1. HAHN ETF Managed Portfolios
A tactical, global macro approach to ETF investing
2. HAHN Investment Stewards: Overview
People and Philosophy
Portfolio Construction
Process
Performance
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3. HAHN Global Investment Strategy Committee
Global Macro Experience
Wilfred J. Hahn, Chairman and Co-Chief Investment Officer
Over three decades of international investment industry experience as global strategist, portfolio
manager, business head. Former Head of Royal Bank Global Investment Group, managing
pension, mutual and private client portfolios with global assets > $13 Billion (CAD).
Mark Arthur, CFA, Chief Executive Officer and Director
Up until 2002, Mark was President, CIO and Director of RBC Global Investment Management
Inc., Vice President Investments and Director of Royal Mutual Funds and Chairman of RBC
Investments Global Investment Strategy Committee.
Tyler Mordy, CFA, Director of Research and Co-Chief Investment Officer
Recognized innovator in the design and application of ETF managed portfolios, and widely
interviewed by the financial media for his global strategy views as well as ETF trends. Recently,
IndexUniverse profiled Tyler as one of the “best and brightest” working in the ETF industry.
Formerly with Deutsche Asset Management in London, UK.
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5. Outline
People and Philosophy
Portfolio Construction
Process
Performance
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6. Global Asset Class Universe
ETFs have colonized virtually every asset class across the globe
HAHN Global Asset Mix Decisions = 939
909
761
746
648
501
451
397
347
102
4
1
751
402
249
53
Cash Fixed Income Equity Opportunity
Short Term T-Bills Country Country Commodity
Credit Duration Sector Real Estate
Foreign Credit Size Thematic
Sector Style
Specialty Specialty
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7. Intelligent Portfolio Construction and Risk Parameters
Globalized, diversified and adaptive*
100
Strategy Range Benchmark Current Strategy
90
80
70
60
50
40
30
20
10
0
Opportunity Traditional Cash Total Equity Canadian Equity US Equity International Total Bonds Canadian Bonds US Bonds International
Investments Investments Equivalents Equity Bonds
* The composite benchmark for this portfolio is comprised of the following indices and weights: CAD 90-day Treasury Bill index (5%), MSCI EAFE Index in $Cdn (14%), S&P 500 Index in $CDN (11%), S&P/TSX 60 Index (25%), Citigroup World
BIG Non-USD Bonds in $Cdn (13%), Barclays Capital U.S. Aggregate Bonds in $Cdn (9.5%), DEX Universe Bonds (22.5%).
www.hahninvest.com
8. HAHN ETF Managed Portfolios
Eleven Distinct Mandates with Different Risk Profiles
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9. HAHN ETF Managed Portfolios
Detailed Investment Guidelines Available
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15. Currencies: The Forgotten Asset Class
Active currency management can diversify portfolio risk factors
HAHN Currency Barometer vs. USD
Currency
Hedging lowers risk only
when over-valuation occurs Overvalued
Currency/USD
Currency
Overvalued
Active Hedging Range
Fundamental Value Range
Foreign Currency/$/USD
Monthly
* Chart is illustrative only and does not reflect any current strategy or policy.
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16. A Repeatable Investment Process
Our Rigorous Process Identifies Risk and Opportunity
“World now in Stage 1 - Global
Purgatory…Nevertheless, a tradable equity market
rally is expected into Spring 2009…Risk
becoming cheaper … some sectors and asset
classes very inexpensive…We must now be
biased “opportunists” … although careful ones at
that.”
Investment Committee Minutes, Nov. 2008
“While the general investment consensus... is
more brazenly complacent and optimistic than
ever, we continue to identify ever-heightening
risks and deteriorating investment conditions.”
Investment Committee Minutes, June 2007
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17. Global Tactical Asset Allocation Matrix
Real world examples: “Pre-crisis” positioning (December 2007)
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18. Global Tactical Asset Allocation Matrix
Real world examples: “Post-crisis” positioning (March 2009)
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20. Why are ETFs Used?
ETFs have Revolutionized the Portfolio Management Industry
1. Global diversification previously available only to large investors.
2. Access to non-traditional asset classes previously illiquid or difficult to access
3. Facilitation of active strategies such as tactical asset allocation.
“We can today build personalized $100,000 global portfolios that are better
quality and less expensive than we could for a large pension fund in the
multimillions twenty years ago.”
Wilfred Hahn, Founder and & CIO, HAHN Investment Stewards
21. ETF Selection Criteria
Rigorous and Disciplined
Filters
Strategy Mapping
Index Construction
Diversification
Low Tracking Error
Liquidity
Expenses
Unique Factors
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22. Outline
People and
Philosophy
Portfolio
Construction
Process
Performance
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23. Conservative, “low drawdown” performance style
International Balanced
190 HAHN Intl. Bal.**
180
Annual Return: 7.26%
Std. Dev: 6.69%
170
160 HAHN Benchmark*
Annual Return: 4.37%
150
Std. Dev: 6.01%
140
130 MSCI Developed World
Annual Return: 3.38%
120
Std. Dev: 11.58%
110
100 CITI World BIG
Annual Return: 2.26%
90
Standard Dev: 9.85%
80
Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12
*Benchmark performances do not include the impact of any fees. The composite benchmark for this portfolio is comprised of the following indices and weights: CAD 90-day Treasury Bill index (5%), MSCI EAFE Index in $Cdn (5%), S&P 500 Index
in $CDN (7.5%), S&P/TSX 60 Index (12.5%), Citigroup World BIG Non-USD Bonds in $Cdn (19%), Barclays Capital U.S. Aggregate Bonds in $Cdn (16%), DEX Universe Bonds (35%).
**Performance statistics for Managed ETF Portfolios are calculated from documented actual investment strategies as set by HAHN’s Investment Committee and applied to its portfolios mandates, and are intended to provide an approximation of
composite results for client separately-managed accounts. Actual performance of individual separate accounts may vary with average gross “composite” performance statistics presented here due to client-specific portfolio differences with respect
to size, inflow/outflow history and inception dates, as well as intra-day market volatilities versus daily closing prices. Performance figures provided are net of total ETF expense ratios and custody fees, but before transaction costs, witholding taxes,
and other investment management and advisor fees. Past investment results provide no indication of future performance. Future returns are dependent on the general investment environment, the nature of the portfolio mandate and active
investment strategies and risks. Word Equity Index - MSCI Developed World Index TR (CAD). World Bond Index - Citi Group World Bond Index TR (CAD). Volatility measured as standard deviation.
24. Conservative, “low drawdown” performance style
International Income Focus
HAHN Int. Inc. Focus.**
140 Annual Return: 8.69%
Std. Dev: 5.8%
130
HAHN Benchmark*
120
Annual Return 2.86%
Std. Dev: 0.15%
110
MSCI Developed World
100
Annual Return: 0.64%
90
Std. Dev: 13.36%
80 CITI World BIG
Annual Return: 4.51%
70 Std. Dev: 10.67%
60
Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12
* HAHN Benchmark is defined as 2% in excess of 90-day Canadian T-bill rate. A long-term time horizon of 4 to 5 years is contemplated which is equivalent to a typical business/credit cycle. Please note that due to time lag in the publishing of
monthly CPI statistics, the previous month’s value may be used for current performance reporting.
**Performance statistics for Managed ETF Portfolios are calculated from documented actual investment strategies as set by HAHN’s Investment Committee and applied to its portfolios mandates, and are intended to provide an approximation of
composite results for client separately-managed accounts. Actual performance of individual separate accounts may vary with average gross “composite” performance statistics presented here due to client-specific portfolio differences with respect
to size, inflow/outflow history and inception dates, as well as intra-day market volatilities versus daily closing prices. Performance figures provided are net of total ETF expense ratios and custody fees, but before transaction costs, witholding taxes,
and other investment management and advisor fees. Past investment results provide no indication of future performance. Future returns are dependent on the general investment environment, the nature of the portfolio mandate and active
investment strategies and risks. Word Equity Index - MSCI Developed World Index TR (CAD). World Bond Index - Citi Group World Bond Index TR (CAD). Volatility measured as standard deviation.
