international core portfolio manager research - FSB approved

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1 investments international core portfolio manager research - FSB approved second quarter 2012 wealth international

2 Contents INTERNATIONAL FUNDS - FSB APPROVED 1. International and Fixed Interest Funds International Funds - US Dollar Money Market Funds 2 - Euro Money Market Funds 4 - Sterling Money Market Funds 6 International Fixed Interest Funds - Global Bond Funds 8 2. International Equity and Specialist Funds International Equity Funds - General Equity Funds 10 - Real Estate Funds International Absolute Return and Balanced Funds International Absolute Return and Balanced Funds - Balanced Funds 14 Fund List and Summary 17 Glossary of Investment Terms and Metrics used in this Document 18 Disclaimer 19

3 International Core Portfolio Second Quarter 2012 The Wealth Core Portfolio report is a quarterly publication, available to registered financial advisers. The report has been formulated to assist advisers in the task of selecting funds and managers for their client portfolios. The list contains a quantitative review of each fund across a number of statistical ratios, as well as fund commentary prepared by Momentum Global Investment Management. In addition to presenting Momentum Wealth s in-house funds i.e. funds managed by Momentum Global Investment Management, the Core Portfolio list aims to identify, in our view, superior Collective Investment Schemes across all collective investment scheme categories, both domestically and internationally. This list is supported by Momentum Wealth s Guide to Investing, which aims to provide financial advisers with a robust and repeatable framework for thinking about, analysing and structuring clients investment portfolios. Please note it is the financial adviser s responsibility to ensure that they only promote funds to clients that they are lawfully authorised to promote to in the relevant jurisdiction. Changes to the Core Portfolio The Core Portfolio is monitored on an ongoing basis in order to ensure that all of our most recent input in terms of comprehensive quantitative and qualitative research is reflected in the limited fund range accordingly. Changes to the Core Portfolio will occur from time to time as a result of a rigorous quarterly review of the fund selection. The proposed addition and removal of Core Portfolio funds is presented to Momentum Wealth by Momentum Global Investment Management for deliberation and review, and hence a business consideration is also applied as an overlay to a strict investment-only process. The addition of funds to the Core Portfolio is relatively straightforward with the decision as to the particular class of fund added determined by Momentum Wealth s negotiation process with each respective management company. The removal of funds from the Core Portfolio is a more onerous process, hence the meticulous consideration and debate applied before a fund is removed from the Core Portfolio. Once the decision to remove a fund from the Core Portfolio is made, a communication will be sent to investors currently invested in the specific Core Portfolio fund informing them that the relevant fund will be removed from the list in three months, and that the fund will continue to be offered on the Momentum Wealth platform but at a higher ongoing Momentum administration fee under the FundShop component. Investors are encouraged to contact their financial adviser in this instance and discuss the communication, as well as possible alternatives. Management companies are also informed of the removal of a fund from the Core Portfolio. This quarterly research document on Core Portfolio funds compiled by Momentum Global Investment Management will also include a note under the respective fund information page that the fund will be removed from the Core Portfolio list. Consequently, there may be a time when a specific fund still features within the range of Core Portfolio funds as per this quarterly publication (albeit with the respective flag that the fund is to be removed) and Core Portfolio fund list, and this may fall within a time frame when the communication to investors is under way. The respective fund will be removed from both the quarterly Momentum Global Investment Management document and the fund list only once the communication to investors is complete. Management companies may reduce the rebate paid on funds that are removed from the Core Portfolio list, and investors should be cognisant of the fact that this, alongside the potential increase in the ongoing Momentum administration fee, may lead to an increase in their overall fee experience of a particular fund. Fund additions Fund name: Nedgroup Investments Funds Global Equity Fund Share classes, fees and rebates: Class A: 1.5% AMC, 0.5% rebate (net 1%). Minimum investment $7,500. Class B: 2% AMC, 0. rebate (net 1.). Minimum investment $7,500. The fund is managed by Veritas, an employee owned investment firm based in London. The main portfolio managers, Andy Headley and Charles Richardson, previously worked together at Newton before leaving to set up this business in They are now supported by a team of five experienced analysts. Their investment philosophy focuses on generating strong absolute returns over time through buying high quality companies at attractive cash flow based valuations. In the absence of good opportunities they are willing to raise cash in the portfolio. The fund has a conservative investment approach which should result in a degree of downside protection, but may cause them to lag in a sharply rising market. Page 1 of 19

4 INTERNATIONAL FUNDS Three-year risk/return profile (Dec Dec 2008) International and Fixed Interest Funds International Funds US Dollar Money Market Funds International Funds: US Dollar Money Market Funds Three year risk/return profile 2 Real Estate 15% Annualised return 1 5% Balanced Equity Money market Investec GSF US Dollar Money 5% 1 15% 2-5% Annualised volatility Page 2 of 19

5 Investec GSF US Dollar Money Benchmark LIBID USD 7 Day Michael Sullivan and Russell Silberston The Money Funds aim to give shareholders access to income at wholesale market interest rates in their respective currencies. They offer regular interest payments and easy access, whilst seeking to preserve capital with lower risk relative to bonds and equities. This fund has not been invested in asset backed commercial paper in the past five years, and has no current plans to do so. The fund returned 1 basis point (0.01%) in US dollar terms during the second quarter, as short term interest rates in the US remained at their current floor of 0. (annualised). Central bank benchmark borrowing rates are at or close to historical lows in many parts of the developed world. The Federal Reserve held back from further asset purchases during the quarter, whilst extending its Operation Twist programme, which is designed to reduce longer term borrowing rates % 0.3% 0.2% 0.2% 0.1% % Commercial paper 40.1% 50.6% Certificates of deposit Annualised tracking error 0.14% Annual Sortino ratio Maximum monthly loss -0.02% Maximum drawdown period 2 Date of maximum drawdown Dec 09 % of positive months 95 Page 3 of 19

6 INTERNATIONAL FUNDS Three-year risk/return profile (Dec Dec 2008) International and Fixed Interest Funds International Funds Euro Money Market Funds International Funds: Euro Money Market Funds Three year risk/return profile 2 Real Estate 15% Annualised return 1 5% Balanced Equity Money market Investec GSF Euro Money 5% 1 15% 2-5% Annualised volatility Page 4 of 19

7 Investec GSF Euro Money Benchmark LIBID EUR 7 Day Michael Sullivan and Russell Silberston The Money Funds aim to give shareholders access to income at wholesale market interest rates in their respective currencies. They offer regular interest payments and easy access, whilst seeking to preserve capital with lower risk relative to bonds and equities. This fund has not been invested in asset backed commercial paper in the past five years, and has no current plans to do so. The fund was essentially flat during the second quarter. rates remain at or close to historic lows in many parts of the developed world. The European Central Bank took the decision to lower its main policy rate immediately following the end of the quarter, reducing benchmark borrowing rates by 25 basis points (0.) to % 0.1% 0.5% % Commercial paper 38.3% Certificates of deposit 34. Annualised tracking error 0.13% Annual Sortino ratio Maximum monthly loss -0.03% Maximum drawdown period 16 Date of maximum drawdown Jul 10 % of positive months 82 Page 5 of 19

8 INTERNATIONAL FUNDS Three-year risk/return profile (Dec Dec 2008) International and Fixed Interest Funds International Funds Sterling Money Market Funds International Funds: Sterling Money Market Funds Three year risk/return profile 2 Real Estate 15% Annualised return 1 5% Balanced Equity Money market Investec GSF Sterling Money 5% 1 15% 2-5% Annualised volatility Page 6 of 19

9 Investec GSF Sterling Money Benchmark LIBID GBP 7 Day Michael Sullivan and Russell Silberston The Money Funds aim to give shareholders access to income at wholesale market interest rates in their respective currencies. They offer regular interest payments and easy access, whilst seeking to preserve capital with lower risk relative to bonds and equities. This fund has not been invested in asset backed commercial paper in the past five years, and has no current plans to do so. The fund returned 0.04% in sterling terms during the second quarter. rates remain at or close to historical lows in many parts of the developed world. The Bank of England elected to increase the size of its quantitative easing programme during the period, bringing the target level for asset purchases to GBP 375 billion % 0.7% 0.2% 0.3% 0.1% % Certificates of deposit 31. Commercial paper 64.2% Annualised tracking error 0.22% Annual Sortino ratio Maximum monthly loss -0.21% Maximum drawdown period 5 Date of maximum drawdown Jun 12 % of positive months 92 Page 7 of 19

10 INTERNATIONAL FUNDS Three-year risk/return profile (Dec Dec 2008) International and Fixed Interest Funds International Fixed Interest Funds Global Bond Funds International Fixed Interest Funds: Global Bond Funds Three year risk/return profile 2 Real Estate Annualised return 15% 1 Balanced Equity 5% Investec GSF Global Bond Money market 5% 1 15% 2 Annualised volatility Page 8 of 19

11 Investec GSF Global Bond Benchmark Barclays Global Aggregate Bond Index John Stopford and Russell Silberston The fund aims both to provide income and to protect and maximise the real asset value of its investments in terms of their international purchasing power, by means of the management and diversification of currency exposure and investment in fixed interest securities. The fund generally adopts a conservative strategy investing primarily in government bonds, but can also invest in high quality corporate bonds. The duration and currency of the fund is actively managed in order to improve potential returns. The fund returned 0.2% in US dollar terms during the second quarter, underperforming the reference index which added 0.6%. After protecting a portion of investor capital during May s sell off, the fund underperformed during the subsequent rally in June % 14.3% 7.2% 1.5% % 0.4% AAA 20.9% AA 7.4% 52.1% A BBB 17. BB Annualised tracking error 2.44% Annual Sortino ratio 0.41 Maximum monthly loss -7.4 Maximum drawdown period 14 Date of maximum drawdown Oct 08 % of positive months 63 Page 9 of 19

12 INTERNATIONAL FUNDS Three-year risk/return profile (Dec Dec 2008) International Equity and Specialist Funds International Equity Funds General Equity Funds International Equity Funds: General Equity Funds Three year risk/return profile 2 Real Estate Annualised return 15% 1 Balanced Investec GSF Global Strategic Equity Equity Nedgroup Investment Funds Global Equity Sarasin IE EquiSar Dollar Global Thematic Fund 5% Money market 5% 1 15% 2 Annualised volatility Page 10 of 19

13 Investec GSF Global Strategic Equity Nedgroup Investment Funds Global Equity Sarasin IE EquiSar Dollar Global Thematic Fund Benchmark Benchmark Benchmark MSCI AC World NR USD MSCI World NR USD MSCI World NR USD Mark Breedon Andy Headley Harry Talbot Rice The Global Strategic Equity Fund aims to provide long term capital growth primarily by investing in companies that are expected to enhance underlying profitability and shareholder value through operational or structural improvements to their business. The investment team implement Investec s four factor process which identifies companies that provide exposure to value, quality and momentum factors. The fund is managed by Mark Breedon who is Head of Global Equities for Investec Asset Management and has managed global equity portfolios since The fund declined by 7. in US dollar terms during the second quarter, underperforming the reference index which fell by 5.6%. Investor confidence faltered post the end of March, as a number of data disappointments emerged from the key economies of the US and China, alongside renewed stresses in the Eurozone. Markets staged a late rally at the end of June, prompted by hopes for greater integration between Eurozone members. The Nedgroup Global Equity Fund is managed by Veritas, an employee owned investment firm based in London. The main portfolio managers, Andy Headley and Charles Richardson, previously worked together at Newton before leaving to set up this business in They are now supported by a team of experienced analysts. Their investment philosophy focuses on generating strong absolute returns over time through buying high quality companies at attractive cash flow based valuations. In the absence of good opportunities they are willing to raise cash in the portfolio. The fund performed in line with its reference benchmark in the second quarter, with a return of -5.1% in US dollar terms. Having enjoyed a strong start to the year, equity markets fell back in May, as the outlook for global growth softened alongside renewed stresses in the Eurozone. The fund managers continue to try and look through the near term volatility to identify those industries and stocks that are best placed to outperform in the future. The Sarasin EquiSar Global Thematic fund is managed from London by Harry Talbot Rice who is supported by a large and well resourced research team. The investment team is led by their Chief Investment Officer Guy Monson. The team employ a thematic investment philosophy which focuses on identifying themes early on and then benefiting from their rising visibility. The fund s objective is for performance to be driven by the quality and extent of their thematic research rather than by style biases, and so the resulting portfolio is well diversified across countries, sectors, themes and styles. The fund declined by 4.3% in US dollar terms during the second quarter, compared to the MSCI World index which fell by 5.1%. Investor confidence faltered post the end of March, as a number of data disappointments emerged from the key economies of the US and China, alongside renewed stresses in the Eurozone. Markets staged a late rally at the end of June, prompted by hopes for greater integration between Eurozone members % 29.8% 10.4% -9.4% 7.6% 26.2% 3.6% 1.3% 3.6% % -11.4% 5.1% Oct 09 Apr 10 Oct 10 Apr 11 Oct 11 Apr % Consumers 7.2% 19.7% Resources Technology 14.9% Services 17.1% Financials US United Kingdom Europe ex UK Asia 11.6% 3.6% 3.5% North America 5.6% Europe ex UK 51.6% Japan United Kingdom 15.6% 16.8% Telcos & utilities Industrials Emerging markets 24.1% Pacific ex Japan Emerging markets Annualised tracking error 4.97% Annualised tracking error 6.8 Annualised tracking error 4.66% Annual Sortino ratio Annual Sortino ratio 0.24 Annual Sortino ratio Maximum monthly loss -20. Maximum monthly loss % Maximum monthly loss % Maximum drawdown period 56 Maximum drawdown period 7 Maximum drawdown period 56 Date of maximum drawdown Feb 09 Date of maximum drawdown Feb 09 Date of maximum drawdown Feb 09 % of positive months 50 % of positive months 64 % of positive months 48 Page 11 of 19

14 INTERNATIONAL FUNDS Three-year risk/return profile (Dec Dec 2008) International Equity and Specialist Funds International Equity Funds Real Estate Funds International Equity Funds: Real Estate Funds Three year risk/return profile 2 Real Estate 15% Sarasin IE Global Sustainable Real Estate Equity Annualised return 1 5% Balanced Equity Money market 5% 1 15% 2 3-5% -1 Annualised volatility Page 12 of 19

15 Sarasin IE Global Sustainable Real Estate Equity Benchmark S&P Developed Property TR USD Guy Mountain The Sarasin Global Sustainable Real Estate Equity fund is managed by Guy Mountain in London. Guy's process combines both bottom up and top down analysis, and is complemented by research from regional analysts. From a top down perspective the manager will seek to discern discrete cycles between regions. This can lead the fund to be largely benchmark unconstrained, and as a result it may not always provide returns which are similar to general listed property indices. The fund is restricted to only investing in companies that are deemed to be run in a 'sustainable' fashion, in so far as they take ecologocial and social sustainability issues into account in their business operations. The fund added 0.6% during the second quarter in US dollar terms, as listed property companies (including interests in property investment funds) outperformed the broader equity market. Property securities bettered global equities in each of the three months during the second quarter % 33.4% 15.6% -7.9% 13.6% % 6.5% North America 11.8% Pacific ex Japan 51.4% Japan Europe ex UK 22.4% United Kingdom Annualised tracking error 3.52% Annual Sortino ratio Maximum monthly loss % Maximum drawdown period 56 Date of maximum drawdown Feb 09 % of positive months 57 Page 13 of 19

16 INTERNATIONAL FUNDS Three-year risk/return profile (Dec Dec 2008) International Absolute Return and Balanced Funds International Absolute Return and Balanced Funds Balanced Funds International Absolute Return and Balanced Funds: Balanced Funds Three year risk/return profile 2 Real Estate Annualised return 15% 1 5% Sarasin IE GlobalSar - Dynamic (GBP) Ashburton Replica Euro Asset Management Ashburton Replica Sterling Asset Management Ashburton Replica Dollar Asset Management Balanced Sarasin IE GlobalSar - Dynamic (USD) Investec GSF Global Strategic Managed Equity Money market 5% 1 15% 2 Annualised volatility Page 14 of 19

17 Ashburton Replica Dollar Asset Management Ashburton Replica Euro Asset Management Ashburton Replica Sterling Asset Management Benchmark Benchmark Benchmark Global Balanced USD Peer Group Global Balanced EUR Peer Group Global Balanced GBP Peer Group Tristan Hanson Tristan Hanson Tristan Hanson The Ashburton Replica multi-asset funds are run by Tristan Hanson from London. The funds will always provide a minimum of 5 exposure to the base currency but aside from this currency exposure is managed as a distinct investment decision to preserve capital. The fund can hold a maximum of 7 bonds, 5 equity and can go 10 into cash if conditions necessitate. The Ashburton Replica multi-asset funds are run by Tristan Hanson from London. The funds will always provide a minimum of 5 exposure to the base currency but aside from this currency exposure is managed as a distinct investment decision to preserve capital. The fund can hold a maximum of 7 bonds, 5 equity and can go 10 into cash if conditions necessitate. The Ashburton Replica multi-asset funds are run by Tristan Hanson from London. The funds will always provide a minimum of 5 exposure to the base currency but aside from this currency exposure is managed as a distinct investment decision to preserve capital. The fund can hold a maximum of 7 bonds, 5 equity and can go 10 into cash if conditions necessitate. The fund declined by 2.6% in US dollar terms during the second quarter, as equity markets sold off by over 4% in local currency terms. The manager currently sees value in Japanese stocks, which have underperformed other regions recently. Equally, opportunities exist in corporate and select emerging market bonds. Whilst equities are attractively priced relative to government bonds and cash, concerns remain over the outlook for growth in the US and China, alongside ongoing stresses in the Eurozone. The fund declined by 1.5% in euro terms during the second quarter, as equity markets sold off by over 4% in local currency terms. The manager currently sees value in Japanese stocks, which have underperformed other regions recently. Equally, opportunities exist in corporate and select emerging market bonds. Whilst equities are attractively priced relative to government bonds and cash, concerns remain over the outlook for growth in the US and China, alongside ongoing stresses in the Eurozone. The fund declined by 1.7% in sterling terms during the second quarter, as equity markets sold off by over 4% in local currency terms. The manager currently sees value in Japanese stocks, which have underperformed other regions recently. Equally, opportunities exist in corporate and select emerging market bonds. Whilst equities are attractively priced relative to government bonds and cash, concerns remain over the outlook for growth in the US and China, alongside ongoing stresses in the Eurozone % 11.6% 9.2% -2.3% 2.3% % 11.7% -0.8% 3.2% -12.6% 8.9% 10.1% -1.4% Equities Equities Equities Index linked bonds Annualised tracking error 3.86% Annualised tracking error 4.24% Annualised tracking error 4.02% Annual Sortino ratio Annual Sortino ratio Annual Sortino ratio Maximum monthly loss -7.85% Maximum monthly loss -7.97% Maximum monthly loss -8.05% Maximum drawdown period 42 Maximum drawdown period 36 Maximum drawdown period 26 Date of maximum drawdown Feb 09 Date of maximum drawdown Feb 09 Date of maximum drawdown Feb 09 % of positive months 55 % of positive months 65 % of positive months 60 Page 15 of 19

18 Investec GSF Global Strategic Managed Sarasin IE GlobalSar - Dynamic (USD) Sarasin IE GlobalSar - Dynamic (GBP) Benchmark Benchmark Benchmark 6 MSCI AC World; 4 Citigroup WGBI 5 MSCI World; 5 Citigroup US Government 5 MSCI World; 5 Citigroup UK Government Philip Saunders David Vickers David Vickers The fund is run by Philip Saunders in London who uses the strategy of Investec s equity and bond teams to form the core of the portfolio. This is combined with satellite positions which give the fund exposure to other asset classes or perceived valuation opportunities. The fund's investment strategy is set for the medium term, but the manager has the freedom to tailor positions in the fund to take advantage of short term tactical opportunities. The portfolio is likely to perform relatively better in times of rising equity markets and low inflation, but conversely could perform less well in falling equity markets when inflation is high or rising. The fund declined by 4.5% in US dollar terms during the second quarter, after equity markets sold off in May. The fund was underweight fixed interest securities during the second quarter, with core developed market government bonds continuing to offer the best protection for investors during periods of heightened uncertainty. The decision to avoid government bonds is consistent across many fund managers, who perceive the value of these investments as being poor on a The Sarasin GlobalSar Dollar Dynamic Fund is managed by David Vickers in London. David takes a pragmatic approach to investing which takes account of independent economic advice from Sarasin s economists. The fund seeks to achieve long term capital growth with lower risk than pure equity funds. Equities will be chosen to fit into Sarasin's global growth themes, which track long term trends that are largely independent of any one region or market. The fund declined by 2.1% in US dollar terms during the second quarter, despite adding 2.7% in June. Economic data appeared to slow post March, prompting falls for equities. The fund was underweight government bonds over the period, on the basis of their appearing richly priced. The fund retains its bias towards corporate bonds and attractively valued global equities. medium term view % 29.2% 13.9% -7.9% 3.3% -27.6% 19.5% 7.3% -6.8% 4.4% -17.9% 11.2% 9.4% -6.7% 4. The Sarasin GlobalSar Sterling Dynamic Fund is managed by David Vickers in London. David takes a pragmatic approach to investing which takes account of independent economic advice from Sarasin s economists. The fund seeks to achieve long term capital growth with lower risk than pure equity funds. Equities will be chosen to fit into Sarasin's global growth themes, which track long term trends that are largely independent of any one region or market. The fund declined by 2.1% in sterling terms during the second quarter, despite adding 1.9% in June. Economic data appeared to slow post March, prompting falls for equities. The fund was underweight government bonds over the period, on the basis of their appearing richly priced. The fund retains its bias towards corporate bonds and attractively valued global equities % 6.1% Equities 4.3% Equities 5.1% 5.3% % Equities 8.1% 28.7% Alternatives 60.8% Alternatives 27.2% 58.1% Alternatives 26.1% 59. Property Property Annualised tracking error 4.1 Annualised tracking error 4.04% Annualised tracking error 5.59% Annual Sortino ratio Annual Sortino ratio Annual Sortino ratio Maximum monthly loss % Maximum monthly loss % Maximum monthly loss -8.99% Maximum drawdown period 56 Maximum drawdown period 56 Maximum drawdown period 39 Date of maximum drawdown Feb 09 Date of maximum drawdown Feb 09 Date of maximum drawdown Feb 09 % of positive months 52 % of positive months 52 % of positive months 53 Page 16 of 19

19 Annualised tracking error Annual Information ratio Annual Sortino ratio Maximum drawdown % of positive months Longest period of negative performance US Dollar Money Market Investec GSF US Dollar Money 0.14% % % 0.14% % Yes Euro Money Market Investec GSF Euro Money 0.13% % % 0.22% 0.52% 7.74% Yes Sterling Money Market Investec GSF Sterling Money 0.22% % % 0.23% 0.58% 8.67% Yes Global Investec GSF Global Bond 2.44% % % -0.62% 19.68% 40.56% Yes General Equity Investec GSF Global Strategic Equity 4.97% % % -9.14% 32.94% % Yes Nedgroup Investment Funds Global Equity % % -1.47% 34.88% 34.91% Yes Sarasin IE EquiSar Dollar Global Thematic Fund 4.66% % % % Yes Real Estate Sarasin IE Global Sustainable Real Estate Equity 3.52% % % -1.45% 51.53% % Yes Balanced Ashburton Replica Dollar Asset Management 3.86% % % 8.62% Yes Ashburton Replica Euro Asset Management 4.24% % % % 11.35% Yes Ashburton Replica Sterling Asset Management 4.02% % % 21.74% 16.93% Yes Investec GSF Global Strategic Managed % % -8.28% 28.55% -4.95% Yes Sarasin IE GlobalSar - Dynamic (USD) 4.04% % % -4.42% 20.49% -5.06% Yes Sarasin IE GlobalSar - Dynamic (GBP) 5.59% % % -2.96% 21.93% 1.42% Yes 3 months 12 months 3 years 5 years FSB approved Page 17 of 19

20 Glossary of investment terms and metrics used in this document Tracking error A fund s tracking error is a measure of the volatility of the fund s return relative to that of the benchmark return. A fund with a smaller tracking error will perform closer to the benchmark than a fund with a larger tracking error. Passive tracker funds have the smallest tracking errors. In this document the tracking error and Information Ratio for each fund is calculated relative to the mean return of the fund s categorisation group as benchmark (in terms of the official ACI categorisation of funds). Information Ratio The Information Ratio (IR) for a fund is a risk adjusted measure of the performance of the fund. It evaluates the return achieved by a fund given the risk that was taken by the fund manager in achieving the return. In the Information Ratio risk is represented by the tracking error of the fund (which is the standard deviation of the return of the fund relative to the benchmark return). This is the classic representation of risk that captures both upside and downside risk. This is the risk of either underperforming or outperforming the benchmark. The higher the Information Ratio, the higher the excess return of a fund, given the amount of risk involved, and the better a fund manager. Asset Allocation The latest available asset allocation or where applicable sector allocation is shown in pie-chart format. Where Momentum Global Investment Management may have a particular concern about a fund but this is not deemed significant enough to trigger the removal of the fund from the Core Portfolio list, the concern is flagged and will be closely monitored. Notes 1. All risk and performance measures in this document are calculated over the 3 year period ending 30th June 2012, unless stated otherwise. 2. A risk-free rate of 3. is used in the calculation of the Sortino ratio. 3. s are annualised for periods longer than 1 year. 4. data for all funds are sourced from Lipper Hindsight Sortino ratio The Sortino Ratio (SR) is similar to the Information Ratio in that it is a risk adjusted measure of performance. It however utilises a different definition of risk from the IR. Because most rational investors are more concerned about underperformance or losing money (i.e. downside risk) than outperformance (upside risk), the risk definition in the Sortino Ratio only focuses on and isolates underperformance in the calculation. The larger the Sortino Ratio number, the better a fund s risk adjusted performance is on this measure. Rolling 12-month quartile rank The quartile ranking of a fund based on rolling 12-month returns relative to other funds in its group are represented graphically. This indicates the relative consistency of a fund s return relative to its competitors, as measured by its ranking change over time. Note that for small fund groups with relatively few constituent funds the graph may be more volatile than for larger fund groups. Page 18 of 19

21 Disclaimer Risk Warnings Past performance of any investment is not necessarily a guide to the future. Fluctuations in the value of the underlying assets and the income from them and changes in interest rates mean that the value of a fund and any income arising from it may fall, as well as rise, and is not guaranteed. Deductions of charges and expenses mean that you may not get back the amount you invested. The fees charged within a fund and by the managers of the underlying funds are not guaranteed and may change in the future. Higher risk investments may be subject to sudden and large falls in value. Higher risk investments include, but are not limited to, investments in smaller companies, even in developed markets, investments in emerging markets or single country debt or equity funds and investments in high yield or non-investment grade debt. Notwithstanding ongoing monitoring of the underlying funds within the Core Portfolio, there can be no assurance that the performance of the funds will achieve their stated objectives. Certain funds may contain shares or units in underlying funds that do not permit dealing every day. Investments in such funds will only be realisable on their dealing days. It is not possible to assess the proper market price of these investments other than on the fund s dealing days. Investment in a fund may not be suitable for all investors. Investors should obtain advice from their financial adviser before proceeding with an investment. Certain unregulated Collective Investment Schemes may permit a greater degree of leverage than is permitted with investment funds that are available to the general public in South Africa. Such Collective Investment Schemes have a greater underlying volatility, which increase risk of loss. Important Information Opinions expressed in this document are those held as at the date appearing in this material only. The information and opinions provided are of a general nature and are not intended to constitute advice as contemplated in the Financial Advisory and Intermediary Services Act. The information used to prepare this document is from third party sources and whilst every effort has been made to ensure the accuracy and validity of the data, Momentum cannot guarantee the accuracy or completeness of such information, nor can it guarantee that such information is always up to date. Momentum shall not be liable or responsible for any use of this document or to any other person or entity for any inaccuracy of information contained in this document or any errors or omissions in its content, regardless of the cause of such inaccuracy, error or omission. This publication is not intended to give legal, tax, accounting, exchange control or any other professional advice. No reader should act on the basis of any matter contained in this publication without considering and taking appropriate advice on their own particular circumstances. Past performance is not necessarily indicative of future performance. An investor whose reference currency differs from that in which the fund is denominated may be subject to exchange rate movements, which may cause fluctuations in the value of their investments. In addition, investments involving exposure to a currency other than that in which the fund is denominated may also cause values to fluctuate. Momentum Investment Consulting (Pty Ltd), registration number 2007/018275/07 has its registered office at 268 West Avenue, Centurion, South Africa. Momentum Investment Consulting is an authorised Financial Services Provider. Momentum Wealth International Limited Registered address: La Plaiderie House, La Plaiderie, St Peter Port, Guernsey, Channel Islands, GY1 1WF Registered in Guernsey No Postal address: PO Box 166, La Plaiderie House, La Plaiderie, St Peter Port, Guernsey, Channel Islands, GY1 4HE Switchboard +44 (0) Facsimile +44 (0) Momentum Wealth International Limited is licensed by the Guernsey Financial Services Commission to conduct Investment Business Momentum Wealth International Limited is an authorised Financial Services Provider pursuant to the Financial Advisory and Intermediary Services Act No. 37 of 2002 in South Africa A member of the MMI Holdings Group MWI Page 19 of 19