Review of IOOF MultiMix Trusts

Presented by

Review of IOOF MultiMix Trusts September quarter 2012

IOOF Investment Management Limited

29 October 2012Not s

igned off: D

O NOT D

ISTRIBUTE

2

DisclaimerIssued by IOOF Investment Management Limited (IIML), ABN 53 006 695 021, AFSL 230524. Client Services 1800 002 217. Website www.ioof.com.au . IIML is a company within the IOOF Group of companies, consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This is general advice only and does not take into account, your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser. You should obtain and consider a copy of the Product Disclosure Statement available from us or your financial adviser, before you acquire a financial product. IIML, its employees and directors may receive remuneration up to 0.3% of the amount invested. Further details are available in the PDS. Ratings are only one factor to be taken into account when deciding whether to invest. For more information on the meaning of these ratings and the rating scales used, please refer to the Lonsec websites at www.lonsec.com.au

To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Neither IIML nor any company in the IOOF group guarantees the performance of any fund or the return of an investor’s capital.

Past performance is not indicative of future performance. The Lonsec Limited (“Lonsec”) ABN 56 061 751 102 rating (assigned as follows: IOF0092AU-November 2011; IOF0098AU- November 2011; IOF0094AU- November 2011; IOF0095AU-November 2011; UFM0051AU-November 2011; IOF0093AU- November 2011; IOF0097AU- November 2011; IOF0090AU-November 2011) presented in this document is limited to “General Advice” and based solely on consideration of the investment merits of the financial product(s). It is not a recommendation to purchase, sell or hold the relevant product(s), and you should seek independent financial advice before investing in this product(s). The rating is subject to change without notice and Lonsec assumes no obligation to update this document following publication. Lonsec receives a fee from the fund manager for rating the product(s) using comprehensive and objective criteria.

Review of IOOF MultiMix Trusts September 2012

Agenda

1. Financial markets review – September 2012

2. Market outlook

3. MultiMix single-sector trusts review – September 2012

4. MultiMix diversified trusts review – September 2012

5. Strategic tilting

6. Appendices

3Review of IOOF MultiMix Trusts September 2012

Financial markets review September 2012

Investment returns for major asset classes

5

Total returnMajor listed asset classes

Year to 30

Sep 2010

%

Year to 30

Sep 2011%

Year to 30

Sep 2012

%

Quarter to

30 Sep 2012

%

Month to 30

Sep 2012

%

Australian shares 0.65 -8.71 14.46 8.75 2.18

International shares (in A$ - unhedged)

-2.79 -4.52 13.59 5.05 2.11

International shares (hedged) 8.97 -1.26 24.61 6.28 2.44

Australian bonds 7.34 9.04 9.56 1.98 0.97

Global bonds (hedged into $A) 11.02 7.79 10.06 2.86 0.67

Australian listed property trusts -4.52 -6.29 28.90 6.68 1.20

Global listed property trusts (hedged) 20.57 0.00 30.17 3.77 -0.06


Past performance is not indicative of future performance. Source: IRESS

Short term returns have improved


SuperRatings Fund Crediting Rate Survey

3 Months 1 Year 3 Years

Return Quartile Return Quartile Return Quartile

IOOF MultiMix Australian Shares Trust 7.7 3rd 10.6 4th 0.9 3rdIOOF MultiMix International Shares Trust 5.3 2nd 7.7 4th 0.1 3rdIOOF MultiMix Diversified Fixed Interest Trust 2.7 1st 8.6 2nd 7.8 3rdIOOF MultiMix Hi Growth Trust 5.5 1st 9.2 4th 1.3 4thIOOF MultiMix Balanced Growth Trust 5.0 1st 9.0 4th 3.2 4thIOOF MultiMix Moderate Growth Trust 3.8 2nd 8.5 3rd 3.9 3rdIOOF MultiMix Conservative Growth Trust 3.2 1st 8.4 2nd 5.1 3rdIOOF MultiMix Capital Secure Trust 2.0 1st 6.6 1st 5.9 1stIOOF MultiMix Cash Enhanced Trust 1.3 2nd 4.7 2nd 4.4 2nd

Past performance is not indicative of future performance. Source: SuperRatingsIOOF 'Corporate 100' performance and quartile ranking

Financial markets review

• S&P/ASX 300 Accumulation Index closed the period 8.75% higher, continued to be volatile

• Driven in part by further bond purchases announced by European and US central banks

• Actions of policy makers in Europe, US, and China are key

• Investors remained cautious, preferring defensive stocks

• MSCI All Countries World ex-Australia Index ($A) appreciated 5.19% in unhedged AUD terms

• Emerging markets performed even better with a return of 6.20%


Financial markets review

• Australian bonds returned 1.98%

• International bonds returned 2.86%

• Government bond markets benefited in part from the promise of further quantitative easing in the US and the UK, as well as the introduction of the ECB’s new bond-buying initiative

• Softer economic data globally also helped although gains were limited by a marked improvement in risk sentiment

• The recent sustained run of strong fixed interest performance suggests further gains may be more difficult to come by

• Australian property gained 6.68% over the September quarter, underperforming the broader market

• AREITs outperformed Global REITs which were up 3.48%


Market outlook

• European crisis: positive action taken but structural issues still persist. Ongoing focus on Spain, Portugal and Italy

• United States: housing improving which is important but corporate earnings turning over and what about ‘fiscal cliff’?

• China: slowdown occurring but still high base growth. Will stimulus measures work?

• Australia: possible further rates cuts anticipated as strong dollar impacts domestic economy

• Equity Markets: remain cheap relative to bonds and fair value relative to own metrics

• Global fixed income: remains an expensive safe haven but what is the catalyst for an increase in yields?

• Currency markets remain volatile and are hostage to macroeconomic events


IOOF MultiMix single-sector trusts review September 2012

IOOF MultiMix Australian Shares Trust

Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML

Sep 2012

Total return for periods ending 30 September 2012

3 Months%

1 Year%

3 Years% pa

IOOF MultiMix Australian Shares Trust 7.45 11.53 -0.66

S&P/ASX 300 Accumulation Index 8.75 14.46 1.69

Excess return -1.30 -2.93 -2.35

11

Integrity 13.52%

Perennial15.09%

Alliance Bernstein 14.92%

Merlon7.11%

Solaris17.84%

Vinva16.69%

Legg Mason7.36%

IIML3.91%

Allocations may not sum to 100% due to rounding


Boutique Manager Portfolio3.56%

IOOF MultiMix International Shares Trust


3 Months%

1 Year%

3 Years% pa

IOOF MultiMix International Shares Trust 6.08 9.67 0.42

MSCI All Countries World ex Australia $A Index * 5.19 13.01 1.61

Excess return 0.89 -3.34 -1.19

Sep 2012

12

SSGA 28.97%

LSV Asset Management18.09%

Neuberger Berman14.50%

Wellington9.85%

Perennial4.76%

Credit Suisse Asset Management 6.27%

*International shares benchmark changed from MSCI World ex Australia $A Index (unhedged) from October 2011. Figures shown here are a composite of both indexes.Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML

TT International 12.22% Esemplia 5.34%



IOOF MultiMix Diversified Fixed Interest Trust


3 Months%

1 Year%

3 Years% pa

MultiMix Diversified Fixed Interest Trust 3.04 10.36 9.15

50% UBS Comp Bond Index /50% Barclays Capital Global Agg Index

2.42 9.83 9.13

Excess return 0.62 0.53 0.02

PIMCO (Aust fixed interest) 11.76%

Loomis Sayles 12.16%

Sep 2012

Brandywine12.95%

IIML (Cash) 5.56%

IIML (Income) 12.61%

Perennial (Aust fixed interest) 15.83%

Perennial (Cash) 9.44%


13

PIMCO (Intl fixed interest)14.80%


Western Asset Management4.91%


IOOF MultiMix Cash Enhanced Trust

Perennial35.41%



3 Months%

1 Year%

3 Years% pa

IOOF MultiMix Cash Enhanced Trust 1.59 5.75 5.79

UBSA Bank Bill Index 0.91 4.36 4.55


IIML64.59%

Sep 2012



MultiMix Wholesale Trusts review September 2012

MultiMix Wholesale Australian Property Trust


3 Months%

1 Year%

3 Years% pa

MultiMix Wholesale Australian Property Trust 6.54 28.96 5.75

S&P/ASX 300 Property Trust Accum Index 6.68 28.88 4.86

Excess return -0.14 0.08 0.89

Colonial First State22.96%

Challenger75.16%

Sep 2012


16

Cash 1.89%



MultiMix Wholesale International Property Trust


3 Months%

1 Year%

3 Years% pa

MultiMix Wholesale International Property Trust 4.80 31.13 12.82

UBS Global Investors ex Aust AUD hedged net TR 3.48 30.54 18.09

Excess return 1.32 0.59 -5.27

Cohen & Steers20.53%

Perennial54.45%

Sep 2012Cash0.94%

Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IIML


BT Global24.08%


MultiMix Wholesale Alternative – Defensive Trust


3 Months%

1 Year%

3 Years% pa

MultiMix Wholesale Alternative – Defensive Trust 1.43 7.81 6.29

Composite benchmark* 2.42 9.83 9.32

Excess return -0.99 -2.02 -3.03

Infrastructure25.57%

Credit opportunities11.68%

Sep 2012

Cash49.49%

Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IIML*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au


Subordinated debt13.26%


MultiMix Wholesale Alternative – Growth Trust


3 Months%

1 Year%

3 Years% pa

MultiMix Wholesale Alternative – Growth Trust 3.62 4.03 8.17


Excess return -1.57 -8.98 -0.06

Discretionary hedge funds11.67%

Systematic hedge funds51.65%

Sep 2012

Cash13.49%

Performance is net of management costs and expenses Past performance is not a reliable indication of future performance. Source: IIML*For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au


Special situations5.41%


Private equity17.78%

IOOF Trusts review September 2012

IOOF Wholesale Income Trust


3 Months %

1 Year %

3 Years% pa

IOOF Wholesale Income Trust 3.33 9.91 9.41

UBS Credit FRN Index (from 31/12/10)* 1.99 6.54 5.35


Cash0.93%

Perennial Income Fund 99.07%

Sep 2012

Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML*Performance figure is a composite of UBSA Bank Bill Index and the UBS Credit FRN Index.



IOOF Cash Management Trust


1 Month%

3 Months%

1 Year %

3 Years% pa

5 Years % pa

IOOF Cash Management Trust 0.32 1.00 4.54 4.58 5.00

UBSA Bank Bill Index 0.31 0.91 4.36 4.55 5.12

Excess return 0.01 0.09 0.18 0.03 -0.12

• FUM: $1.4b

• Weighted average duration: 55 days

• Term deposits: 48%

• Maximum exposure: CBA 28%

• A1+ exposure: 66%

• A1 exposure: 21%

• A2 exposure: 13%



IOOF MultiMix diversified trusts reviewSeptember 2012

IOOF MultiMix Balanced Growth Trust

Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML *For further information on the composite benchmark, please refer to a copy of the IOOF MultiMix Trust Product Disclosure Statement available from our website www.ioof.com.au


3 Months%

1 Year%

3 Years% pa

IOOF MultiMix Balanced Growth Trust 5.26 10.57 3.23


Excess return -0.14 -4.06 -2.01

Sep 2012

24

Property7.90%

International shares

29.71%

Cash 5.74%

Australianshares

29.70%Fixed interest 17.16%

Alternatives9.80%



IOOF MultiMix Balanced Growth TrustAttribution for September quarter:

• The bulk of the underperformance was a result of the underperformance within the Australian shares portfolio

• Low levels of hedging contributed negatively to performance• The Alternatives – growth portfolio contributed negatively to performance as it

underperformed its equities benchmark• Positive performance from the international equities portfolio contributed to

performance• Positive performance from the diversified fixed interest portfolio contributed to

performance• Positive performance from the international listed property portfolio contributed

to performance


Asset allocation update

IOOF MultiMix Balanced Growth Trust

Asset class Target allocation (%)

Range(%)

Actual as at September 2012

(%)

Cash & short-term securities 3 0-15 5.74

Diversified fixed interest 22 10-35 17.16

Alternative – defensive 3 0-15 2.61

Property 10 0-20 7.90

Australian shares 30 20-40 29.70

International shares 25 15-35 29.71

Alternative – growth 7 0-20 7.19

100 100


IOOF MultiMix Moderate Trust



3 Months%

1 Year%

3 Years% pa

IOOF MultiMix Moderate Trust 4.01 10.04 4.50


Excess return -0.56 -3.65 -1.09

Sep 2012

27

Property8.29%


14.85%

Cash 22.71%

Australianshares

18.30%

Fixed interest 27.07%

Alternatives8.78%




Attribution for September quarter:

• The bulk of the underperformance was a result of an overweight allocation to cash

• Poor performance from the underlying Australian equities managers detracted from performance

• An underweight to equities, particularly Australian equities also contributed to the underperformance

• Positive performance within the fixed interest and cash asset classes contributed the bulk of value

• Positive performance from the international equities asset class also contributed to performance


Asset allocation update


Asset class Target allocation (%)

Range(%)

Actual as at September 2012

(%)

Cash & short-term securities 5 0-25 22.71

Diversified fixed interest 35 25-45 27.07

Alternative – defensive 5 0-15 3.86

Property 10 0-20 8.29

Australian shares 22 10-35 18.30

International shares 18 5-30 14.85

Alternative – growth 5 0-15 4.92

100 100


IOOF MultiMix Capital Stable Trust

Sep 2012

30



3 Months%

1 Year%

3 Years% pa

IOOF MultiMix Capital Stable Trust 2.99 9.01 7.11



Diversified fixed interest42.17%

Australian shares 10.53%

Cash 42.22%

Property 5.08%



IOOF MultiMix Conservative Trust

Sep 2012

31



3 Months%

1 Year%

3 Years% pa

IOOF MultiMix Conservative Trust 3.32 9.84 6.42


Excess return 0.16 -1.03 -0.48

Diversifiedfixed interest

35.84%

International shares 7.24%


Cash 29.95%

Alternatives 7.31%

Property9.27%



IOOF MultiMix Growth Trust

Sep 2012

32



3 Months%

1 Year%

3 Years% pa

IOOF MultiMix Growth Trust 5.74 10.32 2.10


Excess return -0.56 -5.52 -2.11

Property 6.96%

International shares 29.71%


Cash 2.87%Alternatives 8.08%

Diversified fixed Interest 4.99%



IOOF MultiMix Growth Trust


• Positive performance from the international equities portfolio contributed to performance

• The bulk of the underperformance was a result of underperformance within the Australian shares portfolio

• Low levels of hedging contributed negatively to performance• The Alternatives - growth portfolio contributed negatively to performance as it

underperformed its equities benchmark


IOOF Multi Series Balanced Trust

Performance is net of management costs and expenses. Past performance is not a reliable indication of future performance. Source: IIML *For further information on the composite benchmark, please refer to a copy of the IOOF Multi Series Balanced Trust Product Disclosure Statement available from our website www.ioof.com.au


3 Months%

1 Year%

3 Years% pa

IOOF Multi Series Balanced Trust 5.50 11.27 3.08


Excess return -0.27 -1.98 -0.96

Sep 2012

34

Australian property 4.84%


30.02%

Cash 5.35%Australian

shares34.55%

Diversified fixed interest 25.23%



IOOF Multi Series Balanced Trust


• Strong performance from Legg Mason/Brandywine in international fixed interest contributed to performance

• Strong performance from Credit Suisse Holt in international shares contributed to performance

• Strong performance from Colonial First State in Australian fixed interest contributed to performance

• Credit Suisse Holt’s Australian shares portfolio detracted from performance• Societe Generale’s emerging markets portfolio detracted from performance


Strategic tilting update

Currency/overseas assets

• Asset allocation committee decided to put more money offshore (AEQ to OEQ) for the Balanced Growth and Hi Growth Trusts (November 2010). All funds maintain a zero hedge target benchmark

• The AUD is trading at historically high levels

• We see the following four main catalysts for Australian dollar weakness:• Increased risk aversion from the ongoing debt crisis in Europe• RBA easing• Fiscal tightening• Decline in commodity prices prompted by the economic slowdown in China

• Valuation on overseas shares was attractive – especially in the US

• The natural hedge – if markets fall, A$ fall – GFC example

• Tilt has outperformed by 2.7% as at 30 September 2012

37Lonsec Investment Review – August 2012

AUD/USD

Source: Datastream

38Lonsec Investment Review – August 2012

0.4

0.5

0.6

0.7

0.8

0.9

1

1.1

US

D/A

UD

Date

USD per AUD & PPP Value

PPP +/- 2 standard deviationPPP +/- 1 standard deviationPPP +/- 2 standard deviationPPP +/- 1 standard deviationPPP +/- 2 standard deviationPPP +/- 1 standard deviation Tilt entered

Global fixed interest/cash tilt

39

• August 2010, 20% allocated to cash funded from global bonds within the IOOF MultiMix Diversified Fixed Interest Trust

Rationale

• US Gov’t bonds yields unsustainably low at around 1.5%

• Cash and term deposits currently have a high running yield with no duration risk

Status/Outcome

• Since implemented, global bonds outperformed cash

• Tilt has underperformed by approximately 7.0% as at 30 September 2012

Lonsec Investment Review – August 2012

US 10 year government bond yield

Source: Bloomberg

Lonsec Investment Review – August 2012 40

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US 10 year Govt Bond Yield

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Tilt entered

Review of IOOF MultiMix Trusts

Documents

financial products

financial circumstances

financial adviser

ioof holdings limited

lonsec limited lonsec

multimix diversified

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Transcript of Review of IOOF MultiMix Trusts

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