PKC – Introducing Pinebridge Investments

An introduction to Pinebridge’s investment strategy, in essence, a global dynamic asset allocation fund.

Michael: Some of you may be aware of Pinebridge and our investment capabilities and others this may be their first time introductions. So the purpose from my side today is to essentially cover off who is Pinebridge and what are our investment capabilities and what are we talking about today which is essentially the global dynamic asset allocation funds. The APIR code is on the cover here and it’s also been been approved by Longsec and SEF and it’s also on the approved product list. The Madison man is in the model portfolios I believe so this is a couple of model portfolios there within the alternatives buckets. Apologies he’s not here to do that but I just wanted to confirm that we have met most of the requirements and this is available to be used if not already.

So today it’s quite a long presentation there’s a lot of bios in the back so I’m not going to talk about every single slide but I will talk on some of the key points and naturally what you can expect from a global dynamic asset allocation product in your client’s portfolios and through an investment cycle. I would encourage you if you have any questions to please send them through and we will answer them as we go or at the end as well. My details are also on the front here so if you have any questions and you’d like just to call me or email me please feel free.

So Pinebridge has been Pinebridge since March 2010 as the entity, prior that we were the AIG in house and active management teams leading into the GFC. Post GFC we were sold to a private investing group called Pacific Century Group who are based in Hong Kong. They are a majority shareholder and also the other major shareholders are senior asset consultant, asset managers and the board as well. It’s an independent group that has investment capabilities back to the 1960s in private markets being the ex AIG background we are quite strong in fixed income as well as having footprints across 18 different locations around the world. As you can see we’re in the major financial hubs of New York, London and Hong Kong but we think a key difference for someone of our size that’s 85 billion in breadth across the developed and emerging markets is a key trait to our firm.

750 employees approximately with 210 of those as investment professionals being analysts, traders and portfolio managers across those locations. Pinebridge Investments as I touched on already is just shy of 85 billion in fixed income, equities, alternative’s and today’s product that we’re talking about which is within the multi-asset group. Within our client regions in Asia and the Americas is predominantly where where our footprint is located for our clients but our investment capabilities as I mentioned just shy of 50 billion in fixed income, equities, fixed income and then the multi-asset team itself is managing around 13.4 billion. In Australia we have an Australian trust which is just shy of 500 million and a part of that is the multi-asset team, themselves.

Now the product that I’m talking about today as I mentioned is the asset-allocation funds. A couple of key points about and positioning statements for the strategy. Essentially the headline objective is CPI plus 5% per annum over rolling five year periods before fees, that’s the headline objective for our clients. We have historically done that with half to two thirds of equity volatility but also keeping up with equity like returns. So within an alternatives allocation we would be an asset allocator with a growth tilt because of our historical return series being more growth like.

The strategy itself is a sea of wide ranges, 0-100% of defensive, 0-90% gross cash and dynamic currency hedging is also a feature of this strategy. You will see our gross derivative exposure is 0-180% so just to clarify that a strategy product itself does not use debt or derivative leverage we use derivatives for implementation purposes and the net result is 100% exposure throughout the investment itself. So there’s no debt or derivative leverage used within the strategy and if you need to have some more detail on that please let me know and I can send you through some materials.

The other point is that our multi-assets process we have a flexible risk dial score so in volatility terms it ranges from anywhere form 3-3.5% volatility in periods like the GFC all the way up to 11-11.5% when you’re being paid to take risk. On average we have an 8-10% per annum volatility risk with again targeting CPI plus 5% per annum over a rolling five year horizon.

So those are the objectives, I’ll go through to a slide at the back here which gives you a sense of what you can expect from a multi asset strategy. As I mentioned before the CPI plus 5 is the objective with half to two thirds equity volatility. So what does this actually mean for investors through a cycle? We try and look at a cycle through five years. This one’s a little bit longer due to a number of factors but if you look there on the left the de-risking market of 2007-8 the returns for the MISTY which is the global equities index we were significantly better at protecting capital through that period because we had the wide ranges and the ability to move into cash and defensive asset classes.

Then again in the re-risking market in 2009 to current we’ve been able to keep up with the upside of equity like returns. What does that mean for investors over a full cycle which is that third bar chart there is the return series is just over 7% with the growth proxy being 3.34. So it’s equity like returns if not better for half to thirds the rolling risk which is the far right hand side which shows the risk for the equity index versus the risk for the strategy itself. That’s the statements we make and this is the actual experience historically that we’ve offered to clients.

I’ll just go back to the beginning to give you a sense of the investment team. One of the key things we think for our team and the strategy is that it’s a dedicated 18-person team lead by Michael Kelly. Michael Kelly has background at Townsend Greenspan then he was with JP Morgan for a number of years managing their equity portfolio and also sitting on their asset allocation teams. Then in 1999 Michael joined AIG as it is now Pinebridge so the teams been together since the very beginning. Magali Azema-Barac in the top left there under the research Magali is based here in Sydney she’s been with the team since 1999, Deanne has been here since 2001, Paul since the mid 2000’s, Marcus since 1996 so the longevity and the team maintaining through the investment cycles and also the change from AIG to Pinebridge is a unique trait to Pinebridge. Then the team has built out as we’ve taken on the new clients and the AUM for the multi-asset team has increased.

For the Australian trust there is four dedicated portfolio managers, Michael Kelly is one of those, Magali Azema-Barac is also another and then you’ll see in the middle here at the bottom of portfolio invitation is Peter Hu in New York and Agam Sharma also in New York. They’re the four dedicated portfolio managers that are on the Australian trust and Agam, Magali, Peter and Michael are rotating and visiting the region on a periodic basis.

This team has the ability to tap into the internal 210 investment professionals across 16 cum equities cum mixed alternatives to get an insight into what their views are for their asset class. So having that process in place enables the multi-asset team to understand what are the fundamental drivers that are happening in their asset classes and why. Why they think there’s going to be a political event that’s going to affect their asset class, what are the forward looking investment spread views, return on equity in the different Japanese equities for example. They have the ability to tap into these internal teams as well as use external broker research reports and their own sources of information to develop a view.

We don’t have a CIO and we don’t have to move to a house view which means this team is able to own the insights and the outputs for their decision making and what allocations they have towards what particular asset class over the cycle. You see on the right hand side the team members are spread across New York, London, Tokyo, Taipei and Sydney and the team itself has optimists and pessimists, eastern culture, western culture, you’ve got people with 30 plus years and people who have just come out of MBA school so there’s a dynamic nature of the team as well which is quite interesting and we believe it’s a benefit for investors.

Philosophy it’s fundamentals drive markets and we think fundamentals and price converge over a 9 to 18 month time horizon rolling. Anything under sort of 9 months we believe is a bit of a random walk and it’s quite a unique skillset, our process is focused on identifying fundamentals as they develop and how they can converge to price over a cycle. In that point we also believe that each cycle is unique, we have a forward looking process which I’ll touch on shortly. We acknowledge mean reversion or historical averages throughout asset classes but we also believe that each cycle is unique in trying to build a forecast in what our views are in different asset classes.

Again the team supports and encourages differences of opinion so as briefly mentioned there’s people with 30 plus years’ experience and MBA graduates, eastern and western cultures. That’s the team itself but they also have the ability to tap into the equities and the bonds teams and the private markets and the fixed income teams and the currency teams just to get a sense of what’s happening in the markets and get to the right answer by everyone’s opinions on the table. Lastly diversification alone doesn’t protect markets through periods of market stress. We think that diversification works 78-85% of the time and it’s worthwhile but in periods of market stress like the GFC you have to have the ability to either be the blue team or the red team, you have to be defensive or growth, risk on or risk off. Having that wide asset class ranges gives you that ability to protect capital and then also out of the 2009 period to capture the upside growth.

The three step process is quite simple from a high level to follow. On page 10 you’ll see that the process is put into a capital markets line which is the five year forward looking views, that’s on a quarterly basis. Then the next step is monthly meetings for the team to assess what do they have conviction in in what asset classes and what the risk posture is going to be for the strategy and then the final step is the daily monitoring and the implementation of the different portfolios including the Australian trust.

So it’s a five step process going from a five year forward looking view, fundamental driven then moving into a monthly decision to understand where prices and fundamentals will converge over the next 9-18 months. That’s where the asset class weights will be decided in terms of the convictions and also the risk posture and then the final implementation is how that translates to the portfolios.

So it’s going to take you out of this into those actual documents themselves. Now this capital market line research is done quarterly, daily inputs in pricing are coming in obviously daily and this is a quarterly snapshot of teams forward looking views of capital market line research. This is the 19 different interviews that they conduct for the multi-asset team conducts 19-20 interviews across the different asset classes and say what are your different forward looking fundamental views of what’s happening in your asset class. Then the team will take away that information, put it into a model which then produces this graphical illustration to easily understand what asset classes are attractive in the teams views.

On the right hand side here you’ll see that there is a five year forward looking view of equities fixed-income alternatives and risk and return expectations and then the size of the dot and the colour represents the correlation and the liquidity of those asset classes from data perspective. Keeping in mind these forward looking views are linear, they’re five year linear views and as we know markets don’t naturally go sideways for five years or decline on a linear or increase on a linear perspective over five years. This is an expectation of where US equities will be, it doesn’t necessarily mean that it’s going to be next year or year three or year four of a cycle it’s just a snapshot of today.

The other point is obviously risk and correlation of the liquidity is taking into account to understand what asset class risks are there in a portfolio, where they want to avoid asset classes based on this research. The key point for this process is any asset class that is on or above the line is essentially fair game for the team to then consider to be put into a portfolio. I’ll move onto the next step shortly but it’s an idea to say the team will then consider anything that’s on or above this line to do it at a portfolio and the second step is moving into the risk posture of this portfolio is the slope of this line. I’ll show you later on in the presentation the slope of the line moves around because it’s forward looking and doesn’t mean revert which means that this slope can flatten, it can be hockey stick, it can be inversed which gives the indication to the team to the risk posture.

So this comes out quarterly it’s available to all clients. If you would like to be on the distribution risk to receive it directly please let me know and the insights are quite easy to see and our forward looking expectations as well from the teams perspective. This is a four page document, the unabridged version is 150 pages and there’s a lot of detail and information behind the scenes that support the team’s view on this. Just going back again so a three step process we’ve just talked about the capital market’s line of view, quarterly meetings with the team is a fundamental qualitative process represented in a quantitative fashion to show illustratedly the views of different asset classes.

The next step is then meeting monthly to determine what is the conviction of those asset classes that are on or above the line and taking into account this slop of the line what is the risk posture of the strategy. That is the second document here which is the monthly, as you can see May is the most recent. Again it’s a shortened version which shows the teams views and particularly what asset classes they have conviction in. So referring back to anything that’s on or above the line the team will then look at those most attractive, least attractive asset classes and as you can imagine the portfolio will be built out on the most attractive asset classes on a team’s forward looking views.

Now within this five year view again we’re fundamentals driven so we think that prices and fundamentals converge over a rolling 9 to 18 month period. These are our monthly meetings looking over our next 9 to 18 months is where we’re going to build conviction in our asset classes and that’s what moves into the portfolio. So it’s a 9 to 18 month rolling forward views of different asset classes. The second part of this process is determining the risk dial score. Now we have a flexible risk dial score as you can see, five being bearish and one being bullish. In volatility terms you could put a 3% tag or volatility next to the 5 there and a 1 would be 11% volatility, anywhere between that.

As you can see the team is quite pro risk with having our risk posture at 1.8 due to a number of factors based on the CML slope of the line and also the dispersion of the asset classes in that research. You can see here the dispersion between asset classes has never been this wide which means that based on the team’s view of risk they have a higher conviction in a number of asset classes above the line which they believe that they are being paid to take that risk over a intermediate term over the next 9 to 18 months.

The team actually believes in a global bounce based on a number of fundamental factors across Europe, Japan, US and also quantitative easing around the world so we believe to be a global growth bounce over the next 9 to 18 months hence why we have our risk posture remaining at 1.8. Again just summarising that page this is a monthly meeting where the team gets together determining what asset class convictions they’re going to hold over the next 9 to 18 months and based on the slope of the line what is the risk posture of the strategy.

The final step is the daily implementation which is to the Australian trust implemented by Magali, Michael, Agam and Peter and they will determine what the Australian trust parameters are which is what is the risk constraints. It’s a liquid only assets classes and trying to exceed CPI plus 5 over rolling five year periods per annum. That gives you a sense here of the third document which is the fact sheet which is available on the Pinebridge Australia website. It gives the information on the objectives, the market overview for this month which is as of the 31st March retrospective.

It gives you a sense of where the portfolio is sourcing alpha from, the historical returns, it gives you the Zenith rating and the Longsec ratings but then most importantly it gives you a sense on the second page the asset allocation weights in the portfolio. So naturally anything on or above the line is going to be in the portfolio at some point then the team builds their monthly forward looking views as to the next 9 to 18 months what is their highest conviction going to be and what asset classes.

That therefore translates into the positions in the portfolio so Japanese equities and Europe ex-UK equities is two big positions in the portfolio. Then you’ll see the diversification across those asset classes are above the line but you also see some parts of the markets from an emerging market equities perspective we don’t it as an asset class but we do like the sub asset classes being India or Mexico for example in those markets. So we give you the ability to get assets to parts of asset classes that you may not have had access to by buying an ETF or buying a global equities manager. We can provide that and also bank loans and high yield is another portion of the portfolio we have an allocation towards and are quite positive on.
Sliding rate notes, the expectation of the Fed increasing rates obviously that’s something that you want to have in your portfolio.

Rounding out this you’ll see that there is a very low if not zero allocation towards Australian asset classes, equities, bonds, property. It doesn’t necessarily mean that we think the Australian market per se is negative, we are actually seeing it coming up on the capital market side research but the Aussie equities is actually starting to come up on the CML. The reason why the team doesn’t have it in there is essentially we think there is other asset classes around the world that are offering us better risk return expectations.

What does that mean for you and your clients and obviously you are very aware of the Aussie equity market, property market and bond market. We don’t think we are either cannibalising that or overweighting or underweighting your views. What we offer is a globally diverse portfolio that is sourcing alpha from different parts of the global markets as you would to the Australian market. I’ll just stop there for the three steps, I don’t know if there’s any questions here but I think Wayne has a couple of questions.

Wayne: Yes when you say you go into the Australian market is that you’re just buying an index or are you specifically buying stocks and shares in the market?

Michael: So when we go into an asset class for example Japanese equities we have a 19.1% allocation. When we move into that it’s usually via ETFs or derivatives to do a position and then we’ll move into that’s a 2-4% allocation and as the fundamental signposts continue to come in we build our conviction in that over the next 9 to 18 months. Then our weight starts to increase and as we are now mid 2013 is when we started to get a position in Japan and that’s built out to where it is today.

We first went in with derivatives and ETFs, then we had some internal strategies around low tracking error so the research enhanced products and then the final step in that position is we can use our active Japanese equities team. It’s about one third derivatives and ETFs, one third low tracking error, one third active.

Wayne: What do you mean by low tracking error?

Michael: So low tracking meaning it’s a research enhanced product which will track an index but they’ll shape that slightly and take out a couple of stocks they don’t like in that global index. A low tracking error is 1-2%, high tracking error would be an active global equities manager that has a tracking error of 6-8%. So it’s not a smart data product the label has been given to some of those, this is more of a global index that we can slightly tweak to take out different exposures.

Now the reason I mentioned that is because if we were to get access to the Australian market or have an exposure it will most likely come through our global equities global index products and we can either keep the Australian equities exposure in there. It may be a couple of banks and maybe Telstra or BHP that get into the global index or if we don’t have a positive view on the Australian market we can use derivatives to shake out that particular exposure so we can buy this global index but mix through the Australian exposure, exclude the US small caps or something like that.

So that’s how we get it but we don’t directly….if we did like Australian equities we would most likely buy a futures or ETF to that exposure and build that out. The point being it’s not saying we can’t, but it’s most likely you won’t have a 5% weight towards Aussie equities. If we did it would be via an ETF or derivatives and the point being if your clients may already have 25-30% allocation to Aussie equities so why would you want a global manager that has access to other markets giving you access to something that you have already. So we think that’s a benefit to the way we source alpha through the cycle.

Bethany: If you’d like to ask a question you can just type it into the chat function and I’ll ask it for you.

Michael: I think this may give some questions as well it may generate some questions based on page 12. Now this CML research that the team conducts has been constructing for ten plus years that slope of the line inverses, flattens and moves around based on our views of different asset classes individually. You put them into the model and it gives you a line of best fit for the slope of the line. You can see here before I get further today’s slope this is as of today, the dispersion you can see between asset classes and slope of that line, it’s disappointingly positively sloped but it’s still positive and has the dispersion so there is a benefit of or the returns that can be generated by selectively taking risk.

If you look back historically you can see leading into the GFC environment of September 2008 our CML slope inversed. You can imagine the conversations that our multi-asset team was having with our equities teams, our private equity teams, our fixed income teams. They’re all still relatively bullish, they think the markets are in a good healthy state but the CML is indicating to the team that you’re not being paid to take risk on a forward looking five year time horizon based on the valuation and the fundamental metrics that they’re discussing with the individual teams. So the team went back and checked all their data inputs, did we actually press the wrong button, no, they redid it and it still came out with the same result.

So you can see here that it’s starting to indicate that you should take risk off the table and you should be going from growth assets to defensive assets. Our strategy in 2006 was 2% cash, January 2007 six months before this CML inversed we were sitting on 22% cash. So we’re a little bit early to get out of the growth markets but that’s what our process is giving and showing that it we’re not being paid to take risk we will make the dynamic decision to move out of growth assets into case and defensive asset classes and that’s where we protected through that GFC period.

Again you can see June 2009 our CML slope was straight up it was saying that you’re being rewarded for taking risk and these are the asset classes that you should be looking to build into a portfolio. You can imagine March, June, September 2009 each quarter the team is very tentative, the asset class managers themselves and product portfolio managers themselves are a little bit tentative so we’re a little bit late getting back into the market but still we say the fundamental signposts coming in. The markets were recovering, the global bounce was coming out of the GFC and it pays to take risk.

You see now on the far right hand side that these asset class dots are relation to the March 2016 numbers that you’ll historically the slope of the line has started to come down. That’s why we say it’s disappointingly positively sloped because the slop is coming down and different asset classes are popping up and are getting above that line. The point being again is the dispersion in the asset classes and the slope of the line helps us set our risk posture and also our convictions in asset classes that are on this line based on the dispersion. That’s a bit of a proof point as to how the CML process itself adds value.

The second point is in the second step of the process is the historical risk dial score, 5 being 3% volatility and 1 being 11%. The proof point on this benefit of having a flexible risk dial score is looking at the historical risk dial score decisions. On page 27 you can see here that bullish a 1 is 11% volatility and 5 bearish is a 3% volatility. December 2006, March 2007, June 2007 monthly decisions to move these around showing just on each quarter but they’re going from leading into the GFC where we’re bullish and then we see the fundamentals deteriorate and the team has the ability to dynamically de-risk the portfolio down to 5, 3.5% volatility. That’s where we protect capital, capital preservation that’s where you get the half to two thirds equity volatility. Then the ‘B’ here is for the bounce 2009 period and that’s re-risking the portfolio, C and D is the taper tantrum and Euro crisis and then we get to day which is back on a risk on posture of 1.8 is where the team currently sits.

So what does that mean for the start of the year that the December, January and mid-February sort of drawback? We saw it as more of a market sentiment and it wasn’t based on fundamentals, the fundamentals were still improving globally, they were improving slowly but they were still improving therefore we kept our risk posture. What happened in the Q1 for us ourselves we had a negative 3.7% loss, global equities was down 7.5-8% so again half the volatility of global equities with the ability to capture the upside growth. Then you look at April you add 4% return and then you look at May where we are now where obviously as we stand today positive as well.

So it’s half the equities volatility but also for having the risk posture to be able to capture that upside growth and over a cycle of that five year rolling that’s where we are able to achieve a CPI plus 5% per annum which I believe is actually equated to 9.32% per annum since inception for the strategy. On a gross basis that’s an 8.23 and it’s exceeding its CPI plus five objective for a 100% hedged portfolio. Looking at page 17 what has the actual experience been for historical investors the 100% hedged is the green, the US dollar is in the orange and you can see through the cycle there is some period where we exceed CPI plus 5, others is where we have periods of losses in 2008 but again we’re capturing that upside growth through the cycle.

So some of the key points from today’s briefing is it’s actually the product is an asset allocation product aiming to achieve CPI plus 5 over a rolling five year period. It is liquid, it provides a daily net asset value and it’s transparent as you can see the process what are the longer term five year intermediate term views? What is the team’s views on their risk posture and their asset class convictions over the next 9-18 months and then how does that translate into the portfolio in terms of the monthly forward looking views, the return profile and most importantly what is the asset classes that this product has exposure to? All of that is very transparent, it’s all available to clients and we also believe that relative to other strategies out they’re we’re relatively cheap as well with the 1% fee no performance and we’re looking to establish a tiered volume discount for Madison advisors who are part of the Madison dealer group as well so that it will become cheaper over time.

The other point as I mentioned 8.23% returns per annum since 2005 if you’re invested. The Australian trust is just going on to two years, it is the same team, the same process, the same insights it’s just that the Australian trust which has it done in a currency hedge overlay within the teams capabilities. We do not use debt and/or derivative leverage, we use derivatives to show 8 positions and our net position is always showing 100%. As I mentioned I think we compliment the Australian client’s portfolios with the Aussie equities bonds and potentially so we offer our diversified range of global asset classes on a relatively dynamic nature.

Again as I’ve mentioned this before Zenith and Longsec have given it a recommended rating and we’re on a number of batch platforms and looking to get on Asgard Infinity in the next couple of weeks as well. One last point I might make is on page 32, why would you use an asset allocation product in an alternatives portfolio and what is it giving me and my clients the amount of fees that I’m paying this manager. Essentially over a full cycle and the major periods 1,3,5,7 and 10 we have shown that we are sourcing alpha from different asset classes over that cycle. You can see here equities, fixed income, alternatives currency and cash.

Over the full 1,3,5,7 and 10 year cycle we’ve sourcing alpha at different parts of the market through the different cycle and that that’s why we’re dynamic over the 9 to 18 month period that’s where we add value to you and your clients by sourcing alpha from different parts of the global market and putting that with what you’re doing locally as well. 255 base points or 2.5% is approximately 75-80% of our alpha is sourced from beta decisions. When you look at an SAA government model you have ranges of 25-45% for equities, 20-50% for bonds and alternates is 5-15% and then you and diversify via different managers selection in those different asset classes. We actually source alpha from beta decisions which is a differentiated source of alpha to your clients portfolios.

We paid well with the likes of Invesco, Winton and I believe we are being put together with the Bennelong short equity strategy as well. Using those three alternative managers in your clients portfolio gives you different sources of returns, it also gives you a sense of what you’re going to expect from different managers through the cycle. Not everybody’s always going to be up and not everyone is going to be up at different levels and not everyone is going to be down or down at different levels through the cycle.

You want a blend that’s going to give you a cycle of protection through the cycle, capital appreciation, upside capture and different sources of returns from different asset classes. So that’s where we think we add value to you and your client. From perspective just being able to discuss with you today the three step process it’s easy to understand visually anything that is on or above the line is fair game. Then the team moves into what do we have conviction in over the next 9-18 months and how much conviction do we have in that? Then what’s the risk posture and then the implementation part is what is actually in the portfolio and where is the client’s allocations towards Japan, Europe, Mexico, coco bonds wherever it may be whatever different asset classes.

So I think it’s very easy to follow the process, it’s very easy to explain there’s the work and the content and also the visual people that may need to see, your clients that may need to see what’s happening and what our teams’ views are. I think that’s enough for today, if you have any questions or want to talk any particular pages or you want some background data I am very happy to provide that to you if you’d like to send my email which my details are on the front of this presentation.

Wayne: I guess what I try to look at when I hear these kinds of presentations is what’s the elevator speech, what’s the 75 word wrap up of the product that’s simple and easy to understand by a financially illiterate client.

Michael: Yeah so I would have said it’s a variable beta globally diversified product but jargon isn’t always good people don’t know what beta is. So it essentially gives you a team that act dynamically to put you into the right asset classes at the right time to preserve capital and capture upside growth through a cycle.

Wayne: I’d say this is something that we haven’t dealt with before to the client and that it’s in what we call the alternative space, it’s outside of your normal Australian equities, it’s international and it’s something that’s going to reduce your risk. When the others are doing poorly this thing is going to keep the leg in the queue and hold the portfolio. That’s what I’d say.

Michael: Yeah there’s a balance between risk and return. Capital preservation through the periods of market stress like the GFC everybody knows that but also capture growth just giving you return profiles similar to a global equity portfolio. That’s what you can expect from us so it’s a balance between risk and return through a market cycle. Apologies I’m usually talking to you guys.

Wayne: That’s ok we’ve just got to interpret that to the client that’s all.

Michael: I’m happy to take any questions or talk on a different level as well.

Wayne: The dynamic six, the front runners.

Michael: Yeah our strategy is probably just of the list we’ve got here post on to that another 7 across the group. I’m about half way through just sort of introducing Pinebridge and talking about yes the return series through the cycle but what is it actually going to do for me and my clients at different stages of the cycle.

Wayne: The risk reductions are in volatile times.

Michael: Yeah so that’s what really helps and the other thing is everybody says from an alternative manager you need to have low correlation to traditional equities and bonds. We believe that low correlation, I didn’t know if we could use that term to mums and dads but everyone wants low correlation in the alternatives bucket and that’s what we give you to reduce the bucket stress, our bucket correlation is less than .2.

Wayne: It doesn’t elevator pitch me low correlation through market stretch.

Michael: Yep but high beta in periods of upside growth.

Wayne: And it will go up during up cycles.

Michael: Yes, so essentially we had the variable beta globally diversified product. Essentially when you’re going through a GFC environment our equity beta is low protecting capital. When it’s getting paid to take risk and the equity markets are running where you’re going to get the most of your sources of return we have a higher beta. It’s not necessarily thinking that alternative bucket is only for low correlation strategies like hedge funds and credit managers and whatever it may be you can actually put in a portfolio like this that has a variable beta to be able to capture the upside and also protect through periods of market stress by having that variable beta that can move up and down. That’s 45 minutes thank you very much everyone for your time and again feel free to contact me if you wish.

Bethany: Thank you so much Michael, and Wayne for all your questions. If anybody needs to contact Michael you can use the details on the front of the page or if you don’t want to take those down you can always contact me and I’ll give you his details. Other than that thank you for joining us and enjoy the rest of your day.

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