Constructing a global investment strategy
Ruth Hollies
September 2006
Introduction
• History • Background• Benefits• Processes• Other issues
Background and history
• Historic estate• Moving money off shore for
tax purposes• Naïve diversification in 1953
with the acquisition of Annacis Island in Canada
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
The rationale for a global portfolio
Reducing risk
Increasing return
Increasing opportunities
Increases financial stability
The Grosvenor approach
Economics and DemographicsForecast returnsOptimal portfolios
Operating Company Strategic
plans
Boards
Optimal Portfolios
• Data issues• Investment Objective?• Limitations• Other issues
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
Investment objective?
• Liabilities• Time • Attitude to Risk• Benchmarking• Development
Landing safely, doesn’t mean you didn’t take any risks
Limitations
• Time period used• Past analysis over short
periods• In it for the Long-run• Structural shifts• Emergence of new areas
Bringing it together
• Treat Portfolio results with caution– Constraints– Sensitivity to small changes
• Forecasts• Policy watch - Economics
A changing world
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Average Yields in the Grosvenor world
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Source: Real Capital Analytics, CBRE, CWHB, JLL, Grosvenor
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Rates Yield shift (Conner estimate) Yield shift (Grosvenor estimate)
Changes in short rates and potential yield shift
Percent
Source: Grosvenor
5 year IRR forecast scenarios
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Office All property Industrial Retail Residential
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The alternative