200 years of economic history and how I ruined the world

Stewart Cowley, Head of Fixed Income

Old Mutual Asset Managers (UK)

200 years of health and wealth

1960

1918

75

40$400 $40,000

Health

Wealth

Old Mutual Asset Managers (UK)

How I ruined the world

“Just unpleasant…”

Old Mutual Asset Managers (UK)

1960 1965 1972 1977 1987 2011

Old Mutual Asset Managers (UK)Data source: The IMF

Global reserves$10 trillion East Asia and

Pacific$5.5trillion

Japan$1trillion

Middle East$1trillion

US$0.5trillion

Old Mutual Asset Managers (UK)

Old Mutual Asset Managers (UK)

Global imbalances

Source: Bloomberg

5,000

3,000

1,000

-3,000

-5,000

-7,000

-9,000

-1,000

Developing national reserves

US Treasury borrowing

Old Mutual Asset Managers (UK)

200 years of health and wealth

Source: UN

40

75

Health

Wealth$400 $40,000

Old Mutual Asset Managers (UK)

1960Global Over-Eaters Index Daily Calories/2,245

Source: UN

1.0

0.9

1.3

0.9

0.7

1.1

1.4

1.1

1.7

1.2

1.3

1.4

2008

Old Mutual Asset Managers (UK)

Old Mutual Asset Managers (UK)Old Mutual Asset Managers (UK)

Calorie-in-take and Income

Source: UN

Wealth

Calorie in-take

Old Mutual Asset Managers (UK)

The carbon blipReserves

Time

Knownreserves

Old Mutual Asset Managers (UK)

Cars sold in China and US each yearMillions

Source: Bloomberg

2005 2007 2009

20

15

10

5

US

China

Old Mutual Asset Managers (UK)

Internet usage over last 20 years

Source: UN

68%

8%

75%

24%

Old Mutual Asset Managers (UK)

Old Mutual Asset Managers (UK)

Annual Australian coal exports to China

20,000

40,000

60,000

80,000

Millions tonnes

Source: Bloomberg

2000 2002 2004 2006 2008 2010

Old Mutual Asset Managers (UK)

Alternative energy usage over last 50 years

Source: UN

39%

4%

1%

6%

0%

ME 0%

43%

18%

11%

15%

3%

ME 1%

Old Mutual Asset Managers (UK)

Old Mutual Asset Managers (UK)

Gold

1oz 15

Source: UN Old Mutual Asset Managers (UK)

Old Mutual Asset Managers (UK)

Gold and oil

If you think oil is going to $150 then….

Gold will be 15 x 150 = $2,250

140

US$/barrel

1959 1969 1979 1989 1999 2009

100

60

20

Source: Datastream Old Mutual Asset Managers (UK)

Old Mutual Asset Managers (UK)

Strategic conclusions

Old Mutual Asset Managers (UK)

The global trend towards health and wealth is having profound effects

Embrace deficit reducers

Avoid deficit creators

Embrace commodity currencies –inflation is coming

Embrace companies at “pinch points” in the supply chain

Old Mutual Asset Managers (UK)

Old Mutual Asset Managers (UK)

Portfolio conclusions

Old Mutual Asset Managers (UK)

Buy commodity-related

currenciesAvoid financially

unstable countries

Government bonds – look to

create a negative

duration one day

Buy “higher” yielding corporate bonds with inflation-plus yields

Old Mutual Asset Managers (UK)

We face some very large challenges going forward

Protecting the real value of our clients’ money is going to be of utmost importance

We are going to need all the tools we can find to manage our way through

Conclusions

Old Mutual Asset Managers (UK)

Important information

Old Mutual Asset Managers (UK)

For professional clients only. This information is being communicated only to persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001, as amended (the Order) and to persons to whom it may otherwise be lawful to communicate it to (all such persons being referred to as relevant persons). Other persons should not rely or act upon this document or any of its contents. The recipient should not use the information in this document in any way which would constitute 'market abuse'.

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Old Mutual Asset Managers (UK) Ltd is the appointed Investment Manager to the Fund. Issued by Old Mutual Asset Managers (UK) Limited, 2 Lambeth Hill, London EC4P 4WR, UK. Registered in England No. 2949554. Authorised and regulated by the Financial Services Authority.