Strathclyde Pension Fund Where Are We Now Sandy N

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					 Strathclyde Pension Fund
   Where Are We Now

Sandy Nairn – Investment Partner & CEO

             19 June 2009
 Strathclyde Pension Fund
   Where Are We Now

Sandy Nairn – Investment Partner & CEO

             19 June 2009
                     Bear Market of 2007 – 09


• faster than 1929

• deeper than 1973

• biggest since 1929

Note: as measured by DJIA




                                                2
                                 Significant Portfolio Shift


                                       May 08     May 09

Telecoms
Healthcare                             40 - 50%    20-30%
Cash

Technology                              14%        25-30%

Asia                                    4%          14%




 Source: Edinburgh Partners 31/05/09




                                                               3
                         Why the Shift?


• Companies with predictable near-term earnings but dull long-term
  prospects have performed strongly




• Companies with good long-term growth but short-term cyclical downturn
  were heavily penalised




                                                                          4
Forecasting Errors: Extrapolating Recent
                History


                                    End cycle=big over estimate




          Mid-cycle=good estimate



                                          Early cycle= big under estimate



                                         Source Edinburgh Partners 29/02/08




                                                                              5
Nokia




        6
                                           Nokia
                                                                           7/3/08
                            Nokia - Rebased Share Price (Euro)
240



220
                                                                                            Discounting
                                                           Sold                             continued
200
                                                                                            growth
180



160



140




120




                                                           Purchased
100



 80




 60
          2003              2004                2005        2006   2007
 NOKIA

HIGH 226.12 8/11/07,LOW 74.13 12/8/04,LAST 183.64 6/3/08               Source: DATASTREAM




                                                                                                          7
                                                   Nokia

                                   N ok ia - Ope r a ting P r ofit Ma r gin                          6/3/08
20


18
                                                                                                     Sell side Forecast
16
                                                                                                            (2008)

14


12



10


8


6
                                                                                                          Sell side Forecast
                                                                                                          (2009)
4



2


0



-2
     89   90   91   92   93   94   95   96   97   98   99   00   01   02   03   04   05   06   07   08   09   10



                                                                                                Source: DA  S   A
                                                                                                          TA TRE M




                                                                                                                               8
                                                                                                           Nokia
                                                                                       Nokia - Rebased Share Price (Euro)


                                                                                                                                                   2 9 /4 /0 9
                                   240




                                                                                                                                                    Sold
                                   220



                                   200



                                   180



                                   160



                                   140



                                   120



                                   100



                                    80
                                                                                                               Purchased                                                        Purchased
                                    60



                                    40
                                                2004                      2005                          2006              2007      2008
                                     N O K IA

                                   H IG H 2 2 2 .0 4 6 /1 1 /0 7 ,L O W 5 9 .1 1 3 /3 /0 9 ,L AS T 8 0 .9 9 2 8 /4 /0 9          So u r c e : T h o m s o n D a ta s tr e a m

Source: Edinburgh Partners, 29/04/09
This is for an illustrative purposes only and should not be construed as a
recommendation, invitation or inducement to purchase this security.




                                                                                                                                                                                            9
                                                                                        Applied Materials

                                                                   Applied Mats. – Rebased Share Price
                                                                                                                                               Leading supplier of nano technology and thin film
120
                                                                                                                  2 9 /4 /0 9
                                                                                                                                               solutions
110

                                                                                                                                               Market focus:
100
                                                                                                                                               •   Obsessed with dreadful near-term outlook for
 90
                                                                                                                                                   semiconductors

 80

                                                                                                                                               EP long-term view:
 70
                                                                                                                                               •    Net cash on balance sheet
 60                                                                                                                                            •    Secular growth while high
                                                                                                                                               •    Technology leadership
 50

                                                                                                                                               •    Top quality management
 40
              2004                      2005                           2006             2007      2008
  A P P L IE D M A T S .

H IG H 1 1 7 .3 3 7 /8 /0 7 ,L O W 4 4 .6 8 1 7 /2 /0 9 ,L A S T 5 9 .2 1 2 8 /4 /0 9          S o u r c e : T h o m s o n D a ta s tr e a m
                                                                                                                                               •   Initial Purchase Date, Feb 2009
   Source: Edinburgh Partners, 29/04/09
   This is for an illustrative purposes only and should not be construed as a recommendation, invitation or
   inducement to purchase this security.




                                                                                                                                                                                                   10
                                                                                                     Baidu
Price ($)
    450
                               Baidu Share Price                                  6/5/09

                                                                                                         Leading Chinese language internet search provider
    400



    350
                                                                                                         Market focus:
                                                                                                         • Cyclical headwinds
    300

                                                                                                         • Short-term medical listings issue
    250



    200
                                                                                                         EP long-term view:
    150                                                                                                  • No 1 market leader
    100
                                                                                                         • Secular growth trends
                                                                                                         • Cash on balance sheet
     50

                                                                                                         • Valuation now more compelling : Y5 P/E 8.5x
      0
            2004             2005                2006         2007       2008
     BAIDU 'A' ADR 1:1 (~U$)

    HIGH 424.25 6/11/07,LOW 46.98 7/2/06,LAST 259.94 5/5/09             Source: Thomson Datastream
                                                                                                         • Initial Purchase, Dec 2008
Source: Edinburgh Partners, 05/06/09
This is for an illustrative purposes only and should not be construed as a recommendation, invitation
or inducement to purchase this security.
                                                                Source: Thomson Financial Datastream




                                                                                                                                                             11
           What about the Economy?
US Cost of Median Home / Disposable Income

                                 U S H P M E D E A /U S IN P E R Q B
  7 .5 0                 F R O M 1 5 /5 /6 0 T O 1 5 /5 /0 9 Q U A R T E R L Y

                                                                                                                                   Least
                                                                                                                                   Affordable
  7 .0 0




  6 .5 0




  6 .0 0




  5 .5 0



                                                                                                                                     Most
  5 .0 0
                                                                                                                                     Affordable
           1960   1965   1970      1975      1980      1985       1990      1995         2000             2005



                                                                                   S o u r c e : T h o m s o n D a ta s tr e a m




                                                                                                                                                  12
               Current Conclusions:
                Pay now, pay later

• Trough of cycle within sight
• We borrowed from Asia to finance consumption
• Western households now saving; but governments are
  borrowing to fill gap

Next
• Western governments “save” to repair their balance sheets
  (government “savings” = taxes!)
• Global growth slower
      - Historically 3-4%
      - Expect 2-3%
      - Recovery subdued (i.e. jobless)



                                                              13
                                            Important Notes
•   This presentation is being made, and this document is being distributed, only to and is directed only at persons who have professional experience in
    matters relating to investments falling within paragraph 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (all such
    persons together being referred to as "relevant persons"). Any person who is not a relevant person should not act or rely on this presentation or
    this document or any of its contents.

•   This document does not constitute or form part of, and should not be construed as, an offer, invitation or inducement to purchase or subscribe for
    securities nor to enter into any contract for the provision of investment services , nor shall it be relied upon in connection with any such
    transaction. The information and opinions contained in this presentation are subject to change without notice. Client accounts of Edinburgh
    Partners Limited and their respective directors, officers and employees may have positions in the securities referred to in this presentation and may
    deal in them from time to time.

•   This document has been prepared by Edinburgh Partners. Its contents are confidential and may not be distributed, published, reproduced (in whole
    or in part) by any medium or in any form, or disclosed by recipients to any other person. All data including graphs and charts, sourced to Edinburgh
    Partners is copyright and may not be copied or reproduced without prior permission.

•   The information contained in this document has been compiled by Edinburgh Partners from various sources and has not been independently verified.
    No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or
    correctness of the information or opinions contained herein. Edinburgh Partners shall not have any responsibility or liability whatsoever (for
    negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this
    document. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may
    change materially.

•   Past performance is not a guide to the future and the value of investments and the income from can go down as well as up. Investors may not get
    back the amount originally invested. Exchange rates can also cause the value of underlying overseas investments to go down as well as up.

•   This document has been issued and approved by Edinburgh Partners Limited, 12 Charlotte Square, Edinburgh EH2 4DJ.

•   Registered Office 12 Charlotte Square Edinburgh EH2 4DJ Registered in Scotland SC243661. Authorised and regulated by the Financial Services Authority 25
    The North Colonnade, Canary Wharf, London, E14 5HS




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