2. FIDELITY INTERNATIONAL
Modern Portfolio Theory, 2011
Asset Allocation
Peter Duke – Sales Director, FidelityMiddle East
July 2011
This presentation is for Investment Professionals only and should not be relied upon by private investors
3. FIDELITY INTERNATIONAL
In the next 10 minutes, we’ll talk about …
Does diversification work - long term correlations3
2 Is average good enough?
What happens when we’re stressed?4
Alternative asset classes – the liquidity premium5
In summary – what’s the solution6
1 The story so far – Harry, James and Bill
4. FIDELITY INTERNATIONAL
The man with his feet in the oven
The average doesn’t suffice
…on average he feels pretty good
and his head in the refrigerator..
5. FIDELITY INTERNATIONAL
10.5
8.5
3.2
4.7
1.1
0 5 10 15
20 years
15 years
10 years
5 years
3 years
Average Return
-40
-30
-20
-10
0
10
20
30
40
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Return(%)
S&P 500 – Calendar Year Returns over the past 20 years
7. FIDELITY INTERNATIONAL
FTSE UP months 9/30/2007 to 9/30/2010
UK STX ACWI EM STX SM STX SPEC BDS UK REIT HF COMMD UK CORP UK PHYS GOLD UK CSH UK GOVT
UK STX 0.50 0.07 0.72 0.30 0.78 0.15 -0.74 0.50 0.27 -0.63 -0.44 -0.19
ACWI 0.50 1.00 0.37 0.36 0.66 0.46 -0.32 -0.50 0.11 -0.04 -0.10 -0.17 0.31
EM STX 0.07 0.37 1.00 0.19 0.43 -0.08 0.30 -0.18 -0.20 -0.35 -0.02 0.13 0.01
SM STX 0.72 0.36 0.19 1.00 0.31 0.85 0.04 -0.48 0.33 -0.08 -0.42 -0.18 -0.05
SPEC BDS 0.30 0.66 0.43 0.31 1.00 0.25 -0.15 -0.49 0.43 -0.36 0.10 0.06 0.44
UK REIT 0.78 0.46 -0.08 0.85 0.25 1.00 -0.13 -0.54 0.37 0.15 -0.42 -0.42 0.02
HF 0.15 -0.32 0.30 0.04 -0.15 -0.13 1.00 0.02 0.23 0.28 0.08 -0.31 -0.37
COMMD -0.74 -0.50 -0.18 -0.48 -0.49 -0.54 0.02 1.00 -0.52 0.03 0.41 0.12 -0.16
UK CORP 0.50 0.11 -0.20 0.33 0.43 0.37 0.23 -0.52 1.00 -0.01 0.04 -0.09 0.25
UK PHYS 0.27 -0.04 -0.35 -0.08 -0.36 0.15 0.28 0.03 -0.01 1.00 -0.15 -0.81 -0.51
GOLD -0.63 -0.10 -0.02 -0.42 0.10 -0.42 0.08 0.41 0.04 -0.15 1.00 0.26 0.47
UK CSH -0.44 -0.17 0.13 -0.18 0.06 -0.42 -0.31 0.12 -0.09 -0.81 0.26 1.00 0.34
UK GOVT -0.19 0.31 0.01 -0.05 0.44 0.02 -0.37 -0.16 0.25 -0.51 0.47 0.34 1.00
Correlations under Stress
UK STX 0.07
-0.20UK CORP
-0.74
-0.50
-0.18
-0.48
-0.49
-0.54
0.02
1.00
-0.52
0.03
0.41
0.12
-0.16
UK STX
ACWI
EM STX
SM STX
SPEC BDS
UK REIT
HF
COMMD
UK CORP
UK PHYS
GOLD
UK CSH
UK GOVT
8. Dubai
U.A.E -2 -1 0 +1 +2-4 -3 +3 +4
Dubai –WhereEastmeetsWest:Locatedthe same flight distance from
London asfrom Beijing, Dubaihasincrediblyeasyaccessto most of the world’spopulation.
10. ► McKinsey study in 2010 shows that companies moving from worst to best in corporate governance can expect 10% to 12%
increase in their market valuation
► More than 75% executives surveyed by McKinsey in 2010 said that environmental, social, and governance (ESG) initiatives create
corporate value in the long term
► Sustainability-focused companies outperform peers
10
ESGcompanies deliverbetterresults
Utilities
Telecommunications
Technology
Oil and Gas
Industrial goods and services
Construction and material
Healthcare
Insurance
Financial services
Banks
Travel and leisure
Retail
Media
Personal and household goods
Food and beverage
Automobiles and parts
Chemicals
Basic resources
Industry average better Sustainability focused companies better
7% 9%
5% 13%
12% 15%
11% 23%
-8% -2%
12% 13%
15% 21%
17% 25%
4% 11%
5% 10%
10% 17%
28% 33%
-4%-6%
9% 16%
20% 33%
18% 30%
5% 10%
-10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40%
Indexed stock price performance percentage differential to market
6 months
3 months (positive)
3 months (negative)
5% 7%
Source: Green Winners, AT Kearney, 2009
11. ► Serving the interests of all major stakeholders—employees, suppliers, customers,
creditors, communities, the environment—is not at odds with the goal of
maximizing corporate value. It’s essential to achieving that goal
Source: Competing for Growth
–Ernst & Young
The new
normal
Cost
Competitive-
ness
Operational
Agility
Customer
Reach
Stakeholder
Confidence
The markets a company is in
determines their opportunity
A company’s profitability is
determined by the competitiveness
of their cost base
A company’s growth is
determined by the their ability
to respond
A company’s value and ability to fund
growth is determined by the confidence
of their stakeholders
11
New drivers of corporate leadership
12. Trust
► Trust and transparency are as important to corporate reputation as the quality of
services offered by a company
12
42%
45%
83%
83%
Source: 2010 Edelman Trust Barometer Report
13. Contributing to key markets growth
13
Key Markets
Social
investment
Stakeholder
engagement
platforms
Partner
company
engagement
Abraaj
thought
leadership
Transparency
and
governance
A
S
S
E
T
REINFORCES:
► Performance
► Trust
► Leadership
Core
Business
► Performance
► Trust
► Leadership
15. The road ahead
15
None of this is quick and easy. An
organization that benefits society as well as
shareholders requires leaders at all levels
who never stop reflecting on who they are
and who they want to be, who can blend their
own personal vision with those who see the
world differently, who tell the truth about
obstacles and recognize their own personal
responsibility in creating them, and who
know there are no final answers or formulas.
This takes, literally, forever.
Peter Senge,
Director of the Center for Organizational Learning,
MIT Sloan School of Management
16. GDP real growth rate of 6.7%
The UAE has an economy with high per capita income and a sizeable annual trade
surplus. Abu Dhabi Emirate enjoys the highest per capita in the world. The nations
wealth is based on oil and gas output.
Abu Dhabi holds approximately 10 % of the world’s proven oil reserves and 90% of
U.A.E oil and 5 percent of its gas. the income from which has been wisely invested to
create a flourishing modern metropolis with a first class infrastructure.
At the same time great care has been taken to protect the country’s setting of Abu
Dhabi’s natural scenic beauty with over 200 Islands, 1300km of coastline and to
preserve the authentic spirit of Arabia.
Abu Dhabi Economy
Real Estate Projects ContactAbout Us Vision/Mission Abu Dhabi
18. Middle East Growth - Staff
StaffNumbers
0
200
400
600
800
1000
1200
1400
1600
April 99 April 00 April 01 April 02 April 03 April 04 April 05 April 06 April 07
Staff based in Middle East
Middle East Projects
Projection
19. Architectural concept
Architectural detail
Interior design
Structural design
Building services
Highway design
Technical Supervision of
construction
Oil and Gas engineering
Design Services
Services & Skills
Buildings 54%
Transport
18%
Other 5%
Rail 11%
Oil & Gas 12%
21. 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2001 2002 2003 2004 ’05/’06 ’06/’07 ’07/’08 ’08/’09 ’09/’10 ’10/’11
%Growth
Period
Oil Price > $40
Oil Price > $30
Business Summary
Strategy vs Statistics High Oil Price
22. Arqaam Capital Limited
Level 4 - Building GV05 5
The Gate Building
Dubai International Financial Centre
PO Box 506687 Dubai
United Arab Emirates
Tel: +971 (0)4 507 1700
Fax: +971 (0)4 507 1701
23. Slide Title
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Header
Footer
Header
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Header
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Slide Footer Client’s logo
24. Slide Title
Footer
Header Weights
0
500
Feb-05 Feb-06 Feb-07 Feb-08
Basket vs. Tadawul Index
Basket Values SASEIDX Index
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adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
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minim veniam, quis nostrud exer Ut enim ad minim veniam, quis - Lorem ipsum
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Slide Footer
Client’s logo
25. Logistics Landscape in Dubai
David Harris
Director, International Logistics
Fahad Al Thani
Investment Manager
Foreign Investment Office
Department of Economic Development
Smart 2009
26. UAE Projected GDP
UAE Projected GDP
(US$ Billion)
Source: IMF
2008 2010 2012
260
236
280
36. THE GCC – A BOOMING ECONOMY
The World’s 16th largest economy
2003 GDP $350 billion
MEED PROJECTSGCC EXITDEMOSALES KIT
Middle East - A rapidly evolving project sector
0
10
20
30
40
50
60
70
80
Year
1995
2000
2003
The Engine Major Projects Future Growth Data Gathering Middle East Map
37. FUTURE GROWTH 2004-2006 (Projects)
MEED PROJECTSGCC EXITDEMOSALES KIT
11088
73
12801
1201
36330
1210
53630
5265
47033
5273
52098
6153
0
10000
20000
30000
40000
50000
60000
Bahrain Oman Kuwait Saudi Arabia UAE Qatar
Budget
Awarded
The Engine Major Projects Future Growth Data Gathering Middle East Map
38. UNITED ARAB EMIRATES
GENERAL STATISTICS - 2003
GDP per Capita $19,728 million
Population $ 3.6 million
Exports $ 47,900 million
Imports $ 35,000 million
CONTINUOUSLY GROWING REGION
Abu Dhabi Breakwater Island Development
Dubai Airport Expansion
Natural Gas Distribution Network, Abu Dhabi
Burj Dubai
North East Abu Dhabi Development, Adco
MEED PROJECTSGCC EXITDEMOSALES KIT
The Engine Major Projects Future Growth Data Gathering Middle East Map
49. Why invest in Sharjah?
Ideal business hub that welcomes foreign investment
Trade relations with 126 countries
Good infrastructure and all essential modernised services
Policies foster continuing sustainable development
At the forefront of industrialization in the UAE
Dedicated industrial areas, international airport
