Debt Rating Agency Conference February 29, 2012
Peter Demirali Managing Director and Portfolio Manager (800) 257-7013 ext. 322 Peter.Demirali@Cumber.com Twitter: @CumberlandADV
Florida Office One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236
New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360
(800) 257-7013 ŠCopyright 2012 Cumberland AdvisorsŽ. Further distribution prohibited without prior permission.
Average Cumulative Default Rates
Source: Moody’s Florida Office One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236
New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360
(800) 257-7013
2 ©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.
Growth of Securitization
Source: Federal Reserve Flow of Funds Florida Office One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236
New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360
(800) 257-7013
3 ŠCopyright 2012 Cumberland AdvisorsŽ. Further distribution prohibited without prior permission.
Asset Backed Issuance
Source: Bloomberg Florida Office One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236
New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360
(800) 257-7013
4 ŠCopyright 2012 Cumberland AdvisorsŽ. Further distribution prohibited without prior permission.
Ratings Downgrades Balance Distribution of Originally AAA Bonds by Worst Current Rating Investment Grade
Non-Investment Grade
Sector
Vintage
AAA
AA
A
BBB
BB
B
CCC
C
Prime
2003
45%
16%
23%
12%
3%
1%
0%
0%
2004
14%
11%
21%
26%
15%
9%
4%
0%
2005
2%
2%
4%
7%
10%
20%
29%
26%
2006
4%
0%
6%
1%
1%
9%
12%
66%
2007
5%
1%
3%
1%
2%
4%
17%
68%
All
8%
4%
7%
6%
5%
8%
16%
46%
2003
27%
23%
23%
19%
3%
4%
0%
0%
2004
6%
6%
9%
24%
16%
19%
15%
5%
2005
1%
1%
1%
1%
3%
7%
45%
42%
2006
0%
1%
0%
0%
0%
2%
31%
66%
2007
0%
1%
0%
0%
0%
0%
27%
71%
All
1%
1%
1%
2%
1%
3%
31%
60%
2003
10%
14%
22%
23%
20%
7%
1%
3%
2004
23%
26%
22%
7%
11%
6%
3%
1%
2005
9%
12%
8%
4%
15%
16%
21%
15%
2006
3%
2%
1%
0%
3%
4%
25%
62%
2007
4%
3%
1%
1%
1%
2%
27%
61%
All
5%
5%
3%
2%
4%
5%
24%
52%
4%
3%
3%
3%
3%
5%
26%
54%
Alt-A
Subprime
Al Non-agy
Originally AAA-rated securities are grouped by the lowest current rating by Moody's, S&P, and Fitch. Florida Office One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236
New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360
Source: J.P. Morgan, Moody's, S&P, Fitch
(800) 257-7013
5 ŠCopyright 2012 Cumberland AdvisorsŽ. Further distribution prohibited without prior permission.
About Cumberland Advisors Cumberland Advisors supervises over one billion dollars in separate account assets for individuals, institutions, retirement plans, government entities, and cash management portfolios. Cumberland manages portfolios for clients in 48 states, the District of Columbia, and in countries outside the United States. Cumberland Advisors is an SEC-registered investment adviser. Munis, Taxables, ETFs Cumberland’s portfolio management efforts emphasize long-lasting relationships and continuous dialogue among clients, their consultants, tax advisors, accountants, estate planners, and their assigned portfolio management contact at Cumberland. Cumberland offers several different investment portfolio management styles. Our investment strategy is described in detail on our website. Fixed Income All of our fixed-income offerings are total return strategies, but can take the client’s current income needs into consideration. Our fixed income styles are Tax-Free Municipal Bonds and Taxable Bonds. Stocks Cumberland uses Exchange-Traded Funds to manage global equities. Exchange-Traded Funds (ETFs) are securities that mimic the price performance and dividend yield of an index, or a basket, of securities. Cumberland uses ETFs as building blocks in crafting a portfolio, investing in attractive equity sectors, industries, market capitalization strata, styles, and regions. Our equity portfolios are U.S. ExchangeTraded Funds (ETF) Equity, International Exchange Traded Funds (ETF) Equity, Emerging Markets Exchange-Traded Funds, and Global Multi-Asset Class Exchange-Traded Funds. Balanced Accounts Cumberland can blend the strategies presented above to create a balanced mix of stocks and bonds. For further information about Cumberland Advisors, please visit our website at www.cumber.com.
Florida Office One Sarasota Tower 2 N. Tamiami Trail, Suite 303 Sarasota, FL 34236
New Jersey Office 614 E. Landis Avenue Vineland, NJ 08360
(800) 257-7013
6 ©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.