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2013-02-28
Carl Bernadotte Founded CB Asset Management 1994 26 years of experience
Owner, ABB Investment Management, portfolio manager
Portfolio management ABB Aros Securities, head broker
Edu: Master of Science in Business and Economics,
born 1955 Stockholm University
Marcus Grimfors Edu: Bachelor of Science in Business and Economics, 4 years of experience
Portfolio management Stockholm University; Joined CB August 2008
Master of Science in Engineering Physics,
born 1981 Royal Institute of Technology, Stockholm
Alexander Jansson Acacia Partners (Alder), analyst 4 years of experience
Portfolio management Edu: Master of Science in Business Administration Joined CB October 2009
and Bachelor of Science in Economics,
born 1983 Uppsala University
Erik Allenius Somnell Edu: Master of Science in Industrial Engineering
Business Development and Management, Joined CB January 2013
Royal Institute of Technology, Stockholm
born 1984
CB Funds
Team
2
Jan Malmgren Consultant. Since inception
Chairman Has been managing director at Öhman Fondkommission and
born 1948 SBC Arbitech (now referred to as UBS Stockholm).
Nils Bildt Founder and co-owner of Teleopti AB, a niche-oriented, Joined the board 2008
Member multinational software-optimising company, maintaining
born 1952 communication networks and contact centres around
the world.
Per-Otto Hyland Senior Advisor of the Investment banking of Credit Suisse. Has Joined the board 2008
Member worked close to 30 years in different international banks. Board
born 1954 member of NatImmune, a Danish biotech-company, BlueStep
Bostadslån, a Swedish financial services company, and
Innovation, a Norwegian strategy consultancy.
Christoffer Saidac Partner at Hannes Snellman Attorneys Ltd. Since inception
Member Has worked many years within Corporate Finance
born 1959 and Capital Markets at Vinge.
Carl Bernadotte Managing director and owner, CB Asset Management. Since inception
Member
born 1955
3
CB Funds
Board of Directors
Caceis
Luxembourg
SEB
Luxembourg
European
Quality Fund CB Hedge Save Earth
Fund
CB Funds
Stockholm
CB Funds
4
Swedish Financial Supervisory
Authority
Our philosophy
Private and institutional investors alike seek return on assets. This is the
foundation for all investments.
Our philosophy and goal, therefore, is to generate an absolute return and at
the same time to be competitive in relation to a relevant index.
Simplicity, Quality and Long-term perspective are our guidelines.
CB Funds
5
CB Funds
6
Ethical guidelines
No investments in companies active in
Production of tobacco or alcohol
Weapons manufacturing
Gambling
Pornography
Became a signatory of the “The United Nations-backed Principles for
Responsible Investment Initiative” (PRI) in February 2011.
European Quality Fund and Save Earth Fund have been awarded the
environmental-ethical ME-labeling from the Swedish Pensions Agency.
This document is neither an offer to sell nor a solicitation to invest. Such offers or
solicitations must be preceded or accompanied by a current offering document of the
funds. This document is submitted to you confidentially solely in connection with your
consideration of an investment in CB Hedge, European Quality Fund and/or Save Earth
Fund (the “Funds”). The preceding/upcoming pages constitute a summary only. No
assurance can be given that the investment objective will be achieved, and investment
results may vary substantially over any given time period. Past performance is not
necessarily indicative of future results. The funds involves a degree of risk. An investor in
the funds could lose all or a substantial amount of his or her investment. The funds has
fees that will reduce returns. The funds performance may be volatile.
Disclaimer
CB Funds
7
European Quality Fund
a fund of large and mid-caps with sustainable growth
3-Year 5-Year 10-Year
Large caps within MSCI Europe
Concentrated portfolio (20-33 positions)
Long-term perspective
European Quality Fund
Guidelines
Objective
Lower volatility than MSCI Europe
Absolute return (rolling 36 months)
Outperform MSCI Europe (rolling 12 months)
9
Investment criteria
European Quality Fund
10
Large caps
- Minimum market cap 1 BEUR -
Mature industries
- Proven management -
Stable dividend yield
- Not necessarily high -
Conservative valuation
- Future profits -
Internal recruiting
- Of top management -
Resilient profit growth
- Regardless of economic cycles - Primary
Secondary
European Quality Fund
11
Portfolio
A strong global position
Visibility* Market position** Market share***
Industrials 44% 2 18%
Health Care 59% 1 27%
Materials 44% 2 18%
Consumer Staples 25% 4 4%
Consumer Discretionary 3% 3 11%
IT 71% 1 30%
Aggregate 45% 2 21%
*Refers to the porportion of the company's turnover that is of a recurring nature or from the order book. The figures refers to 2012.
**Refers to the company's position within relevant segment
***Refers to the company's market share within relevant segment
European Quality Fund
Portfolio
12
High and transparent exposure to emerging markets
We argue that an EM exposure through well-run DM
companies is a very attractive combination
Standard deviation (risk) Performance*
*Net in EUR as of 2012-12-31
**European Quality Fund
EQF** MSCI China MSCI India MSCI Brazil MSCI Russia
1 yr 20% 21% 24% -1% 12%
3 yrs 38% 14% 4% -9% 6%
5 yrs 2% -7% -24% -8% -8%
EQF** MSCI China MSCI India MSCI Brazil MSCI Russia
1 yr 8% 17% 27% 22% 25%
3 yrs 11% 17% 24% 20% 24%
5 yrs 15% 26% 33% 30% 36%
European Quality Fund
13
Stable earnings growth (EPS) – on average 14% higher than index
Portfolio
EQF – performance 2013
MSCI Europe
EQF – performance 12 months
MSCI Europe
EQF – performance 36 months
MSCI Europe
EQF – standard deviation
MSCI Europe
Beta (Sensitivity to market fluctuations)
Information ratio (>0 justifies active management)
Tracking error (Active risk)
R2 (100% if active risk is 0%)
Active Share (Deviation from index)
European Quality Fund
Key ratios*, as of February 28 (EUR)
36 months
14
+5.2%
+3.8%
+16.2%
+12.7%
+39.1%
+28.2%
11.4%
13.1%
*All fees are included if nothing else is stated. The performance of MSCI Europe includes dividends after the
deduction of withholding taxes.
0.62
0.29
9.5%
50.6%
91.0%
15
European Quality Fund
Performance against MSCI Europe, 5 years (EUR)
+17.2%
+5.2%
+139.9%
+105.7%
Performance against MSCI Europe, 10 years (EUR)
16
The fund’s ability to preserve capital (EUR)
European Quality Fund
Period Index Fund Outperformance
2007-07-16 - 2009-03-09 -58,5% -45,3% 13,2%
2010-04-15 - 2010-05-25 -13,7% -10,8% 2,9%
2011-02-17 - 2011-09-22 -24,3% -14,1% 10,2%
2012-03-16 - 2012-06-04 -12,8% -6,7% 6,1%
Drawdown
17
European Quality Fund
Alpha
Risk analysis – EQF compared to MSCI Europe*
Correlation Standard deviation
Beta Tracking error
*All figures are on a 60 days rolling basis 18
European Quality Fund
0.73
0.72
9.5% 9.6%
7.0%
19
Geographical exposure vs MSCI Europe
European Quality Fund
Sector exposure vs MSCI Europe
Company Country Industry Share of fund Average share Performance, EUR Contribution
Fresenius Germany Healthcare 7.2% 6.4% 20.8% 1.2%
SAP Germany IT 7.1% 5.0% 42.2% 1.6%
Volkswagen Germany Consumer Discretionary 7.0% 2.3% 43.7% 1.1%
Elekta Sweden Healthcare 6.6% 5.1% 36.0% 1.7%
Rolls Royce UK Industrials 6.5% 5.4% 20.9% 0.9%
Adidas Germany Consumer Discretionary 4.8% 4.6% 30.9% 1.3%
SGS Switzerland Industrials 4.7% 4.7% 28.1% 1.2%
Linde Germany Materials 4.7% 6.7% 14.9% 1.0%
Getinge Sweden Healthcare 4.7% 4.8% 28.9% 1.3%
Syngenta Switzerland Materials 4.6% 0.9% 30.3% 0.1%
Coloplast Denmark Healthcare 4.4% 0.8% 52.8% 0.3%
Bureau Veritas France Industrials 4.3% 4.6% 41.6% 1.7%
BASF Germany Materials 4.3% 2.7% 30.5% 0.8%
Novo Nordisk Denmark Healthcare 4.2% 5.5% 34.8% 2.0%
Svenska Handelsbanken Sweden Financials 4.2% 4.2% 32.2% 1.1%
Henkel Germany Consumer Staples 3.9% 4.9% 35.3% 1.7%
Vopak Netherlands Industrials 3.8% 4.5% 27.8% 1.2%
Schindler Switzerland Industrials 3.7% 4.4% 21.3% 0.8%
Essilor France Healthcare 3.4% 3.7% 34.0% 1.1%
Barclays UK Financials 0.4% 0.3% 49.1% 0.1%
Allianz Germany Financials 0.4% 0.3% 38.3% 0.1%
Deutsche Bank Germany Financials 0.3% 0.2% 16.8% 0.0%
2012
European Quality Fund
20
Portfolio as of 2012-12-31
European long-only fund with a concentrated portfolio consisting of world-leading
growth companies.
Invests in quality countries with high transparency: Germany, Netherlands,
Switzerland, France, Sweden, Denmark and the UK
Ethical guidelines, no investments in companies active in production of tobacco or
alcohol, weapons manufacturing, gambling and pornography.
Historically above average return with lower than average risk. Competitive
compared to the benchmark index as well as peers.
Managed by a team of three portfolio managers.
Summary of European Quality Fund
European Quality Fund
21
Fund name: European Quality Fund
Manager: CB Asset Management AB
Domicile: Luxembourg/BVI
Custodian: Caceis Investor Services (Crédit Agricole), Luxembourg
Auditor: PricewaterhouseCoopers S.ár.I.
Currency: EUR
Liquidity/NAV: Daily/Daily
Fees, SICAV A, BVI: Management fee: 1.5%, perform. fee: 0%
Fees, SICAV I: Management fee: 0.5%, perform. fee: 20% on net return above
benchmark index (MSCI Europe)
Fund launch: November, 1995
Minimum investment: SICAV A: None, SICAV I: €1M
PPM: 309 492
ISIN/Reuters/Bloomberg: LU0112589485 / 908840.FBF / EUREUEA LX
European Quality Fund
Fund facts
22
Countries represented in the MSCI Europe index
Holdings > 5% sum < 40% of portfolio assets
Any single holding < 10% of portfolio assets
Only listed stocks
Put options < 10% of portfolio assets
Investment restrictions
Appendix 1
European Quality Fund
23
24
Historical performance, as of February 28 (EUR)
Historical relative-performance, as of February 28 (EUR)
Appendix 2
European Quality Fund
European Quality Fund
Case - Fresenius
25
Founded 1912. Listed in Germany since 1986.
The company is a market leader in dialysis,
intravenous nutritional supplements, planning of
hospitals and early phase biotechnology projects.
The company holds a leading position in all
markets and in all areas they operate in. The
company’s customers are large companies with
high credit ratings, which ensure stable,
predictable and sustainable cash flows.
19 consecutive years of raised dividends!
Earnings, dividend, and sales growth
The stocks outperformance against the European market (EUR)
Did you know…Fresenius Medical Care (30% owned by
Fresenius) has overtaken Gambro as the market leader
within the dialysis market
Appendix 3
N/A
CB Hedge
An ethical hedge fund
3-Year 5-Year 10-Year
Selection of
long
positions
from EQF*
Short
position
MSCI
Europe
Net long
* European Quality Fund, a long-only fund managed by CB Funds
CB Hedge
27
Bull market Bear market
Consistent returns
A market-neutral fund attempts to generate consistent returns in both up and down markets.
Return is generated in an up market when the Long portfolio (blue box) rises more than the
Shorted index, MSCI Europe (red box). Return is generated in a down market when the long
portfolio falls less than the short side.
Strategy: consistent returns
CB Hedge
28
CB Hedge
Guidelines
Strategy: Long European equities, short MSCI Europe
Long side: Between 7 and 33 stocks, selected from EQF*
Short side: MSCI Europe
Net exposure: Net long between 0 and 20%
Gross exposure: Maximum 300% of AUM
Largest exposure: Single position max 20% and sum of the
4 largest positions max 60% of AUM
* European Quality Fund, a long-only fund managed by CB Funds
Objective
Annual return of 10-15% over a twelve month period
Outperform HFRX Equity Market Neutral Index over a twelve month period
29
30
CB Hedge
Sida 30 2013-03-25 30
The fund must always have a net exposure of 0-20%. In addition, the fund’s gross exposure may not exceed 300%
of AUM. During 2012 the average net and gross exposure amounted to 12% and 274%, respectively.
Gross and net exposure 2012
31
CB Hedge
Sida 31 2013-03-25
Performance since fund inception July 2, 2007 (EUR)
March 9, 2009: The market troughed
September 1, 2009: ”Restart”
+4,3%
-14,2% -13,5%
32
CB Hedge
Performance, 36 months (EUR)
+26,8%
+20,8%
-6,2%
CB Hedge
Sida 33 2013-03-25
CBH** – performance 2013
HFRXEMN***
CBH – performance 12 months
HFRXEMN
CBH – annual performance
HFRXEMN
CBH – standard deviation
HFRXEMN
Sharpe (0%)
Correlation to MSCI Europe
Value at Risk
Key ratios*, as of February 28 (EUR)
*All fees are included if nothing else is stated
**CB Hedge
***HFRX Equity Market Neutral Index
33
36 months
+1.4%
+0.6%
+5.7%
-3.7%
+6.8%
-1.9%
10.9%
4.5%
+0.62
-0.17
-0.97%
34
CB Hedge
Sida 34 2013-03-25 34
60 days rolling correlation with MSCI Europe*
0.14
*Data for 2012.
Market neutrality, i.e. independency of market flucuations is one of the more important objectives in the management
of the fund. The fund’s correlation with the European stock market should therefore be close to 0. During 2012, the
correlation between CB Hedge and MSCI Europe was kept in a tight interval between -0.2 and 0.2.
35
CB Hedge
Sida 35 2013-03-25 35
Correlations, 1 year
*Data för 2012.
Correlations, 3 years
CB Hedge MSCI Sweden MSCI USA MSCI Europe MSCI World
CB Hedge 1,00 -0,11 -0,23 -0,43 -0,33
MSCI Sweden -0,11 1,00 0,77 0,84 0,84
MSCI USA -0,23 0,77 1,00 0,83 0,96
MSCI Europe -0,43 0,84 0,83 1,00 0,93
MSCI World -0,33 0,84 0,96 0,93 1,00
CB Hedge MSCI Sweden MSCI USA MSCI Europe MSCI World
CB Hedge 1,00 0,12 -0,16 -0,24 -0,18
MSCI Sweden 0,12 1,00 0,80 0,82 0,83
MSCI USA -0,16 0,80 1,00 0,90 0,98
MSCI Europe -0,24 0,82 0,90 1,00 0,95
MSCI World -0,18 0,83 0,98 0,95 1,00
The fund has a low or negative correlation with all broad market indices. With its low correlations the fund
contributes to diversification in a portfolio with high exposure to the stock market.
36
CB Hedge
Sida 36 2013-03-25 36
60 days rolling standard deviation*
10.4%
6.8%
*Data for 2012.
We have an implicit target saying that the standard deviation of the fund should be around 10%, illustrated below
as the red line. For the greater part of 2012, the fund’s standard deviation, 60 days rolling, was below 10%, which
was significantly lower compared to the European stock market.
37
CB Hedge
Sida 37 2013-03-25 37
60 days rolling beta against MSCI Europe*
0.09
*Data for 2012.
The fund’s Beta, measured against MSCI Europe, shows how sensitive the fund is to movements in the stock
market. Since market neutrality is an objective, the fund’s beta should be close to 0. During 2012, and measured
on a 60-day rolling basis, the fund’s beta was kept in an interval between -0.2 and 0.2.
38
CB Hedge
Sida 38 2013-03-25 38
60 days rolling VaR, 95% confidence interval*
0.70%
*Data for 2012.
Value at Risk indicates how much the fund may drop in value during a single day and by a certain probability. By
the end of 2012, there was a 5% probability that the fund would fall more than 0.7% in one trading day, based on
60 days data.
39
CB Hedge
2013-03-25 39
Correlation against MSCI Europe* Standard deviation*
Beta against MSCI Europe*
*Data for 2010-2012. Key ratios concerns CB Hedge and are on a 60-days rolling basis.
0.14
0.09
VaR, 95%*
10.4%
6.8%
0.70%
The charts below illustrates the development for some of our most important risk measures. In all these cases,
the risk level has gone down; an effect of our continuous and strict risk monitoring.
40
Sector exposure as percentage of long portfolio vs MSCI Europe
Geographical exposure as percentage of long portfolio vs MSCI Europe
CB Hedge
41
CB Hedge
Sida 41 2013-03-25 41
Portfolio as of 2012-12-31
Focused management with well-defined universe
Permanent hedge
Low correlation to the market
Prospect of good performance with low risk independent of market direction
42
The advantages of the fund
CB Hedge
Fund name: CB Hedge Europe
Manager: CB Asset Management AB
Domicile: Luxembourg, (FCP fund Fonds Commun de Placement)
Custodian: SEB Fund Services, Luxembourg
Auditor: PricewaterhouseCoopers S.ár.l.
Primebroker: Skandinaviska Enskilda Banken AB publ.
Currency: EUR
Liquidity/NAV: Daily subscription, monthly redemption
Fees: Fixed annual management fee 1%. Performance fee
of 20% on net return above EURIBOR 3M
High watermark: Yes, collective
Subscription fee: Up to 5%, for the moment 0%
Redemption fee: 1%
Fund launch: July 2, 2007
Minimum investment: None
ISIN/Reuters/Bloomberg: LU0302609374 / LP65078535 / CBHEEUR LX
Fund facts
CB Hedge
43
N/A N/A
The most successful managers in the world – in one fund
3-Year 5-Year 10-Year
Investment universe
Renewable energy
• Wind
• Solar
• Hydro
• Bio
• Geothermal
Water treatment
• Filtration
• Saving/Efficiency
• Infrastructure
Cleantech
• Energy storage
• Energy infrastructure
• Energy efficiency
• Transportation
• Emissions control
• Smart materials
• Recycling & Waste treatment
Save Earth Fund
Save Earth Fund
45
Guidelines
Actively managed funds and ETF:s within renewable energy, cleantech and water
treatment
Global universe
Low density/well-diversified portfolio (6-10 funds)
Objective
Lower than MSCI World volatility
Absolute return (rolling 36 months)
MSCI World (outperformance rolling 12 months)
Save Earth Fund
46
Save Earth Fund
Investment strategy
Identification of investment
universe
Criteria check
Shortlist
20-30 funds
Quantitative screening
Qualitative screening
Allocation
Investment
6-10 funds
All available funds and strategies
– 150 funds; 40 ETF:s; and ~200
stocks
Liquidity, AUM, diversification,
track-record
Performance, standard deviation,
sharpe ratio, alpha, beta, correlation
and drawdown
Track record, view on risk,
competences, incentives etc
Sector- and region allocation
47
SEF – performance 2013
MSCI World
SEF – performance 12 months
MSCI World
SEF – performance 36 months
MSCI World
SEF – standard deviation
MSCI World
Beta (Sensitivity tio market fluctuations)
Information ratio (>0 justifies active management)
Tracking error (Active risk)
R2 (100% if active risk is 0%)
Save Earth Fund
*All fees are included if nothing else is stated. The performance of MSCI World includes dividends.
Calculated
since fund
inception
48
Key ratios*, as of February 28 (EUR)
+6.8%
+6.2%
+10.7%
+13.3%
+14.6%
+38.2%
11.6%
10.2%
-0,96
.-0,97
6,2%
71,2%
Save Earth Fund
Performance since fund inception, 2008-06-09 (EUR)
6.8% -60.9% +35.3% -16.0% +25.8%
Renewable energy index: WilderHill New Energy Global Innovation Index
Water index: Palisades Global Water Index
Cleantech index: The Cleantech Index
MSCI World: MSCI World
49
50
Save Earth Fund
Performance and risk* Sharpe*
*Weekly data from Lipper for the period 2011-12-30 – 2012-12-28, in EUR.
In 2012, Save Earth Fund had the fourth best return and at the same time the lowest risk among its Nordic and
largest international peers. The fund had the best risk-adjusted return (Sharpe.)
Save Earth Fund
Sector allocation
* The cash in the underlying funds is
included.
51
Geographical allocation
Save Earth Fund
52
* The cash in the underlying funds is
included.
Risk analysis – The fund compared to MSCI World*
Correlation Standard deviation
Beta Tracking error
Save Earth Fund
*36 months. The charts shows Save Earth Fund compared to MSCI
World. All numbers are on a 60 days rolling basis. 53
0.76
9.1%
7.1%
0.62 5.9%
54
Portfolio as of 2012-12-31, largest company exposures
Save Earth Fund
2012
Company Sector Country Performance, EUR
Andritz Renewable Energy Austria 51.5%
American Water Works Water Treatment USA 14.3%
Xylem Water Treatment USA 3.5%
Danaher Water Treatment USA 16.6%
Arcadis Cleantech Netherlands 47.9%
Pentair Water Treatment USA 44.9%
Aqua America Water Treatment USA 13.1%
Nemetschek Cleantech Germany 28.7%
Umicore Cleantech Belgium 30.8%
Idex Water Treatment USA 23.0%
Save Earth Fund
Fund facts
Fund name: Save Earth Fund
Manager: CB Asset Management AB
Domicile: Luxembourg
Custodian: SEB Fund Service, Luxembourg
Auditor: PricewaterhouseCoopers S.ár.I.
Currency: EUR
Liquidity/NAV: Daily/Daily
Fees RC: Fixed annual management fee of 1%. Performance fee
of 20% on postive net return above MSCI World
Fees IC: Fixed annual management fee of 1%. Performance fee
of 20% on net return above MSCI World
High Watermark: Yes, collective. From start of each share class
Subcription/Redemption fee: No/No
Fund launch: June 9, 2008
Minimum investment: None
PPM: 639 690
ISIN/Reuters/Bloomberg: LU0354788688 / 913218.FBF / CBSVERC LX
55