FIXED INCOME MANAGEMENT

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1 P R O D U C T S FIXED INCOME MANAGEMENT MEMBER OF THE SBA AND REGISTERED SECURITIES DEALER

2 Dynagest is a specialist in international bond management, offering a wide selection of fixed rate investment approaches: portfolio insurance on long-term rates, index tracking, and semi-active or active management. Systematic control of currency risk exposure is an integral part of our service. By combining recognised fundamental research and established quantitative expertise Dynagest is able to provide a very broad spectrum of management techniques. This advantage is underpinned by an ability to integrate these different techniques and develop personalised solutions to ensure greater risk control. Approaches to fixed income management* provided by Dynagest Index tracking Semi-active management Credit risk management Ratchet management Currency-hedged international fixed income management International fixed income management with currency overlay. * See brochure "Bond IndexTracking and Enhanced Indexing, "Dynamic Ratchet Management and Portfolio Insurance and Dynamic Ratchet Management applied to Currency Overlay. Dynagest s strengths Over twenty years of experience in the fixed income management Ability to ensure increased risk control Stringent implementation of the various management processes Pioneer in the application of currency-hedged bond management Consistent performance over time Institutional reporting. Fees Management fees vary between 0.05% and 0.5% depending on the complexity of the product and the volume of assets under management. A degressive fee structure is preferred. Medium- and long-term objectives Drawing on its experience in fixed income portfolio management and advisory services provided to institutional clients, Dynagest continues to develop systematic risk control. Its goal is to offer its clients a variety of strategies by means of: Portfolio insurance techniques for managing interest rate and currency risk Quantitative management techniques for controlling actively managed portfolios. * See brochure Fixed Income Advisory Services.

3 Dynagest s major clients for fixed income management Dynagest manages bond portfolios and provides advisory services for professional clients, institutions, and high net worth individuals including: Banque Cantonale Vaudoise (BCV), Lausanne, Caisse de Prévoyance de l Etat de Genève (CPEG), Genève. Funds managed and advised by Dynagest As of 31 January 2016, Dynagest managed/advised the following investment funds: BCV Dynamic Fund BCV Dynagest International Bond Expo (CHF), Banque Cantonale Vaudoise, Lausanne* BCV Dynamic Fund BCV Dynagest World Expobond (EUR), Banque Cantonale Vaudoise, Lausanne DMC Fund Dynamic Flooring Expo Bonds Europe "DF" in EUR and in CHF (hedged), Units R, Dynamic Asset Management Company (Luxembourg) SA, Luxembourg DMC Fund Dynamic Flooring Expo Bonds USD "DF" in USD and in CHF (hedged), Units R, Dynamic Asset Management Company (Luxembourg) SA, Luxembourg DMC Fund Dynamic Flooring Expo Bonds Euro «MAS» (EUR), Units I and R, Dynamic Asset Management Company (Luxembourg) SA, Luxembourg DMC Fund Dynamic Flooring Expo Bonds USD «MAS» (USD), Units I and R, Dynamic Asset Management Company (Luxembourg) SA, Luxembourg FONDS SYNERGIE OBLIGATIONS MONDE (ex-chf) hedged in CHF-C. * International fixed income product for which currency risks are managed through the use of asymmetric techniques (systematic currency overlay). Insight articles authored by Dynagest* "Currency overlay" obligataire: la preuve par le cliquet La gestion à cliquets appliquée au secteur des obligations Cliquet obligataire: près de quinze ans de performance La gestion obligataire à l'heure des taux zéro Les Key Rate Durations surpassent la duration modifiée Risque de change: impact sur les principales classes d'actifs La dynamique interne de la gestion indicielle. *Available from Dynagest SA or on our website at

4 Four approaches to fixed income management Currency-hedged international fixed income management This approach involves investing in foreign currency bonds applying systematic, full currency hedging. It offers all the advantages of international fixed income management: an alternative to short- and long-term interest rate management in the investor's reference currency diversification of interest rate risks opportunities offered by changing spreads in yield curve levels and interest rates. It overcomes the main drawback of exposure to currency risk, which largely impacts the profitability of foreign currency bonds. Management can be active or passive in terms of yield curve positioning or allocation. Index tracking* This approach, based on stringent risk control, aims to track the performance of a given bond index as closely as possible. Dynagest has developed a proprietary tracking methodology based on the Key Rate Durations (KRD) concept. Using this tool, portfolios can be created whose sensitivity to shifts in the yield curve is identical to that of the index. The methodology is well suited to replicating sovereign debt indices. Semi-active management* The Key Rate Durations concept can also be applied using a semi-active fixed income management approach. The objective in this case is to outperform the benchmark index by selecting a number of securities, with different yield spreads or yield curve positioning, while maintaining a risk profile very close to that of the index. Compared with mainstream active management, this approach has the advantage of containing the risk of underperformance within a predefined range. Credit risk management* Both in index tracking and in the framework of semi-active management, the use of the concept of Duration Times Spread (DTS) provides a relevant picture of the credit risk associated with each bond. This concept corresponds to the product of the spread by the spread duration.** It measures the sensitivity of a loan to a relative changes in spreads. It appears, moreover, that this measure of risk is linearly related to the relative volatility of excess returns. Ratchet management*** This portfolio insurance approach is particularly suited to managing long-term interest rate exposure. It allows the investor to take advantage of the upside potential of long-term bonds, while permanently limiting the downside risk by means of an upwardly adjustable absolute investment floor or benchmark. The strategy applies to the main fixed income markets for high-grade debt and can be implemented either by directly managing long positions or on an overlay basis. International fixed income management with currency overlay**** This approach applies to all types of fixed income management in an international context. Unlike currency-hedged international fixed income management applying systematic full currency hedging, in this approach the currency exposures systematically managed through the use of asymmetric techniques based on Time Invariant Portfolio Protection (TIPP)*** principles. Thus the currency risk is not eliminated but is managed so as to limit the potential impact of a fall in foreign currencies, while preserving a significant participation in their appreciation. * See brochure Bond Index Tracking and Enhanced Indexing. ** As an example, a bond portfolio with a 200 basis point spread and a 2-year spread duration carries as much risk as a portfolio with a 100 basis point spread and a 4-year spread duration. *** See brochure Dynamic Ratchet Management and Portfolio Insurance. **** See brochure Dynamic Ratchet Management Applied to Currency Overlay.

5 The Key Rate Durations : a tool to control interest rate risk Source: Dynagest S.A., SA, Geneva JP Morgan Germany Index Bund 3 % Juiy 4, 2020 Key Rate Durations 1 year 2 years 3 years 5 years 7 years 10 years 15 years 20 years 25 years 30 years 50 years Maturities Key Rate Durations measure a bond s or a bond portfolio s price sensitivity to shifts along the yield curve at key maturity points. The Duration Times Spread : a tool to control credit risk in an index tracking framework Banking Energy Utility Insurance Telecommunications Basic Industry Financial Services Media Healthcare Consumer Non-Cyclical Consumer Cyclical Services Capital Goods Technology & Electronics Real Estate Automotive Portfolio Benchmark Source: Dynagest S.A., Geneva

6 The information provided in this brochure is valid as of 31 January DYNAGEST SA QUAI DE LA POSTE GENEVA PHONE FAX