett

Warning: This information does not constitute investment advice or a recommendation. It has been provided for discussion purposes only. You should seek professional investment advice with your financial adviser

Noise or not noise?

1. Crises in China - Autumn 2015

2. Oil / commodities – Winter/ Spring 2015

3. Brexit – Summer 2016

4. Trump – Winter 2016 / Spring 2017

5. Euro crises 2017?

What should you establish in order to invest with an optimal return?

4

1. Your investment time horizon

2. Your risk/volatility capacity

3. Your personal risk/volatility preference

4. You need to know that your asset allocation decision is the key determinant of your returns

Warning: This information does not constitute investment advice or a recommendation. It has been provided for discussion purposes only. You should seek professional investment advice with your financial adviser

Your asset allocation decision

5

1. Cash

2. Bonds

3. Alternatives

4. Property

5. Equities

SuperCAPP – ESMA 2

6

Active Asset Allocation- AAA – ESMA 4

7

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan

-15

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

De

c-1

5

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

May

-16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

6

De

c-1

6

Jan

-17

Feb

-17

Cash

Alternatives

Property

Short Bond Fund

Active Fixed Income

Equities

The evolution of the AAA fund

Balanced Managed fund – ESMA 5

9

Source: MoneyMate

Balanced Managed fund – ESMA 5

The end of the 35 year bong bull market?

10 year bond yields

Source: FactSet, Tullett Prebon, JP Morgan

Asset Management

Start of rotation from bonds into equities?

Plenty of scope for the trade to continue…

Source: BofA Merrill Lynch Global Investment Strategy, EPFR Global

Equities 2007 to 2017 – World MSCI in €

Equity market valuations

Source: Citi, Zurich Life

Weight P/E EPS YoY %

2016e 2017e 2016e 2017e

Global 100 18.4 16.3 2.7 13.0

North America

57 20.3 18.3 2.3 11.1

UK 6 17.7 14.7 3.6 20.6

Europe ex-UK 14 17.4 15.2 -1.0 15.5

Japan 8 16.4 14.9 9.1 12.1

Asia ex- Japan 12 15.5 13.5 -0.4 14.8

2009-2017

AAII bullish sentiment

Zurich Investments - current views

Source:

Zurich

Events and risks to watch in 2017

Dates with destiny

Source: Blackrock Investment Institute

What can we do to navigate this market in 2017?

18

1. Be aware of your exposures to bonds within your portfolio and be realistic about future returns.

2. Avoid the mistakes of the past i.e. concentration of investment risk

3. Remain well diversified i.e. multi-asset, globally diversified

4. Stick to your plan

Warning: This information does not constitute investment advice or a recommendation. It has been provided for discussion purposes only. You should seek professional investment advice with your financial advisor

Warning: Past performance is not a reliable guide to future performance.Warning: Benefits may be affected by changes in currency exchange rates.Warning: The value of your investment may go down as well as up.Warning: If you invest in this product you may lose some or all of the money you invest.

“What we have learned from the past is that we have not learned from the past”

- Warren Buffett

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