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Gartmore US Equities
Excellence in Asset Management
Simon Melluish – Head of US Equities
Expectmore, Getmore,
29th January 2002
Agenda
People
Investment process
Funds
Gartmore American Growth Fund
sector stances
top 10 holdings
New role for small caps
Appendix
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Organisation Chart
Peter Chambers Gartmore has access to
Global CIO dedicated portfolio constructors
and research analysts through its
Neil Rogan Young Chin sister company, Villanova Capital
Head of Int’l Equities US CIO
Gartmore Gartmore Villanova Villanova
Portfolio Research Research Portfolio
Constructors Constructors
Liam Pagliaro Jason Kotik
Simon Melluish Richard Urwin Kent Madden William Miller
Nick Ford Jamie Lewin Fran Radano Chris Baggini
Simon Moss Katie Flanagan Chris Welch Chuck Bath
Ben Walker Gavin Cartledge Chip Zhu Paul Cluskey
Robert Murphy Aaron Harris
Asim Ann Rafferty
Nurmohamed Jean Rhee
Kwang Chin Kim
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Investment Process
Ideas Generation Research Robust and disciplined
investment process
Separate research and
Sell Disciplines
portfolio construction
functions
Portfolio
Construction Sell discipline as
important as buying
Portfolio An evolving process
Monitoring
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Gartmore American Growth Fund
Relative to S&P 500 Composite Index
Underweight % Overweight %
Industrials 4.3
Healthcare 2.1
Materials 0.8
Unassigned 0.3
-0.1 Consumer Staples
-0.3 Energy
-0.3 Financials
-1.4 Telecommunications
-1.7 Information Technology
-2.3 Utilities
-3.6 Consumer Discretionary
-5 -4 -3 -2 -1 0 1 2 3 4 5
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Source: FactSet as at 24th January 2001
Gartmore American Growth Fund
Top Ten Holdings
Microsoft Corp 5.0%
Exxon Mobile Corp 2.9%
Fannie 2.6%
Pfizer 2.5%
Top ten holdings = Wal-Mart Store 2.5%
26.4% Citigroup 2.4%
of the portfolio Procter & Gamble 2.3%
General Electric 2.2%
Intel Corp 2.0%
American International Group 2.0 %
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Source: FactSet as at 24th January 2002
“Maximum Bullish” Outlook for Small Caps
Average Price Performance Before and After Last Four Recessions We believe…
Time Period (mos) Historical Current
(benchmarked to Large Cap Small Cap Large Cap Small Cap Small caps should be owned in
R=100) periods of economic recession
R-24 110.4 108.8 92.4 113.3
R-21 108.3 109.9 86.3 98.4
R-18 101.8 106.3 92.0 105.4 Buy when macroeconomic
Before
R-15 99.4 99.4 80.1 89.3 Newsflow is bleak
R-12 98.1 96.7 78.3 83.6
R-9 95.8 89.0 80.5 87.1 Out-performance is strong coming
R-6 95.9 92.0 81.2 86.4
R-3 99.3 97.0 88.1 93.2 out of recessions
R 100.0 100.0 100.0 100.0
R+3 104.7 110.6 105.9 113.8 This time will not be different
R+6 107.3 117.8
R+9 118.5 132.0
R+12 124.8 152.0
After R+15 130.4 156.6
R+18 133.8 166.5
R+21 134.8 167.5
R+24 137.4 176.7
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R-3 = Three months prior to the first day of the first quarter that registered negative GDP growth
R+3 = Three months after the first day of the first quarter that registered negative GDP growth
Source: Ibbotson Associates, Frank Russell Company and Salomon Smith Barney
Appendix
Biography
Simon Melluish - Head of US Equities
Simon joined Gartmore as an Investment Manager on the Global
Portfolio Team in 1995 with specific responsibility for the US market.
In July 2000 he was promoted to Head of US Equities.
He began his career at Henderson Administration plc where he was
responsible for US equity investment for UK segregated pension funds.
Prior to joining Gartmore he worked at Singer & Friedlander
Investment Management as an Assistant Director in the Private Client
division with joint responsibility for a number of discretionary global
portfolios for private individuals.
Simon graduated from Durham University in 1986 with an
Honours degree in Economics.
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A Cautionary Note
The value of investments and the income from them may go down
as well as up and you may not get back your original investment.
Past performance is not necessarily a guide to future performance.
Changes in rates of exchange between currencies may cause the
value of investments to decrease or increase.
For the attention of business and professional investors only. This
document should not be circulated to private investors.
Investment may be made in securities which are free of withholding
taxes in respect of interest/dividend payments to the Fund. Such tax
relief may be subject to change in the future and does not imply that
such relief is applicable to the beneficial owner of the assets.
All data as at 17th January 2001 unless stated otherwise.
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Issued and approved by Gartmore Fund Managers Limited (GFM) which is regulated by the FSA.
GFM is a member of the NatWest and Gartmore Marketing Group and of AUTIF
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Page with Table and Bullet Points
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Table text 18
Table Lines 2pt outer, 1.5pt inner borders
Table Paragraph on title 6 cm before and after
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Chart and Bullets Points
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Source and Date: (Odense Cond size 12)
Chart with Chart Title and Bullets with Titles
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Pence Bullet Odense size 20
500 Sold
Titles (Odense Demi size20)
450
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400 Bullet Odense size 20
350 Titles (Odense Demi size20)
Buy
300 Bullet Odense size 20
Bullet Odense size 20
250
200
150
100
May Jun Jul Aug Sep
2001
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Source and Date: (Odense Cond size 12)
Bar Chart Example
Chart Title (FrnkGothITC Hv BT - 24pt)
30 BBB 30.030.0
28.0
GARTMORE
25.0 25.0
25 Other 23.0 25.0
Other 20.0
20.0
20 18.0 20.0
15.0 15.0
15 14.0 15.0
10.0
10.0 10.0
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A B C D E
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Organisational Charts
Name and Title
Odense Cond size 12
Andrew Fleming Roger Bartley
Nick Henderson
Deputy CIO, Gartmore
Global
Head of Equity Quantitative
Fixed income
Investments Strategies
Stephen Watson Philip Ehrmann Neil Rogan
Robert Siddles
Global Portfolio Emerging Pacific Rim
US Equities
Team Markets Equities
Mark Crutchley
Peter Whelpton Stephen Jones
Neil Mears
Japanese European
Gervais Williams
Equities Equities
UK Equities
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528c – 173/120/216
2727c – 70/104/228
326c – 0/187/181
389c – 204/241/0
123c – 255/205/0
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Other Page Examples
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Global Sector Trends
(Local Currency)
%
Defensive sectors had
130
outperformed cyclical
120
sectors prior to
110
September 11th
100
90 As markets have rallied
80 after the terrorist
70 attacks, that pattern of
60 Energy relative returns has
50 Financials
reversed
40 Information Technology
30 Telecoms
20 Non-Cyclical Consumer Goods
Dec Feb Apr Jun Aug Oct Dec
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Source: Thomson Financial Datastream/Gartmore
As at 17th December 2001
Rebased to 100
Equity Market Trends
(Local Currency)
% All markets fell sharply
US UK in the immediate
120 Europe ex UK Japan aftermath of the
Pacific Rim Emerging Markets attacks on the US
110
Recent rally has seen
100 all markets return to
90 their pre-attack levels
Rally seen as
80
evidence that markets
70 had become oversold
60
Dec Feb Apr Jun Aug Oct Dec
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Source: Thomson Financial Datastream/Gartmore
As at 17th December 2001
Rebased to 100
The US Market 2001
A Volatile Time for Equities
Price Indexed Investors astoundingly
130 optimistic given bear
S&P 500 Composite Sector Average
market and war
Nasdaq Composite Price Index
120
Dow Jones Industrials Price Index
110
100
90
80
70
60
Dec Feb Apr Jun Aug Oct Dec
2001
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Source: Thomson Financial Datastream
From 20th December 2000 to 20th December 2001
Rebased to 100
How Are Gartmore Focus Funds Different?
Focus Fund Typical Unit Trusts
25-30 stocks 70-100 stocks
- easier to monitor
Index coverage secondary Significant index coverage
- only real conviction ideas
No padding Padding to reduce risk
- maximise your positive views
Size counts Small individual stock bets
- average individual stock bet 3%
Small moves can give big returns Returns around the index
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Investment Themes
For The Year Ahead
Will economic activity recover in 2002? Yes...
Near term news flow will be mostly negative, but...
Expect news to turn more positive as we go through the year
Very easy monetary conditions and falling energy prices are the main drivers
Will the policy stance remain stimulative? Yes…
Little upward pressure on interest rates as inflation outlook remains benign
Large fiscal stimulus expected, especially in the US
Scope for major policy changes in Japan remain limited
Will equity markets rally in this environment? Yes…
Outlook for corporate profits improving, not yet fully priced in to markets
Falling levels of risk aversion will also provide a boost to markets
However, sector level valuation measures would suggest that limited
upside exists in Technology given recent strong rally
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The Gartmore Stable Growth Fund
Top Ten Holdings
Gartmore Absolute Growth Fund size: £18.8 m
6.2% London UK Equity 5.5%
Royal
No of holdings: 23
Merrill Lynch Def Ret II 5.5%
Estimated Gross
Top ten holdings =
Investors Capital 5.3% Redemption Yield after
48.6% Jupiter Enhanced 5.0% charges: 7.3%¹
of the portfolio
Weighted Hurdle Rate:
City of Oxford 4.5%
-4.7%¹
Exeter Financials 4.4%
Murray Global Return 4.1%
Weighted life of
Jupiter Dividend & Growth 4.1% investments: 4.5 years¹
Jupiter Split 4.0%
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Source: Gartmore as at 31st December 2001
¹ Source: DB (Fundamental Data)/ABN Amro
Biography
Ashley Willing - Senior Investment Manager
Ashley joined Gartmore in 1994 as an investment
analyst. He assumed responsibility in 1997 for
managing a number of UK Institutional pension
funds. From 1999 he was responsible for running
the Gartmore Pooled funds and the NatWest Life
funds, as well as being a member of the UK Retail
team. From the start of 2001 he relinquished his
Institutional responsibilities to concentrate fully on
Retail funds.
Ashley graduated from Loughborough University in
1994 with an Honours degree in Economics with
Politics. Prior to University, Ashley worked in
accounting for four years where he was involved in
the auditing of a number of UK Companies.
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