1

Research Methodology - Fund Research General principles and objectives Bank J. Safra Sarasin Fund Research selects third party funds and offers advisory services, with the goal of generating a higher return through best-in-class fund recommendations. For this purpose, we analyze funds on a combined quantitative and qualitative basis with a 10 factor approach. Fund research universe Our fund research universe contains mutual fund companies included in the Morningstar database. The underlying strategies must be in existence for at least three years and have an invested asset volume of at least USD 50 million (or the equivalent in a different currency). Our research focuses on equity, convertible bond and fixed-income strategies. Currently real estate funds, unregulated hedge funds and funds of hedge funds are not covered by our team. Quantitative pre-selection Fund selection starts with a substantial reduction of the investment universe via quantitative screenings. Within the Morningstar peer groups, we rank each fund by using an individual score, which comprises of several risk and return ratios weighted by relevance. Funds with the highest rank within their respective peer group are then subject to qualitative analysis. Understanding the reasons for their outstanding track record as well as to get a view on the sustainability of previous alpha drivers is the main objective. Qualitative 10-factor analysis At first we look at the asset management company with regards to e.g. structures, stability, important changes and reputation. The portfolio manager respectively the management team is of essential importance. Personalities, track record, resources, changes and motivation are in the focus of our interest. Further factors are investment philosophy and the process in all its details as well as its stability. Portfolio analysis is useful to avoid surprises with regards to unexpected risky investments. It also can be the best source of information to understand the portfolio manager’s sell discipline, historical mistakes, style drifts, risks induced by portfolio construction as well as liquidity risks. Another essential point is the examination of historical performance patterns in relation to market phases.

Furthermore fee structures, counterparty risk management, operations and other aspects like investor-concentration and problematic fund sizes are considered. Recommendation lists/Factsheets The Fund Selection list is published monthly since August 2014 and comprises of currently 58 asset classes and more than 60 funds. We aim to select funds, which offer the chance to be at least a best in class performer on a 3-year horizon, since certain asset classes only offer a remote chance to outperform the benchmark after fees. If we recommend more than one fund per asset class, we try to achieve style diversification. The recommendations should be expected not to be changed frequently, however deletions from the list will for example take place, if a star-manager quits, if the pursued investment style or the investment process are subject to massive changes or just if we find better opportunities for our clients. For all recommended funds on the fund selection list we provide factsheets, containing an executive summary of the strategy and relevant quantitative information. Additionally we provide links to external factsheets on our intranet site. For further information please contact: Paul Schulz Head Fund and Manager Selection T: +41 (0)58 317 33 20 E-mail: paul.schulz@jsafrasarasin.com Bank J. Safra Sarasin Ltd General Guisan-Quai 26 P.O. Box CH-8022 Zürich