Global High Yield – Remains the Sweetest Spot in Credit

Global High Yield – Remains the Sweetest Spot in Credit Swisscanto Asset Management AG Shahzada Omar Saeed-- Head of High Yield Paris, June 16th 2011 Agenda 1. High yield at Swisscanto 2. The case for high yield 3. Product, Positioning & Performance 4. Why Swisscanto high yield? 5. Appendix 2 © Swisscanto Asset Management AG Swisscanto – your partner Shahzada Omar Saeed Head of High Yield Omar Saeed (1975), MBA in Financial Management, is responsible for the Swisscanto (CH) Institutional Bond Fund - Global High Yield and Short Duration Global High yield Fund (LUX) From 2007 till 2009 he worked for Western Asset Management Company Ltd. in London as a High Yield Portfolio Manager and Senior Research Analyst, where he was responsible to co-manage euros800m in high-yield and leverage loan portfolios. Previously at Foreign & Colonial Asset Management he gained similar experience where he was co-manager for the Global High Yield retail funds. In addition Omar gained industry experience at Standard & Poor’s Rating Services in London. Omar received his MBA from Greenwich University, Pakistan Campus of Southeastern University, Washington D.C. in 1998 with Distinction in Financial Management. Joined Swisscanto: 2009 Professional experience: 12 years Hansueli Gasser Senior Portfolio Manager Hansueli Gasser (1959), lic. oec. HSG, is a member of the Senior Management and works as Credit Analyst and Portfolio Manager in the bonds team. His investment universe ranges from investment grade to non-investment grade. As Portfolio Manager, he co-manages the Swisscanto (CH) Institutional Bond Fund - Global High Yield and Short Duration Global High Yield fund (LUX). He began working in the securities business at UBS in 1985. In the course of his professional career, he has acquired in-depth knowledge in corporate finance and M&A, and also in the credit, issuing and investment business. Joined Swisscanto: 2003 Professional experience: 25 years 3 © Swisscanto Asset Management AG High Yield at Swisscanto A historical perspective High Yield AUM ($m) at Swisscanto $1'400 $1'200 $340.00 $1'000 $800 $290.00 $600 $400 $565.00 $200 $0 June 2007 June 2008 June 2009 June 2010 June 2011 Global High Institutional Fund Short Duration High Yield Fund High Yield in non-dedicated funds High Yield AuM’s more than tripled in 2 years --- Committed & Growing Set of Investors 4 © Swisscanto Asset Management AG Agenda 1. High yield at Swisscanto 2. The case for high yield 3. Product, Positioning & Performance 4. Why Swisscanto high yield? 5. Appendix 5 © Swisscanto Asset Management AG High-Yield vs Equities 58.2 Even after big gains, returns historically remain healthy in subsequent years 46.2 29.0 25.6 17.4 19.2 15.7 17.1 15.1 9.7 12.5 11.4 12.8 11.1 11.9 5.3 10.7% 5.0 2.7 0.8 1.9 2.4 1.9 -1.0 -1.4 -5.9 -9.6 -26.2 84‘ 85‘ 86‘ 87‘ 88‘ 89‘ 90‘ 91‘ 92‘ 93‘ 94‘ 95‘ 96‘ 97‘ 98‘ 99‘ 00‘ 01‘ 02‘ 03‘ 04‘ 05‘ 06‘ 07‘ 08‘ 09‘ 10‘ Stabile Phase Stabile Phase Stabile Phase Stabile Phase Source: Barclays, J.P. Morgan, S&P/LCD The high-yield asset class has consistently outperformed equities 6 © Swisscanto Asset Management AG ….and returns have been generated with significantly lower volatility At 35% exposure to Swisscanto’s customised high-yield benchmark allows credit only or credit/equity portfolios to maximize the sharpe ratio of the fund and boost weighted total returns by 50bps Realized returns Expected Return JCNF is US HY 8.0 HPIC1 is EUR HY 7.0 Cust High Yield SW BM 6.0 5.0 JCNF CHF hedged 4.0 HPIC1 CHF hedged 3.0 GOBC CHF hedged 2.0 Hedged Russell 2000 TR USD 1.0 0.0 -1.0 Cust Aktien Schweiz -2.0 100% Global -3.0 Investment Grade -4.0 Hedged MSCI North America Hdg USD -5.0 Hedged MSCI UK GBP -6.0 Hedged MSCI EMU EUR -7.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 Standard Deviation (Risk) Source: Swisscanto An efficient portfolio should have consistently higher allocations to the high-yield asset class 7 © Swisscanto Asset Management AG High-yield versus interest rate sensitive products Short Duration high yield’s negative correlation to interest rates would be at least similar to leveraged loans Source: J.P. Morgan; S&P/LCD Short Duration High-yield serves as an even stronger hedge against rising treasury yields 8 © Swisscanto Asset Management AG High-yield versus High-Grade HY performs well versus HG in a rising rate environment 12 months ending 10 Year Treasury yield High Yield bonds total Investment-grade bonds move returns (CHF hedged) total returns (CHF hedged) Sep 87 220 bps 3.93% -3.74% Feb 89 117 bps 6.87% 0.97% Dec 1994 204 bps -0.19% -2.74% Dec 1999 179 bps -1.58% -5.67% May 2004 130 bps 11.65% 1.49% Jun 06 120 bps 2.