SLIDE 1
PERSONAL ASSETS TRUST
TOTAL ASSETS £590M AS AT 30 JUNE 2015 “The shareholder is god” Ian Rushbrook
2
Source: Google Images
A NNUAL G ENERAL M EETING T HURSDAY 23 J ULY 2015 & L ONDON M - - PowerPoint PPT Presentation
A NNUAL G ENERAL M EETING T HURSDAY 23 J ULY 2015 & L ONDON M - - PowerPoint PPT Presentation
P ERSONAL A SSETS T RUST PLC A NNUAL G ENERAL M EETING T HURSDAY 23 J ULY 2015 & L ONDON M EETING F RIDAY 24 J ULY 2015 P ERSONAL A SSETS T RUST T OTAL A SSETS 590 M AS AT 30 J UNE 2015 I RREPLACEABLE C APITAL The shareholder is god Ian
SLIDE 2
SLIDE 3
3
PERSONAL ASSETS TRUST
DISCOUNT TO NET ASSET V
ALUE
2000-2015
“The discount is voluntary” Robin Angus
Source: Datastream, Numis Securities & Troy Asset Management Ltd, 30 June 2015
SLIDE 4
PERSONAL ASSETS TRUST
SHARES IN ISSUE 1995-2015
Source: Personal Assets Trust/Troy Asset Management Ltd, 30 June 2015
4
SLIDE 5
PERSONAL ASSETS TRUST
TRACK RECORD 2000-2015
5
Source: Personal Assets Trust, 30 April 2015
SLIDE 6
Seeking above average returns with below average volatility
- ver the cycle
PERSONAL ASSETS TRUST
VOLATILITY COMPARED TO PEER GROUP 2000-2015
Source: Lipper, 30 April 2015 FTSE All Share LIBID S&P 500 TR FTSE Global Gov’t Bond
Personal Assets Trust
FTSE A British Gov’t All Stocks
% TR, ExD, GBP
6
SLIDE 7
IS THE FINANCIAL CYCLE DEAD?
7
Source: Google Images
SLIDE 8
Compound annual growth rate (%) 2000-07 2007-14 Total 7.3 5.3 Household 8.5 2.8 Corporate 5.7 5.9 Government 5.8 9.3 Financial 9.4 2.9
NO DELEVERAGING
GLOBAL DEBT ($TRILLION) 2000-2014
8
Source: McKinsey Global Institute, Debt and (not much) Deleveraging February 2015
199 87 142
+57 trillion
246 286 269 Total debt as % of GDP
SLIDE 9
INTEREST RATES – SUB ZERO
NO NORMALISATION YET
9
Country Policy Rate Switzerland
- 0.75
Sweden
- 0.35
Euro 0.05 Denmark 0.05 (market rate -0.75%) Japan 0.075 (market rate) US 0.25 Singapore 0.4 (market rate) UK 0.5 Hong Kong 0.5 Canada 0.75
Source: Bloomberg/Troy Asset Management, 6 July 2015
Rates cannot go much lower…
SLIDE 10
Source: Bloomberg, 31 May 2015
Not All Money Is Created Equal
MONETARY EXCESS
HAS DRIVEN UP MOST ASSET PRICES
10
SLIDE 11
PRESERVING CAPITAL
WHAT WORRIES US TODAY? TINA
11
Source: Google Images
SLIDE 12
YIELD ON A “BALANCED” PORTFOLIO
1987-2015
12
Low yields lead to high volatility
(*Yield Indices – Sovereigns - BoA Global Gov’t Bond 10 year+, Global Equity - MSCI World, Cash - US T-Bill, Corporate Bonds - BAA US Corporate Yield)
(50% Equity, 40% Bonds, 5% Corporate Bonds, 5% cash)*
Source: Societe Generale, February 2015
1 2 3 4 5 6 1 2 3 4 5 6 1987 1991 1995 1999 2003 2007 2011 2015 Yield (%)
SLIDE 13
CORRELATION
BETWEEN US 10YR TREASURY & S&P 500 INDEX
13
Pre-2010 (correlation = -0.6) Post-2010 (correlation = +0.3)
Source: Bloomberg/Troy Asset Management, 30 June 2015
50 100 150 200 250 50 100 150 200 250 2010 2011 2012 2013 2014 2015 S&P500 (rebased to 100) US 10 year Treasury Price (rebased to 100)
SLIDE 14
“NO MORE BOOM & BUST”
GORDON BROWN S&P 500 – Length Of Bull Phases In Months 1943-2015
14
“Sell everything that is not nailed down” Leon Black, Apollo Global Management
10 20 30 40 50 60 70 80
1943 1947 1950 1953 1956 1960 1963 1966 1969 1973 1976 1979 1982 1986 1989 1992 1995 1999 2002 2005 2008 2012 2015
(Months)
Source: Société Générale, 30th June 2015
2015
SLIDE 15
Source: CLSA
BUYBACKS ARE CYCLICAL
1999-2015
15
Corporations are the major marginal buyers of equities
SLIDE 16
DO NOT RELY ON CONSENSUS FORECASTS…
16
…Rely on value
Source: Google Images
SLIDE 17
GLOBAL EQUITY MARKET V
ALUATIONS:
MEDIAN PERCENTILE OF MARKET CAP/GDP RATIO OF 24 MAJOR ECONOMIES 1991-2015
Source: National Inflation Association, Independent Strategy
17
“Sell when you can: you are not for all markets” Rosalind, As You Like It
SLIDE 18
VALUATION DISPERSION
NEAR HISTORIC LOWS
18
A rising tide lifts all boats
Source: Bernstein, 31 March 2015
SLIDE 19
SECULAR BEAR MARKET – IS IT OVER?
“Progress is cumulative in science and engineering but cyclical in finance” James Grant (Money of the Mind)
Source: Bloomberg, 30 June2015
19
SLIDE 20
INVESTMENT OVERREACH
2003 & 2009 2000 & 2007 2015?
Source: Google Images
20
SLIDE 21
TROY EQUITY SELECTION
AVOIDABLE DISASTERS
Technological Change Capital Intensity Acquisitive High sales, low cash flow Too much debt
Source: Google Images, 30 November 2014
21
SLIDE 22
BUYING QUALITY/ TIPPING THE SCALES
AIMING TO OWN BUSINESSES THAT ARE LIKELY TO GET HEAVIER WITH TIME
“Time is the friend of the wonderful company, the enemy of the mediocre” Warren Buffett
22
Source: Google Images, 30 November 2014
BP BAE Systems Newmont Mining Tesco Dr Pepper Snapple Becton Dickinson Nestle Unilever
SLIDE 23
HIGH QUALITY COMPANIES BACK ON THE PODIUM OF POPULARITY
23
Source: Bloomberg, 30 June 2015
Forward P/E multiples of some typical Troy stocks 2007-2015
SLIDE 24
ASSET ALLOCATION AS AT 30 JUNE 2015
CAUTIOUSLY POSITIONED
Source: Troy Asset Management Ltd 30 June 2015
24
Top 10 Holdings
(excl short dated-govt bonds)
% Fund Gold 10.2 British American Tobacco 4.5 Philip Morris 3.9 Nestlé 3.7 Coca Cola 3.4 Sage Group 2.8 Microsoft 2.6 Altria 2.3 Imperial Oil 2.3 Becton Dickinson 2.2 Total al Top 10 37.9 .9 8 other holdings 11.5 Cash & equivalent 50.6 Total al 100.0 .0 Currency Exposure at 30.06.15 GBP 70.0% USD 9.5% Gold 10.2% CHF 3.7% SGD 3.8% CAD 2.8%
SLIDE 25
“… the chief losses to investors come from the purchase of low-quality securities at times of good business conditions.”
Benjamin Graham, The father of value investing
OUTLOOK
25
SLIDE 26
DISCLAIMER
26