Performance through Specialisation

‘Putting clients first in a world thatgenerally doesn’t…’

Amsterdam, 27 januari 2011

Lars Dijkstra, Chief Investment Officer

1

Management is about efficiency Leadership is about effectiveness

Leadership is…

Climb up the ladder as quickly as possible

See if the ladder is leaning againstthe right wall

2

Asset management: is the ladder leaning against the right wall?

n Expertise

n Discipline

n Reliable

n Honest

n Trust

Foundations of a profession

n Jungle investment fundsn 80% of managers lags behind in

2008

n Failing risk managementn Terror peer groups/benchmarks

n Hedge funds are not keepingpromises

n Investment funds locked up

n High (not transparant) feesn Complex credit productsn Madoff

Facts in 2009

3

Trust between clients and asset managers is underpressure

n Ownersn Originally: PM’sn Subsequently: Publicly listedn Now: Conglomerate

→ Consequence: Business managers in charge

n Portfolio managers need to perform in the short run (careerrisk)

n Sales sells in line with whatclients want ‘flavour of the month’

‘We have changed from a profession with aspects of a business, to a business with aspects of a profession’

J. Bogle, CEO Vanguard, 2005

4

Conclusion: The ladder is leaning against the wrong wall!

Asset management has evolved from a profession to a marketing driven industry in the past 30 years

5

What next…?

… Continue on the same path1

2

3

… To passive managers

… Back to a profession

6

Market share US asset managers

McKinsey: ‘trend to passive and privately ownedmanagers’

Source: McKinsey, “The Asset Management Industry in 2010”, published in 2006

‘Privately owned’managers

Publicly listedconglomerates

Passivemanagers

22%33%

43%

65%51% 35%

13% 16% 22%

2000 2005 2010

7

… To passive managers

But is it effective as well?§ Winners from the past§ Bankruptcy candidates§ Socially unethical§ Seems cheaper than it is

→ Good relative risk and return, but will it put food on yourtable?

2

Advantages§ Computer§ Scale§ Cheaper§ No underperformance

→ Competition on cost and efficiency

8

… Back to a profession

What type of asset manager will produce the best investment results?

I. Entrepreneurial, ‘privately owned’ managers

II. Managers with focus and specialisation

III. The smaller the scale, the better the results

3

9

‘Privately owned’ managers outperform

Source: John Bogle, Financial Analyst Journal, November/December 2005

Asset manager

1. Dodge & Cox2. First Eagle3. Calamos4. SouthEastern5. Royce6. American Funds7. Harris Associates

Asset manager

48. Merrill Lynch49. Aim50. Nations Funds51. American Express52. Black Rock53. Pioneer54. JP Morgan

I

10

Focus and specialisation both work

Source: John Bogle, Financial Analyst Journal, November/December 2005

II

Asset manager

1. Dodge & Cox2. First Eagle3. Calamos4. SouthEastern5. American Funds6. Royce7. Harris Associates

Number of funds

4583

2614

7

Asset manager

48. Merrill Lynch49. Aim50. Nations Funds51. American Express52. Black Rock53. Pioneer54. JP Morgan

Number of funds

58624260322438

11

-0,9%

0,5%

The smaller the scale, the better the results

Source: Cremers en Petajisto (Yale) “How active is your fund manager?”, 2006

Small

Large

Specialty shop betterthan supermarket

Average annual US mutual funds outperformance

III

12

New leadership required in asset management…

Business Strategy

InvestmentPhilosophy

People

n Employee ownership and long-term loyal clientsn Focus n Conservative innovative: transparant, simple and high

expected absolute returns

n Alignment with clients interests (best form of risk management)

n Investment culture founded on sound principlesn Long-term committed and engaged shareholdership

n Stick out neck for clients (take career risk)n CQ > IQ n Your ‘trusted advisor’

13

Conclusion: away from marketing, back to a profession!

n From Salesmanship to Stewardship: Money does not bring quality, but qualitybrings money!

n Do not sell investment products to yourclients which you would not buy yourself

n Your role as a client?¡ Select asset managers with new

leadership characteristics¡ Buy investment products that are out of

favour!