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ASSET ALLOCATION WORKSHOPNovember 17, 2017
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
ASSET ALLOCATION WORKSHOP
Warren Buffet Peter Thiel
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
Asset Management Industry
Global Asset Under Management
USD 63.9 Trillion
Indian Asset Under Management
USD 334.8 Billion
Bangladesh Asset Under Management
USD 895 Million
Expected Grow Rate 6%
USD 100 Trillion by 2020
Fundamental shift to low-cost funds
• In 1998, AIMS, the first AMC, started
• Took 10 years to launch a second
one, LR Global Bangladesh
• AUM increased by five times since
2010, despite the crash
30%
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
About LR Global Bangladesh
Asset Under Management
BDT 1,127 Crore
OUR TEAM50 Years of Cumulative Experience
100% from Top Business Schools
2008 2010First Mutual FundInception
What We DoManaging institutional
investors’ money
Objective is to earn superior
risk-adjusted return on a
consistent basis
Across six Mutual Funds since
2009
Our Moto: NEVER LOSE YOUR
INVESTOR’S MONEY
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
A Tale of Two Stocks
BDT 207.31 January, 2009
BDT 3,297.916 November, 2017
CAGR 49.4%In Last 9 Years
BDT 1.0 Crore invested in BATBC in 2009 would have become
BDT 25.0 Crore
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British American Tobacco Bangladesh Company Limited
24,885.8
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
A Tale of Two Stocks
BDT 1,105.530 December, 2008
BDT 11.616 November, 2017
After Adjustment
CAGR (3.5%)In Last 9 Years
Since its Peak in 5 December, 2010, Prime Finance Lost 91.3% of its
Market Cap
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Prime Finance & Investment Ltd.
750.7
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
Performance of LR Global Bangladesh
140
81
25
50
75
100
125
150
Jan-11 Apr-12 Jul-13 Oct-14 Jan-16 Apr-17
LR_AIBL1STMF
AIBL 1ST ISLAMIC MUTUAL FUND DBH FIRST MUTUAL FUND
164
115
20
45
70
95
120
145
170
195
Feb-10 Oct-11 Jun-13 Feb-15 Oct-16
GREEN DELTA MUTUAL FUND
133
91
20
45
70
95
120
145
Sep-10 Jan-12 May-13 Sep-14 Jan-16 May-17
LR_GREENDELMF
MBL 1ST MUTUAL FUND NCCBL MUTUAL FUND-1LR GLOBAL BANGLADESH MF ONE
157
105
50
75
100
125
150
175
Sep-11 Dec-12 Mar-14 Jun-15 Sep-16
LR_LRGLOBMF1 146
88
25
50
75
100
125
150
Feb-11 May-12 Aug-13 Nov-14 Feb-16 May-17
LR_MBL1STMF
155
131
50
75
100
125
150
175
May-12 May-13 May-14 May-15 May-16 May-17
LR_NCCBLMF1
LR_DBH1STMF
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
Our Performance
Performance Statistics
(From Feb, 2010 to Sep, 2017)
So, What is our secret sauce?
LR Funds Benchmark
Annualized Return (ɼ) 8.1% 1.9%
Annualized Std. Deviation (Ϭ) 11.7% 22.7%
Return Per Unit of Risk (ɼ/Ϭ) 0.69 0.08
Alpha (α) 4.8%
Beta (β) 0.46
Performance Attribution Analysis: Alpha (α) Drivers
Asset Allocation 67%
Security Selection 33%
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
4 StepsDeciding which ASSET CLASSES
to include and which to exclude
Strategically altering the
weights to capture excess
returns, aka MARKET TIMING
Deciding WEIGHTS for each of
the asset classes allowed
SECURITY SELECTION
Investment
Policy
Investment
Strategy
How to Design A Portfolio
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
The Importance of Asset Allocation
Asset Allocation
67%Security Selection
33%4.8%Alpha Generated
93.6% of Return Variations
Come from Asset AllocationDeterminants of Portfolio Performance*
* Determinants of Portfolio Performance was a seminal research by Gary P. Brinson, L. Randolph Hood and Gilbert L. Beebower published in 1995,
one of the first works that academically analyzed performance of portfolio managers of mutual funds during 1985-94 period
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
Asset Allocation of LR Global Bangladesh
Active Management and Asset Allocation
Asset Size BDT 1,048 Crore
(From Feb, 2010 to Sep, 2017)
Since Inception, Our Material Outperformance Enabled Funds to Disburse Cash Dividend to
Unit Holders Even in Down-Markets
0%
25%
50%
75%
100%
2010 2011 2012 2013 2014 2015 2016 2017 2017
21.4%
5.5%11.7%
13.3%
1.3%11.0%
0.0%
3.2%
21.0%
11.6% Banks &
FI
Cash
This presentation is prepared for FINWITZ 2017 by LR Global Bangladesh Asset Management Company. Any kind of usage without permission
is strictly prohibited.
Copyright©2017 LR Global Bangladesh Asset Management Company. All rights reserved
Takeaway