The Princely Portfolio - The Family Office Forum

Transcription

Confidential
Family Office Forum
The Princely Portfolio
Prince Maximilian von Liechtenstein
Wiesbaden, 6 May 2014
Table of content
I.
Introduction to Liechtenstein Princely Family and LGT Group
II. Core beliefs of investment strategy
 Establishing a high competence investment organization
 Asset allocation and manager selection as key competences and performance drivers

Alternative asset classes for return enhancement and diversification
III. Long-term outperformance is the result
IV. Outlook for the further development of the investment strategy
 Further build-up of in-house direct investment and execution competence

Growing emphasis on positive social and environmental impact
V. Executive Summary
© LGT Group
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Overview of LGT Group
Private ownership through
the Liechtenstein
Princely Family
 LGT was founded in 1920 and has been controlled by the Princely Family since 1930
 Today LGT is the largest private banking and asset management organization
completely controlled by a single family
Business focus on
private banking and
asset management
 Private banking and asset management are highly attractive, growing and low risk
segments of the financial services industry
 AuA come from private (60%) and institutional clients (40%)
International
platform &
global perspective
 LGT’s private and institutional client base is geographically well diversified
 LGT manages over 25 offices and is represented in all the important financial centers
worldwide
Strong culture &
organization
 LGT develops a culture that emphasizes integrity, competence, commitment, longterm orientation, entrepreneurship, and alignment of interest between clients,
employees and owners
Financial strength &
investment
competence
 LGT has a very strong balance sheet and a history of stable growth and profits
 To develop a world class investment competence within LGT has been a priority for
the Liechtenstein Princely Family
© LGT Group
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Attractive growth, strong balance sheet, solid profits
LGT Group - Assets under Management (CHF bn)
86.9
102.1
2.7
2.4
51.6
110.7
2.8
56.3
38.8
45.7
47.8
51.6
Key figures LGT Group (as of 31 December 2013)
Total operating income
CHF 895 mn
Group net profit
CHF 139 mn
Cost/income ratio
77%
Net asset inflow
CHF 7.5 bn
Total assets
CHF 28.3 bn
Tier 1 ratio
21.3%
Employees
1’921
31.12.2011
31.12.2012
31.12.3013
LGT Princely Portfolio
Client assets without discretionary mandate
Client assets with discretionary mandate
© LGT Group
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1998 as the starting point for a dedicated organization
responsible to invest the Princely Portfolio
The successful divestiture of a larger family business triggered the establishment of LGT Capital Partners as a dedicated
investment organization that was given the responsibility to invest the Princely Portfolio.
Source: LGT
Positive performance in the past is no guarantee of positive performance in the future.
Investments open up new opportunities, but they also involve risks. Please consider the legal information at the end of this presentation.
© LGT Group
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Table of content
I.


© LGT Group
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Core beliefs of investment strategy – Establishing a high competence investment organization
Organization & Governance
LGT Group Foundation Board
H.S.H. Prince Philipp von und zu Liechtenstein
Group Internal Audit
LGT Group CEO
H.S.H. Prince Max von und zu Liechtenstein
Human Resources
Marketing &
Communications
Philanthropy
CFO
Olivier de Perregaux
Compliance
Controlling & Accounting
Legal & Tax
Risk Controlling/Corporate
Finance
Private Banking
(LGT Bank)
Asset Management
(LGT Capital Partners)
Operations & Technology
Thomas Piske
Roberto Paganoni
André Lagger
Senior Management Board
© LGT Group
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LGT Capital Partners –
history of strong organizational development and growth
Key facts of today’s organization
>USD 50bn AuM
>400 clients
300 staff
11 offices
2014
2010
2008
2006
2004
2002
1999
1997/98
Dedicated
organization
started
1st private
equity
investment
USD 1bn AuM
1st PE
investment in
Asia
Opening of
Hong Kong
office
One of
Europe’s
largest
Acquired a
alternative
direct ILS team investment
firms
2012
Opening of
New
York office
>100 staff
Over 300
institutional
investors
Became
signatory of
UNPRI
USD 20bn
AuM
Opening of
Beijing office
Integration of
LGT Capital
Management
Opening of
London office
Source: LGT
Positive performance in the past is no guarantee of positive performance in the future.
© LGT Group
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Sophisticated institutional investor base
>400 clients
32 countries
5 continents
Insurance companies
Government related funds
Public pension funds
© LGT Group
Corporate pension funds
Foundations
9
The core features
Princely Portfolio
successful track record since 1998
Risk diversification
Asset allocation across
Global Investable Markets
(GIM)
Research and
scenario-based
analysis
Manager Selection
Identify the best managers to
generate alpha
Cultivate and leverage the
relationships – managed account
platform, preferred access, coinvestments
Alignment of interest: clients investing alongside the Princely Family and investment managers
Source: LGT
© LGT Group
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Core beliefs – Asset allocation and manager selection as key competences and performance drivers
Broad diversification over various asset classes
Strategic asset allocation of the Princely Portfolio (GIM Classic)
Private equity
20.0%
Equity developed
13.5%
Equity emerging markets
9.0%
Investment grade bonds
4.0%
Alternative diversifier
9.0%
Inflation-linked bonds
4.0%
Alternative equity
5.0%
Credit bonds
15.0%
Alternative credit
6.0%
Alternative bond
4.0%
Insurance-linked securities
Infrastructure
4.0%
Commodity Real estate
1.5%
3.0%
2.0%
Equities
22.5%
Fixed income
27.0%
Real assets
6.5%
Hedge funds
24.0%
Private equity
20.0%
Convertible bonds
High yield bonds
Loans
Bonds emerging markets
3.00%
3.25%
0.75%
8.00%
+2.0% Precious metal
exposure (overlay)
Source: LGT
Private Equity weighting to be managed in ranges. To take into account the relevant situation on the financial markets, the actual ("tactical") asset allocation may deviate significantly from the targeted
strategic asset allocation.
© LGT Group
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Thinking in scenarios for portfolio management and risk mitigation
Baseline scenarios
Leveraged boom
Leveraged boom
Low anemic
growth
20%
Perfect world
15%
Low anemic
growth
10%
5%
Regional divergence
Stagflationary
repression
Alternative scenarios
Robust portfolio
0%
-5%
Hot inflation
Regional
divergence
-10%
Global sovereign
confidence crisis
Deflationary depression
Hot inflation
Perfect world
Stagflationary
repression
Deflationary
depression
Global sovereign
confidence crisis
Maximum return of optimal scenario-specific portfolios
Return of the optimised, robust portfolio
Source: LGT
Scenario-specific "corner portfolios" as well as the "robust portfolio" are dependent on the investors' time horizon, risk aversion and permissible asset classes.
© LGT Group
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Systematic process developed and executed since 1998
Key facts on manager selection
Long-standing relationships
250 top quartile specialized investment firms currently invested in
17 years of building relationships
Across all asset classes
all globally investable markets
Global network
500 manager visits p.a
e.g. 2013:
185 on-site
15 cities
11 countries
>100 manager selection investment professionals
17 years with LGT (core team)
12 years experience (team average)
0 turnover in core team
Countries in which the Princely Portfolio currently invests
Source: LGT/PresentationLoad. Investments open up new opportunities, but they also involve risks. Please consider the legal information at the end of this presentation.
© LGT Group
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Core beliefs of investment strategy – Alternative asset classes for return enhancement and diversification
Private equity substantially outperforms listed equity indices
Private equity portfolio performance vs public equity
(USD; gross of LGT management fees, net of external manager fees; 31 October 1999 through 31 December 2013; cumulative returns)
3,500
238.1%
3,000
2,500
2,000
68.0%
1,500
12.6%
33.1%
16.2%
14.7%
23.1%
9.5%
27.5%
20.1%
2007
10/2013
2006
10/2012
2005
10/2011
2004
10/2010
2003
10/2009
10/2007
10/2008
10/2006
10/2004
10/2003
10/2002
1999
2000
2001
2002
(2M)
4.9% 12.7% -17.7% -7.2%
11.1% -13.2% -16.8% -19.9%
10/2005
GIM Private Equity
MSCI World (USD) NR
10/2001
10/2000
500
10/1999
1,000
2008
2009
2010
2011
2012
2013
38.8% -15.8%
9.0% -40.7%
-4.1%
30.0%
15.3%
11.8%
9.2%
-5.5%
13.4%
15.8%
13.7%
26.7%
Source: LGT/Datastream
Positive performance in the past is no guarantee of positive performance in the future. The risk of price and foreign currency losses and of fluctuations in return as a result of unfavorable exchange rate
movements cannot be ruled out. Investments open up new opportunities, but they also involve risks. Please consider the legal information at the end of this presentation.
© LGT Group
14
Core beliefs of investment strategy – Alternative asset classes for return enhancement and diversification
Hedge funds: focus on stable and positive portfolio performance
Hedge fund portfolio reported 11 positive years in the past 13 full calendar years
(USD; gross of LGT management fees, net of external manager fees; 31 October 1999 through 31 December 2013; cumulative returns)
2,500
145.7%
2,250
2,000
1,750
68.0%
1,500
1,250
1,000
750
500
1999
2000
GIM Hedge Funds
MSCI World (USD) NR
2001
2002
2003
2004
2005
2006
2007
2008
1999
2000
2001
2002
(2M)
3.9%
8.6%
8.2%
8.3%
11.1% -13.2% -16.8% -19.9%
2003
2004
2005
2006
14.6%
33.1%
6.7%
14.7%
7.0%
9.5%
13.6%
20.1%
2009
2007
2010
2011
2012
2013
2008
2009
2010
2011
2012
2013
9.0% -13.6%
9.0% -40.7%
11.0%
30.0%
9.1%
11.8%
-4.2%
-5.5%
5.1%
15.8%
8.9%
26.7%
Positive performance in the past is no guarantee of positive performance in the future. The risk of price and foreign currency losses and of fluctuations in return as a result of unfavorable exchange rate
movements cannot be ruled out. Investments open up new opportunities, but they also involve risks. Please consider the legal information at the end of this presentation.
© LGT Group
15
Table of content
I.


© LGT Group
16
Long-term outperformance is the result
The Princely Portfolio significantly outperformed in the long-term
perspective
Performance of the Princely Portfolio
USD 2.7bn
USD 1.8bn
USD 1bn
Princely
Portfolio
01/99
Princely
Portfolio
as of 03/2014
MSCI World
as of 03/2014
Source: LGT
© LGT Group
17
Long-term outperformance is the result
Value added from strategic asset allocation and manager selection
Added value of strategic asset allocation and manager selection since inception
(gross of fees, net of external manager fees; 31 October 1999 through 31 March 2014; cumulative returns)
160%
Performance (in %)
127%
1999
93%
2000
2001
2002
2003
2004
Mixed portfolio (50/50 portfolio)1
2005
2006
2007
2008
Strategic asset allocation
2009
2010
2011
2012
2013
Manager selection
1 50/50 portfolio: 50% Bonds Global: Salomon Brothers Global Govt Bond hedged in USD; 50% Equities Global: MSCI World hedged 70% in USD (monthly rebalancing).
The graph is only used to highlight the performance record of the strategic asset allocation and the manager selection and does not represent the actual performance of GIM Classic.
© LGT Group
18
Table of content
I.


© LGT Group
19
Outlook for the further development of the investment strategy
Further build-up of in-house investment and execution skills

Some exposures are best achieved through delegation to skilled external managers, others will be better obtained
through in-house execution and yet others will be completely out of reach

Neither buying (manager selection) nor making (in-house execution) is without costs and risks

Investors will differ in their capabilities and need to evaluate their comparative advantage in "making" versus
"buying"

LGT Capital Partners has a clear edge as direct investor for secondary private equity investments and insurance
linked securities

In other categories, where the in-house advantage is less pronounced, LGT Capital Partners is executing parallel
exposures – having in-house investment efforts compete with external managers
Source: LGT
© LGT Group
20

LGT is committed to create a positive social and environmental footprint

LGT has a group wide Corporate Social Responsibility effort

LGT Venture Philanthropy:

–
was founded in 2007 with the objective to invest capital efficiently to create positive social impact
–
has become one of the world’s leading social impact investing organizations, investing on behalf of institutional,
private clients and the Liechtenstein Princely Family
–
High profile social impact investments include Bridge International Academies, M-Kopa and Lumni
LGT Capital Partners:
–
is member of UNPRI, FNG/Eurosif, Asian Corporate Governance Association, Carbon Disclosure Project
–
is influencing its external investment managers through an evaluation and ranking of their ESG performance
Source: LGT
© LGT Group
21
Table of content
I.

 Further build-up of in-house investment expertise

© LGT Group
22
Executive Summary

LGT focuses on private banking and asset management serving a growing institutional and private client base

LGT also acts as the family office for the shareholding Liechtenstein Princely family who has controlled LGT with a
long-term perspective

The capital markets investment strategy of the Liechtenstein Princely Family has two primary competences that
generate excess returns:


–
Asset allocation drives exposures and manages risks
–
Manager selection provides access to extraordinary managers
Family offices use LGT in different ways:
–
As a safe, efficient and service oriented booking and trading platform
–
As an external investment manager for certain exposures – most frequently in the area of alternative assets
–
As external provider of a core investment with a moderate level of risk – co-investing in the Liechtenstein
Princely Investment Strategy
Please contact Franziska Blindow (franziska.blindow@lgt.com, +423 235 1828), René Canal (rene.canal@lgt.com,
+423 235 1331) or Christian Buchli (christian.buchli@lgt.com, +423 235 1285)
Source: LGT
© LGT Group
23
Disclaimer
This information material was produced by LGT Capital Partners Ltd and/or its affiliates (hereafter “LGT CP") with the greatest of care and to the best of its knowledge and belief. However, LGT CP provides no
guarantee with regard to its content and completeness and does not accept any liability for losses which might arise from making use of this information material.
This information material is not a prospectus as stated in Art. 652a/Art. 1156 of the Swiss Code of Obligations, nor the result of a financial analysis and therefore not subject to the "Directives on the
Independence of Financial Research" (Swiss Bankers Association) and does not constitute an offer or a recommendation to buy or sell financial instruments or services.
This information material is provided for information purposes only and is designed to give an overview of the main features of the product. For full details of the product features and of the opportunities,
risks, and costs associated with this product, please see the corresponding legal documents, i.e., to the extent applicable and available, the sales prospectus, the private placement memorandum, the Key
Investor Information Document (KIID) or simplified prospectus, the management regulations or articles of incorporation and the annual and half-yearly reports or the annual financial statements (all together
“Product Documents”). The information and opinions contained in this information material come from the initiator or from other sources that LGT CP deems to be reliable. However, only the information
contained in the associated Product Documents can be considered definitive. The product may therefore be purchased only on the basis of the most recent Product Documents.
Not all information relevant for investment decisions may be available in German – either in the original or as a translation – and product characteristics could therefore be misunderstood. The information and
opinions contained in this information material do not take account of the recipient’s personal circumstances and therefore constitute merely promotional communication, and not investment advice.
Consequently, reading this information material is no substitute for a personal consultation with a professional advisor before making any investment decision. Historical performance figures, projections, and
other simulations are no guarantee of future performance.
Performance data does not take account of the commissions and costs incurred on the issue and redemption of units. LGT CP may receive consideration from third parties in exchange for distribution and other
services, either as single or recurring payments.
The products are considered foreign investment schemes pursuant to Art. 119 of the Swiss Federal Collective Investment Schemes Act (CISA). No application has been submitted to the Federal Financial Market
Supervisory Authority (FINMA) to obtain approval within the meaning of Art. 120 CISA to advertise, offer or distribute the investments in or from Switzerland to non-qualified investors, and no other steps have
been taken in this direction. As a result, the investments are not registered with FINMA. Consequently, investors do not benefit from the specific investor protection and/or FINMA supervision pursuant to the
CISA and its implementing ordinances. Any offer or sale must therefore be in strict compliance with Swiss law, and in particular with the provisions of the CISA and its implementing ordinances, and FINMA
circular 2013/9 on the distribution of collective investment schemes. Pursuant to the CISA and its implementing ordinances, the units may not be advertised, offered or distributed to retail investors in or from
Switzerland, but only to qualified investors within the meaning of Art. 10 para. 3, 3bis, 3ter and 4 CISA.
The information is valid only at the time this information material was produced. A change in the economic environment, possible changes in the law, and other events may cause future performance to
deviate from that indicated in this information material. This applies particularly to statements regarding returns and taxes.
Every investment involves risk, especially with regard to fluctuations in value and return. Investments in foreign currencies involve the additional risk that the foreign currency might lose value against the
investor's reference currency.
Alternative investments (e.g. hedge funds or private equity investments) are complex instruments and may carry a very high degree of risk. Such risks include, among other things: (i) loss of all or a substantial
portion of the investment due to the extensive use of short sales, derivatives and debt capital, (ii) incentives to make investments that are riskier or more speculative due to performance based compensation,
(iii) lack of liquidity as there may be no secondary market for hedge fund and private equity interests and none is expected to develop, (iv) volatility of returns, (v) restrictions on transfer, (vi) potential lack of
diversification and resulting higher risk due to concentration, (vii) higher fees and expenses associated that may offset profits, (viii) no requirement to provide periodic pricing or valuation information to
investors, (ix) complex tax structures and delays in distributing important tax information and (x) fewer regulatory requirements than registered funds. Hedge funds and private equity investments are intended
only for investors who understand and accept the associated risks.
This product may include investments in commodities that are subject to greater fluctuations in value than normal investments and may lead to additional investment risks.
This product may further include investments in emerging markets. Emerging markets are located in countries that possess one or more of the following characteristic: A certain degree of political instability,
relatively unpredictable financial markets and economic growth patterns, a financial market that is still at the development stage or a weak economy. Emerging markets investments usually result in higher
risks such as political risks, economical risks, credit risks, exchange rate risks, market liquidity risks, legal risks, settlement risks, market risks, shareholder risk and creditor risk.
This information material is intended for the recipient personally, and it may be used solely by the persons to whom it was presented. It may not be reproduced either in part or in full without the written
permission of LGT CP. It is expressly not intended for persons who, due to their nationality or place of residence, are not permitted access to such information under local law.
Any Products Documents may be obtained free of charge from LGT CP upon request.
© LGT Group
24

The Princely Portfolio - The Family Office Forum

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