Team Invictus

8/9/2019 Team Invictus

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I N V I C T U S

G l o b a l

E m e r g i n g

M a r k e t F u n d

The Next Fund Manager 2010

N e l s o n L i m

D a r r y l K o h

K oh Y o n g S e n g

Presented By:


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The Scenario

Windstorm from Atlantic Ocean made a

landfall in New York

Caused billions of dollars in damages and

brought businesses in New York to a standstill


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Agenda: The Preview

Fund Composition The Overview

Reassuring Investors

The Effects

Adjusted Fund Portfolio The Strategy

InvestmentOpportunities

The Overview The Effects The Strategy The Analysis

The Analysis


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Invictus Global Emerging Markets Fund

Fund Composition

Fix Income

30%

Equities

70%

Aberdeen GlobalOpportunities

15%

First State GEM

Leaders

55%

United GEMsInvestments10%

DWS Lion Fund

20%



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Effects of Natural Disaster on

Financial Markets

Past Similar Case: Hurricane Katrina(Aug 2005)

Caused damages in excess of US$100 billion

Devastated several US states and disrupted oil supply

Effects of Hurricane Katrina on Financial Markets:

Initial fall in stock prices

Shortly after, Markets recovered and continued to rise

higher than before disaster

Hurricane Katrina

Hurricane Katrina



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Effects of Natural Disaster on

Financial Markets

Observed similar findings during Hurricane

Andrew (1992), Hurricane Hugo (1989) and

even during September 11 Terrorist AttackInvestors should be advised not to do

panic exit as this will result in selling at

an unfavourable price



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How will our Fund be Affected

Pre-dominantly invested in Emerging Markets

Minimum exposure in US markets (3%)

Negative impacts of US markets on our fundshould be minimal



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How will our Fund be Affected

However, we need to take a

Economy is just recovering

Fragile state

Possibility of triggering another recession in US

Cautious Approach!



9/58The Overview The Effects The Strategy The Analysis

Investment Opportunities During

a Natural Disaster


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Implementing Changes to

Portfolio Composition

ModeratelyAggressive

MaintaningExisting

Strategy

EmergingMarkets

Maintaining

Key RevenueDriver



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Moderately Aggressive Portfolio

Composition

Equity, 70%

Fixed Income,

30%First State GEM,

45%

Material , 10%Construction, 5%

Global Aberdeen,

10%

DWS Lion Fund,

20%

United GEM

Investments, 10%



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Moderately Aggressive Portfolio

Composition

DWS Lion

Fund, 20%

United GEM

Investments,

10%

Increasing

SovereignRisk,especiallyEurozone

US Incurring

AdditionalDebt tofinancereconstruction

Focus on High

GradeInvestmenetCorporateBonds



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Emerging Market as Key

Revenue Driver

EmergingMarkets,

55%

Global

Markets,45%



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Analysis of Investment

Opportunities

Material , 10%

Construction,

5%



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URS Corporation

Leading US federal government contractor

Provides planning, design and program and

construction management services forpublic buildings

Strong fundamentals, with stable growth in

earnings Participated in the rebuilding work in the

aftermath of Hurricane Katrina



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URS Corporation

Annualized return of approximately 17%

between 2005 and 2007, compared to 10-yr

annualized return of 13%



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Worlds largest steel company

10% of worlds steel output in 2007

23% of steel sales to USA, 39% to EM

Demand of steel, a key material for

construction, is expected to rise substantially

during the rebuilding stage of natural disasterrecovery

ArcelorMittal



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ArcelorMittal

Annualized return of approximately 49%

between 2005 and 2007, compared to

10-yr annualized return of 10.7%



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Largest steel producer in China, 3rd largest in

the world

An increase in demand for steel will raise the

price of steel

Share price is highly correlated to world steel

price

High growth potential given the likelihood on

increase in demand of steel caused by disasterShare Price Chart for

Baosteel (2005-2009)



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Projected Fund Performance

Security 10-yr

Annualized

Return

Annualize

d Return

between

2005-07

Projected

2-yr

Annualized

Return

URS

Corp.

13.0% 17% 17%

Arcelor

Mittal

10.7% 49% 49%

Bao

steel

3.9% N/A 11.1%*

First

State

GEM,45%

Arcelor

Mittal,

5%

URS

Corp, 5%

Aberdeen,

10%

DWS

LionFund,

20%

United

GEM,

10%

Baosteel,

5%

* approximated using rise in steel price from 2005-07


Invictus Global Emerging Markets Fund

Proportion Returns Std Dev

First State GEM Leaders SGD0.45 11.25% 5.30

Aberdeen Global Opportunities

SGD0.10 2.49% 4.84

United GEMs Investments SGD0.10 6.84% 2.04

DWS Lion Fund 0.20 2.70% 0.46

Arcelor Mittal 0.05 49% 27.40

URS Corporation0.05 17% 6.92

Baosteel Group 0.05 11.1% 13.02Expected Returns

10.39% (7.79%)

Std Dev5.532 (3.937)

Coefficient of Variation0.53 (0.51)


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Overview Challenges Implications Measures Evaluation

Divest into USdisaster recovery

industries

Balance of portfolioAllocation

PROPOSED STRATEGY IMPLEMENTATIONCurrent 2011 2012 Onwards

Re-Analyse MarketConditions

Exploreopportunities

Consistent withObjectives

Capitalize and reap theprofits of projected

growth in disasterrecovery companies

MAIN STRATEGY

BACKUP STRATEGIES

US market becomes too volatile

Re-allocate portfolio by pulling out of USA

Possible use of gold fund as hedging tool

Looking Forward


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INVICTUSGlobal Emerging Market Fund

todays investment for tomorrows growth


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Appendix

Additional Fund Information:Client Profile

First State GEM Leaders Fund

Aberdeen Global Opportunities Fund

United GEMs Investments Fund

DWS Lion Bond Fund

United Gold and General Fund

Original Fund Overview

B.Strategy 1 Bearish EM OutlookB.Strategy 2 Bearish Equities

First State Peer Comparison/ Additional Info

Aberdeen Peer Comparison/ Additional Info

United GEMs Peer Comparison/ Add Info

DWS Lion Bond Peer Comparison/ Additional Info

United Gold & General Fund Additional Info

Slides:Fund Composition

Effects on Capital Market

Effects on the Fund

Investment Opportunities

Implementing ChangesModerately Aggressive Portfolio

Key Revenue Driver

Analysis of Opportunities

URS Corp

Arcelor MittalBaosteel

Projected Fund Performance

Looking Forward

New Assets Information:

Analysis on URS Corporation

Analysis on Arcelor Mittal

Analysis on Baosteel


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Main Strategy

Invictus

GlobalEmerging

Market Fund

EquitiesFunds

(70%)

Fixed IncomeFunds

(30%)

CommodityFunds

(Backup)

Mid to Long TermCapital Appreciation

Main driver of return

Key focus on Emerging

Markets

Diversification

Cushion downside

riskMore emphasis on

global bond funds

Hedging purpose

Times of highly

volatile market

conditions


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First State GEM

Leaders

Consistently outperforming the emerging

market

5-yr annualized returns of 11.25%

Low volatility with standard deviation of 5.3%

Performance of First State GEM Leaders Fund Versus MSCI Emerging Markets Index


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Strong emphasis on Asia region of high

growth

Heavily focused on defense industries

creating stable growth

First State GEM

Leaders


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Uptrend shift, consistently support by 100-day

and 200-day moving average since mid-July 2009

Highest returns (2.49%) with least volatility

(4.84%) among peers


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Investments in developed countries

Primary allocations in financials, energy and IT

Well poised to capture effects of economic

recovery


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United GEMs

Investments

Stable growth even in times of volatile market

conditions

Highest annualized returns per unit risk taken

Impressive excess return (alpha) of 0.35

Performance of United Global Emerging Markets versus MSCI World Index and MSCI Asia EX Japan


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Performance of DWS Lion Fund versus MSCI World Index and MSCI Asia EX Japan

Resistant to market fluctuations

Stable growth of 2.70% (annualized)

2X Sharpe ratio of competing funds at 0.11


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Mainly in developed Asian countries which are

less affected by recent economic crisis

Comprising of corporate bonds from key

sectors such as banking and transportation

64.21%10.79%

8.61%

5.23% 11.16%

Asset Allocation - by Country

Singapore

South Korea

USA

Hong Kong

Others

26.34%

18.40%

10.29%

3.98%

3.75%

37.24%

Asset Allocation - by Industry

Banks

Real Estate

Transport

Finance

Electronic

Others


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Used as a hedging tool given negative

correlation with the global market

Cumulative return of 88.25%, 6.16% YTDFund

Annualised

Return

Standard

Deviation

Sharpe

RatioCurrent NAV

United Gold & General Fund 15.57% 10.10 0.10 1.861


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Over 70% investments in gold and precious

metals good hedging instrument

Used as backup strategy to hedge against

downside risk of a possible W-shaped recovery


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Original Fund Overview

Invictus Global Emerging Markets FundProportion Returns Std Dev

First State GEM Leaders

SGD0.55 11.25% 5.30

Aberdeen Global

Opportunities SGD0.15 2.49% 4.84

United GEMs Investments

SGD0.1 6.84% 2.04

DWS Lion Fund0.2 2.70% 0.46

United Gold & General Fund0 15.57% 10.10

Expected Returns 7.79

Std Dev3.937

Coefficient of Variation0.51


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20%

40%

10%

20%

10%

Bearish Expectations on Emerging Markets

Backup Strategy 1

Backup Strategy + Gold Options

Proportion ReturnsStd

Dev


SGD

0.2 11.25% 5.30

Aberdeen Global

Opportunities SGD

0.4 2.49% 4.84


SGD

0.1 6.84% 2.04

DWS Lion Fund 0.2 2.70% 0.46

United Gold & General

Fund

0.1 15.57% 10.10


Std Dev 4.302

Coefficient of Variation 0.71


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20%

20%

20%

30%

10%

Bearish Expectations on Equities Market

Backup Strategy 2

Backup Strategy + Gold Options

Proportion Returns Std Dev


SGD0.2 11.25% 5.3

Aberdeen GlobalOpportunities SGD

0.2 2.49% 4.84


SGD0.2 6.84% 2.04

DWS Lion Fund 0.3 2.70% 0.46


Fund 0.1 15.57% 10.1


Std Dev 3.584

Coefficient of Variation 0.55


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First State GEM Peer Comparison


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First State GEM Peer Comparison

FundAnnualise

d Return

Standard

DeviationAlpha Beta

Sharpe

Ratio

Current

NAV (caa

03/02/10)

First State GEM

Leaders SGD

11.25% 5.3 0.23 0.69 0.13 1.86

Aberdeen Global

Emerging Markets4.33% 7.36 0.28 0.84 0.03 1.57

RIC Emerging

Markets Equity J

Acc

10% 7.47 -0.1 1.02 0.09 41.58

Schroder Emerging

Markets

9.58% 6.94 -0.07 0.94 0.08 1.43


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First State GEM Additional Information


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Aberdeen Global Peer Comparison


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Aberdeen Global Peer Comparison

FundAnnualised

Return

Standard

DeviationAlpha Beta

Sharpe

Ratio

Current

NAV

(caa

03/02/10)

Aberdeen GlobalOpportunities SGD

2.49% 4.84 0.30 1.06 0.01 0.80

United International

Growth Fund-1.73% 4.33 -0.07 0.98 -0.07 1.59

Henderson Global

Technology1.97% 5.38 0.11 0.93 0.00 1.32

Schroder Global

Smaller Companies

1.09% 4.97 0.09 0.91 -0.02 1.76


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Aberdeen Global Additional

Information


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United GEMs Peer Comparison


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United GEMs Peer Comparison

Fund

Annualized

Return

Standard

Deviation

Alpha Beta Sharpe

Ratio

Current

NAV

(caa

03/02/10)

United GEMs

Investments SGD

6.84% 2.04 0.35 0.29 0.21 1.42

Fidelity Emerging

Market Debt A SGD

4.20% 3.99 0.04 0.95 0.05 1.00

Schroder Emerging

Market Bond

3.15% 1.65 0.12 0.2 0.11 0.91


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United GEMs Additional Information


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DWS Lion Bond Peer Comparison


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DWS Lion Bond Peer Comparison

Fund

Annualized

Return

Standard

Deviation

Alpha Beta Sharpe

Ratio

Current

NAV

(caa

03/02/10)

DWS Lion Bond

SGD

2.70% 0.46 0.05 0.07 0.11 1.48

Legg Mason

Global Bond

Trust

1.03% 1.72 (0.06) 0.85 (0.05) 1.20

LionGlobal Bond

A SGD

1.98% 1.1 0.06 0.08 0.05 1.56

DWS Li B d Addi i l


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DWS Lion Bond Additional

Information

U it d G ld & G l F d P


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United Gold & General Fund Peer

ComparisonCumulative Performance by %

Fund 1 m 3 m 6 m 1 y 2 y 3 y 5 y SI

United Gold &

General Fund

-10.39 -2.52 2.43 32.12 -9.96 17.90 106.13 88.25

Equity Sector

Gold&Prec Metals

-7.79 1.96 10.23 36.18 -- 5.60 78.61 --

FTSE AW/Mining

TR

-11.91 -0.41 4.54 60.58 -24.56 14.14 98.50 --

Cust Benchm UOB

United Gold &

General Fund

-10.88 -1.84 2.43 28.32 -13.91 13.43 76.00 --

SIBOR SGD 3

Months

0.04 0.13 0.25 0.52 1.81 4.57 10.71 --

U it d G ld & G l F d P


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United Gold & General Fund PeerComparison

Calendar Year Performance by %

Name 2005 2006 2007 2008 2009 YTD


Fund

51.84 15.15 29.02 -30.84 32.12 6.16

Equity Sector Gold&PrecMetals

58.30 6.84 23.82 -37.37 36.18 --

FTSE AW/Mining TR 66.36 4.80 45.60 -52.47 67.80 -10.08

Cust Benchm UOB United

Gold & General Fund

64.11 -5.46 31.76 -32.91 28.32 -10.88

SIBOR SGD 3 Months 2.30 3.49 2.71 1.29 0.52 0.05

United Gold & General Fund


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United Gold & General Fund

Additional Information

Eff t f H i H d C ill


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Effects of Hurricane Hugo and Camille

on Financial Markets

Markets move upwards subsequent to the

occurrence of the natural disasters

C l ti b t US d EM it


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MSCI Emerging Markets Index

S&P 500

Dow Jones

Correlation between US and EM equity

markets

Past financial market trends have shown slight

positive co-relation between US equities and

Emerging Markets equities


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Analysis of URS Corp

Average increase of 15% in EPS for the past 5years

Healthy financial leverage, D/E ratio of 17%

Operating income at approx. 5% of revenue,increasing over the past 5 years.

Revenue from Federal sector (energy andconstruction) increased by 67% over past year

Key Competitors: Fluor & Jacobs Engineering

Key Competitive Advantage: Relationship withGovernment


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Analysis of Arcelor Mittal

Showing signs of recoveryfrom the economic crisis

Improved EDITBA and CFfrom Operations in 2009

Improved leverage with aUSD13.7 billion reductionin debt since theeconomic crisis

Key Competitors: Ternium,US Steel Corp.

Outperformed duringHurricane Relief


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Analysis of Baosteel

Low financial leverage, D/E Ratio approx. 10%

CF from operating activities take up 50% of

net CF of the year in 2009

Good growth potential with heavy

investments in research and development

Key Competitors: Angang Steel, Wuhan Iron

and Steel

Documents

Team Invictus