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WPP Money Purchase Pension Scheme July 2010 - BlackRock

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WPP Money Purchase Pension Scheme July 2010 - BlackRock Powered By Docstoc
					WPP Money Purchase
Pension Scheme

July 2010



Christopher Head & Sara Morgan


We cannot provide individual
financial planning advice
WPP Money Purchase Pension Scheme

    I.     Who are BlackRock?
    II.    Risk versus Reward
    III.   Your Investment Options
    IV.    Investment Performance
    V.     Investment Outlook
    VI.    Where can I get more information?




2
Who are BlackRock?
     Who are BlackRock?

          30

          25
£ Bn
          20

          15                                                                  Market Cap

          10

            5

            0
                    BlackRock Prudential   Aviva   L&G   Standard
                                                            Life


                           We manage over £1.9 trillion for clients
                                                           as at 1 Dec 2009


       Source: FT.com 26.01.2010
 4
Risk versus Reward
    Where You Can Invest Your Money


         Equities                  Shares in a company




       Alternative or      Property (commercial), Infrastructure,
     Diversified Assets   Commodities, Currency, Private Equity…



                              Loans issued by Governments and
      Fixed Interest                Corporations (Bonds)



                               Money held on deposit to which
           Cash                      interest is added


6
    Long Term Returns Versus Inflation
                                     Gross Total Return (Adjusted for Cost of Living)
                                                     1969 - 2009
                                                                                                                                              Retiring now?
    GBP £
    1,000
                     Equities           Gilts
     900             Cash               Property

     800
                                                                                                                                                                  £829

     700

     600

     500

     400
                                                                                                                                                                  £370
     300
                                                                                                                                                                  £287
     200                                                                                                                                                          £212

     100

       0
        1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

                                                                              Original investment of £100 on 31 December 1969 to 31 December 2009, gross income
                                                                              reinvested except property price performance. Adjusted for cost of living.
                                                                              All property data is using the UK Nationwide House Price Index.

     Source: Barclays, Datastream, Nationwide UK Houseprice Index - BlackRock Information Research
7
    Market Returns to 31 March 2010

                                                                         12 Months Index Performance

    80%                                                                                          71.6
                                                                                67.2
    60%       52.3                             48.8
                               41.8
    40%                                                        29.6
                                                                                                                                                                 24.8
    20%                                                                                                                                          10.4                              11.7
                                                                                                                                  -0.2                                     0.5
     0%
                                                                                                                   0.8
    -20%
                UK            North        Europe (ex          Japan          Pacific        Emerging All Stocks                Long            Index-           Long      Cash   Property
                             America          UK)                            Basin (ex       Markets      Gilt                  Dated           Linked           Dated
                                                                              Japan)                                            Gilts                            Corps



    Equity markets up significantly
    Corporate Bonds provide strong returns
    Cash positive
       As of 31 March 2010. All returns shown in sterling, total return. UK = FTSE All-Share Index, US = FTSE World United States Index, Europe = FTSE World Europe
       (ex UK) Index, Japan = FSTE World Japan Index, Pacific Basin = FTSE World Asia Pacific (ex Japan) Index, Emerging Markets = MSCI EMF (ex Taiwan and Korea)
       Index, All Stocks Gilts = FTSE A UK Gilts All Stocks Index, Over 15 Year Gilts = FTSE Over 15 Year Gilt Index, Index-Linked = FTSE Over 5 Years Index-Linked Gilt
       Index,, Corporate Bonds = BofA ML Eurosterling Index, Cash = IBID 7 Days Notice, Property = IPD All Balanced Funds Weighted Average.
       Source: BlackRock.
8
Your Investment Options
Lifestyle or Self Select
 Lifestyle – Default Option

               Growth Phase                    Switching Phase

       100%

        85%

        70%
   %
Invested 55%

        40%

        25%

        10%

        -5%                                                                          Retirement
               15 14 13 12 11 10         9     8   7   6   5     4   3   2   1   0
                                                                                      (NRA 65)

           60/40 Global Equity Index Tracker       DC Pre-Retirement         Cash

10
     Self Select Funds
          Fund                         Type                        Charge pa.
          7 DC Inst Emerging Markets   Equities                    0.60%
          6 DC American Growth         Equities                    0.60%
          6 DC European Growth         Equities                    0.60%
          6 DC Pacific Growth          Equities                    0.60%
          6 DC Japanese Growth         Equities                    0.60%
          6 DC Overseas Equity         Equities (OS)               0.60%
          5 DC UK Growth               Equities (UK)               0.60%
          5 DC 60/40 Global Growth     Equities (UK & OS)          0.60%
          5 DC 60/40 Equity Index      Equities (UK & OS)          0.20%
          4 DC Property                Property (Commercial)       1.00%
          4 DC Balanced Growth         Equities / Bonds / Cash     0.60%
          3 DC Diversified Growth      Equities / Bonds / Cash     0.65%
          3 DC High Income Bond        Bonds (Corporate)           0.75%
          2 DC Pre-Retirement          Bonds (Corporate & Gilts)   0.30%
          1 DC Cash                    Cash                        0.20%
Capital
  Risk
    11
 How the DC Diversified Growth Fund works




     Making Money                                 Not Losing Money
     •Asian Equities                              •Hedging strategies
     •Developed Markets Equities                  •Government Bonds
     •Corporate Bonds                             •Cash




                                   Smoothing Investment Returns
                                   •Commodities
                                   •Hedge Funds




12
 Why Asset Allocation Matters

                           Rolling 12m Returns of Various Asset Classes (Dec 1990 to Dec 2009*)
                   100%               86%

                                                               76%                                                                                                   Min
                     80%
                                                                                                                                                                     Max
                     60%
                                                                                                                                          58%                        Average
                                                                                        34%
                     40%                                                                                          26%
                                                                                                                                                                     27%
                     20%
 Return (% p.a.)




                                               6%                                                 8%                        6%                     4%                      8%
                                                                        4%
                      0%

                    -20%                                                                                                                                             -7%
                                                                                        -21%
                    -40%                                                                                          -27%

                    -60%                                                                                                                  -50%
                                                              -60%
                    -80%                                                                           Alternatives                          Traditional
                                      -81%
                   -100%
                                 UK Private                Commodities             Hedge Fund               UK Property            Global Equities             UK Gilts
                                   Equity                                           of Funds

              Source: Bloomberg, Citigroup WGBI, FTSE All Share,, MSCI World, S&P GSCI, Thomson Finanical - Datastream, UBS Developed Infrastructure Index, UK DS.
              * Data for HFRI HFOF ,Investment Trusts Private Equity and UK IPD Index are to 30 September 2009 – December 09 data not available
13
 Finding the Right Balance of Strategies

 In POSITIVE market conditions, typically favour:
     • Equities
     • Commodities
                                                              Developed Equities
     • Corporate Bonds
                                                              Emerging market
                                                              Equities
                                                              Sector Equities
 In NEGATIVE market conditions, typically favour:
     • Cash                                                   Commodities

     • Government Bonds                                       Corporate Bonds

     • Hedge Funds                                            Hedge Funds

                                                              Other Alternatives

 In NEUTRAL market conditions, typically favour:              Government Bonds
     • Favour risk assets over cash and government bonds      Cash
     • Hedge Funds
                                                              Derivatives
     • More use of tactical instruments such as futures and   Instruments
       options



     Source: BlackRock – illustrative only
14
 Dynamic Asset Allocation in Practice

                         September 2008                                                                          December 2009


                                                     19%                                                   17%
                                                                                                                                         26%


                                                                     2%
                                                                                                  5%
                                                                      2%
        49%

                                                                 8%                              7%


                                                                1%                                                                             8%
                                                                                                      5%
                                                           8%                                                                             3%

                                               10%
                                                                                                                                    6%
                                    1%
                                                                                                                 23%

                       Developed Equities                                  Emerging Market Equities              Sector Equities


                       Natural Resources & Commodities                     Corporate Bonds                       Government Bonds


                       Hedge Funds                                         Futures Margin                        Physical Cash


     Source: BlackRock DC Diversified Growth Fund
15
 Investment Outlook

 A positive but subdued growth environment

 Inflation to remain under control

 Policy stimulus set to continue
     • Exceptionally low interest rates to persist well into next year

 Risk assets still attractively valued
     • Equities and credit expected to outperform government bonds and
       cash




16
Investment Performance
    Net Performance for Selected Funds to 31/03/2010

           60/40 Global Equity Index Tracker                                     UK Growth (0.60% p.a.)
                     (0.20% p.a.)
     60                 50.7                                          60      53.1    52.3
               50.1
     50                                                               50
     40                                                               40
     30                                                               30
%                                                                 %
     20                                                               20
     10                                          1.5        1.8       10                                     1.6     -0.2
      0                                                                0
     -10                                                              -10
                  1 year                             3 yrs p.a.                  1 year                       3 yrs p.a.

                              Fund    Benchmark                                             Fund    Benchmark



            Pre-Retirement (0.30% p.a.)                                     Diversified Growth (0.65% p.a.)
     30                                                               30
                                                                              22.0
     20                                                               20
%                                                                 %
               8.9
     10                                                               10
                        5.8
                                                4.1        3.8                                               3.0     3.2
                                                                                      0.5
      0                                                                0
                  1 year                         3 yrs p.a                       1 year                       3 yrs p.a.

                            Fund     Benchmark                                            Fund     BOE Base Rate
             Source: BlackRock / CAPS / Datastream
18
Where can I get more
information?
 www.blackrock.co.uk/pensions/wpp




20
 What are your investment options?




21
 Planning Tools




22
 Contact Details

                 Website
     www.blackrock.co.uk/pensions/wpp

               Helpline Number
                01733 353663

                  Email
            uk.dc@blackrock.com
23
 The following notes should be read in conjunction with the attached document:
     1. Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Services Authority. Registered
        office: 33 King William Street, London, EC4R 9AS. Tel: 020 7743 3000. Registered in England No. 2020394. For your protection
        telephone calls are usually recorded. BlackRock is a trading name of BlackRock Investment Management (UK) Limited.
     2. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise
        and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies
        may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility
        fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.
     3. Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such
        research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are
        subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no
        assurances are made as to their accuracy.
     4. This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock
        funds and has not been prepared in connection with any such offer.
     5. Subject to the express requirements of any client-specific investment management agreement or provisions relating to the
        management of a fund, we will not provide notice of any changes to our personnel, structure, policies, process, objectives or, without
        limitation, any other matter contained in this document.
     6. Unless otherwise specified, all information contained in this document is current as at 13 July 2010.




24
 Establishing wide asset allocation bands


                        DC Diversified Growth Fund
                  Objective: Bank of England Base Rate +3.5%




                Asset Allocation Overlay using Futures & Options




                 Short-dated bonds
                                                                    Alternative
     Equities            and                      Cash
                                                                   Investments
     (0-60%)      cash instruments              (0-100%)
                                                                      (0-20%)
                      (0-75%)


                         Individual Investment Teams


25

				
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