Australian Index Investments. How to generate investment returns using Sector ETFs

Transcription

1 Australian Index Investments How to generate investment returns using Sector ETFs

2 Disclaimer The information has been prepared by Australian Index Investments (ACN ) ("Aii") as investment manager of the Aii Sector ETFs. Aii is a corporate authorised representative number issued by Valuestream Investment Management (ACN ) (AFSL No ) ("VIML") The Aii Sector ETFs are issued by VIML under a Product Disclosure Statement ("PDS") for the Aii Sector ETFs. Copies of the PDS may be obtained via the website or can be obtained by contacting Aii on The PDS contains important information on how to trade the Aii Sector ETFs. Please read the entire PDS before making any investment decision. The information provided is factual information only and is not intended to amount to general or personal financial product advice or a recommendation to invest in the Aii Sector ETFs and does not constitute an offer or invitation to purchase or subscribe for the Aii Sector ETFs. The information does not take into account your personal investment objectives, financial situation or particular needs. We recommend that you seek professional advice regarding these matters before making any investment decision. Although Aii attempt to provide accurate, complete and up-to-date information obtained from reliable sources, neither Aii nor its associates make any representations or warranties (express or implied) as to whether the information in this document is accurate, complete or up-to-date Neither Aii nor its associates guarantee the performance of the Aii Sector ETFs, the repayment of capital invested or any particular rate of capital or income return (unless otherwise stated in the PDS). Past performance information is not necessarily a guide to future performance. and returns on the Aii Sector ETFs are not guaranteed. The Aii Sector ETFs are not sponsored, endorsed, sold or promoted by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ( S&P ) or the Australian Securities Exchange ( ASX ). S&P and ASX make no representation, condition or warranty, express or implied, to the owners of the Aii Sector ETFs or any member of the public regarding the advisability of investing in securities generally or in the Aii Sector ETFs particularly or the ability of the S&P/ASX 200 Financials Index, the S&P/ASX 200 Financials x-a-reit Index, the S&P/ASX 200 Industrials Index, the S&P/ASX 200 Resources Index, the S&P/ASX 200 Energy Index and the S&P/ASX 300 Metals and Mining Index. "S&P" is a trademark of Standard & Poor's Financial Services LLC and "ASX" is a trademark of ASX Operations Pty Ltd. These trademarks have been licensed for use by Aii. The Aii Sector ETFs is not sponsored, endorsed, sold or promoted by Standard & Poor's or ASX Operations Pty Ltd. Standard & Poor s and ASX Operations Pty Ltd make no recommendation as to the advisability of investing in Aii Sector ETFs.

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4 Index Returns Index Returns 1 yr % p.a. 3 yrs % p.a. 5 yrs % p.a. S&P/ASX 200 Index (benchmark) 13.1% -5.84% 4.90% - Aii ETF S&P/ASX 200 Resources 9.7% 0.15% 13.46% RSR S&P/ASX 200 Energy -2.2% 3.29% 11.14% ENY S&P/ASX 200 Industrials 9.7% % -3.46% IDD S&P/ASX 200 Financials 17.8% -8.55% 2.28% FIN S&P/ASX 200 Financials x-a- REITs 17.2% -5.57% 4.60% FIX S&P/ASX 300 Metals & Mining 14.8% -1.01% 14.33% MAM Source: Standard and Poor s 30 June 2010 Accumulation Index Annualised Total Returns

5 Top Down Analysis Economic Trend E.g. Emerging market demand for raw materials Sector Selection E.g. Buy Aii S&P/ASX 300 Metals & Mining (MAM) Outperform the benchmark by taking advantage of macroeconomic trends.

6 Metals & Mining outperforms over 10 years S&P/ASX 300 Metals & Mining v S&P/ASX stocks 500 Metals & Mining ASX code - MAM Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 S&P/ASX 200 Price range* - $3.90-$4.85 One Trade instant diversification Annualised return** 14.33% over 5 years compared to 200 benchmark of 4.90%. *Price range since listing **Standard and Poor s 30 June 2010 Accumulation Index Annualised Total Returns Source: IRESS, Standard & Poor's

7 Introducing Aii Sector ETFs

8 Implementing Aii Sector ETFs Case Study 1: Core-Satellite Portfolio Core portfolio of property and managed funds Use Aii Sector ETFs as satellite investments with the potential to outperform the market Case Study 2: Sector Tilts Existing portfolio of direct investments Use Aii Sector ETFs to tilt your portfolio to sector(s) of the market that are likely to outperform Case Study 3: Sector Rotation An active investment sector rotation strategy using Aii Sector ETFs

9 Case Study 1: Core-Satellite Portfolio Add value to a core portfolio of property & managed funds using Aii Sector ETFs as satellite investments

10 Case Study 2: Sector Tilts By buying MAM investor gets INSTANT mining exposure (69 stocks) with one trade and you don t have to worry if you have picked the right stock!

11 Case Study 3: Sector Rotation Source: PennyWise Investments October 2010 Use key economic fundamentals to trade in and out of market sectors

12 The Products Aii Sector ETF Aii S&P/ASX 200 Financials Aii S&P/ASX 200 Financial x-a-reit Aii S&P/ASX 200 Energy Aii S&P/ASX 200 Industrials Aii S&P/ASX 200 Resources Aii S&P/ASX 300 Metals and Mining ASX Code (.AXW) S&P/ASX Index inav Number of constituents FIN XFJ YFIN 40 FIX XXJ YFIX 24 ENY XEJ YENY 22 IDD XNJ YIDD 36 RSR XJR YRSR 61 MAM XMM YMAM 69 Low MER % inav published every 30 secs 100% of fund assets held by RBC Dexia (Fund Custodian) Distributions paid out twice a year with franking credits Dividend reinvestment plan available Liquidity & transparency traded on ASX, market makers T+3 settlement, one HIN

13 Summary Sector Rationale Apply a macro approach to investing using Aii Sector ETFs Ability to generate proven outperformance (alpha) by investing in Aii Sector ETFs 3 trading strategies: Core-satellite Sector tilts Sector rotation Take advantage of instant diversification, lower trading costs and less administration

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