Consistently mixing CREATING good ingredients WEALTH …documents.efgroup.co.za/Documents/Boutique Collective Investment... · 37 GFI -46% 38 ANG -54% 39 IMP -70% 11 Outperformance

PRESENTED BY:

DATE:

CREATINGWEALTHWITH GENUINE,TIME-TESTEDVALUES

June 2017

From BCI Income Plus to Cautious.

Proceed less Cautiously

Consistently mixing good ingredients together

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Introduction to Fairtree Capital

Income Plus…… the base has been set

From Income Plus to Cautious

CONTENTS

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Leading multi strategy investment manager

FAIRTREE CAPITAL OVERVIEW

HIGHLIGHTS2007/2008 - Strong performance 2010 - Launched Multi Strategy funds

- Fixed Income & Commodity joins2011 - Long only equity and

directional bias fund launched2013 - Awarded NBIM mandate

- Volatility Arbitrage, Credit & InternationalEquity join

2015 - Launch of Private equity funds2016 - Launch of Protea long short equity funds

2003STARTED

TYPELong Only (R26 bn) ~ 80%; Alternatives (R6 bn) ~ 20%

INDUSTRY9% of SA Hedge Fund industry *

INVESTORSForeign ~ 58%Domestic ~ 42%

~R32BNFIRM AUM

Specialist teams across major asset classes

Small independent teams across 3 offices

World classinstitutional infrastructure

Large investment team with diverse skill set

15STRATEGY TEAMS

Portfolio managersAnalysts Trading Investment support

45+INVESTMENTPROFESSIONALS

* Assets under management as at March 2017. Industry assets from Novare Hedge Fund survey June 2016

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CONTENTS

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Inception 1 January 2007

INCOME PLUS MANDATES: MORE THAN 10 YEARS OF RELATIVE PERFORMANCE

Source: Morningstar, Bloomberg, Jan 2007: Dec 2016

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INCOME PLUS MANDATES: 10 YEARS OF RELATIVE PERFORMANCE

Source: Morningstar, Bloomberg

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INCOME PLUS MANDATES: 10 YEARS OF CORRELATION

Source: Morningstar, Bloomberg

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Annual data from 2007 to 2016

TOP40 and Income Plus dominates……..

Source: Bloomberg, Morningstar

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CONTENTS

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• Local Equity Performance Since Beginning Of “Bull Market” (March 2009 – April 2017)

• Highly Dispersed

South Africa…..Equity Returns A Great Potential For Stock Picking

Source: Bloomberg

ALBI = 93,6%

STeFi = 65,4%

FIPF = 101.0%

Rank Code TR

1 CPI 2922%

2 MNP 1939%

3 MND 1548%

4 NPN 1554%

5 BAT 956%

6 WHL 805%

7 SNR 768%

8 CFR 754%

9 MRP 748%

10 BVT 641%

Rank Code TR

30 SBK 162%

31 BGA 139%

32 SOL 104%

33 ITU 100%

34 MTN 81%

35 BIL 58%

36 AGL 43%

37 GFI -46%

38 ANG -54%

39 IMP -70%

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Outperformance of 4.5% pa since 2002 net of all fees

FAIRTREE EQUITY FUND MANAGER TRACK RECORD

Relative Performance (Jan ’02 – Apr ‘17)

Note: Returns for retail asset class and are net of all fees; for the 10 months from Jan-Oct 2011 ALSI returns used as proxy for manager performanceSource: Bloomberg, Morningstar, MetCI and Prescient

CAGR 14.82%

CAGR 19.35%

R 823

R 1,484

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Top long term performers attract assets

Multi Asset: Low Equity Category has shown great growth over time

As of 30 April 2017

Source: April 2017; Morningstar

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Short term numbers : random

Multi Asset: Low Equity Category has attracted more managers to the trough !!!!

As of 30 April 2017


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Over the long run, everyone gets something different !

Marked difference in longer term performances!!!!!

As of 30 April 2017


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Becomes more difficult to pick winners !!!!

Volatility of outcomes approaches linearity in time

As of 30 April 2017


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So just how can we select a manager…… inference, confidence or perhaps just a great story !!!!!

Sometimes a bit of caution is warranted

Theoretical Portfolio Standard Deviation = 0.2887

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Choose your risk tolerance…….

Fairtree Equity and Income Plus……..

Source: Bloomberg, Morningstar

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35% Equity, 65% Income Plus…. A low volatility solution, quite cautious !

Back tested simulated returns on real data

As of 30 April 2017


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35% Equity, 65% Income Plus…. A low volatility solution, quite cautious !

Back tested simulated returns on real data

As of 30 April 2017


Period Rank Number of Funds

1 Year 13 135

2 Year 5 117

3 Year 3 95

5 Year 1 80

7 Year 1 65

10 Year 1 43

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You can never win with only one tool at your disposal

Sometimes it’s about the opportunity set !!!!!!

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Thank you

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Fairtree Capital (Pty) Ltd is registered as a financial services provider with the Financial Services Board ofSouth Africa, with registration number 2004/033269/07 and FSP number 25917.

A schedule of fees, charges and maximum commissions, as well as a detailed description on howperformance fees are calculated and applied, is available on request from the manager, being IDSManagement Company (RF) (Pty) Ltd (“the Manager”), a registered and approved manager of CollectiveInvestment Schemes. Additional information, including key investor information documents, minimumdisclosure documents as well as other information relating to the portfolio is available, free of charge,on request from the Manager.

The Manager retains full legal responsibility for any co-named portfolio. Firstrand Bank Limited, actingthrough its RMB Custody and Trustee Division, is the appointed trustee.

We believe the information displayed is accurate and reliable, but no warranty of accuracy or reliabilityis given and no responsibility arising in any way for errors and omissions (including by way ofnegligence) is accepted by Fairtree Capital (Pty) Ltd.

This information is not intended to provide advice to, or take into account individual investors’objectives or circumstances. This material should not be construed to represent a solicitation to investin the portfolio and is disclosed for reporting purposes only.

Collective Investment Schemes are generally medium to long-term investments. Please note that pastperformance is no guarantee of future performance and that the value of participatory interests may godown as well as up. Collective investments are traded at ruling prices and can engage in scrip lendingand borrowing. A Collective Investment Scheme may be closed to new investors in order for it to be

managed more efficiently in accordance with its mandate. The Manager does not provide anyguarantee with respect to the capital or the return of the portfolio. Excessive withdrawals from theportfolio may place the portfolio under liquidity pressure and in such circumstances, a process of ring-fencing of withdrawal instructions and managed pay-outs over time may be followed. Commission andincentives may be paid, and if so, are included in the overall costs. Investors should note that the valueof an investment is dependent on numerous factors which may include, but not limited to, share pricefluctuations, interest and exchange rates and other economic factors. Performance is further affectedby uncertainties such as changes in government policy, taxation and other legal or regulatorydevelopments.

The performance of the portfolio is dependent on the making of correct assessments of the pricemovements of individual securities and other investments. Financial markets have historically exhibitedhigh levels of volatility and negative movements that have affected the price of all assets within aspecific class. The portfolio’s investments will thus be subject to market risk. Through financial gearingvia the long/short process, the portfolio may be leveraged. This will mean enhanced positive gains butconversely can mean magnified losses. No taxation has been deducted in the computation of returns.The taxation treatment of returns is the investor’s responsibility. All returns are disclosed net ofperformance fees.

DISCLAIMER