constructing a global investment strategy

Constructing a global investment strategy

Ruth Hollies

September 2006

Introduction

• History • Background• Benefits• Processes• Other issues

Background and history

• Historic estate• Moving money off shore for

tax purposes• Naïve diversification in 1953

with the acquisition of Annacis Island in Canada

Where we are today

• In 2000 split into 4 individual geographic companies – North America and Canada– Continental Europe– Australia and Asia– Great Britain and Ireland

• Research teams in each region• And a global Fund Management business

The rationale for a global portfolio

Reducing risk

Increasing return

Increasing opportunities

Increases financial stability

The Grosvenor approach

Economics and DemographicsForecast returnsOptimal portfolios

Operating Company Strategic

plans

Boards

Optimal Portfolios

• Data issues• Investment Objective?• Limitations• Other issues

Data issues

• ‘All investors should worry about the information that they need before worrying about issues of investment strategy’ 1

• Consistent global data set or one that is clearly defined

• We adjust/filter the data

1 Guide to Investment Strategy, Peter Stanyer

Investment objective?

• Liabilities• Time • Attitude to Risk• Benchmarking• Development

Landing safely, doesn’t mean you didn’t take any risks

Limitations

• Time period used• Past analysis over short

periods• In it for the Long-run• Structural shifts• Emergence of new areas

Bringing it together

• Treat Portfolio results with caution– Constraints– Sensitivity to small changes

• Forecasts• Policy watch - Economics

A changing world

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Source: Real Capital Analytics, CBRE, CWHB, JLL, Grosvenor

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Rates Yield shift (Conner estimate) Yield shift (Grosvenor estimate)

Changes in short rates and potential yield shift

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Source: Grosvenor

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The alternative