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september 9, 2013
A great deal of money has been created to stimulate the worlds economies.
Money has to go someplace. The central banks have lowered the return on Treasurys and other safe investments.
This has caused people to look to risky markets for the returns they crave.
The returns on risky assets have been good in recent years. Default experience has been unusually benign for four years. All things equal, psychology becomes more positive after markets rise.
Even though people may not be thinking bullish, many are acting bullish. The price for pursuing safety appears high today, and the price for accepting risk has been low of late. This combination encourages risk-taking.
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The level of uncertainty is very high The economic recovery is sluggish Theres the possibility of highly significant negative developments Providers of capital are exhibiting risk-tolerant behavior
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Balance the many pros and cons its not supposed to be easy
The outlook certainly isnt so propitious (and assets arent so cheap) as to call for investing aggressively. But at the same time, conditions arent so bad and prices arent so high that its time for extreme risk aversion.
Since inception, our U.S. high yield bond and U.S. convertibles strategies have outperformed their
benchmarks by 110 and 200 basis points on a gross basis, respectively. Their Sharpe ratios versus benchmarks have been 0.80 vs. 0.54 and 0.48 vs. 0.31, respectively.
Since inception, Oaktrees closed-end funds have generated an aggregate IRR of 19.9% on a gross
basis, while the S&P 500 returned only 9.7% over the same period.
All 48 pre-2012 closed-end funds have positive gross IRRs. All 19 distressed debt funds have double-digit gross IRRs. 84% of pre-2012 incentive-creating committed capital has a net IRR over the 8% preferred return
threshold.
Weve distributed over $40 billion to clients since 2008, while still growing AUM by 50%.
Note: Unless otherwise indicated, all data in this presentation is as of June 30, 2013
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118 of those years, or 91%, were good years, in which we either beat our benchmark or
delivered a high return.*
For an extreme case, we have a 27-year record in U.S. high yield bonds without a single
bad year by this standard.
High level of service and reporting Low incidence of portfolio manager turnover Strong reputation for integrity and putting the client first
References to performance are on a gross basis. High return is defined as 7% or more for senior loans and 9% or more for all other strategies.
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Since January 1, 2007, we have raised more than $81 billion of gross capital.
Weve raised $9.8 billion or more for 6 years in a row. We are on the same pace in 2013, through
the first half of the year, without the benefit of a distressed debt Opportunities fund.
78% of our AUM is from clients who are invested in multiple strategies, with 39% from clients in
4 or more.
Oaktrees diversified client base includes more than 1,800 LPs: o 100 of the 300 largest global pension funds o 75 of the 100 largest U.S. pension funds o 38 states o Over 300 universities, endowments and foundations o 10 sovereign wealth funds
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Real Estate Debt Diversified real estate debt instruments, including CMBS, commercial
mortgages, subordinated secured debt, mezzanine loans, corporate debt and residential mortgage pools
Emerging Market Opportunities Emerging market stressed and distressed corporate debt Emerging Markets Equity Long-only strategy European Dislocation Fund Lending opportunities resulting from the retrenchment by
European banks
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