![Page 1: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/1.jpg)
1
The Great Muddle Through
Wayne McGauley – Head of Retail, IML March 2014
![Page 2: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/2.jpg)
2
Agenda
Intro to IML
The Great Muddle Through
Investment strategy
Portfolio focus for clients
Summary
![Page 3: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/3.jpg)
3
Agenda
Intro to IML
The Great Muddle Through
Investment strategy
Portfolio focus for clients
Summary
![Page 4: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/4.jpg)
4
About IML
• Boutique manager established in 1998
• Circa $5bln FUM – retail and institutional clients
• Disciplined and consistent ‘true to label’ value style
• Owned by IML investment staff and Treasury Group (TRG)
• Large investment team with experienced leadership
• Market leading performance over 15 years…
![Page 5: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/5.jpg)
5
Investment Philosophy: focus on quality
We seek to buy and own:
Companies with a competitive advantage,
with recurring earnings,
run by capable management,
that can grow,
.......at a reasonable price.
![Page 6: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/6.jpg)
6
Retail Investor Needs
Capital preservation
Reasonable capital growth
Income focused
![Page 7: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/7.jpg)
7
Feature IML
Reasonable Capital growth over time
Resilience in falling markets
Low volatility
Consistent income
Tax effective
IML - Meeting the expectations of a ‘Value’ Manager
This is what differentiates IML
![Page 8: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/8.jpg)
8
The IML experience – capture the ups, avoid the downs
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Portfolio Benchmark
Total Return 1yr to Jan14
Benchmark +10.58%
IML +12.94%
IML Australian Share Fund monthly returns v benchmark, As at 31 January
2014
![Page 9: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/9.jpg)
9
10.5 11 11.5 12 12.5 13 13.5 14
Annualized Standard Deviation
8
9
10
11
12
An
nu
aliz
ed
Re
turn
Investors
Mutual WS
Australian
Share Fund
S&P/ASX
300 - Total
Return
Risk/Return Since IML Inception07/1998 to 01/2014
IML 15 year history - looking to smooth volatility
Value Investing
Source: Factset as at 31st January 2014
![Page 10: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/10.jpg)
10
Agenda
Intro to IML
The Great Muddle Through
Investment strategy
Portfolio focus for clients
Summary
![Page 11: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/11.jpg)
11 Source: Factset as at 31 Dec 2013
Australian household debt – deleveraging ongoing
![Page 12: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/12.jpg)
12
Australian mortgage equity withdrawal….
![Page 13: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/13.jpg)
13
Deleveraging ongoing…
![Page 14: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/14.jpg)
14
QE = monetary madness
![Page 15: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/15.jpg)
15
Australian 10 year bond yields...driving equities
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '132.0%2.0%
3.0%3.0%
4.0%4.0%
5.0%5.0%
6.0%6.0%
7.0%7.0%
8.0%8.0%
9.0%9.0%
10.0%10.0%
11.0%11.0%
12.0%12.0%
4.00
Australia 10Y Treasury Yield
Source: RBC, January 2014
![Page 16: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/16.jpg)
16
Looking Back Over History
Calendar
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Dividend
Return 3% 4% 4% 4% 4% 4% 4% 5% 5% 4% 5% 5% 4%
EPS change 6% 2% 4% 19% 22% 14% 9% -15% -12% 18% 4% -10% 6%
PE change 0% -14% 5% 3% -4% 4% 3% -31% 49% -17% -18% 27% 9%
Total Return 10% -9% 15% 28% 23% 24% 16% -38% 37% 2% -11% 20% 20%
S&P/ASX Return Composition
Source: Factset
![Page 17: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/17.jpg)
17
PE’s expanded….
Source: Factset
![Page 18: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/18.jpg)
18
EPS revisions
![Page 19: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/19.jpg)
19
The Great Muddle Through
• US: slow and patchy recovery
• Europe: ongoing sovereign debt issues
• China: slowing to more sustainable levels
• Record low interest rates and large quantitative easing
Lacklustre global economic outlook set to continue,
supported by Central Bank liquidity measures
![Page 20: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/20.jpg)
20
Global GDP…….
Source: OECD, CBA
![Page 21: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/21.jpg)
21
OECD Composite Leading Indicators
Source: OECD, CBA
![Page 22: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/22.jpg)
22
Australian Economy
• Economy patchy
• Consumer and business confidence volatile
• Employment and wage growth soft
• Interest rates set to stay low
• Federal Government – fiscal consoliation
![Page 23: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/23.jpg)
23
Misery Index
Source: CBA as at 31 May 2013
![Page 24: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/24.jpg)
24
Employment - participation rate falling
![Page 25: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/25.jpg)
25
Real savings rate relatively low
![Page 26: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/26.jpg)
26
Unit Labor Cost in Manufacturing
![Page 27: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/27.jpg)
27
Mining Investment
Sources: ABS; Butlin (1964, 1985); RBA; Withers, Endres and Perry (1985). As at 30 June 2013
0%
1%
2%
3%
4%
5%
6%
7%
8%
1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Mining investment, % of GDP
![Page 28: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/28.jpg)
28
Australia’s demographics – working age of population declining
![Page 29: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/29.jpg)
29
Australia’s demographics – number of retirees growing
![Page 30: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/30.jpg)
30
Overall Outlook
• Economic growth to a ‘muddle through’
• Volatility remains a risk
• Earnings growth for most companies will be much harder to achieve
• Bonds markets driving equity markets
• Very selective environment!
![Page 31: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/31.jpg)
31
Agenda
Intro to IML
The Great Muddle Through
Investment strategy
Portfolio focus for clients
Summary
![Page 32: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/32.jpg)
32
Source :IML as at 30 December, 2013
The dilemma of the Australian Market
39%
17%
44%
Sector distribution- ASX 300 Index
Financials
Materials
Other
![Page 33: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/33.jpg)
33
IML Australian Share Fund Sector positioning
-1%
4%
9%
14%
19%
24%
29%
34%
39%
Investors Mutual Australian Share Fund Sector Weights
As at 31st January 2014
IMAS Sector Weights % ASX300 Sector Weights %
![Page 34: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/34.jpg)
34
Banks PEs historic v today
7
8
9
10
11
12
13
14
15
16
17
Oct-98 Oct-99 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12
Major bank forward PEs
CBA NAB WBC ANZ
Source: Factset as at 30 September 2013
![Page 35: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/35.jpg)
35
Banks - Credit Growth
Source : Shaw
![Page 36: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/36.jpg)
36
Banks - interest payments to disposable income
Source: RBA & company data as at 30 September 2013
![Page 37: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/37.jpg)
37
Banks - bad debts
-
50
100
150
200
250
300
350
400
1988 1993 1998 2003 2008 2013
Bas
is P
oin
ts
Bad Debt Charges
ANZ CBA NAB WBC
Source: RBA & company data as at 30 September 2013
![Page 38: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/38.jpg)
38
Resources - focus on quality only
• Supply side not supportive – stockpiles and pipelines
• Demand side lackluster
• Competitive suppliers
• Cost pressures
![Page 39: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/39.jpg)
39
Resources - China’s fixed asset investment declining
YTD fixed asset investment
![Page 40: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/40.jpg)
40
Resources - Chinese house prices
Source: Factset as at 31st December 2013
![Page 41: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/41.jpg)
41
Resources - the supply side…
![Page 42: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/42.jpg)
42
The case against cyclicals…
• Earnings expectations too high – downgrades appearing
• De-leveraging ongoing
• Inflation in essential household items
• Fiscal consolidation
• Employment and wage growth not evident
• First home buyers not active
![Page 43: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/43.jpg)
43
IML’s focus - very stock specific environment:
• Acquisitions
• Restructuring
• New products
• Contracted growth
• Market share gains
![Page 44: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/44.jpg)
44
Agenda
Intro to IML
The Great Muddle Through
Investment strategy
Portfolio focus for clients
Summary
![Page 45: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/45.jpg)
45
Portfolio focus for clients
• Active management – large and uneven dispersion of EPS
• High Quality portfolio (low beta)
• Recurring income and growing overtime
• Portfolio that is resilient
![Page 46: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/46.jpg)
46
10.5 11 11.5 12 12.5 13 13.5 14
Annualized Standard Deviation
8
9
10
11
12
An
nu
aliz
ed
Re
turn
Investors
Mutual WS
Australian
Share Fund
S&P/ASX
300 - Total
Return
Risk/Return Since IML Inception07/1998 to 01/2014
IML 15 year history - looking to smooth volatility
Value Investing
Source: Factset as at 31st January 2014
![Page 47: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/47.jpg)
47
Risk - there is a meaningful difference…
Source: Morningstar as at 31st
December 2013
![Page 48: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/48.jpg)
48
Australia... highest yielding stock market
Country Dividend Yield (Next 12m)
Australia 4.7%
United States 2.2%
United Kingdom 4.0%
Germany 3.0%
Japan 1.7%
China 1.4%
Source: Factset as at Feb 2014
![Page 49: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/49.jpg)
49
Income - the least volatile component of investment returns
Source: IRESS
58%
42%
0%
10%
20%
30%
40%
50%
60%
70%
CapitalReturn
IncomeReturn
94%
6%
0%
20%
40%
60%
80%
100%
CapitalStandard Deviation
IncomeStandard Deviation
S&P/ASX300
20 years to Sep 2013 Return Composition Risk Composition
![Page 50: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/50.jpg)
50
Income - important & consistent component to returns –
IML Australian Share Fund Income Growth Total Return
1 year +4.34% +8.60% +12.94%
3 years p.a. +5.13% +7.57% +12.70%
5 years p.a. +5.20% +9.46% +14.66%
Since Inception p.a.
(June 1998) +5.00% +6.62% +11.62%
As at 31 January 2014
85%+ of income is underpinned by franked dividend yield
^% Performance per annum. *Fund returns are calculated net of management fees, and assuming all distributions are re-invested. Investors should be aware that past performance is not indicative of future performance. Returns can be volatile,
reflecting rises and falls in the value of underlying investments. **The benchmark for this Fund is the S&P/ASX 300 Accumulation Index.
![Page 51: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/51.jpg)
51
Why income/yield is so important…
Income/Yield - Key Attributes
Downside protection – a sustainable yield provides a floor to share prices
Lower levels of volatility – high yielding stocks are inherently less volatile
Immune to investor sentiment – income is the reliable component of the total return
Reliable Cashflow – predictable and growing in nature
![Page 52: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/52.jpg)
52
First Rule of Investing …
50
60
70
80
90
100
-50% +100%
-30%
-10%
+43%
+11%
![Page 53: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/53.jpg)
53
Outperforming in Down Markets - IML Reliable and Repeatable
Source: Morningstar Monthly returns since
inception as at 31st December 2013
87%
54% 55%
47%
70%
52%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
IML Australian Share Value A Value B Value C Value D Style Neutral
![Page 54: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/54.jpg)
54
Downside protection – critical for clients
Source: Morningstar Direct as at
31st December 2013
![Page 55: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/55.jpg)
55
Downside protection - this is why it is critical
![Page 56: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/56.jpg)
56
Agenda
Intro to IML
The Great Muddle Through
Investment strategy
Portfolio focus for cleints
Summary
![Page 57: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/57.jpg)
57
Conclusion
• Low return, volatile environment
• Invest in quality companies that are not heavily reliant on the
economic cycle
• Many cyclical stocks remain unattractive
• Value present in many quality industrial stocks that pay
consistent dividends
![Page 58: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/58.jpg)
58
IML Australia Share Fund: Performance
ASX300 IML Outperformance
6 months +5.01% +5.60% +0.59%
1 year +10.58% +12.94% +2.36%
3 years p.a. +7.32% +12.70% +5.38%
5 years p.a. +12.76% +14.66% +1.89%
Since Inception p.a. (circa 15 years - June 1998)
+8.85% +11.62% +2.77%
As at 31 January 2014
![Page 59: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/59.jpg)
59
Feature IML
Reasonable Capital growth over time
Resilience in falling markets
Low volatility
Consistent income
Tax effective
IML - Meeting the expectations of a ‘Value’ Manager
This is what differentiates IML
![Page 60: The Great Muddle Through - Schroders...7 Feature IML Reasonable Capital growth over time Resilience in falling markets Low volatility Consistent income Tax effective IML - Meeting](https://reader035.vdocuments.us/reader035/viewer/2022062507/5fda0685ff42cd490e54f7b3/html5/thumbnails/60.jpg)
60
While the information contained in this presentation has been
prepared with all reasonable care, Investors Mutual Limited accepts
no responsibility or liability for any errors or omissions or
misstatements however caused. This is general financial product
advice only and is not intended to constitute a securities
recommendation. This information does not account for your
investment objectives, particular needs or financial situation.
Statements of opinion are those of IML unless otherwise attributed.
Except where specifically attributed to another source, all figures are
based on IML research and analysis.
Investors should be aware that past performance is not indicative of
future performance. Returns can be volatile, reflecting rises and falls
in the value of underlying investments. Potential investors should
seek independent advice as to the suitability of the Fund to their
investment needs. The fact that shares in a particular company may
have been mentioned should not be interpreted as a recommendation
to either buy, sell or hold that stock. Any commentary about specific
securities is within the context of the investment strategy for the given
portfolio. Investors Mutual Limited is the issuer of the Investors
Mutual Australian Share Fund, Investors Mutual Industrial Share
Fund, Investors Mutual Future Leaders Fund, Investors Mutual
Australian Smaller Companies Fund, Investors Mutual Small Cap
Fund and Investors Mutual Equity Income Fund. Applications can
only be made on the form in the current Product Disclosure
Statements dated 2nd September 2013 or through IDPS products that
include these Funds. The Product Disclosure Statements can be
obtained by contacting Investors Mutual or at http://iml.com.au.
Potential investors should consider the Product Disclosure
Statements before deciding whether to invest, or continue to invest in
the Funds.
The prospective P/E ratios and earnings forecasts referred to in
this presentation constitute estimates which have been calculated by
IML's investment team based on IML's investment processes and
research.
© 2013 Morningstar, Inc. All rights reserved. Neither Morningstar, nor
its affiliates nor their content providers guarantee the data or content
contained herein to be accurate, complete or timely nor will they have
any liability for its use or distribution. To the extent that any of this
information constitutes advice, it is general advice and has been
prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544,
AFSL: 240892 and/or Morningstar Research Limited (subsidiaries of
Morningstar, Inc.) without reference to your objectives, financial
situation or needs. You should consider the advice in light of these
matters and, if applicable, the relevant Product Disclosure Statement
(in respect of Australian products) or Investment Statement (in
respect of New Zealand products) before making any decision to
invest. Neither Morningstar, nor Morningstar’s subsidiaries, nor
Morningstar’s employees can provide you with personalised financial
advice. To obtain advice tailored to your particular circumstances,
please contact a professional financial adviser. Please refer to our
Financial Services Guide (FSG) for more information
www.morningstar.com.au/fsg.asp