Old Mutual Spectrum Funds - Balancing risk and return · PDF fileOld Mutual Spectrum Funds When seeking investment advice, one of the first things your financial adviser will do is

OLD MUTUAL SPECTRUM FUNDSQ4 2016

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Old Mutual Spectrum Funds

When seeking investment advice, one of the first things your financial adviser will do is ask questions to determine the extent to which you are prepared to take risks with your money. This risk profiling is an essential part of the advice process as it’s important that you feel comfortable that your investments match your attitude to risk - not just today but also in the future.

The Old Mutual Spectrum range has been designed to work alongside some of the markets leading risk profile questionnaires, so that you can select one of six ready-made portfolios to suit your attitude to risk.

MATCHING YOUR NEEDSEach Spectrum fund (risk profile 3-8) is a multi-manager fund, which means that it invests in a broad mix of fund managers in different asset classes. These managers are blended together slightly differently within each fund with the aim of maximising the expected investment return for a given level of risk.

The multi-asset team at Old Mutual Global Investors employ this method of investing because they believe that diversifying your investment helps to diversify your risk. That’s because different assets can act differently at different times in different market conditions.

The team also believes that no one fund manager can be the best in every asset class. Therefore they scour the globe to find leading fund managers in their respective asset class for your investment.

STAYING ON TRACKThe aim of the Spectrum funds is to match your attitude to risk, not remove it entirely. Therefore the team, together with Towers Watson, a leading consultancy firm, review this mix of assets and fund managers on a regular basis to ensure they continue to meet this expected level of risk in all economic conditions.

The result is a fund range that is managed in a way that matches your attitude to risk, so you have more confidence to invest for the long term, no matter how challenging markets become.

MANAGING EXPECTATIONSWithin the Spectrum fund range risk is expressed in terms of volatility: a statistical measurement of how widely a range of returns produced by a fund varies from its average over a particular period. This means each Spectrum fund targets a particular volatility level, so that you have a better indication of the level of risk your investment is exposed to.

The current targets and annualised volatility for the Spectrum funds are shown below. The annualised figure demonstrates the average level of volatility the funds have experienced since launch.

RISK VS RETURNGETTING THE RIGHT BALANCE

CURRENT AND ANNUALISED VOLATILITY TARGETS

All funds launched on 28 April 2008. Annualised figures as at 30 December 2016. *Current volatility targets source: Willis Towers Watson1. **Annualised volatility source: Old Mutual Global Investors. Volatility figures based on annualised simple daily returns of Old Mutual Spectrum Funds 28 April 2008 to 30 December 2016.

1 As an input to Old Mutual Global Investors’ asset allocation model, Willis Towers Watson conducts a quarterly review of the asset class assumptions used. This review is carried out solely for Old Mutual Global Investors under agreed terms of engagement and not for any third party. Willis Towers Watson assumes no responsibility, duty of care or liability to any third party in respect of the Old Mutual Global Investors asset allocation model of the Old Mutual Spectrum funds.

Current volatility target*

Annualised volatility

since launch**

Spectrum 3 5.75% - 7.85% 4.75%

Spectrum 4 7.86% - 9.56% 5.95%

Spectrum 5 9.57% - 11.28% 7.26%

Current volatility target*

Annualised volatility

since launch**

Spectrum 6 11.29% - 12.99% 8.56%

Spectrum 7 13.00% - 14.71% 10.00%

Spectrum 8 14.72% - 16.43% 11.65%


1.3%

65.5%

24.5%

12.0%

3.5%

0% 20% 40% 60% 80% 100%

Cash

Fixed Income

Global Equity

UK Equity

Property

1.1%

38.5%

36.8%

20.4%

3.5%

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Cash

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Global Equity

UK Equity

Property

1.3%

13.5%

48.7%

29.2%

3.5%

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Cash

Fixed Income

Global Equity

UK Equity

Property

0.9%

52.2%

30.8%

16.0%

3.5%

0% 20% 40% 60% 80% 100%

Cash

Fixed Income

Global Equity

UK Equity

Property

1.1%

25.6%

43.6%

24.8%

3.5%

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Cash

Fixed Income

Global Equity

UK Equity

Property

1.4%

2.7%

54.7%

33.6%

3.5%

0% 20% 40% 60% 80% 100%

Cash

Fixed Income

Global Equity

UK Equity

Property

CURRENT ASSET ALLOCATIONSThe Spectrum funds are highly diversified and incorporate a wide mix of assets, recognising that by diversifying your investments you are able to diversify your risk. The manager reviews the asset allocation on a quarterly basis, which ensures they continue to reflect the economic outlook, keeping them current and appropriate at each risk level.

The charts below show the asset allocations for each of the six Spectrum funds as at 30 December 2016.

Source: Old Mutual Global Investors as at 30 December 2016.Due to rounding and the use of derivatives – financial instruments that derive their values from other underlying assets – the allocations may not add up to 100%.

SPECTRUM 3 SPECTRUM 4




The Fund aims to achieve long-term capital growth by investing in a diversified range of asset classes. The risk profile of the Fund is moderately defensive, with a majority of investments in defensive asset classes and between 25% and 50% in equities.

MATCHING YOUR NEEDS OVER TIMEThe Spectrum funds aim to achieve the highest expected return for each risk level, so it’s vital that the asset allocations remain in line with a changing market, and continue to match your attitude to risk. The charts below show how the asset allocations for each of the six Spectrum funds have changed each quarter since launch on 28 April 2008, alongside their objectives.

The Fund aims to achieve long-term capital growth by investing in a diversified range of asset classes. The risk profile of the Fund is defensive, with a significant majority of investments in defensive asset classes and between 15% and 40% in equities.

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Cash Fixed Income Property UK Equities Global Equities Specialist

SPECTRUM 3

SPECTRUM 4

The Fund aims to achieve long-term capital growth by investing in a diversified range of asset classes. The risk profile of the Fund is broadly balanced, with between 40% to 60% invested in equities and the remainder in more defensive asset classes.

SPECTRUM 5

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The Fund aims to achieve long-term capital growth by investing in a diversified range of asset classes. The risk profile of the Fund is broadly balanced, with a majority, 50% to 75%, invested in equities and the remainder in more defensive asset classes.

The Fund aims to achieve long-term capital growth by investing in a diversified range of asset classes. The risk profile of the Fund is moderately aggressive, with a significant majority, 60% to 80%, invested in equities but with some exposure to more defensive asset classes.

SPECTRUM 6

SPECTRUM 7

The Fund aims to achieve long-term capital growth by investing in a diversified range of asset classes. The risk profile of the Fund is aggressive, with a significant exposure, 70% to 90%, to equities.

SPECTRUM 8

Source: Old Mutual Global Investors, as at 30 December 2016.

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POTENTIAL RETURNSThe graph below demonstrates the likely range of annual ‘expected returns’ for each of the funds and the average of all possible returns within the range of each risk level.

The figures should not be taken as a projection of the likely returns from the Spectrum funds and show the expected variation in return figures of the funds, to two standard deviations (ie all returns are expected to be between these extremes in 95 years out of 100; this is often described as a 95% confidence level).

16.9%

21.7%

26.7%

31.9%

37.3%

42.8%

-11.2%-13.5%

-15.8%-18.1%

-20.3%-22.4%

-30%

-20%

-10%

0%

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20%

30%

40%

50%

3 4 5 6 7 8Spectrum funds

Plus 2SD

Minus 2SD

Average Return

Source: Old Mutual Global Investors, Figures as at 30 December 2016. Figures are shown net of tax, underlying manager fees and the Old Mutual Global Investors Annual Management Charge (AMC).

PERCENTAGE GROWTH YEAR BY YEAR TO MONTH END TO LAST QUARTER ENDThe table below shows the actual performance achieved by each of the Spectrum funds on a year by year basis over the past five years to the end of the last quarter.

Source: Factset. Percentage growth is calculated on a single pricing basis with net income reinvested into the Fund. Old Mutual Spectrum funds were launched 28 April 2008.Past performance does not indicate future performance.

1 Year to 30/12/2016

1 Year to 31/12/2015

1 Year to31/12/2014

1 Year to31/12/2013

1 Year to31/12/2012

Spectrum 3 6.40% -0.37% 2.96% 5.62% 10.87%

Spectrum 4 7.14% -1.51% 3.61% 7.56% 11.36%

Spectrum 5 7.67% -0.82% 3.08% 9.35% 11.65%

Spectrum 6 8.13% -0.50% 2.70% 11.37% 12.05%

Spectrum 7 8.83% -1.09% 3.58% 13.13% 12.56%

Spectrum 8 9.86% -0.96% 3.34% 14.84% 12.73%


MANAGER PROFILESOur structure allows us to access the skills of managers in the institutional or corporate market as well as access to those who are already available to individual investors through retail funds. Managers that we select in the institutional market are asked to manage a mandate (essentially this is simply a written agreement between us on how we want our investment to be managed on our behalf) – this allows us to control the investment boundaries, including the types of investment and the level of risk we want the manager to take. By tailoring the mandate we can also get each manager to focus on the areas where we think they are most skilled - giving them the best chance to outperform. These mandates may be managed as Old Mutual Global Investors funds.

Asset Allocation Fund Name

Segregated Mandate or Retail/Institutional Fund Manager

Spectrum Funds3 4 5 6 7 8

CashHeld on Deposit Cash - 1.30% 0.89% 1.08% 1.09% 1.25% 1.40%

GS Sterling Liquid Reserves Fund Retail Fund Goldman Sachs 0.01% 0.01% 0.01% 0.01% 0.01% 0.02%

Fixed Income

Old Mutual Liquid Macro Fund Retail Fund Old Mutual Global Investors 1.74% 1.47% 1.11% 0.68% 0.38% 0.06%

Mirabaud Convertible Bonds Europe Fund Retail Fund Mirabaud 2.06% 1.72% 1.01% 0.83% 0.46% 0.18%

Old Mutual Local Currency Emerging Market Debt Mandate Retail Fund Old Mutual

Global Investors 1.82% 1.44% 0.97% 0.75% 0.39% 0.06%

Mexican 5Y USD Bond Bond - 0.21% 0.17% 0.16% 0.14% 0.10% 0.05%

Old Mutual Bond 1 Mandate Segregated Mandate TwentyFour 10.07% 7.95% 5.86% 4.12% 2.13% 0.31%

Fixed Income Overlay Futures Contract - 10.37% 7.70% 5.44% 4.11% 2.61% -0.11%

Old Mutual Gilt Mandate Segregated Mandate Blackrock 0.02% 0.05% 0.00% 0.02% 0.01% 0.02%

US Inflation Linked Bonds Bond - 2.40% 1.96% 1.46% 0.98% 0.46% 0.26%

US Nominal Bonds Bond - 2.47% 1.95% 1.47% 1.04% 0.56% 0.05%

Old Mutual Bond 3 Mandate Segregated Mandate DuPont 6.15% 5.11% 3.98% 2.68% 1.38% 0.16%

Wells Fargo US High Yield Bond Fund Retail Fund Wells Fargo 2.77% 2.19% 1.70% 1.14% 0.57% 0.10%

Pareto Nordic High Yield Fund Retail Fund Pareto Asset Management 0.70% 0.52% 0.40% 0.26% 0.17% 0.06%

Wells Fargo Short-Term High Yield Retail Fund Wells Fargo 1.32% 1.05% 0.81% 0.54% 0.26% 0.04%

Nordea European High Yield Bond Retail Fund Nordea 0.57% 0.44% 0.33% 0.23% 0.14% 0.05%

Fidelity Moneybuilder Income Fund Retail Fund Fidelity 0.52% 0.05% 0.05% 0.05% 0.05% 0.05%

Old Mutual Bond 2 Mandate Segregated Mandate Fidelity 12.30% 9.69% 7.09% 3.85% 1.74% 0.70%

Wellington Global Credit Plus Retail Fund Wellington 9.97% 8.75% 6.66% 4.17% 2.07% 0.61%

Futures Futures Overlay Offset Cash - -6.77% -3.48% -0.32% 1.37% 3.78% 4.15%

UK Equities

UK Equity Overlay Futures Contract - 2.22% 3.35% 1.98% 1.85% 2.28% 0.33%

Old Mutual Equity 1 Mandate Segregated Mandate

Old Mutual Global Investors 2.72% 3.80% 4.83% 5.42% 6.20% 6.92%

Old Mutual UK Alpha Segregated Mandate

Old Mutual Global Investors 3.08% 4.26% 5.35% 6.09% 7.88% 10.22%

Woodford Equity Income Fund Retail Fund Woodford 2.31% 1.73% 2.95% 4.36% 5.30% 5.57%

Old Mutual UK Equity Income Fund Retail Fund Old Mutual Global Investors 0.54% 0.62% 0.64% 0.96% 1.02% 1.22%

Direct Equity Equity Old Mutual Global Investors 1.13% 2.28% 4.66% 6.15% 6.51% 9.32%

PropertyHenderson UK Property Fund Retail Fund Henderson 1.47% 3.11% 2.32% 1.57% 0.65% 0.56%

M&G Property Portfolio Retail Fund M&G 2.04% 0.40% 1.20% 1.97% 2.88% 2.93%

The table below shows the target asset allocations for each manager within each of the six Spectrum funds as at 30 December 2016. Not every manager is represented in every fund and the actual asset allocations may differ slightly from these target weightings.

* Please refer to glossary


Global Equities

AQR Global Relative Value Retail Fund AQR Capital Management 2.35% 2.36% 2.36% 2.36% 2.36% 2.34%

Old Mutual STAR Retail Fund Old Mutual Global Investors 1.77% 1.77% 1.78% 1.78% 1.78% 1.76%

Fair Oaks Income Fund Investment Trust Fair Oaks 0.55% 0.55% 0.55% 0.55% 0.55% 0.54%

SQN Asset Finance Income Investment Trust SQN 0.45% 0.45% 0.45% 0.45% 0.45% 0.45%

Sequoia Economic Infrastructure Investment Trust Sequoia 0.63% 0.63% 0.64% 0.64% 0.65% 0.63%

Hermes Asia Ex-Japan Equity Retail Fund Hermes 0.35% 0.65% 0.82% 0.92% 1.28% 1.73%

Old Mutual Asian Equity Retail Fund Old Mutual Global Investors 0.27% 0.65% 0.81% 0.91% 1.26% 1.73%

Duet Emerging Europe Retail Fund Duet Group 0.47% 0.72% 0.91% 1.36% 1.70% 2.26%

Aubrey Global EM Opportunities Retail Fund Aubrey 0.52% 1.02% 1.45% 1.48% 1.96% 1.13%

Global Equity Overlay Futures Contract - -5.82% -7.57% -7.10% -7.33% -8.67% -4.37%

Old Mutual Global Best Ideas Retail Fund Old Mutual Global Investors 2.37% 2.73% 4.56% 4.98% 5.79% 7.72%

Polar Capital Financials Income Retail Fund Polar Capital 0.31% 0.41% 0.51% 0.62% 0.73% 0.82%

Polar Capital Global Financials Investment Trust Polar Capital 0.06% 0.09% 0.11% 0.13% 0.15% 0.17%

Renewables Infrastructure Group Investment Trust - 0.11% 0.14% 0.18% 0.22% 0.25% 0.28%

Old Mutual UK Specialist Retail FundOld Mutual Global Investors

0.72% 0.98% 1.24% 1.50% 1.66% 2.05%

IPM Systematic Macro Retail FundIntelligent Portfolio Management

0.54% 0.75% 0.94% 1.13% 1.26% 1.59%

Pershing Square Holdings Retail Fund Pershing Square 1.32% 1.82% 2.29% 2.75% 2.97% 2.84%

Old Mutual Voyager Global Retail FundOld Mutual Global Investors

17.49% 22.63% 24.32% 29.11% 32.59% 31.02%

Old Mutual Voyager Global Dynamic Equity Fund underlying managers are:

Held on Deposit Cash - 0.23%

Aubrey Asian ConsumptionSegregated Mandate

Aubrey 4.78%

Schroders Asia MandateSegregated Mandate

Schroders 7.69%

Argonaut European Alpha MandateSegregated Mandate

Argonaut 3.46%

Montanaro European Equity Mandate

Segregated Mandate

Montanaro 3.50%

Wellington European Large-Cap Value Mandate

Segregated Mandate

Wellington 5.62%

Old Mutual Global Equity Income Retail FundOld Mutual Global Investors

4.57%

Wellington Durable Companies Mandate

Segregated Mandate

Wellington 12.00%

Dalton Japanese Equity MandateSegregated Mandate

Dalton 5.84%

Brandywine Focused Large Cap Value

Segregated Mandate

Brandywine 10.38%

Lapides US Mid-Cap Value Mandate

Segregated Mandate

Lapides 9.57%

Pershing Square Holdings Retail Fund Pershing Square 2.56%

Schroders US Mid Cap MandateSegregated Mandate

Schroders 16.00%

LSV US Low Volatility Equity Mandate

Segregated Mandate

LSV 10.12%

Old Mutual Global Investors UK Equity Mandate

Segregated Mandate

Old Mutual Global Investors

3.68%

Asset Allocation Fund Name

Seg Mandate or Retail/Institutional Fund Manager

Spectrum Funds

3 4 5 6 7 8


FIXED INCOME

OLD MUTUAL BOND 3 MANDATE – FUND MANAGER – MING SHAOMing and his team use an absolute value investment approach to seek to capitalise on opportunities that are mispriced due to market dislocations. The team utilizes a disciplined, analytical approach, employing top-down sector allocation and bottom-up security selection processes, to spot value opportunities in the high yield markets around the globe. Powerful analytical models that identify pricing inefficiencies are used in concert with deep fundamental research to select issues believed to have the greatest potential for adding alpha and absolute return to the total portfolio. DuPont Capital’s fundamental analysis includes an evaluation of company risk, capital structure, cash flows, liquidity, and asset recovery and valuation, as well as an understanding of company management.

FAIR OAKS INCOME FUND – FAIR OAKS TEAMThe fund seeks to generate returns of 12-14% per annum through exposure to US senior loans, via controlling stakes in income notes of CLOs. Fair Oaks distributes all of its net income via monthly dividends and has a defined investment period that runs until mid 2016. The portfolio provides exposure to over 770 unique bank loan issuers the fund has the ability to invest up to 20% in Europe, although the investment team currently believes the investment opportunities available in the US remain significantly more attractive given the returns available. The focus of the six person investment team is on ensuring that they are happy with the credit quality of all of the underlying investments in each CLO.

FIDELITY MONEYBUILDER INCOME FUND AND OLD MUTUAL BOND 2 MANDATE – FUND MANAGER, IAN SPREADBURY AND THE FIDELITY TEAMIan Spreadbury is a very high conviction manager with impressive capabilities in both qualitative and quantitative analysis. Recognising that some areas of the market are more efficient than others, and that different factors will drive the market at different times, Ian demonstrates a clear view of where the key opportunities in the market lie, why they exist and how best to exploit them. He is supported by a well resourced team of credit analysts with access to high-quality proprietary quantitative models that provide an undoubted competitive advantage. The Fidelity MoneyBuilder Income Fund has a strong long-term performance track record, with security selection a key source of added value.

MIRABAUD CONVERTIBLE BONDS EUROPE FUND – FUND MANAGER, RENAUD MARTINMirabaud’s Convertible Bonds European fund is managed by Renaud Martin, an experienced convertible bonds investor who has been in the investment management industry since 1991, having joined Mirabaud from Credit Agricole where he was Head of Convertibles. The Mirabaud strategy combines a top down view with strong bottom up fundamental research, enabling the manager to exploit market moves driven by the current stage of the business cycle as well as more idiosyncratic opportunities.

OLD MUTUAL LIQUID MACRO FUND – FUND MANAGER, OLD MUTUAL ABSOLUTE GOVERNMENT BOND TEAMThe Old Mutual Liquid Macro Fund is managed by the Old Mutual Global Investors Absolute Return Government Bond team. The team’s investment philosophy hinges on the belief that, through a detailed understanding of forward interest rates, it is possible to express views on macro trends in a very precise way. Through this approach to investing, the team is able to target specific risks and opportunities, without “inadvertently” taking economic exposures to those risks it would rather avoid. At the core of the approach is the understanding that forward rates are influenced by very different factors depending on their location on the curve. The Fund’s focus is on generating attractive and steady returns irrespective of market conditions. Meanwhile, with a very low correlation with many of the more popular absolute return strategies available, the Fund offers a potentially effective way of diversifying exposure to absolute return strategies.

OLD MUTUAL LOCAL CURRENCY EMERGING MARKET FUND – FUND MANAGER, JOHN PETA AND DELPHINE ARRIGHIThe Old Mutual Local Currency Emerging Market Debt fund seeks to achieve total returns through investment in a well-diversified portfolio of fixed and variable rate debt securities issued in emerging markets worldwide, predominantly denominated in local currency. The fund is managed by John Peta, head of emerging market debt at Old Mutual Global Investors. Peta has a wealth of emerging market debt experience, having specialised in the asset class since 1997. He joined the business from Threadneedle Asset Management in early 2015.

PARETO NORDIC HIGH YIELD – FUND MANAGER, STEFAN ERICSON AND TEAMPareto Asset Management, part of a broader financial services group, is a Norweigan investment house focussing on global and Nordic corporate bonds and equities. The fund is managed by a team that is focussed on finding fundamental value in the Scandinavian credit markets. Given the bias of commodity related issuers in the region, we like the focus on credit analysis conducted by the team, including the detail on covenants and the overriding quality bias of the holdings.

SQN ASSET FINANCE – SQN ASSET FINANCING TEAMSQN seeks to provide regular, sustainable dividends and to generate capital appreciation through investment in business essential, revenue producing (or cost saving) equipment which will be leased to businesses and government bodies.Through a combination of lease income and residual value uplifts, the Company is targeting an attractive total return with a significant proportion generated as income.


FIXED INCOME

OLD MUTUAL BOND 1 MANDATE – FUND MANAGER, GARY KIRK AND EOIN WALSHTwentyFour Asset Management is a small, focused fixed income boutique. While the firm is fairly new, it is staffed with highly experienced fixed income professionals who are keen to build their reputation. The team have a specialization in credit, particularly in mortgage-backed and asset-backed securities, where they believe there is greater potential to add value. With only £1 billion under management, the firm is extremely nimble when compared to its peers. The mandate is run with an emphasis on delivering steady total returns with lower volatility.

WELLINGTON GLOBAL CREDIT PLUS FUND – FUND MANAGER – LOUIS CHABRIER Established in 1928, Wellington is an independent asset management company based in Boston that advises 1,600 institutions in 40 countries. As a global fixed income manager, Wellington is well resourced both in breadth and depth and is one of the few organisations truly capable of treating the many and varied tasks of global bond management with sufficient attention. The quality of the individuals involved in running the portfolio and their well thought-out process give Wellington a competitive advantage. Head of credit and portfolio manager Louis Chabrier has proven himself a thought leader internally and is particularly adept at assimilating the top-down views of the global bond team with the bottom-up analysis provided by Wellington’s analysts and positioning accordingly.

WELLS FARGO US HIGH YIELD – FUND MANAGERS, PHILIP SUSSER AND NIKLAS NORDENFELTThe strategy run by Philip Susser and Niklas Nordenfelt forms one of our core ‘high yield,’ company debt that is not rated investment grade, positions. The fund, run out of the US, is driven by bottom-up, company research with focus on credit fundamentals. Philip Susser and Niklas Nordenfelt seek to manage credit risk and invest opportunistically when the reward justifies the risk, while diversifying across company issuers, sectors, and bond maturities. They use a contrarian philosophy, with an emphasis on the relative risk/reward characteristic of each individual credit, and utilise the vast resources of Wells Capital Management to support the team’s intensive research philosophy.

WELLS FARGO SHORT TERM HY – FUND MANAGERS, THOMAS PRICE, KEVIN MASS, MICHAEL SCHUELLERWells Capital’s short term high yield strategy is very appealing because it stands out in its conservatism. The short term duration high yield market has a number of inefficiencies which offer an interesting investment opportunity, but can be risk mitigated with a more conservative strategy. In particular, the refinancing risk of the market yields a risk premium, but requires much higher focus on shorter term credit ratings and more use of ‘negative’ research (avoiding problems). Most market players do not consider shorter term credit risk and focus more on ‘positive’ research (identiing opportunities). The team at Wells Fargo recognise these inefficiencies and are well set up to capture them given their deep credit research team and conservative philosophy.

PROPERTY

HENDERSON UK PROPERTY FUND – FUND MANAGER, AINSLIE MCLENNANManaged by Ainslie McLennan and Marcus Langlands Pearse, the Henderson UK Property funds offers access to prime and good quality secondary UK commercial real estate. Henderson are a significant player in the UK property space and lead manager Ainslie McLennan has more than 15 years of property industry experience. Combined with Marcus Pearse, who has been working in commercial property since 1991, the fund boasts well experienced managers as well as an attractive liquidity profile.

M&G PROPERTY PORTFOLIO – FUND MANAGER, FIONA ROWLEYThe property team consists of over 50 investment professionals with the portfolio managers determining strategy and the investment managers managing the equity holdings and purchasing properties, leaving the asset managers to manage the physical property investments. The firm is very unusual in having all the activities required in managing a property portfolio carried out in-house – from investment management to property management, ie managing tenants and producing the accounts.

UK EQUITIES

OLD MUTUAL EQUITY 2 MANDATE – FUND MANAGER, ALASTAIR MUNDY AND TEAMAlastair Mundy and team are experienced value investors with an approach that may be described as ‘patient contrarian’. They focus solely on investing in stocks that have fallen significantly out of favour and with cheap valuations, seeking to sell out as a fundamental profit improvement and/or a re-evaluation by the market takes place. They invest for the long term, typically holding stocks for four to five years, accepting that some stocks or sectors may remain unloved for long periods. The team constructs their portfolios from the bottom up without reference to equity market levels, giving as much attention to what might go wrong as to factors that might drive a company’s share price higher. Investec’s highly disciplined, risk-controlled process has been in place since 1992 and has delivered consistently strong performance under just two managers.

OLD MUTUAL EQUITY 1 MANDATE – FUND MANAGER – RICHARD WATTS Focusing on small and medium-sized companies, the team aim to identify stocks with the potential for earnings upgrades. The philosophy behind their approach is based on the view that many brokers do not undertake sufficient market analysis on smaller companies, are too driven by short-term trends and are overly attached to guidance provided by company management. The team aim to exploit the pricing inefficiencies that can result from these tendencies. The Fund is managed in a flexible manner, with the manager prepared to invest in growth and/or value companies in the belief that a single investment style will not work in all market conditions. The research process is rigorous and consistent yet pragmatic, and is structured to directly exploit the inefficiencies identified by their philosophy.


UK EQUITIES

OLD MUTUAL UK ALPHA MANDATE – FUND MANAGER, RICHARD BUXTONThe cornerstones of the approach are twofold: fundamental research into the companies in which we invest and a patient, long-term time horizon. Many investors focus on the immediate outlook for companies and share prices. Quarterly result statements and the vagaries of current trading, together with concerns about the immediate direction of macro-economic indicators, tend to drive share prices in the short term. By contrast, our investment approach focuses on opportunities over a three to five year time horizon. Fundamental research into companies and their prospects over the long term identifies both winning business models and significant turn-around situations, together with those companies facing sustained pressure unlikely to reward investors.

OLD MUTUAL UK EQUITY – OMGI MULTI ASSET TEAMThe directly held stock portfolio focusses on finding companies with solid business profiles, with a view to holding them for the long term. The portfolio is diversified across industries and economic sensitivies and should offer a ride which is consistent in nature. Additionally, the team use the Wingman process to ensure discipline in execution, exploiting volatility in markets to incrementally add value to the portfolio.

WOODFORD EQUITY INCOME FUND – FUND MANAGER, NEIL WOODFORDNeil Woodford is a well-known investor with an excellent track, who has founded his own asset management business. We like his philosophy of long-term investing, which is value-orientated in nature but quite pragmatic, and his consistency of performance. The fund aims to provide a reasonable level of income, together with capital growth, by investing primarily in UK listed companies. Neil Woodford is supported by a team of three experienced fund managers – each with a different skill set, providing depth of cross-market coverage.

GLOBAL EQUITIES

AQR GLOBAL RELATIVE VALUE FUNDAQR Capital Management is a leading provider of alternative investments as well as a broad spectrum of long-only funds. Headquarted in Greenwich, CT, AQR manages over $105bn in assets for institutional investors as well as registered investment advisors. The AQR Global Relative Value UCITS Fund offers access to AQR Capital Management’s systematic global relative value strategy in a UCITS-compliant Fund. The Fund aims to realize low correlation to traditional asset class returns, deliver efficient exposure to a well-diversified portfolio of hedge fund risk premia and provide a systematic approach to portfolio construction and rebalancing.

AUBREY GLOBAL EM OPPORTUNITIES FUND – FUND MANAGER, ANDREW DALRYMPLEAndrew is the founder and largest shareholder in Aubrey Capital Management and its lead fund manager. He is responsible for the Global Emerging Consumer mandate within the Global Dynamic Equity fund, as well as the Global EM Opportunities fund. Prior to founding Aubrey, Andrew had worked for First State Investments where in 1999 he established the Global Opportunities Fund, now the First State Global Opportunities Fund, which was his signature fund throughout his time at First State and which since inception in July 1999 through to his departure in 2006 rose 112% compared to a rise of 4% in the MSCI World Index. The Fund was top quartile over 1, 2, 3, 4 and 5 years, and since inception. The long term success of this fund is now being replicated in various vehicles at Aubrey Capital Management, notably the SW Aubrey Global Conviction Fund, which is also top quartile since inception in 2007. At the route of this investment success is Andrew’s long experience, expertise and belief in Asian markets, derived in particular from his time working for James Capel and UBS Warburg in Hong Kong between 1991 and 1998.

BLACKROCK GROWTH & INCOME – FUND MANGAGER, ALAISTAIR BISHOP, TOM HULL AND SKYE MACPHERSONBlackrock Natural Resources Growth & Income offers diversified exposure to the three main commodity sectors – energy, metals and mining and agriculture. The portfolio tends to be relatively high quality but research is centred on understanding the commodity cycle as well as business model/strategy and where the company sits on the cost curve.

HERMES ASIA EX JAPAN – FUND MANAGER, JONATHAN PINESHermes Fund Managers is an investment firm based in London, formerly the internal investment manager for the BT Pension Scheme. The Hermes Asia ex-Japan Fund has been managed by lead portfolio manager Jonathan Pines since the inception in 2010 alongside his team of 5. Underpinning the investment philosophy is a belief that equity markets are inefficient in the long term, and the best way to exploit these inefficiencies are by building a benchmark agnostic, focused, bottom up portfolio of 45-60 long term opportunities. The 45 to 60 stock portfolio should display significant contrarian value characteristics through the cycle. The focus on capital preservation and downside protection should result in a higher quality portfolio with lower volatility characteristics over time.

IPM SYSTEMATIC MACROIPM Informed Portfolio Management was founded in 1998 and is primarily recognized for its multi-asset systematic macro strategy, but also for its Smart Beta equity strategy, both building on similar investment principles. IPM’s investment strategies are based on economic theory and rely on the belief that market prices fluctuate around the true fundamental value of financial assets. IPM designs novel approaches to model these movements and then captures the resulting profit. The investment process is systematic using a broad set of fundamental information as inputs.


GLOBAL EQUITIES

OLD MUTUAL ASIAN EQUITY – FUND MANAGER, JOSH CRABBThe Old Mutual Asian Equity Fund is managed by Josh Crabb, Head of the Asian Equity team. Over 20 years of investing experience in Asia has framed his core investment beliefs which incorporate a need to be flexible in investment. The strategy effectively targets two broad sources of alpha: cyclical alpha which are driven by a style or factor which are more favoured during certain parts of the market cycle; and independent alpha which are investment opportunities with alpha potential independent of the cycle. The team’s robust and repeatable process and drive and ambition to succeed will drive attractive risk-adjusted results over the cycle as a core Asian equity exposure.

OLD MUTUAL GLOBAL BEST IDEAS – FUND MANAGER, LEE FREEMAN-SHOROld Mutual Global Investors has selected world-class fund managers, asked each of them to pick their ten best stock ideas, and put them all together in a single fund. The result is a global equity portfolio consisting of around 100 stocks, where every holding is a high conviction stock from a top-quality manager.

OLD MUTUAL GLOBAL EQUITY INCOME – FUND MANAGERS, IAN HESLOP, AMADEO ALENTORN AND MIKE SERVENTThe Global Equity Income fund is a core holding for the portfolios. The investment strategy is quantitative in nature, and is different to its peers in its neutral stance on sectors. This should mean it does not become susceptible to swings in relative sector performance but instead is able to ‘compound’ returns over time thanks to its income-biased strategy. The fund is managed by Ian Heslop, Amadeo Alentorn and Mike Servent, and supported by developers and quant researchers.

OLD MUTUAL UK SPECIALIST EQUITY – FUND MANAGER, TIM SERVICEThe aim of the fund is to achieve capital appreciation by taking long and short positions principally in UK equities outside the FTSE 100 Index, whilst seeking to deliver absolute returns in all market conditions. The fund is managed with a low net exposure to the UK equity market, and a focus on alpha generation from both long (buying) and short (selling borrowed stock) positions. Fund manager Tim Service and deputy manager Luke Kerr have an excellent long-term track record in UK equity investing at Old Mutual Global Investors.

OLD MUTUAL STYLE PREMIA ABSOLUTE RETURN (STAR) – FUND MANAGER, LEIF CUSSEN The Style-premia Absolute Return fund seeks to deliver exposure to economically relevant style premia across assets. By focussing on premia that are well documented in academic research as well as having intuitive reasons for existing, this helps to ensure that these premia are likely to persist and can deliver returns over time. The end result should be a combination which delivers strong risk adjusted returns and that can diversify exposures from more generic market factors (such as equities and bonds).

PERSHING SQUARE HOLDINGS – FUND MANAGER, WILLIAM ACKMANPershing Square follows a concentrated, research intensive, fundamental value and activist approach, investing primarily in US mid and large caps both long and short. On the long side of the portfolio they target investments in companies with unconventional or hidden sources of value but with minimal downside. These investments are often complex situations, yet typically simple underlying businesses or assets where they have identified catalysts and where they believe their activist approach can effectuate changes to unlock value. On the short side of the portfolio investments are judged on their absolute return merits or as a hedge to the long book and they will typically look for situations with an asymmetric riskreward payoff. They focus on companies with accounting issues or poor earnings quality, frauds or companies with liquidity and bankruptcy risk and where their activist approach can bring these issues to light. The Fund is managed by William Ackman who is supported by an investment team of 11. The team has a strong and established pedigree of collaboratively working with management, boards and shareholders of target companies to unlock value or bring issues to bear and we believe them to be one of a very limited number of managers in the world that can successfully pursue a large cap shareholder activist strategy.

POLAR CAPITAL FINANCIALS – FUND MANAGER, NICK BRIND AND JOHN YAKASThe Polar Capital Financials exposures are managed by a specialist financials team of John Yakas and Nick Brind. At their core, the Polar team focus on finding value within the space - the expertise within the team allows them to look across the capital structure, especially in the Income Opportunities strategy where they can buy bonds as well as equity.

THE RENEWABLES INFRASTRUCTURE GROUP – INFRARED CAPITAL TEAMTRIG focuses on operational onshore wind farms and solar PV parks in the UK and Northern Europe, targeting a 6% dividend yield growing by inflation. The fund’s asset cash flows are contractually geared to inflation through PPA (purchasing power agreements) and renewable subsidies. It is set to benefit from power generators’ need to meet environmental and energy supply obligations as well as regulatory support.

SEQUOIA ECONOMIC INFRASTRUCTURE – SEQUOIA ECONOMIC INVESTMENT TEAMSequoia Economic Infrastructure Income focuses primarily on making select senior debt investments in infrastructure projects and companies. The Fund invests in the UK, Western Europe, North America, Australia and New Zealand and has a focus on ensuring high quality of the underlying projects. The overall aim is to provide investors with regular, sustained, long-term distributions and capital appreciation from a diversified portfolio of such projects.


GLOBAL EQUITIES

OLD MUTUAL VOYAGER GLOBAL DYNAMIC EQUITY FUND – FUND MANAGER, LEE FREEMAN-SHOR The Global Dynamic Equity Fund is a focused and flexible global equity solution that combines both manager selection and active asset allocation in a single fund. The Fund provides access to a diversified portfolio of high-quality investment managers, each running a specialist regional- or country-specific mandate across the full global equity opportunity set.

The Old Mutual Voyager Global Dynamic Equity Fund’s underlying managers are as follows:

BRANDYWINE – FUND MANAGERFounded in 1986, Brandywine Global Investment Management offers a broad array of fixed income, equity, alternatives, and asset allocation strategies that seek value across global markets. As of 30/06/2015, Brandywine Global manages $67 billion in assets. The firm is a wholly owned, independently operated subsidiary of Legg Mason, Inc. (NYSE: LM), and is headquartered in Philadelphia with office locations in San Francisco, Montreal, Toronto, Singapore, and London.

ARGONAUT EUROPEAN ALPHA MANDATE – FUND MANAGER, BARRY NORRISBarry Norris is a very impressive, pragmatic stock picker managing high-conviction, focused portfolios with a view to maximising alpha. He sees on average four new firms a month and attempts to understand the factors driving and affecting the company from a bottom-up perspective. In particular, he tries to identify bottlenecks occurring within an industry, so as to be in a position to consider investment opportunities in companies that serve to address such situations. Barry looks to hold companies for between one and three years, allowing time for a thesis to come to fruition. Quality of analysis rather than quantity is the approach, and the focus is on fundamental company research rather than macro economic developments.

AUBREY GLOBAL EMERGING ASIAN CONSUMPTION MANDATE – FUND MANAGER, ANDREW DALRYMPLEAndrew is the founder and largest shareholder in Aubrey Capital Management and its lead fund manager. He is responsible for the Global Emerging Consumer mandate within the Global Dynamic Equity fund, as well as the Global EM Opportunities fund. Prior to founding Aubrey, Andrew had worked for First State Investments where in 1999 he established the Global Opportunities Fund, now the First State Global Opportunities Fund, which was his signature fund throughout his time at First State and which since inception in July 1999 through to his departure in 2006 rose 112% compared to a rise of 4% in the MSCI World Index. The Fund was top quartile over 1, 2, 3, 4 and 5 years, and since inception. The long term success of this fund is now being replicated in various vehicles at Aubrey Capital Management, notably the SW Aubrey Global Conviction Fund, which is also top quartile since inception in 2007. At the route of this investment success is Andrew’s long experience, expertise and belief in Asian markets, derived in particular from his time working for James Capel and UBS Warburg in Hong Kong between 1991 and 1998.

CUPPS US ALL-CAP GROWTH MANDATE – FUND MANAGER, ANDREW CUPPSCupps Capital is a Chicago-based investment boutique, employing an aggressive growth approach to investing in US equities. Andrew Cupps is the CIO and founder; he focuses on the higher growth segment of the market and over his career has been able to derive significant performance from opportunities in the more inefficient small and mid-cap areas. The result is that small and mid-cap stocks with high growth characteristics often play an important role in this all cap strategy. Stock selection and portfolio construction are driven by a bottom-up focus on individual companies. Fundamental research conducted by Cupps Capital concentrates on five perspectives for measuring opportunities: valuations, technical factors, timeliness, quality and management. The strength of Cupps’ approach and pragmatism in stock selection is seen as a significant competitive advantage, resulting in an above average beta, with significant alpha generation over time.

DALTON JAPANESE EQUITY MANDATE – FUND MANAGER, AKIRA YOSHIMIDalton is a unique organisation with strong leadership, which has served to cultivate a free-thinking and performance-oriented culture. Portfolio manager Akira Yoshimi is a uniquely talented individual with a strong reputation and unparalleled track record, previously only available to institutional investors within Japan. He is a value oriented investor, believing that stocks with low valuations and strong company fundamentals will outperform the market. His skill lies in his ability to interpret what is happening in the market, put it into an historical context and both react to and pre-empt market and share price shifts. The investment process is strongly grounded in investment theory as well as Yoshimi’s many years of experience, providing both efficacy and pragmatism to the approach. The portfolio targets excess returns through both fundamental (valuation) and sentiment-based (secular and cyclical) strategies. It is managed as a high-alpha strategy but is benchmark-oriented with a strong emphasis on risk control.

LAPIDES US MID-CAP VALUE MANDATE – FUND MANAGER, STEVE WILSON Lapides focuses on identifying companies with sustainable competitive advantages and they invest when the share price falls below the long-term fair value. The investment team utilises an active idea generation approach, followed by highly thorough fundamental research with a strong focus on ensuring that the company’s long-term business model is sustainable and that the reasons for the share price drop are not a long-term risk. They gain an in-depth understanding of the companies they research and it is not unusual for them to monitor companies for years before the opportunity to invest arises. This meticulous research process, coupled with their focused and contrarian approach, enables them to exploit the significant investment potential in the US mid-cap value space. Lapides Asset Management is a US-based boutique focusing solely on US mid- and small-cap equities. The firm was founded in June 2005 by Steve Wilson, former CIO at Reich & Tang. Steve has nearly three decades of experience investing in mid and small-cap stocks.


GLOBAL EQUITIES

The Old Mutual Voyager Global Dynamic Equity Fund’s underlying managers are as follows:

LSV US LOW VOLATILITY MANDATE – LSV INVESTMENT TEAMThe LSV U.S. Managed Volatility Fund applies the LSV quantitative model to a universe of stocks to create and maintain a broadly diversified portfolio of primarily large and midcap U.S. listed equities. The Fund will typically have deep value orientation relative to the Fund benchmark, including low price to earnings, low price to cash flow, and high dividend yield relative to the Fund benchmark. The Fund also seeks to manage volatility by selecting stocks whose total returns are expected to fluctuate less than those of the equity markets as a whole.

MONTANARO EUROPEAN EQUITY MANDATE – FUND MANAGER, CHARLES MONTANAROCharles Montanaro is an experienced investor with a strong pedigree and he now manages this mandate from his own firm. This mandate focusses on investment in high quality businesses where Montanaro and team have identified a particular business edge. The companies tend to be in relatively niche markets and are typically in the smaller or mid cap sectors and this mandate views its holdings through the lens of an income investor. Charles is supported by a well resourced pool of analysts who focus on in depth stock research.

SCHRODERS ASIA MANDATE – FUND MANAGER, ROBIN PARBROOKRobin Parbrook has more than 20 years investment experience and is supported by one of the largest dedicated Asia analyst teams in the region, with 10 other portfolio managers and 18 dedicated investment analysts across a number of key locations in Asia. Schroders’ Asian equities team seeks to invest in companies that can grow shareholder value over the long term. As a result, their approach has natural biases towards stable franchises with high returns on invested capital and other quality characteristics. However, Parbrook and his team’s investment process involves close monitoring of valuations across markets, sectors and styles such that they are able, where appropriate, to take a contrarian stance and invest in true value and turn around opportunities.

SCHRODER US MID CAP – FUND MANAGER – JENNY JONESThis allocation has been introduced as a core equity exposure in the US for a number of reasons. The team is very experienced, in particular portfolio manager Jenny Jones. Jenny has structured the research process to exploit three specific anomalies she has discovered in her decades-long investment career. Each anomaly is distinct and has its own economic drivers, which means that the fund should enjoy a smoother ride over the cycle.

WELLINGTON EUROPEAN LARGE-CAP VALUE MANDATE – FUND MANAGER, DIRK ENDERLEINDirk Enderlein is a hugely impressive, motivated and passionate portfolio manager. His skill is borne out by an excellent track record in managing large-cap growth portfolios relative to peers since 2003 despite the challenging market conditions for this type of strategy for much of this period. He demonstrates excellent introspection, investing only where he believes he has a genuine edge. Dirk has a coherent and repeatable investment philosophy focusing on structural growth rather than cyclical or established growth, meaning that stocks bought are not dependent on the economic cycle. He seeks companies with above-average long-term growth in earnings and cash flows that the market has yet to fully anticipate. His longer-term perspective aims to exploit investors’ tendency to focus heavily on short-term results. Dirk is able to leverage the ideas of Wellington’s very well resourced team of global industry analysts.

WELLINGTON DURABLE COMPANIES MANDATE – FUND MANAGER, DAN POZEN As the name suggests, fund manager dan Pozen focces on finding and buyng the companies that are stable, ie those companies with a strong profit base. The differentiator here is that he is especially looking for the companies in sectors and geographies which are less favourably viewed by most in the market thereby leading to opportunities. The mandate is global in nature and tends to have a mid cap bias.


ABSOLUTE RETURNAbsolute return funds look to make positive returns whether the overall market is up or down.

ABSOLUTE VALUEA valuation method that uses discounted cash flow analysis to determine a company’s financial worth. Absolute value models try to determine a company’s intrinsic worth based on its projected cash flows.

ALPHAA measure of the difference between a fund’s actual returns and its expected performance, given its level of market risk. Alpha can be positive or negative, and directly reflects the value added or subtracted by the fund’s manager.

ANALYTICAL APPROACH Examining or liking to examine things very carefully.

ASSET ALLOCATION Deciding which categories of assets, and in what proportions, the investment should be spread across to offer the most attractive potential returns.

BENCHMARKA standard against which the performance of a security or fund can be measured. The benchmark could be an index or the average for all similar funds, also known as the sector average.

BETA A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.BOTTOM-UP The process of searching for individual shares with outstanding performance, before considering the impact of economic trends.

BOUTIQUE A small investment firm specialising in offering specific, but limited services to a select number

of clients. They provide a highly personalized environment for investing.

COLLECTIVE INVESTMENT SCHEME A type of investment in which the money invested by individual investors is pooled into an investment fund, such as a Unit Trust or Open-Ended Investment Company, and then managed across a spread of underlying investments by professional fund managers.CORPORATE CREDIT ANALYSIS Assessing the financial health of a corporation.

CREDIT A type of fixed interest security in which there is a risk of default, such as a corporate bond.

CREDIT DYNAMICS The forces that control change in value.

DEFAULT A borrower’s failure to repay a loan or otherwise meet a contractual obligation.

GLOSSARY OF COMMON INVESTMENT TERMS

CHANGES WHICH OCCURED LAST QUARTER

Old Mutual Star Fund, Blackrock Growth & Income, Polar Capital Financials, Sequoia Economic Infrastructure and LSV US Low Volatility Mandate added to global equities; SQN Asset Finance added to fixed income.

HISTORIC MANAGER CHANGES

If you require any further information on the Old Mutual Spectrum fund range, please speak to your financial adviser.

DETAILS OF MANAGER CHANGES IN THE SPECTRUM FUNDS RANGE OVER THE LAST 2 YEARS.

Q3 2016The Renewables Group added to global equities; Direct stocks added to UK equities; Wells Fargo Short Term HY added to fixed income.

Q2 2016Old Mutual UK Specialist Equity Fund added to global equities.

Q1 2016Artemis UK Growth Fund removed from UK equities; Investec Pan European Absolute Return Fund removed from global equities; Investec Local Currency Emerging Market Debt Fund removed from fixed income; Woodford Equity Income Fund added to UK equities; Schroder US Mid Cap Fund added to global equities; Pershing Square added to global equities; Old Mutual Global Equity Income added to global equities.

Q4 2015Nordea European High Yield added to fixed income; Montanaro Europe added to global equity; Metisq Capital removed from global equity; Wellington US All Cap removed from global Equity; Alfred Berg removed from Fixed Income; Dimensional Emerging Market Targeted Value Fund removed from global equity; Old Mutual Global Statistical Arbitrage Fund removed from global equity; JP Morgan Latin American Equity Fund removed from global equity; Mandarine European Value Mandate removed from global equity; BlackRock Passive removed from global equity.

Q3 2015Duet Emerging Europe added to global equity; IPM Systematic Macro added to alternatives; Brandywine added to global equity; QMA removed from global equity; AllianceBernstein removed from global equity.

Q2 2015Fair Oaks Income Fund added to global equity; Armajaro Strategic Emerging Europe Fund removed from global equity; Openfield Technology Fund removed from global equity.

Q1 2015Aubrey Global EM Opportunities added to global equity; JP Morgan Latin American Equity Fund added to global equity; Henderson UK Property added to property; Old Mutual Property Mandate removed.

Q4 2014Pershing Square Holdings added to global equity, Old Mutual Global Statistical Arbitrage Fund added to global equites, Old Mutual Asian Equity Fund added to global equity, Centurion Fund added to global equity, Hermes Asia ex-Japan Equity Fund added to global equity, Jardim Botanico added to Old Mutual Voyager GDE (emerging markets), RenAsset added to Old Mutual Voyager GDE (emerging markets), Henderson removed from Old Mutual Voyager GDE (emerging markets).


DERIVATIVES A financial contract that derives its value from an underlying security, commodity or index without a requirement for the investor to purchase the underlying assets.

FREE CASH FLOWA measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base.

FUNDAMENTALS Information relating to the economic well-being of a company such as revenue, earnings, assets, liabilities and growth. These factors are used to determine the worth of an investment in fundamental analysis. A company with little debt and a lot of cash is generally considered to have strong fundamentals.

FUTURES OFFSETThe futures offset is generated when the funds invest in futures contracts. The offset ensures the futures contracts reflect an appropriate weight in the portfolio.

HEDGE FUNDS Hedge funds seek to achieve higher returns by utilising a variety of investment techniques, such as the use of derivatives, short selling and gearing. This approach provides the fund manager with additional options when considering stocks for the portfolio.

HIGH YIELD The generic name for bonds rated as below investment grade by the major credit rating agencies. High-yield bonds offer higher interest payments to compensate for the perceived greater default risk.INTROSPECTION Examination of and attention to your own ideas, thoughts and feelings.

INVESTMENT GRADE A bond rated BBB (Standard & Poor’s) or Baa (Moody’s) or higher and traditionally regarded as being of sufficient quality for long-term investment.

INVESTMENT STYLE The overarching strategy or theory used by either a retail investor or an institutional money manager to set asset allocation and choose individual securities for investment. The investment style of a fund helps set expectations for long-term performance potential and aids in advertising the fund to investors looking for a specific type of market exposure.

MACROECONOMICS The field of economics that studies the behaviour of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.

MARKET DISLOCATIONS A situation in which an industry or economy is no longer working in the usual way or place.

MOMENTUM Investment based on a rising trend in a company’s earnings or price movements. A momentum manager will seek to ride out the trend and sell the stock once it has peaked.LIQUIDITY The ability to convert an asset to cash quickly with little or no loss of capital.Patient contrarian – Investing in a manner that differs from conventional wisdom.

POSITION A stock or sector weight which is at variance to the market average, also known as a ‘bias’. In the context of this document, a position describes the financial instruments held by a fund manager, in particular derivatives.

PROPRIETARY Exclusively owned.

QUALITATIVE ANALYSIS Analysis that uses subjective judgment in evaluating securities based on non-financial information such as management expertise, strength of research and development and employee relations.

QUANTITATIVE (OR QUANT) MANAGEMENT An approach to investment management which seeks to use statistical or numerical methods rather than using more subjective (or ‘qualitative’) factors.

RISK PREMIUMS The return in excess of the risk-free rate of return that an investment is expected to yield. An asset’s risk premium is a form of compensation for investors who tolerate the extra risk - compared to that of a risk-free asset - in a given investment.

SECURITIES Any investments that can be assigned a value and traded such as bonds or shares, where there is a right to receive interest or dividends from the investment.

SECURITY SELECTION In making securities selections, one considers the risk, the return, the ethical implications and other factors affecting both of the individual securities and the portfolio as a whole

STYLE The investment approach a manager takes to achieve his or her objectives. There are many different kinds of style but the two most common are value and growth.

THEMATIC A fund manager may construct a portfolio by weighting it towards particular industries or sectors expected to benefit from demographic, social or other changes. This is known as thematic investing.

TOP-DOWN A country’s economy is considered before deciding which industry to invest in. Economic conditions determine which industries or sectors will return well and then attractive stocks are bought within those industries.

TOTAL RETURNS When measuring performance, the actual rate of return of an investment or a pool of investments over a given evaluation period. Total return includes interest, capital gains, dividends and distributions realised over a given period of time.

UNCONSTRAINED An investment style where the fund manager operates within loose guidelines enabling them to invest in only their highest conviction companies.

UCITS Stands for Undertakings for Collective Investments in Transferable Securities and derives from a directive governing investment schemes that can be marketed throughout the European Union.

UNRATED BOND A bond which has not been given a rating by any of the major credit rating agencies.

VALUE INVESTOR One who seeks to buy shares when they are underpriced and to take profits when they appear overvalued. The Price/Earnings Ratio is a key valuation measure. Deep value refers to stocks with particularly strong value characteristics.

VOLATILITY A statistical method that measures how much a series of values moves up and down around its average. The higher the volatility number, the less consistent the historical performance has been.


IMPORTANT INFORMATION

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back the amount originally invested. This communication provides information relating to funds known as Old Mutual Spectrum Funds (the “Fund”). This communication is issued by Old Mutual Global Investors (UK) Limited (trading name Old Mutual Global Investors), a member of the Old Mutual Group. Old Mutual Global Investors is registered in England and Wales under number 02949554 and its registered office is 2 Lambeth Hill London EC4P 4WR. Old Mutual Global Investors is authorised and regulated by the Financial Conduct Authority (“FCA”) with FCA register number 171847 and is owned by Old Mutual Plc, a public limited company limited by shares, incorporated in England and Wales under registered number 3591 559. The Fund is also regulated by the FCA and therefore Old Mutual Global Investors may promote the Fund to the public. This communication has been prepared for general information only. It does not purport to be all-inclusive or contain all of the information which a proposed investor may require in order to make a decision as to whether to invest in the Fund. Nothing in this document constitutes a recommendation suitable or appropriate to a recipient’s individual circumstances or otherwise constitutes a personal recommendation. No investment decisions should be made without first reviewing the prospectus and the key investor information document of the Fund which can be obtained from www.omglobalinvestors.com. Exchange rates may cause the value of overseas investments to rise or fall. The Fund may invest principally in units in collective investment schemes. OMGI 01/17/0148

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OLD MUTUAL GLOBAL INVESTORS (UK) LTD

2 Lambeth Hill, London, EC4P 4WR, UK

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Documents

Old Mutual Spectrum Funds - Balancing risk and return · PDF fileOld Mutual Spectrum Funds When seeking investment advice, one of the first things your financial adviser will do is