PRNewswire-FirstCall
LONDON and NEW YORK
(NYSE:BK)
Jul 28, 2008
Credit crisis marked turning point for global change
LONDON and NEW YORK, July 28, 2008 — Newton* has unveiled four new themes set to drive future trends and subsequent stock selection.
Newton uses a dynamic framework of long-term themes to help develop an understanding of how the world is changing and where investment opportunities are likely to appear. The company believes the credit crisis marked an important turning point for financial institutions, companies and investors globally, with the four new investment themes being; 'All Change', 'Uneconomic Growth', 'More Government' and 'Construction and Reconstruction'.
Iain Stewart, a Director of Investment at Newton and the driver of the Newton thematic investment process created over 20 years ago, said: "As the credit crisis has well and truly hit, our attention has turned to the long-term implications of the crisis for investors. Our all change theme forces us to think about a world in which credit is no longer cheap and abundant. That this also appears to be the case for both food and energy makes the transition all the more profound.
"Against this backdrop of tighter credit conditions, we have favoured stable growth businesses which are capable of generating cash throughout an economic cycle. We have been avoiding companies which have relied upon the unsustainable growth of cheap credit such as many western banks, investment banks and real estate businesses."
The uneconomic growth theme relates to how global economic activity and inflation measures are distorted by currency pegs, price controls and subsidies. Newton believes some supply chain arrangements, such as outsourcing to China, could come under pressure. This could favour local manufacturers that operate closer to the consumer.
The construction and reconstruction theme highlights the 'megatrend' in global infrastructure. While spending on global infrastructure including transport, telecoms and utilities has grown rapidly over the past few years, Newton believes infrastructure spending in less-developed economies continues to be a solid growth area in a world experiencing a cyclical slowdown.
The more government theme is based on the premise that the recent financial crisis will lead to more government intervention. Newton believes this form of managed capitalism will have a detrimental effect on global trade and corporate profits. Domestic based 'consumer champions', along with companies operating in the security, surveillance, aerospace and defence sectors are expected to benefit.
Two of Newton's themes 'debt and credit' and 'becalmed' which contributed to strong performance relative to benchmarks in international equity (EAFE Plus), global equity and global bonds during the credit crisis of 2007, have been removed and updated with the four new themes**.
In 1998, Newton was acquired by Mellon Financial Corporation, which merged with Bank of New York Company, Inc., to become The Bank of New York Mellon in July last year. Newton today forms part of the $1.1 trillion (560bn pounds sterling) BNY Mellon Asset Management group of companies.
The Bank of New York Mellon Corporation is a global financial services company focused on helping clients manage and service their financial assets, operating in 34 countries and serving more than 100 markets. The company is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $23 trillion in assets under custody and administration, more than $1.1 trillion in assets under management and services more than $11 trillion in outstanding debt. Additional information is available at http://www.bnymellon.com/.
**Annualized performance to December 31 2007
International Equity
(EAFE Plus) 1 Year(%) 3 Years(%) 5 Years(%) 10 Years(%)
Newton (gross of fees) 18.7 19.1 25.1 13.1
Newton (net of fees) 17.9 18.3 24.2 12.3
Benchmark
(MSCI EAFE NDR Index) 11.2 16.8 21.6 8.7
Global Equity 1 Year(%) 3 Years(%) 5 Years(%) 10 Years(%)
Newton (gross of fees) 20.4 18.3 22.1 11.5
Newton (net of fees) 19.6 17.5 21.2 10.7
Benchmark
(MSCI World NDR Index) 9.0 12.7 17.0 7.0
Global Opportunities 1 Year(%) 3 Years(%) Since inception (%)
Newton (gross of fees) 26.8 23.9 28.7
Newton (net of fees) 25.9 23.0 27.8
MSCI AC World NDR
Index 11.7 14.4 17.3
Global Bonds 1 Year(%) 3 Years(%) 5 Years(%) 10 Years(%)
Newton (gross of fees) 11.1 4.7 9.4 8.7
Newton (net of fees) 10.6 4.3 8.9 8.2
Benchmark (JPM Global
Government Bond Index) 10.8 3.1 6.7 6.3
'Newton' refers to the following group of affiliated companies: Newton Investment Management Limited, Newton Capital Management Limited, Newton International Investment Management Limited, Newton Capital Management LLC and Newton Fund Managers (CI) Limited. Assets under management include assets managed by all of these companies except Newton Capital Management LLC, which provides marketing services in the U.S. for Newton Capital Management Limited. Except for Newton Capital Management LLC and Newton Capital Management Limited, none of the other Newton companies offer services in the U.S. Newton Capital Management Limited is an investment management firm, authorized and regulated in the UK by the Financial Services Authority in the conduct of investment business and is a wholly owned subsidiary of The Bank of New York Mellon Corporation. Registered in England no. 2675952. Newton Capital Management Limited is registered as an investment adviser under the Investment Advisers Act of 1940.
Newton has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPS®). For each of the years from 1996 to 2005, Newton has been verified by an independent verifier. Copies of the verification reports are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results and a complete list and description of Composites is also available by contacting Ciaran Spillane (516) 338 3521. Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. Non-feepaying accounts are not included in this Composite. Capital gains, dividend and interest received may be subject to withholding tax imposed by the country of origin and such taxes may not be recoverable.
The U.S. Dollar is the currency used to express performance. Returns include the effect of foreign currency exchange rates. Further information regarding the exchange rates used is available upon request. Returns are presented gross and net of management fees and include the reinvestment of all income. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The FTSE World and JP Morgan Global Government Bond indices used for comparative purposes are calculated gross of withholding taxes. The MSCI World and MSCI EAFE indices used for comparative purposes are calculated net of withholding taxes.
Past performance is not a guide to future returns. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested. The value of overseas securities will be influenced by fluctuations in exchange rates. If part of the portfolio is invested in sub-investment grade bonds, which typically have a low credit rating and carry a high degree of default risk, then please be aware that this can affect the capital value of your investment. If the portfolio has exposure to hedge funds, gold, private equity and property via publicly quoted transferable securities, then there are additional risks associated with these sectors. The information contained within this document should not be construed as a recommendation to buy or sell a security. It should not be assumed that a security has been - or will be - profitable. There is no assurance that a security will remain in the portfolio.
Newton International Equities (EAFE plus) Strategy
Total Firm Composite Assets
Year Assets U.S. Dollars % of Firm Assets
End (millions) (millions)
2007 78,698 699 Less than 1%
2006 69,694 439 Less than 1%
2005 49,370 116 Less than 1%
2004 41,737 100 Less than 1%
2003 37,824 108 Less than 1%
2002 30,039 62 Less than 1%
2001 30,993 134 Less than 1%
2000 33,101 16 Less than 1%
1999 29,662 19 Less than 1%
1998 21,995 7 Less than 1%
Annual Performance Results
Year Number of Gross Net MSCI Composite
End Accounts Composite Composite EAFE Dispersion
NDR
2007 Five or 18.7 % 17.9 % 11.2 % N.A.
fewer
2006 Five or 23.6 % 22.7 % 26.4 % N.A.
fewer
2005 Five or 15.2 % 14.4 % 13.5 % N.A.
fewer
2004 Five or 25.8 % 24.9 % 20.2 % N.A.
fewer
2003 Five or 44.0 % 43.0 % 38.6 % N.A.
fewer
2002 Five or (14.3)% (14.9)% (15.9)% N.A.
fewer
2001 Five or (19.4)% (20.0)% (21.4)% N.A.
fewer
2000 Five or (14.2)% (14.8)% (14.2)% N.A.
fewer
1999 Five or 50.0 % 49.0 % 27.0 % N.A.
fewer
1998 Five or 25.5 % 24.6 % 20.0 % N.A.
fewer
Newton EAFE (Global Equity ex U.S.) Plus Composite contains fully discretionary segregated portfolios that invest in global equity markets with the exception of North America and for comparison purposes is measured against the MSCI EAFE Index. The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance, excluding the US & Canada. This Composite comprises portfolios that invest in global equities including emerging markets, which may include stocks that do not form part of the benchmark. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The fee schedule appropriate for this presentation starts at 0.30% per annum subject to a minimum of $300,000, however, individual fees are negotiated on an account by account basis. The Newton EAFE (Global Equity ex U.S.) Plus Composite was created in Q4 04.
Newton Global Bonds Strategy
Total Composite Assets
Firm
Total
Firm U.S. % Firm Number of
Year Assets Dollars Assets Accounts
End (millions) (millions)
2007 78,698 3,465 4 % Five or fewer
2006 69,694 2,679 4 % Five or fewer
2005 49,370 1,567 3 % Five or fewer
2004 41,737 842 2 % Five or fewer
2003 37,824 626 2 % Five or fewer
2002 30,039 364 1 % Five or fewer
2001 30,993 188 Less than 1% Five or fewer
2000 33,101 124 Less than 1% Five or fewer
1999 29,662 108 Less than 1% Five or fewer
1998 21,995 135 Less than 1% Five or fewer
Annual Performance Results
Year Gross Net JP Morgan Composite
End Composite Composite Global Gov. Dispersion
2007 11.1% 10.6 % 10.8 % N.A.
2006 6.7% 6.2 % 5.9 % N.A.
2005 (3.0)% (3.5)% (6.5)% N.A.
2004 14.0% 13.4 % 10.1 % N.A.
2003 19.9% 19.3 % 14.5 % N.A.
2002 23.2% 22.7 % 20.1 % N.A.
2001 2.4% 1.9 % (1.4)% N.A.
2000 7.8% 7.3 % 2.3 % N.A.
1999 (9.3)% (9.7)% (5.1)% N.A.
1998 19.3% 18.7 % 15.3 % N.A.
Newton Global Bond Unhedged Composite contains fully discretionary portfolios which invest in international government debt and for comparison purposes is measured against the JP Morgan Global Government Bond Index. The JPM Global Government Bond Index is a market capitalization weighted index that is designed to measure global bond market performance. Actual returns will be reduced by investment advisory frees and other expense that may be incurred in the management of the account. The fee schedule appropriate for this presentation starts at 0.15% per annum subject to a minimum of $150,000, however, individual fees are negotiated on an account by account basis. The Newton Global Bond Unhedged composite was created Q3 03.
Newton Global Equity Strategy
Composite Assets
Year Total Firm Assets U.S. Dollars % of Firm
End (millions) (millions) Assets
2007 78,698 9,685 12 %
2006 69,694 5,535 8 %
2005 49,370 2,700 6 %
2004 41,737 1,936 5 %
2003 37,824 131 Less than 1%
2002 30,039 84 Less than 1%
2001 30,993 81 Less than 1%
2000 33,101 90 Less than 1%
1999 29,662 103 Less than 1%
1998 21,995 76 Less than 1%
Annual Performance Results
Year Number of Gross Net FTSE MSCI World Composite
End Accounts Composite Composite World NDR Dispersion
2007 18 20.4 % 19.6 % 11.3 % 9.0 % 2.0 %
2006 13 20.9 % 20.1 % 21.5 % 20.1 % 1.4 %
2005 8 13.7 % 12.9 % 11.3 % 9.5 % N.A.
2004 9 18.9 % 18.0 % 16.0 % 14.7 % N.A.
2003 Five or fewer 37.9 % 37.0 % 33.9 % 33.1 % N.A.
2002 Five or fewer (19.5)% (20.1)% (19.1)% (19.9)% N.A.
2001 Five or fewer (13.9)% (14.5)% (16.1)% (16.8)% N.A.
2000 Five or fewer (8.2)% (8.9)% (11.1)% (13.2)% N.A.
1999 Five or fewer 35.2 % 34.3 % 26.0 % 24.9 % N.A.
1998 Five or fewer 27.4 % 26.5 % 23.0 % 24.3 % N.A.
Newton Global Equity Institutional Composite contains fully discretionary equity portfolios that invest in global equities including emerging markets, which may include stocks that do not form part of the benchmark and for comparison purposes is measured against the FTSE World and MSCI World indices. The FTSE World and MSCI World Index are free float-adjusted market capitalization indices that are designed to measure global developed market equity performance. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The fee schedule appropriate for this presentation starts at 0.30% per annum subject to a minimum of $300,000, however, individual fees are negotiated on an account by account basis. The Newton Global Equity Institutional Composite was created in Q3 00.
Newton Global Higher Income Strategy
Total Firm Composite Assets
% of
Year Assets U.S. Dollars Firm Number of Gross
End (millions) (millions) Assets Accounts Composite
2007 76,698 623 Less than 1% Five or fewer 22.3 %
2006 69,694 230 Less than 1% Five or fewer 34.4 %
Annual Performance Results
MSCI World
Year Net Composite FTSE World NDR Composite Dispersion
End
2007 21.4% 11.3 % 9.0 % N.A.
2006 33.4% 21.5 % 20.1 % N.A.
Newton Global Higher Income Composite contains fully discretionary portfolios that invest in global equities which have a yield greater than 15% of the local market, and for comparison purposes is measured against the FTSE World and MSCI World indices. The FTSE World and MSCI World Index are free float-adjusted market capitalization indices that are designed to measure global developed market equity performance. This Composite comprises portfolios that invest in global equities including emerging markets, which may include stocks that do not form part of the benchmark. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The fee schedule appropriate for this presentation starts at 0.30% per annum subject to a minimum of $300,000, however, individual fees are negotiated on an account by account basis. The Newton Global Higher Income Composite was created in Q1 06.
Newton Global Opportunities Strategy
Total Firm Composite Assets
Year Assets U.S. Dollars % of Firm Number of
End (millions) (millions) Assets Accounts
2007 78,698 3,656 5 % 8
2006 69,694 1,001 1 % Five or fewer
2005 49,370 128 Less than 1% Five or fewer
2004 41,737 8 Less than 1% Five or fewer
Annual Performance Results
Year Gross Net FTSE MSCI AC Composite Dispersion
End Composite Composite All World World NDR
2007 26.8% 25.9 % 12.7 % 11.7 % N.A
2006 26.9% 26.0 % 22.2 % 21.0 % N.A
2005 18.1% 17.2 % 11.7 % 10.8 % N.A.
2004 19.6%* 19.4%* 12.3%* 12.2%* N.A.
Newton Global Opportunities Composite contains fully discretionary portfolios that invest in global equity markets but are not constrained by investment restrictions and for comparison purposes is measured against the FTSE All World & MSCI AC World indices The FTSE World and MSCI World Index are free float-adjusted market capitalization indices that are designed to measure global developed market equity performance. This Composite comprises portfolios that invest in global equities including emerging markets, which may include stocks that do not form part of the benchmark. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The fee schedule appropriate for this presentation starts at 0.35% per annum subject to a minimum of $350,000, however, individual fees are negotiated on an account by account basis. The Newton Global Opportunities Composite was created in Q4 04.
*'Newton' refers to the following group of affiliated companies: Newton Investment Management Limited, Newton Capital Management Limited, Newton International Investment Management Limited, Newton Capital Management LLC and Newton Fund Managers (C.I.) Limited. Assets under management include assets managed by all of these companies except Newton Capital Management LLC, which provides marketing services in the U.S.. Except for Newton Capital Management LLC and Newton Capital Management Limited, none of the other Newton companies offer services in the U.S.. Newton Capital Management Limited is an investment management firm, authorized and regulated in the UK by the Financial Services Authority in the conduct of investment business and is a wholly owned subsidiary of The Bank of New York Mellon Corporation. Registered in England no. 2675952.
All information source BNY Mellon Asset Management International Limited as at 30 June 2008. This press release is issued by BNY Mellon Asset Management International Limited to members of the financial press and media and the information contained herein should not be construed as investment advice. Not available or offered to U.S. investors. Past performance is not a guide to future performance. Registered office: The Bank of New York Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorised and regulated by the Financial Services Authority.
A Bank of New York Mellon CompanySM