Investment Seminars - Where next for Credit Union Investments? April/May 2014
Nationwide seminars with speakers Adrian Missen, BCP Asset Management and John McCormack, Head of Investments at le chรฉile Group.
3. โข Established in 1969
โข One of Irelandโs largest Independently owned Product Producers
โ Over โฌ1.5bn in assets under management
โ โฌ780m raised since start 2012
โ Over 120 Credit Union Clients in last 3 years - โฌ220m
โ Working alongside key CU advisors - Le Cheile
โข Key Investment Objectives:
โ Provide compelling range of investment, income & deposit solutions
โ Consistent focus on capital protection
โ Conservative investment bias
โ Diversified Portfolio approach
Key Information on BCP
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7. Ireland Inc.
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โข Irish unemployment now at its lowest since 2008 and below the
average for Europe
โข Q1 tax-take up strongly on same period last year
โข Personal and government debt, reliance on exports, austerityโฆโฆ.
8. Eurozone
โข Recovery has impressed but significant headwinds continue
โ Low inflation hurts growth and increases debt burden
โ Jobless rate still near its peak of 12%
โข Fall in Bond yields helps peripheral countries and their ability to borrow
โข Irish yields at their lowest since Euro started 15 years ago
โข Market does not fear a Euro break-up anymore but how will ECB react?
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9. Outlook for Interest Rates
โข Significant decrease in rates since 2008 to protect the global
economy
โข Rate increases are dependent on solid economic growth outlook โ
Not evident anywhere yet
โข Banks are awash with cash and have no motivation to significantly
increase deposit rates
โข Inflation continues to erode the real value of money on deposit
โข Lack of options available for traditional low risk investors
โข Short and medium term outlook is for continued low rate
environment
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11. Trends in Credit Union Market
โข Capital security top priority
โข Fixed Income top priority
โข Low deposit rates encouraging greater product innovation
โข Move towards active investment solutions (funds/indices)
โข Customised Bonds โ BCP can create tailored bonds at โฌ2m+
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14. BCP Fixed Income Plan 6
โข Joint Product between Investec Bank and BCP
โข Open to Credit Unions Only
โข Medium Term Note with 2 options:
โ 3yr Plan paying 2.2% pa gross AER
โ 5yr Plan paying 3.2% pa gross AER
โข Credit risk exposure to Investec Bank plc plus Royal Bank of
Scotland
โข RBS is an โAโ rated bank thatโs +80% owned by UK Government
โข Security of Plan ranks equally with deposits
โข Classified as Category 3 in CU Guidance Notes
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16. BCP Fixed Income Plan 6
Credit Exposure Royal Bank of Scotland Investec Bank plc
Rank Senior Unsecured Debt Senior Unsecured Debt
Market Cap ยฃ35.4bn ยฃ4.5bn
Credit Rating A- BBB-
Country UK UK
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Term: 3 years 5 years
Close Date: 13th
June 2014 13th
June 2014
Start Date: 20th
June 2014 20th
June 2014
End Date: 20th
June 2017 20th
June 2019
Yield (p.a.): 2.20% 3.20%
17. Deposit Options
โข Investec Deposit
โ 5 Year Deposit
โ 1.75% AER Fixed
โข Bank of Ireland
โ 5 Year Deposit
โ 1.67% AER Fixed
โข Interest rates are indicative until traded
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19. Bond Summary
โข Bond tracks the performance of the Carmignac โPatrimoineโ Fund
โข Fund invests in Equities, Bonds and Currencies
โข Fund has โฌ27bn in assets and a 24 year track record
โข Fund has returned over 636% (CAR 8.7%) since its launch in 1989
โข Capital Security provided by Investec Bank plc (Irish Branch)
โข Classified as Category 2 in CU Guidance Notes
Key Features:
โ 20% invested in a 3yr high yield deposit account paying 3.75% AER
โ 80% invested in a 5 year 9 month Absolute Return Bond
โ 80% participation in the fund performance
โ 100% Capital Security from Investec
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20. Past Performance since 1989
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WARNING: Past performance is not a reliable guide to future performance
22. Bond Summary
โข A capital secure Bond that aims to provide absolute equity returns with
low volatility
โข 3 year 6 month term
โข 100% Capital Security
โข Underling Fund managed by specialist manager Marshall Wace
โข Capital security provided by Bank of Ireland
โข No maximum limit to returns earned
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23. Performance vs MSCI World
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Source: Bloomberg. Performance is shown from November 23rd 2007 to March 28th 2014.
Warning: Past performance is not a reliable guide to future performance.
24. Credit Union Matrix
Fixed Income
Plan 6
Credit Union
Absolute
Return Bond
Absolute
Return
Equity Bond
Investec
Deposit Plan
Bank of
Ireland
Deposit Plan
Capital
Security
Income N/A
Compliance
Analysis
Meets CU
Guidelines
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25. Compliance Disclosure
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Please refer to the Brochure and Key Features for full details. With regard to
the BCP Capital Secure Bonds investors may not encash prior to the maturity
dates. AER is Annual Equivalent Rate, CAR is Compound Annual Return.
Capital Security is provided by the relevant Bank. In the event of that Bank
failing to meet its obligations you could lose some or all of your money.
BCP SPLIT DEPOSIT ABSOLUTE RETURN BOND 9; WARNING: If you invest in this
product you will not have any access to 20% of your money for 3 years and 80% of
your money for 5 years 9 months.
BCP ABSOLUTE RETURN EQUITY BOND; WARNING: If you invest in this product
you will not have any access to your money for 3 years 6 months. WARNING: The
value of your investment may go down as well as up.
BCP FIXED INCOME PLAN 6; WARNING: If you invest in this product you will not
have any access to your money for 3 or 5 years.
WARNING: Past performance is not a reliable guide to future
performance.
26. Compliance Disclosure
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Please refer to the Brochure and Key Features for full details. With regard to
the BCP Capital Secure Bonds investors may not encash prior to the maturity
dates. AER is Annual Equivalent Rate, CAR is Compound Annual Return.
Capital Security is provided by the relevant Bank. In the event of that Bank
failing to meet its obligations you could lose some or all of your money.
BCP SPLIT DEPOSIT ABSOLUTE RETURN BOND 9; WARNING: If you invest in this
product you will not have any access to 20% of your money for 3 years and 80% of
your money for 5 years 9 months.
BCP ABSOLUTE RETURN EQUITY BOND; WARNING: If you invest in this product
you will not have any access to your money for 3 years 6 months. WARNING: The
value of your investment may go down as well as up.
BCP FIXED INCOME PLAN 6; WARNING: If you invest in this product you will not
have any access to your money for 3 or 5 years.
WARNING: Past performance is not a reliable guide to future
performance.
John McCormack
Head of Investments
27. Capital Protection with high quality, investment grade institutions
Diversification across different institutions, maturities & investment asset classes
Allowing credit unions to build portfolios & manage risk appropriately
Offer the potential for better returns than short term cash deposits
Completion of fact-find, statement of suitability, full transparency of fees
le chรฉile Investment Philosophy
29. IIii
Previous Product Examples
High Yield Credit
Linked Note
๏ 5% coupon p.a.
๏ Linked to iTraxx
cross over index
Credit Union
Income Plans
๏ 3 year - 2.5% p.a.
๏ 5 year - 3.5% p.a.
Irish Govt. Bond
Linked Note
๏ 3 year โ 4% p.a.
๏ 5 year โ 6% p.a.
Eurozone Inflation
linked Bond
๏ 1.5% coupon p.a.
๏ Participate in annual
inflation figure
30. Current Deposit Based Options
โข RaboDirect On-demand Deposit Account
๏ Instant access, paying 1% p.a.; Max โฌ5m
โข RaboDirect 30 day notice account
๏ Interest rate 1.10% p.a.; Max โฌ1m
โข RaboDirect 90 day notice account
๏ Interest rate 1.25% p.a.; Max โฌ1m
โข Bank of Ireland 5 Year Fixed Term Deposit
๏ Interest rate 1.67% p.a.
โข Investec Bank plc 5 Year Fixed Term Deposit
๏ Interest rate 1.75% p.a.
31. Current Structured Product Options
Societe Generale
Fixed Return note
๏ 4% coupon p.a.
๏ Linked to iTraxx
main index
BBVA EuroStocks
Bonus Note
๏ 4 yr 11 mth term
๏ 8% min return
๏ 16% max return
Merrill Lynch
Multi Asset
Strategy Fund
Investec Income
Plan VI
๏ 3 Year - 2.2% p.a.
๏ 5 Year - 3.2% p.a.
32. Disclaimers & Important Information
This presentation is intended for regulated credit unions only.
All of the terms provided are indicative and subject to change.
The full terms will be provided in brochures in due course.
If you invest in these products, you may lose some or all of the money you invest.
Past Performance is not a reliable guide to Future Performance.
The value of your investment may go down as well as up.
le chรฉile Financial Services Limited trading as le chรฉile Group is regulated by the Central Bank of Ireland.
Registered in Dublin, Ireland under company no. 030391.