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CREDIT SUISSE ASSET MANAGEMENT FUNDS (UK) LIMITED
Credit Suisse/Aberdeen Multi-Manager
June 2009
Corporate Bond Sector - Caveat Emptor ?
What lies within the Corporate Bond Sectors?
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 2
Agenda : Corporate Bond Sector - Caveat Emptor ?
From Zurich to Aberdeen
Corporate bonds – the ‘in vogue’ sector
The divergence in performance of corporate bond funds
What does UCITS III mean for corporate bond funds?
What type of bond funds do we buy?
Summary
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 3
From Zurich to Aberdeen - The Multi Manager Team at Credit Suisse
12 multi-manager funds
FUM £700m
TIMELINE: 1st July Team; 1st August Funds
No Change
Fund Range
Investment Process
Aberdeen
Funds under Management at 18th June 2009
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 4
IMA Fund Flow Statistics – Corporate Bond Fund Sector is in Vogue!
-600
-400
-200
0
200
400
600
800
1000
1200
1400
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Inflow £m
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
2% Return
IMA Fund Flows £m IMA Corp Bond Sector Average Return Source: IMA 31/12/08 - 30/04/09
Gross sales in £ Corporate Bond Sector in 2009 is £4.8bn
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 5
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
IMA £ Corp Bond Sector CSMM Fund Constituents
% Return
IMA Sterling Bond Sector 2009 Performance–Surprising Divergence
Source: Lipper Hindsight 31/12/08 – 29/05/09
CS MM £ Bond 4.6%
IMA Sector Avg -1.6%
+7.7%
-14.4%
The difference in performance between top and bottom year to date is 22%
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 6
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
IMA £ Corp Bond Sector CSMM Fund Constituents
% Return
IMA Sterling Bond Sector 2009 Performance–Surprising Divergence
Source: Lipper Hindsight 31/12/08 – 29/05/09
CS MM £ Bond 4.6%
IMA Sector Avg -1.6%
L&G Dynamic 16.0%
Caz Strategic 11.9%Invesco Stg11.3%RWC Glb Conv 10.3%M&G Strategic 7.5%Bluebay Inv Grd 7.2%
Thread Abslt 2.3%
Temp Glbl TR -2.5%
Thames R Glbl -5.7%
+7.7%
-14.4%
The difference in performance between top and bottom year to date is 22%
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 7
Bond Classifications
Funds In Sector
1 IMA UK Corporate Bonds 88
2 IMA £ Strategic Bonds 61
3 IMA £ High Yield 21
4 Lipper Global £ Corporates 24
5 Lipper Global £ High Yield 8
6 Lipper Global Global Corporates 28
7 Lipper Global £ 164
8 Lipper Global Bond Global 381
TOTAL 775
Source: Lipper Hindsight 31/12/08 – 29/05/09
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 8
What is UCITS III?
- UCITS rules framework issued in 2002
- Adapted and implemented 2007 onwards
- Extends use of eligible instruments e.g. derivatives
- Underlying asset must be available as direct investment
- Increased risk management demands e.g. value-at-risk
- Convergence of sophisticated strategies into retail world
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 9
US All Corporate Bonds Default Rate: Trailing 12 month Issuer Weighted
0
1
2
3
4
5
6
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009
%
Source: Moody’s Investors Service, Thomson Datastream & Cazenove Capital ManagementSource: Moody’s Investors Service, Thomson Datastream & Cazenove Capital Management
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 10
Risk Reward Profile
- Asymmetric Risk
- Interest Rate Risk or Duration
- Credit Risk and Credit Ratings
- Research Process
- Portfolio Construction
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 11
What funds we hold and why?
SECTOR KEY YIELD %
- Cazenove Strategic Bond IMA £ Strat Bond Active/HY 7.5% 8%
- Templeton Global Total Return LG Bond Global Resource/Global 6.5% 8%
- Invesco Sterling Bond LG Bond £ Credit Beta 8.4% 16%
- BlueBay Investment Grade LG Bond £ Corp Low Beta 6% 16%
- L&G Dynamic Bond IMA £ Strat Conviction Mgt - 8%
- Threadneedle Absolute Return Bd IMA Absolute RetDownside protection - 8%
- M&G Strategic Corporate Bond £ Corp Bond Macro Approach 3.6% 8%
Includes all holdings of the Credit Suisse MM Sterling Bond Fund as at 29 th May 2009 except the Thames River Global Bond Fund which is entirely sovereign debt. A number of the above funds are held in our other mandates.
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 12
BlueBay Investment Grade Fund
BlueBay Investment Grade Bond Base I (MF)Lipper Global Bond EUR Corporates (IN:IN)
Markit iBoxx Euro Corporates TR (IN:IN)Relative to
Percentage Growth Total Return, Tax Default, In GBP
1206 Days From 21/02/2006 To 11/06/2009
Perc
en
tag
e G
row
th
-10.0
-7.5
-5.0
-2.5
0.0
2.5
5.0
7.5
10.0
12.5
15.0
04/2006 07/2006 10/2006 01/2007 04/2007 07/2007 10/2007 01/2008 04/2008 07/2008 10/2008 01/2009 04/2009
e12.3
-7.8
User may have modif ied the original chart and axis titles provided by Lipper.
We bought the Bluebay Investment Grade Fund September 2008
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 13
M&G Strategic Bond vs New Star Sterling Bond vs Old Mutual Corporate Bond funds
M&G Strategic Corporate Bond A Acc (MF)New Star Sterling Bond Inc (MF)
Old Mutual Corporate Bond A Acc (MF)
Percentage Growth Total Return, In USD
882 Days From 29/12/2006 To 29/05/2009
Pe
rce
nta
ge
Gro
wth
-60
-55
-50
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
01/2007 04/2007 07/2007 10/2007 01/2008 04/2008 07/2008 10/2008 01/2009 04/2009
-4.1
e-39.9
-43.9
User may have modif ied the original chart and axis titles provided by Lipper.
We sold the Old Mutual fund in February 2008 and sold New Star September 2008
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 14
Our selections: look through
AAA AA/A BBB BB-C NR CASH
Cazenove Strategic Bond 1.3% 21.9% 22.5% 50.3% 0.0% 4.0%
FT Invest Global Total Return 6.0% 35.2% 30.2% 25.2% 3.4% 0.0%
Invesco Sterling Bond 3.1% 36.5% 35.7% 15.9% 6.9% 1.9%
L&G Dynamic Bond Trust 1.5% 43.0% 32.2% 16.4% 0.4% 6.5%
M&G Strategic Corporate Bond
7.3% 45.2% 29.6% 6.0% 5.2% 6.7%
Threadneedle Absolute Return
41.2% 64.6% 2.0% 0.0% 0.0% -7.8%
BlueBay Investment Grade 11.0% 60.1% 26.1% 1.5% 0.6% 0.7%
Investment Grade High Yield
Source: Credit Suisse 29.05.09
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 15
CS Multi-Manager £ Corporate Bond Fund
Source: Lipper HSW Growth TR GBP Figures 30.03.07 – 31.05.09 from the date that the new team started to manage the fund. Please note that past performance is not necessarily a guide to the future.
Credit Suisse Multi Manager Sterling Bond Acc (MF) IMA £ Corporate Bond (IN)
Percentage Growth Total Return, Tax Default, In GBP
791 Days From 30/03/2007 To 29/05/2009
Pe
rce
nta
ge
Gro
wth
-20.0
-17.5
-15.0
-12.5
-10.0
-7.5
-5.0
-2.5
0.0
2.5
04/2007 07/2007 10/2007 01/2008 04/2008 07/2008 10/2008 01/2009 04/2009
-7.2
-11.9
User may have modif ied the original chart and axis titles provided by Lipper.
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 16
Disparity of returns – it’s not just the Corporate Bond Sector
Source: Lipper HSW Growth TR GBP Figures 31.05.08 – 31.05.09. Please note that past performance is not necessarily a guide to the future.
-80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
UK All Companies
UK Equity Income
UK Smaller Companies
North America
Europe ex UK
J apan
Asia ex J apan
Emerging Markets
UK Corporate Bonds
Global Bonds
Absolute Return
All Unit Trusts *
77.5%-58.2%
-15%
-1%
9%
-8%
-21%
-14%
-13%
-25%
-19%
-27%
-23%
-25%
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 17
Disparity of Returns – also amongst multi-manager funds
Source: Lipper HSW Growth TR GBP Figures 31.05.08 – 31.05.09. Please note that past performance is not necessarily a guide to the future.
-50% -40% -30% -20% -10% 0% 10% 20%
IMA Active Managed
IMA Balanced Managed
IMA Cautious Managed
-40.91% 5.40%
-14%
-17%
-21%
-14%
CS MM Cautious Managed (19th of 53)
CS MM Multi Asset Growth (3rd of 54)
-17%
CS MM Balanced Managed (7th of 54)
-21%
CS MM Equity Managed (16th of 46)
Key1st Quartile2nd Quartile3rd Quartile4th Quartile
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 18
Summary – Corporate Bond Sector - Caveat Emptor ?
A seamless transition from CS to Aberdeen Asset
Management
Buyer beware, not only with single manager funds but
also multi-manager funds
Corporate bond funds – handle with care
Source: Lipper Hindsight 31/12/08 – 16/06/09
10 out of 12 of the Credit Suisse Multi Manager Funds are top quartile year to date
Asset Management
Credit Suisse Multi-ManagerJune 2009
Slide 19
Important Information
This presentation has been produced for professional advisers only and is not for circulation to or to be relied upon by retail clients in any form.
Any research included in this document is for illustrative purposes only. It was procured for the Asset Management business of Credit Suisse, One Cabot Square, London E14 4QJ, Tel: 020 7888 0134, www.credit-suisse.com/uk, for its own purposes and is no longer current. The mention of specific funds should not be construed as a recommendation to deal. For your own protection telephone conversations may be recorded.
Issued by CREDIT SUISSE ASSET MANAGEMENT LIMITED and CREDIT SUISSE ASSET MANAGEMENT FUNDS (UK) LIMITED (both authorised and regulated by the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS).
The information contained in this presentation is believed to be correct. Whilst every care has been taken in compiling this presentation, CREDIT SUISSE ASSET MANAGEMENT LIMITED and CREDIT SUISSE ASSET MANAGEMENT FUNDS (UK) LIMITED cannot be held responsible for any errors or omissions.
The price of shares and income from them may fall as well as rise. You may not get back the amount of your original investment. Please not that past performance is not a guide to future returns. Please ask your Sales Manager or visit our website at www.credit-suisse.com/uk for up to date performance information.
