Constructing a global investment strategy
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Transcript of Constructing a global investment strategy
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Constructing a global investment strategy
Ruth Hollies
September 2006
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Introduction
• History • Background• Benefits• Processes• Other issues
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Background and history
• Historic estate• Moving money off shore for
tax purposes• Naïve diversification in 1953
with the acquisition of Annacis Island in Canada
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Where we are today
• In 2000 split into 4 individual geographic companies – North America and Canada– Continental Europe– Australia and Asia– Great Britain and Ireland
• Research teams in each region• And a global Fund Management business
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The rationale for a global portfolio
Reducing risk
Increasing return
Increasing opportunities
Increases financial stability
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The Grosvenor approach
Economics and DemographicsForecast returnsOptimal portfolios
Operating Company Strategic
plans
Boards
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Optimal Portfolios
• Data issues• Investment Objective?• Limitations• Other issues
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Data issues
• ‘All investors should worry about the information that they need before worrying about issues of investment strategy’ 1
• Consistent global data set or one that is clearly defined
• We adjust/filter the data
1 Guide to Investment Strategy, Peter Stanyer
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Investment objective?
• Liabilities• Time • Attitude to Risk• Benchmarking• Development
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Landing safely, doesn’t mean you didn’t take any risks
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Limitations
• Time period used• Past analysis over short
periods• In it for the Long-run• Structural shifts• Emergence of new areas
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Bringing it together
• Treat Portfolio results with caution– Constraints– Sensitivity to small changes
• Forecasts• Policy watch - Economics
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A changing world
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5.5
6.0
6.5
7.0
7.5
8.0
2001 Q
1
Q2
Q3
Q4
2002 Q
1
Q2
Q3
Q4
2003 Q
1
Q2
Q3
Q4
2004 Q
1
Q2
Q3
Q4
2005 Q
1
Q2
Q3
Q4
Average officesAverage Retail
Average Yields in the Grosvenor world
Percent
Source: Real Capital Analytics, CBRE, CWHB, JLL, Grosvenor
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0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
UK USA Euro Australia
Rates Yield shift (Conner estimate) Yield shift (Grosvenor estimate)
Changes in short rates and potential yield shift
Percent
Source: Grosvenor
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5 year IRR forecast scenarios
0
1
2
3
4
5
6
7
8
9
Office All property Industrial Retail Residential
No change50 bps120 bps
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The alternative
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