курт котзеггер

Investment themes – 2011 and beyond
Kurt Kotzegger
Chief Investment Officer – Equities & Asset Allocation

June 2011

Who we are:

Core competence: Core competence:
European fixed … builds on 25 … serves Emerging markets
income years of retail and equities
experience institutional
clients

Raiffeisen
Capital
… employs Management … manages
>50 fund
EUR 30 billion
managers
in assets
& analysts

Core competence: … applies Core competence:
European equities discretionary and Global asset
quantitative active allocation
strategies
As of Q2 2011.
VIP - Vermögensverwaltung in Perfektion
© 2011 Raiffeisen Kapitalanlage-Gesellschaft m. b. H. 2

What do we do… what do investors do?

 What we like, and what our clients have come
Biases to overcome:
to appreciate as well:
„Long-term buy & hold is dead“
„Allocate capital evenly across
 Unconstrained global asset markets“
allocation strategies „I want much risk / minimum risk,
there„s no point in diversifying“

 What we like – and nobody else:
Biases to overcome:
 European equities
„Equities are very risky“
„You can„t seriously buy Europe now“


(1) Unconstrained global asset allocation
Balanced capital allocation Unbalanced risk allocation
Inflation- Real rates
linked Equities
bonds Spreads

Nominal
rates
Equities
Govern-
Credits ment
bonds

Balanced risk allocation Required capital allocation
Equities
Real rates Equities Inflation-
linked Govern-
bonds ment
bonds

Nominal
Spreads rates Credits

Source: Raiffeisen KAG; illustrative examples based on long-term risk estimates for EUR asset classes..

Does it really make sense for every level of risk?
Bonds vs. balanced risk concept Equities vs. balanced risk concept
300 700
T-Notes 600
Equities
250
Balanced equity/interest rate risk Balanced equity/interest rate risk
500
200
400
150
300
100
200
50 100
0 0
Dez.79 Dez.84 Dez.89 Dez.94 Dez.99 Dez.04 Dez.09 Dez 79 Dez 84 Dez 89 Dez 94 Dez 99 Dez 04 Dez 09

 If you want to buy „the market“, don„t just take bits of it!
 Active trading isn„t everything; a broad market portfolio is a very strong basis
for any investment.

Source: Raiffeisen KAG; simplified concept for illustrative purposes; cumulative excess returns of US equities & T-notes vs. T-bills, portfolio scaled
/leveraged to average long-term volatility of naive asset portfolio.

The strategy in real life: maximizing return vs. risk
Raiffeisen 337 - Strategic Allocation Master I (I) T
Täglich von 04.04.2008 bis 31.05.2011; Total Return indexiert in EUR

138
SAA
128
Mix
118 60/40
108
Equities
98

88

78

68

58
04.04.08

04.06.08

04.08.08

04.10.08

04.12.08

04.02.09

04.04.09

04.06.09

04.08.09

04.10.09

04.12.09

04.02.10

04.04.10

04.06.10

04.08.10

04.10.10

04.12.10

04.02.11

04.04.11
60% MSCI World AC net div / 40 % JPM EMU All 3,44% p.a. = equities/bonds 60/40
MSCI World AC Index net dividend reinvested (USD) 2,41% p.a. = global equities
R 337 - Strat. Allocation Master I (I) T 9,49% p.a. = SAA strategy master fund

Source: Raiffeisen KAG, May 2011; fund performance data net of fees, all returns in EUR.

(2) European equities
An objective-oriented and
A price-based view on risk
fundamental view on risk

 Risk is a decline in asset prices…  Risk is the real obstacle to achieving
now! your long-term objectives.

 Equity prices can easily decline  Equities provide current dividend
 by 2-3 % in a day income and long-run real growth.
 by 5-6 % in a week
 Equities represent ownership, bonds
 by more than 10 % in a month represent creditorship.

 Entire markets lost more than 50 %  Investment risk is receiving a too
peak to trough… just recently! small risk premium on an asset.


Equity investment: it„s about cheap stocks!

Bottom-up valuations in European markets
35%

30% PE<10

25% PB<1
share of stocks

DY>5%
20%

15%

10%

5%

0%
small caps mid caps (1) mid caps (2) large caps large/mega
caps

Source: Datastream, Raiffeisen KAG. Universe is DJ Europe STOXX Total Market Index with 1069 constituents as of the
beginning of June 2011.

(3) Some of our current strategies
 Long in equities, short in government bonds.

 Within bond markets, reducing credit risk.

 Moving back into Emerging markets equities after difficult half year.

 In EM bonds, prefer credits and low interest rate risk, but like currencies.

 Also moving slowly back into commodities after the recent correction.

 Use a range of hedges, e.g. long USD vs. EUR, long gold.


Disclaimer

This document was prepared and designed by Raiffeisen Kapitalanlage-Gesellschaft m.b.H., Vienna, Austria (“Raiffeisen Capital
Management” or “Raiffeisen KAG”). Although all information contained therein has been carefully researched, it is for information purposes
only, non-binding, based on the current state of knowledge of the persons responsible for its preparation at the time of its completion and
subject to change by Raiffeisen KAG at any time without further notice. Raiffeisen KAG is exempted from all liability in connection with this
document and the associated oral presentation, in particular with regard to the updated status, correctness and completeness of the
included information / sources of information and the actual occurrence of the forecasts contained therein. Furthermore, no forecasts or
simulated historical performance in this document constitute a reliable indicator of future performance. Regarding our clients whose home
currency differs from the fund currency, we would like to point out that the yield may rise or fall also due to currency fluctuations.
The contents of this document constitute neither an offer nor a buying or selling recommendation nor an investment analysis. In particular,
they shall not serve as a replacement for individual investment advisory services or other types of advisory services. Prior to investing in any
of our products, we would be pleased to provide you with the full prospectus, which can be used for informational purposes and in addition
to the services provided by your financial advisor. Concrete investments should not be made before an advisory appointment has taken
place, which should consider the full prospectus. We would like to point out in particular that securities transactions are sometimes subject to
a high degree of risk and that the tax treatment depends on the investor‟s personal situation and may be subject to future changes.
The performance is calculated by Raiffeisen KAG in accordance with the method developed by the OeKB (Österreichische Kontrollbank AG)
on the basis of data provided by the custodian bank (in the event that the payment of the redemption price is suspended, using an indicative
price). Individual costs such as the subscription and redemption fees have not been included in the performance calculation. Where these
costs are included this will result in a lower performance figure according to the amount of the subscription and redemption fees. The
maximum level of the subscription and redemption fees may be found in the simplified prospectus. Past performance results do not permit
any reliable inferences as to the future performance of an investment fund. Performance is shown as a percentage (excl. charges) while
considering reinvestment of dividends. Current versions of the published prospectuses for the investment funds described in this document
(including all changes since their initial publication) are available at www.rcm.at
The information and data contained in this document, in particular texts, parts of texts and picture material, may not be reproduced without
Raiffeisen KAG‟s prior approval.


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