LIPPER GLOBAL CLASSIFICATION

Transcription

1 LIPPER GLOBAL CLASSIFICATION DEFINITIONS DOCUMENT JULY 2012 lipperweb.com

2 INTRODUCTION PURPOSE The purpose of the Lipper Global Classification (LGC) is to create homogeneous groups of funds with comparable investment objectives. Funds within one LGC sector invest in the same financial markets or specific segments of those markets, but may adopt different investment strategies or styles to achieve their investment objectives. The exceptions to this general rule are LGC sectors containing the word other. This document provides the reader with explanations and definitions of the Lipper Global Classification (LGC) structure. Lipper Global Classifications are to be applied to all funds of the following databases: Hedge Funds Insurance Funds Mutual Funds Pension Funds LGC sectors are accessible in a variety of methods (Hindsight, Lipper Web feeds, press listings etc). By using these classifications users have the ability to identify and analyse funds in a multitude of ways. Lipper operates these classifications on an on-going development basis. Where new fund products or structures enter into a fund market, Lipper will introduce new classifications where it is thought necessary. Lipper also supports other classification schemes, these are supplied dependent on the fund universe analysed. These may be constructed externally by regulators/trade bodies or designed by Lipper. Details of these are available upon request. MONITORING Lipper analysts use a variety of processes to monitor fund classifications. Lipper analyses the outlying performing funds in each sector. We also review sectors which fall below the minimum number of 10 unique portfolios. Further details of these processes are available upon request. In addition to this Lipper operates a Classification Committee that regularly discusses any classification issues that may arise. lipperweb.com [2]

3 OVERVIEW For each fund on the Lipper global database the following classification information is provided: Asset Type Geographical Focus Lipper Global Classification These three fields shall build a unit of coherent and homogenous information within one fund item. In many cases the LGC sector already holds information about the asset type and geographical focus: e.g. LGC: Equity France = asset type equity and geographical focus, France. In some cases a fund may be given a geographical focus that may differ from its classification. For example a fund that has an objective to invest in technology related stocks and has a portfolio consistently heavily weighted towards US, will be placed into an Equity Technology sector rather than Equity US. In this case the funds will be given a geographical focus of US if it is thought that the fund will continue to be heavily weighted towards US, unless it is specifically stated in the investment objective that the fund has a global remit. As a general rule a fund must hold a prevalent exposure with a threshold set at 75% of its portfolio to meet a Lipper Global Classification requirement. Since it may be possible to have temporary changes in strategic asset allocation with divergences from the historical pattern, it is essential to look at historical data to detect for any trend in portfolio allocation to meet the specific classification requirement. Lipper will use the following sources to assign the LGC: Investment objective (statement of the promoter) Prospectus Fund Fact Sheet of promoter group Annual and Semi-Annual reports The primary sources are the investment objective as stated by the promoter and the prospectus. Normally all sources provide information which lead to the same conclusion. lipperweb.com [3]

4 ASSET TYPE DEFINITIONS Each fund is assigned one of the following asset types according to the assets in which the fund invests. As a general rule a fund will be placed according to its primary investment objective as stated by the promoter and given by the fund documents. Funds with a strategic diversification in variable income and fixed income securities along with ancillary liquid assets will be placed as Mixed Asset funds. Equity investing in stock markets Bond investing in fixed Income markets with an average maturity of >1 year Commodity Exposure to commodities either physically or via derivatives Money Market investing in Fixed Income markets with an average residual life to maturity of < 12 months Real Estate investing in physical land property not REITs or real estate listed securities Mixed Assets Strategic mix of variable income and fixed income securities Alternatives Invests in alternative assets, usually by using a derivative/ hedge strategy and is therefore a member of either a hedge fund sector (unregulated funds) or an alternative sector (regulated retail or wholesale funds). Mutual funds with asset types of art, leasing, and private equity would, by default, qualify for alternatives asset type and an alternatives sector. Other Unclassified, Undisclosed The strategic mix of asset types must either be mentioned in the fund s investment objective, or we must have proof that the portfolio has been diversified in an asset type other than mentioned in the investment objective over the whole life of the fund. The diversification has to be significant enough to justify the use of Mixed Assets as asset type and LGC. According to the UCITS Directive funds are permitted to invest their portfolios in ancillary liquid asset or financial derivatives depending on underlying market conditions, window dressing or hedging strategies for efficient portfolio management. Ancillary liquid assets include liquid money market instruments or debt instruments equivalent to liquid money market instruments, with a residual life to maturity up to 12 months. Thus, with respect to these investment policies/hedging strategies only, as long as the fund does not pursue a clear market strategy investing in a mix of asset classes, and the investment in asset classes other than equities remains marginal, the classification of equity funds does not change to mixed asset funds. Please consider that variable debt instruments, i.e. variable coupon, of primary issuers (triple A credit rating) with semi-annual coupons have a short duration (6 months) and as such could be assimilated to liquid assets. Bond funds investing in convertibles or equity funds investing in equity linked products (such as OPALS, warrants, preferred securities, etc.) may hold a residual percentage of, respectively, equities or bonds/other type of assets as a results of conversion of either convertibles or equity linked products, depending on underlying strategic decisions of market convenience between conversion and sale on the secondary market. For similar reasons the classification does not change to mixed assets. lipperweb.com [4]

5 The regulatory frameworks of most funds legislations allow such residual investments in other asset types or liquid assets of a minimal percentage up to 1/3 of the net asset value. However, it is normally not the intention of the manager to make use of this freedom in a strategic manner, and therefore these funds have to remain in the asset type of their primary investment objective. Please note that the public marketing of the promoter may also indicate the LGC and Asset Type of a fund. i.e. funds with an Investment Objective to (primarily) invest in European Equities are most likely: Equity Europe ; even if the prospectus says up to 1/3 of the funds asset may be invested in other than before mentioned securities, including bonds, convertible bonds, etc. The fact that the prospectus allows such investments does not mean that the fund management is using this possibility. Normally, in cases like this, there is no strategic intent to diversify the portfolio in this way. Only a strategic intent to use a diversification with equity and fixed income securities and/or historical evidence of asset allocations over the whole life of the fund justifies a Mixed Asset classification. lipperweb.com [5]

6 GEOGRAPHICAL FOCUS DEFINITIONS Each fund is assigned a Geographical Focus according to the assets in which the fund invests. As a general rule a fund must hold at least 50% of its assets in a Country/Region to be assigned the relevant attribute. EQUITY AND REAL ESTATE FUNDS The GeoFocus shall be selected by taking the predominant country or region of the fund portfolio. Regional funds with a significant strategic (not temporary) overweight in one country (compared to the FTSE/MSCI market capitalisation weightings) should be given the relevant country GeoFocus. (i.e. a European fund with a single country weighted > 50%). For Real Estate funds the property locations are the relevant measure to select the GeoFocus. BOND AND MONEY MARKET FUNDS The GeoFocus shall be selected by taking the predominant issuer domicile of investments and translating this into the relevant country or region. Multi-currency funds with a significant strategic (not temporary) overweight in one issuer domicile should be given the relevant country or region GeoFocus. MIXED ASSET FUNDS The GeoFocus for these funds can normally be derived from the reference currency, since the majority of the portfolio will be focused on either a single country/currency or a geographical region. When an overweight of a region/country is identifiable, it should be stated as GeoFocus. Global should only be used exceptionally. GEOFOCUS FOR OTHER FUNDS The GeoFocus should reflect the local or regional exposure of the fund investments. lipperweb.com [6]

7 EQUITY CLASSES INTRODUCTION The fund strategically invests in variable income securities with ancillary liquid assets. Funds will be classified according to their local or regional equity exposure. Funds focusing more than 75% on a specific industry will be classified in the relevant industry classification. Funds without a typical and prevalent exposure to a specific industry sector will be classified according to the geographical stock market exposure. Funds focusing on equities of small and/or middle capitalization companies will be classified the appropriate Small & Mid Cap sector. Funds using derivatives to achieve an active extension style of investing will be classified in the relevant active extension sector. COUNTRIES / REGIONS Single country funds for which there is no single country sector have to be placed in the relevant regional sector that reflects the closest match. Funds investing in single Emerging countries should be classified in a regional Emerging Markets sector; unless the relevant country sector is available (e.g. Equity Peru would belong to Emerging Markets Latin America etc). The following page lists all sectors relating to countries and regions. lipperweb.com [7]

8 Region Equity ASEAN Equity Asia Pacific Equity Asia Pacific ex Japan Equity Australasia 1 Equity Emerging Mkts Europe Equity Emerging Mkts Asia Equity Emerging Mkts Global Equity Emerging Mkts Latin Am Equity Emerging Mkts Other Equity Europe Equity Europe ex UK Equity Eurozone Equity GCC Equity Global Equity Global ex Japan Equity Global ex UK Equity Global ex US Equity Global Income Equity Greater China Equity Iberia Equity Malaysia/Singapore Equity MENA Equity Nordic Equity Other Country Equity Argentina Equity Australia Equity Austria Equity Belgium Equity Brazil Equity Canada Equity Chile Equity China Equity Denmark Equity Egypt Equity Finland Equity France Equity Germany Equity Hong Kong Equity India Equity Indonesia Equity Israel Equity Italy Equity Japan Equity Korea Equity Kuwait Equity Malaysia Equity Mexico Equity Morocco Country Equity Netherlands Equity Norway Equity Pakistan Equity Philippines Equity Poland Equity Portugal Equity Russia Equity Saudi Arabia Equity Singapore Equity South Africa Equity Spain Equity Sweden Equity Switzerland Equity Taiwan Equity Thailand Equity Turkey Equity UAE Equity UK Equity UK Income Equity UK Diversified Equity US Equity US Income Equity Vietnam 1 Australasia is the area that includes Australia, New Zealand, New Guinea, and the many smaller islands in the vicinity, most of which are the eastern part of Indonesia. lipperweb.com [8]

9 MARKET CAP For funds which follow a specific small or mid cap strategy then the Lipper Global Classification has the below sectors available on a country and regional basis. As the classification is prospectus based then there is no defined limit boundary for the portfolio average market capitalization but rather a written commitment to follow this strategy is made in the objective or full prospectus. Region Equity Asia Pacific Sm&Mid Cap Equity Australasia Sm&Mid Cap Equity China Sm&Mid Cap Equity Europe Sm&Mid Cap Equity Eurozone Sm&Mid Cap Equity Global Sm&Mid Cap Equity Global ex US Sm&Mid Cap Equity US Sm&Mid Cap Country Equity Australia Sm&Mid Cap Equity Canada Sm&Mid Cap Equity France Sm&Mid Cap Equity Germany Sm&Mid Cap Equity Italy Sm&Mid Cap Equity Israel Sm&Mid Cap Equity Japan Sm&Mid Cap Equity Malaysia Sm&Mid Cap Equity Sweden Sm&Mid Cap Equity Switzerland Sm&Mid Cap Equity Taiwan Sm&Mid Cap Equity UK Sm&Mid Cap EQUITY [REGION] & [SM&MID CAP] Funds with the primary objective to invest in Equity Markets of [Region]. Regional Small & Mid Cap focused funds have to be classified in the relevant Small & Mid Cap sector, if available. (See lists above) EQUITY [COUNTRY] & [SM&MID CAP] Funds with the primary objective to invest in Equity Markets of [Country]. Various country specific Small & Mid Cap focused funds have to be classified in the relevant Small & Mid Cap sector. (See lists above) EQUITY EMERGING MARKETS [REGION] Funds with the primary objective to invest in Equities of Emerging markets of the following regions, including single country funds of the relevant regions (if country sector not available): Emerging countries of the European continent Emerging countries of Asia Globally diversified Emerging Markets Emerging countries of the Latin American Continent Emerging Markets in this classification means not an MSCI developed country lipperweb.com [9]

10 EQUITY EMERGING MARKETS OTHER Funds with the primary objective to invest in Equities of Emerging Markets, including single country funds (if country sector not available) and do not fall under Europe, Asia, Globally diversified or Latin America. Multi regions (e.g. EMEA) or multi countries which do not form a fully diversified region must be placed in this sector. Emerging Markets in this classification means not an MSCI developed country EQUITY [REGION/COUNTRY] & [INCOME] Funds with the objective to invest in Equity Markets of [Country/Region] with a primary focus on attaining a high level of income. This is usually achieved via a fundamental approach which seeks high quality, undervalued equity. If equity income is the primary objective then the fund must be classified in the relevant income sector, if available. EQUITY [COUNTRY] DIVERSIFIED Funds with the primary objective to invest in regionally diversified equities, yet with a bias towards [Country]. The [Country] allocation may vary from 30%-75%. EQUITY ACTIVE EXTENSION [REGION/COUNTRY] Funds with the primary objective to invest in Equity Markets with a predominant geo-focus of investments in [Region/Country] and with a strategic long/short target of 100 % net long EQUITY OTHER Funds with the primary objective to invest in developed Equity Markets, where no other Equity classification is appropriate. I.e. funds investing in a single country where no appropriate regional sector is available or in a selection of countries, which are not comparable to other, existing classifications. Please see the next page for the definitions of the sectors related to: China Greater China Hong Kong lipperweb.com [10]

11 EQUITY CHINA Funds with the primary objective to invest in Equity exposure of the Chinese mainland and/or in H-shares 2 or Red-Chips 3 of the Hong Kong stock exchange. Typical benchmarks for this sector are: FTSE China, FTSE Xinhua, Hang Seng China Enterprise, MSCI China, Shanghai SE, Shenzhen SE EQUITY GREATER CHINA Funds with the primary objective to combine the Equity exposures of China, Hong Kong and Taiwan. The Hong Kong exposure must relate to shares other than H-shares or Red-Chips. Typical benchmarks for this sector are: FTSE AW Greater China, MSCI Golden Dragon, MSCI Zhong Hua EQUITY HONG KONG Funds with the primary objective to invest in Equity exposure of Hong Kong (excluding H-shares and Red-Chips). Typical benchmarks for this sector are: FTSE Hong Kong, Hang Seng, MSCI Hong Kong 2 H-Shares are stocks of Chinese companies, which are listed on the Hong Kong stock exchange and freely tradable for foreigners. 3 Red-Chips are stocks of subsidiaries of Chinese companies, which are listed in HK-$ on the Hong Kong stock exchange, and stocks of companies from Hong Kong, whose primary business is on China mainland. In a country allocation H-Shares and Red-Chips are often allocated to Hong Kong, however, they represent Equity exposure to China. Chinese Share Descriptions by FTSE A-Shares: Securities of Chinese incorporated companies that trade on the Shanghai or Shenzhen stock exchanges, quoted in Chinese Renminbi (RMB). Traded by residents of the People s Republic of China (PRC) or international investors under the China Qualified Foreign Institutional Investors (QFII) regulations. B-Shares: Securities of Chinese incorporated companies that trade on the Shanghai Stock Exchange (quoted in US Dollars) or the Shenzhen Stock Exchange (quoted in Hong Kong Dollars HKD). Traded by both non-residents of the PRC and residents with appropriate foreign currency dealing accounts. H-Shares: Securities of companies incorporated in the PRC and nominated by the Chinese Government for listing and trading on the Hong Kong Stock Exchange, quoted and traded in HKD. Those from the PRC are not allowed to trade H shares however there are no restrictions on international investors. Red Chip Shares: Securities of Hong Kong incorporated companies that trade on the Hong Kong Stock Exchange, quoted in HKD. The constituents are substantially owned directly or indirectly by the Chinese Government. Those from the PRC are not allowed to trade H shares however there are no restrictions on international investors. lipperweb.com [11]

12 EQUITY INDUSTRY SECTORS The industry sectors are derived, with some adjustments, to better reflect Lipper classification requirements. The essence of this is taken from the structure of the globally focused Industry Classification Benchmark (ICB) resulting from the merger of more localized legacy Industry classifications: FTSE and Dow Jones. List of current Industry sector classifications: Banks and Other Financials Basic Industries Biotechnology Cyclical Consumer Goods & Services General Industrials Gold & Precious Metals Information Technology Natural Resources Non-Cyclical Consumer Goods & Services Pharma & Health Care Real Estate Europe Real Estate Global Real Estate Japan Real Estate US Real Estate Other Technology, Media and Telecommunication Services Telecommunication Services Utilities Definitions Funds with the primary objective to invest in variable income securities of companies within a specific Industry sector (irrespective of any geographical focus). EQUITY SECTOR BANKS AND OTHER FINANCIALS Funds with the primary objective to invest in companies involved in financial activities such as banking, mortgage and consumer finance, investment banking and brokerage, asset management and custody, insurance and financial investment. In particular the sector includes any of the industries below: Banks: Retail and Investment Non-Life Insurance Life Assurance Re-Insurance Other Insurance Insurance Brokers Investment Companies Consumer Finance Asset Management Mortgage Finance Other Financial lipperweb.com [12]

13 EQUITY SECTOR BASIC INDUSTRIES Funds with the primary objective to invest in companies operating in a wide range of commodity-related manufacturing industries. In particular the sector includes any of the industries below: Chemicals Construction & Building Materials: it includes producers of materials used in the construction and refurbishment of buildings and structures and refractory materials, constructors of residential and non-residential building, large-scale contractors Forestry & Paper: it includes the manufacturers of timber and wood related products, the manufacturers and merchants of all grades of paper Steel and Other Metals (iron and non-ferrous metal) EQUITY SECTOR BIOTECHNOLOGY Funds with the primary objective to invest in companies, the majority of whose research and development implies the use of living material as its means of drug discovery and diagnostic development. EQUITY SECTOR CYCLICAL CONSUMER GOODS AND SERVICES Funds with the primary objective to invest in companies that operate in industries that tend to be the most sensitive to economic cycles (consumer discretionary). Its manufacturing segment includes automobiles, household durable goods, textiles, apparel, accessories and luxury goods. The services segment includes hotels, restaurants and other leisure facilities, transportation, media production and services and consumer retailing and leisure equipment. In particular the sector includes any of the industries below: Automobiles and Components Household Goods: it includes manufacturers of household domestic appliances (it includes also cutlery, tableware, giftware) and consumer electronics and electrical equipment (TVs, VCRs, hi-fi equipment, game consoles, lighting). Textiles Luxury Goods Entertainment General Retailers: it includes shops and wholesalers concentrating on mass distribution of both hardlines and soft goods at discount (discount & super stores and warehouses), e- commerce retailers, hardlines retailers, multi-department retailers, soft-goods (clothes) retailers, department stores. Leisure & Hotels Support Services: it includes business support services, couriers and package delivery services, education providers, environmental control, transaction and payroll services, security & alarm services. Transport Media lipperweb.com [13]

14 EQUITY SECTOR GENERAL INDUSTRIALS Funds with the primary objective to invest in companies whose businesses are dominated by one of the following activities: The manufacture and distribution of capital goods, including aerospace & defence, electronic and electrical equipment, engineering and industrial machinery. In particular the sector includes any of the industries below: Aerospace & Defence Diversified Industrials: it includes industrial conglomerates, i.e. diversified industrial companies with business activities in three or more sectors that differ substantially from each other, none of which contributes a majority of company s revenue. Electronic & Electrical Equipment Engineering & Machinery EQUITY SECTOR GOLD & PRECIOUS METALS Funds with the primary objective to invest in companies that mine, process, and produce gold and related products and precious metals such as platinum. The sector classification also includes funds investing of their assets in finance houses mainly South African - that primarily finance and develop mining interests or derive an income from mining interests, without operating gold and precious metals mining. In particular the sector includes any of the industries below: Gold and Precious Metals Mining (companies that mine, process, and produce gold and related products and precious metals such as platinum) Gold and Precious Metals Mining Finance (finance houses mainly South African - that primarily finance and develop mining interests or derive an income from mining interests, without operating gold and precious metals mining) EQUITY SECTOR INFORMATION TECHNOLOGY Funds with the primary objective to invest in companies operating: technology software & services, including companies that mainly develop software in various fields such as the Internet, applications, systems, databases management and data storage components, and companies that provide information technology consulting and services, as well as data processing and outsourced services; technology hardware & equipment, including manufacturers and distributors of communications equipment, computers & peripherals, electronic equipment and related instruments; semiconductors & semiconductor equipment manufacturers and distributors. In particular the sector includes any of the industries below: Internet Software and Internet Service Providers IT Consulting & Services Software Communications Equipment: Networking and Telecommunications Equipment 4 Computer Hardware, Computer Storage and Peripherals Electronic Equipment & Instruments Office Electronics Semiconductor Equipment & Semiconductors 4 The classification includes manufacturers of computer networking and products, including LANs, WANs and routers. It classifies also manufacturers of telecommunication equipment, including mobile telephones, switchboards and exchanges. For instance, Nokia or Samsung would be classified under the Information Technology sector. lipperweb.com [14]

15 EQUITY SECTOR NATURAL RESOURCES Funds with the primary objective to invest in companies engaged in the exploration, extraction and/or refining of minerals other than gold and precious metals and/or exploration for production, refining, distribution, and supply of mineral oil and gas, providers of services (including drilling services) for oil and natural gas exploration and production. In particular the sector includes any of the industries below: Mineral Extractors & Mines (exploration, extraction and/or refining of minerals other than gold and precious metals) Oil & Gas (exploration for production, refining, distribution, and supply of mineral oil and gas) EQUITY SECTOR NON-CYCLICAL CONSUMER GOODS & SERVICES Funds with the primary objective to invest in companies whose businesses are less sensitive to economic cycles (consumer staples). It includes manufacturers and distributors of food, beverages and tobacco and producers of nondurable household goods and personal products. It also includes food & drug retailing companies as well as hypermarkets and consumer super centres. In particular the sector includes any of the industries below: Beverages Food Producers & Processors Personal & Household Products: it includes producers and distributors of detergents, soaps, toiletries, cosmetics and perfumes. Tobacco Food & Drug Retailers EQUITY SECTOR PHARMA & HEALTH CARE Funds with the primary objective to invest in companies who manufacture health care equipment and supplies or provide health care related services, including distributors of health care products, providers of basic health care services, and owners and operators of health care organisations and facilities, such as hospitals, clinics, nursing homes, rehabilitation and retirement centres. The sector also classifies companies primarily involved in drug research, development, production and marketing. In particular the sector includes any of the industries below: Pharmaceuticals Medical Equipment & Supplies Health Care Facilities Ownership & Management Health Maintenance Organisations EQUITY SECTOR REAL ESTATE Funds with the primary objective to invest in companies specialising in holding a stake in firms specialised in the ownership, management and/or development of property assets. This includes any investments in REITs (Real Estate Investment Trusts) which are property companies traded like equities with special legal status to redistribute a large percentage of lipperweb.com [15]

16 property income. For mutual funds which invest in REITs then these must be treated as investments in an equity type security. The list of country/region below refers to the predominant geographical area of the fund invested portfolio (Other refers to countries/regions not classified elsewhere): Asia Pacific Australia Europe Global Japan US Other EQUITY SECTOR TECHNOLOGY, MEDIA AND TELECOMMUNICATION SERVICES Funds with the primary objective to invest in equities of companies operating in the three industry sectors of technology, media and telecommunication sectors, irrespective of any geographical focus. The 75% threshold is achieved with the allocation of total fund assets to the three sectors together, none of which contributes a majority of asset allocation exposures. Multimedia funds are generally classified under the Technology, Media and Telecommunication Services sector. Multimedia funds have generally an exposure to the three sectors according to different weightings: Technology, Telecommunications and Media. Funds investing in New Markets may be classified within the Technology, Media and Telecommunication Services classification scheme. Nevertheless, it may occur that one of the three sectors has a zero weighting depending on fund manager market expectations and sector allocation strategies. EQUITY SECTOR TELECOMMUNICATION SERVICES Funds with the primary objective to invest in companies that provide communications services primarily through a fixed-line, cellular, wireless, high bandwidth and/or fiber optic cable network. In particular the sector includes any of the industries below: Fixed-Line Telecommunication Services Wireless Telecommunication Services Integrated Telecommunication Services Alternative Carriers EQUITY SECTOR UTILITIES Funds with the primary objective to invest in companies operating electric, gas or water utilities, independent producers and/or distributors of power. This sector includes both nuclear and nonnuclear facilities. In particular the sector includes any of the industries below: Electricity Gas Distribution Water Multi-Utilities: it classifies companies where the majority of total profits arise from the provision of utilities, where no single utility business accounts for greater than 80% of the profits arising from utilities lipperweb.com [16]

17 BOND CLASSES INTRODUCTION The fund strategically invests in fixed income securities with average maturity above 1 year. Funds will be classified according to currency exposure, emerging markets exposure, credit quality and maturity exposure. Aggregate bond funds with government and corporate exposure will by classified in the respective currency classification. High Yield funds primarily invest in bonds with a speculative grade (i.e. bonds with a credit rating below BBB). Currency hedged funds have their own separate classifications according to currency and regional focus. A full list of our bond classes is shown below: Single Currency Bond ARS Bond AUD Bond BRL Bond CAD Bond CHF Bond CLP Bond CNY Bond CZK Bond DKK Bond EUR Bond Eurozone Bond GBP Bond HKD Bond HUF Bond IDR Bond ILS Bond INR Bond INR Government Bond JPY Bond KRW Bond MAD Bond MXN Bond MYR Bond NOK Bond Other Bond PHP Bond PLN Bond PKR Bond RUB Bond SEK Bond SGD Bond THB Bond TND Bond TRY Bond USD Bond USD Municipal Bond ZAR Multi Currency Bond Asia Pacific Bond Europe Bond Europe Other Bond Global Bond Global AUD Hedged Bond Global EUR Hedged Bond Global JPY Hedged Bond Global USD Hedged Bond Other CHF Hedged Bond Other EUR Hedged Bond Other USD Hedged Bond Other Hedged Convertibles Bond Convertibles Europe Bond Convertibles Global Bond Convertibles US Bond Convertibles Japan Bond Convertibles Other Corporate Bond EUR Corporate Bond GBP Corporate Bond Global Corporate Bond ILS Corporate Bond USD Corporate lipperweb.com [17]

18 Emerging Markets Bond Emerging Markets Global HC Bond Emerging Markets Global LC Bond Emerging Markets Latin Am Bond Emerging Markets Other Bond Emerging Markets Europe High Yield Bond AUD High Yield Bond CAD High Yield Bond EUR High Yield Bond Europe High Yield Bond GBP High Yield Bond Global High Yield Bond USD High Yield Inflation Linked Bond EUR Inflation Linked Bond USD Inflation Linked Bond Other Inflation Linked Bond GBP Inflation Linked Bond Global Inflation Linked Maturity Bond ARS Short Term Bond BRL Short Term Bond CAD Short Term Bond CHF Short Term Bond EUR Long Term Bond EUR Medium Term Bond EUR Short Term Bond Eurozone Long Term Bond Eurozone Medium Term Bond Eurozone Short Term Bond GBP Short Term Bond Global Short Term Bond MAD Short Term Bond MXN Short Term Bond PHP Short Term Bond PHP Medium Term Bond USD Medium Term Bond USD Short Term Definitions BOND [CURRENCY] Funds with the primary objective to invest in international fixed income securities of developed markets denominated in [currency], irrespective of the debtor domiciles. BOND [CURRENCY] INFLATION-LINKED Funds with the primary objective to invest in inflation-indexed fixed income securities. Inflationindexed bonds are fixed income securities that are structured to provide protection against inflation. BOND [CURRENCY] LONG TERM Bond funds investing only in the long term segment of 5+ years of a specified currency yield curve, according to the average residual life to maturity. BOND [CURRENCY] MEDIUM TERM Bond funds investing in the 3-5 year segment of a specified currency yield curve, according to the average residual life to maturity. According to the U.S. standard the medium term segment is called Short/Intermediate-Term. lipperweb.com [18]

19 BOND [CURRENCY] SHORT TERM Bond funds investing in the 1-3 year segment of a specified currency yield curve, according to the average residual life to maturity. BOND ASIA PACIFIC Funds with the primary objective to invest in fixed income securities denominated in USD and currencies of the Asian Pacific region from debtors domiciled in countries of the Asian Pacific region. BOND EMERGING MARKETS [REGION] Funds with the primary objective to invest in Bonds denominated in currencies of emerging countries in the [Region] region and/or issued by government debtors in Emerging countries of [Region]. (See next class for single currency Emerging Market Bonds funds). The global sector is now split into hard currency (HC) and local currency (LC) strategies. The qualification for hard currency is >75% exposure to hard currencies, which may be achieved via hedging. Hard Currency means an aggregated exposure to any or all of: USD, GBP, EUR, SKK, NOK, USD, JPY, DKK, CHF, AUD, SGD, CAD, GOLD BOND EMERGING MARKETS OTHER Funds with the primary objective to invest in Bonds denominated in a single currency/country or a selection of currencies/countries of Emerging Markets, which are different from the above mentioned Emerging Market regions and where no single currency sector is available. BOND EUROPE Funds investing their assets in a mix of European currencies, such as EUR, GBP, CHF, DKK, SEK, NOK etc. In many cases the EUR will be the major currency in the fund portfolio (above 75%). When a funds primary investment objective allows the strategic use of currencies other than EUR, it shall be classified as Bond Europe. i.e. invests in bonds denominated in European currencies BOND EUROZONE Funds with the primary objective to invest in fixed income securities issued by Governments or Supranational Agencies of member countries of the European Monetary Union and denominated in Euro. For the identification of this sector, the prospectus must clearly mention the overweighting or restriction of the investments to the above mentioned issues. If the investment objective, as stated in the prospectus, does not specifically mention any investment exposure to issues of Governments or Supranational Agencies of EMU countries, Lipper will classify the fund as Bond EUR. The 75% threshold rule is suspended as long as the fund fact sheet does not support a clear identification of the investment objective through a breakdown by issuer s domicile. lipperweb.com [19]

20 (This remark here is justified by the fact that as long as the investment objective mentions the over weighting to issues of EMU countries fund fact sheet could support the classification similarly to what is done when classifying other LGC, for instance any of the industry sectors above). BOND (LONG, MEDIUM, SHORT TERM) As above, but within the relevant maturity segments. BOND GLOBAL Funds with the primary objective to invest in fixed income securities denominated in various currencies of developed markets. Currency exposure according to global bond market capitalization and not hedged to a single currency (see hedged sectors below for this type of fund). BOND USD MUNICIPAL Bond funds investing primarily in U.S. municipal debt issues that are exempt from Federal (and in some cases state) taxation. BOND [CURRENCY] CORPORATES Funds with the primary objective to invest in [Currency] denominated bonds from corporate issuers (non-government / non-agencies) in the investment grade credit rating (from AAA to BBB) BOND [CURRENCY] HIGH YIELD Funds with the primary objective to invest in [Currency] denominated bonds issued by governments/agencies and/or corporates in the non-investment grade area (below BBB). CURRENCY HEDGED BOND FUNDS These will be classified by looking at the hedge currency investment policy as declared in the prospectus, taking into account the currency of denomination of the fund. The prospectus must clearly state that the fund, in its investment policy, pursues a systematic currency hedging strategy. It is assumed that the fund aims at maximizing returns in the hedge currency or, in the absence of any reference to the hedge currency, in the currency of denomination of the fund. The strategic use of currency hedging overrides any other classification EXCEPT in the strategic cases of: Emerging Markets; Convertibles; Inflation Linked and High Yield. In the latter cases the asset base will supersede the currency hedge in deciding the classification. BOND GLOBAL [HEDGE CURRENCY] HEDGED Funds with the primary objective to invest in fixed income securities denominated in various currencies of developed markets and hedging the various currency exposures to the Hedge currency. lipperweb.com [20]

21 BOND OTHER [HEDGE CURRENCY] HEDGED Same as above, but the bond portfolio is other than internationally diversified in currencies of developed markets. BOND OTHER HEDGED Same as above, but the currency exposure of the bond portfolio is hedged against a currency not available above. BOND OTHER Funds investing in bonds of non-emerging Markets (single or groups of) currencies/countries, where no other classification is appropriate. BOND OTHER INFLATION LINKED Funds investing in inflation-indexed fixed income securities of currencies other than EUR and USD. Inflation-indexed bonds are fixed income securities that are structured to provide protection against inflation. lipperweb.com [21]

22 MONEY MARKET CLASSES INTRODUCTION The fund strategically invests in Money Market and Cash instruments or Bonds with a residual life to maturity of less than 12 months. Funds will be classified according to their currency exposure. CURRENCIES AUD BRL BRL Leveraged CAD CHF CLP CNY CZK EUR EUR leveraged GBP Global Definitions HKD HUF ILS INR JPY KRW KWD MAD MXN MYR NOK NZD Other PHP PKR PLN SEK SKK SGD THB TWD TRY USD ZAR MONEY MARKET [CURRENCY] Funds with the primary objective to invest in [Currency] denominated cash and money market securities. MONEY MARKET [CURRENCY] LEVERAGED Actively managed money market funds investing a large proportion of its assets in [Currency] money market or cash instruments. Funds in this sector use credit derivatives and other similar instruments with the objective to increase their return. lipperweb.com [22]

23 REAL ESTATE INTRODUCTION The fund strategically invests the prevalence of its total assets in direct, tangible buildings and/or land 5. Funds will be classified according to their local or regional market exposure. COUNTRY/REGION Australia Asia Europe Global Japan US Other Russia Switzerland United Kingdom Definitions REAL ESTATE PROPERTY [COUNTRY/REGION] Funds with the primary objective to invest in real estate property (buildings and land) of [Country/Region]. Single country funds may be classified in their relevant regional sectors when the macro-economic drivers of the single country are similar to the regional ones. (I.e. France REAL ESTATE PROPERTY OTHER Funds with the primary objective to invest in real estate property (buildings and land) of countries or regions not mentioned above. 5 Note on Real Estate Investment Trusts: if the fund is an open ended mutual and holds a prevalence of Real Estate Investment Trusts then classify in Equity Sector Real Estate. Conversely, if the fund is a closed ended Real Estate Investment Trust then classify in Real Estate lipperweb.com [23]

24 MIXED ASSET CLASSES INTRODUCTION The fund strategically invests in fixed income and equity securities by over weighting a specific currency or market. The fund aims to optimise returns in the reference currency by over-weighting this currency and/or its respective market (within the fund portfolio or versus the global market capitalisation). Over-weighting makes reference to the prevalent currency exposure of the invested portfolio or, in absence of any prevalence, to the currency of denomination of the fund under the assumption that the fund aims at maximising returns in the investment currency of the investor. Reference currency Other : will either relate to a currency not mentioned below, or to funds, which invest in markets not directly relating to the reference currency, such as Central and Eastern Europe ( EUR), Latin America ( USD), any other groups of or single Emerging countries with no direct relationship to the fund currency (Global Emer Mkts USD) RISK Conservative, Balanced, Aggressive and Flexible COUNTRY OR REGION If needed, there will be an additional geographical distinction narrowing down the investment universe. In these cases an additional criteria [ Country/Region] is added to the sector name, which limits the investment to this country/region and its respective currency. NAMING CONVENTION: Mixed Assets & Reference Currency & Risk Degree & [Country/Region] REFERENCE CURRENCIES: AUD, BRL, CAD, CHF, CLP, CNY, CZK, EUR, GBP, HKD, IDR, ILS, INR, JPY, KRW, MAD, MYR, NOK, NZD, PHP, PLN, RUB, SEK, SGD, THB, TRY, TWD, USD, ZAR, Other RISK DEGREE Variable income Fixed income Conservative < 35 % > 65% Balanced > 35% and < 65% > 35% and < 65 % Aggressive > 65 % < 35 % Flexible At the discretion of the fund manager, varying depending on market conditions lipperweb.com [24]

25 COUNTRY/REGION Europe Eurozone Global US Thailand Definitions MIXED ASSETS [REFERENCE CURRENCY] CONSERVATIVE [COUNTRY/REGION] Funds investing more than 65% in fixed income securities and the remainder in variable income securities. Reference currency exposed securities are over weighted. Investments are limited to country/region and reference currency. MIXED ASSETS [REFERENCE CURRENCY] BALANCED [COUNTRY/REGION] Funds investing more than 35% but less than 65% in variable income securities and the remainder in fixed income securities. Reference currency exposed securities are over weighted. Investments are limited to country/region and reference currency. MIXED ASSETS [REFERENCE CURRENCY] AGGRESSIVE [COUNTRY/REGION] Funds investing more than 65% in variable income securities and the remainder in fixed income securities. Reference currency exposed securities are over weighted. Investments are limited to country/region and reference currency. MIXED ASSETS [REFERENCE CURRENCY] FLEXIBLE [COUNTRY/REGION] Funds with flexible allocations between variable income and fixed income securities. The objective of the fund manager is to achieve the highest possible returns by freely changing risk degrees according to current market conditions. It may be possible that, dependent on market conditions, the portfolio of a mixed asset flexible fund is fully invested in only one of the asset classes above. Reference currency exposed securities are over weighted. Investments are limited to country/region and reference currency. MIXED ASSETS OTHER [RISK DEGREE] Funds investing in variable income and fixed income securities according to the relevant Risk Degrees, with Reference currencies other that the above mentioned, or investing in markets not relating to the fund currency, such as Central and Eastern Europe ( EUR), Latin America ( USD), any other groups of or single Emerging countries with no direct relationship to the fund currency (Global Emer Mkts USD). lipperweb.com [25]

26 Full list Mixed Asset AUD Aggressive Mixed Asset AUD Balanced Mixed Asset AUD Conservative Mixed Asset AUD Flexible Mixed Asset BRL Aggressive Mixed Asset BRL Balanced Mixed Asset BRL Conservative Mixed Asset BRL Flexible Mixed Asset CAD Aggressive Mixed Asset CAD Balanced Mixed Asset CAD Conservative Mixed Asset CAD Flexible Mixed Asset CHF Aggressive Mixed Asset CHF Balanced Mixed Asset CHF Conservative Mixed Asset CHF Flexible Mixed Asset CLP Conservative Mixed Asset CNY Aggressive Mixed Asset CNY Balanced Mixed Asset CNY Flexible Mixed Asset EUR Aggressive - Europe Mixed Asset EUR Aggressive - Eurozone Mixed Asset EUR Aggressive - Global Mixed Asset EUR Balanced - Europe Mixed Asset EUR Balanced - Eurozone Mixed Asset EUR Balanced - Global Mixed Asset EUR Conservative - Europe Mixed Asset EUR Conservative - Eurozone Mixed Asset EUR Conservative - Global Mixed Asset EUR Flexible - Europe Mixed Asset EUR Flexible - Eurozone Mixed Asset EUR Flexible - Global Mixed Asset GBP Aggressive Mixed Asset GBP Balanced Mixed Asset GBP Conservative Mixed Asset GBP Flexible Mixed Asset HKD Aggressive Mixed Asset HKD Balanced Mixed Asset HKD Flexible Mixed Asset IDR Balanced Mixed Asset IDR Conservative Mixed Asset IDR Flexible Mixed Asset IDR Aggressive Mixed Asset ILS Aggressive Mixed Asset ILS Conservative Mixed Asset ILS Flexible Mixed Asset INR Aggressive Mixed Asset INR Balanced Mixed Asset INR Conservative Mixed Asset INR Flexible Mixed Asset JPY Aggressive Mixed Asset JPY Balanced Mixed Asset JPY Conservative Mixed Asset KRW Aggressive Mixed Asset KRW Balanced Mixed Asset KRW Conservative Mixed Asset MAD Balanced Mixed Asset MAD Conservative Mixed Asset MYR Conservative Mixed Asset MYR Flexible Mixed Asset MYR Balanced Malaysia Mixed Asset MYR Balanced Global Mixed Asset NOK Balanced Mixed Asset Other Aggressive Mixed Asset Other Balanced Mixed Asset Other Conservative Mixed Asset Other Flexible Mixed Asset PHP Balanced Mixed Asset PLN Balanced Mixed Asset PLN Conservative Mixed Asset RUB Aggressive Mixed Asset RUB Balanced Mixed Asset RUB Conservative Mixed Asset RUB Flexible Mixed Asset SEK Aggressive Mixed Asset SEK Balanced Mixed Asset SEK Conservative Mixed Asset SGD Aggressive Mixed Asset SGD Balanced Mixed Asset SGD Conservative Mixed Asset THB Balanced Mixed Asset THB Conservative Mixed Asset THB Flexible - Thai Mixed Asset THB Flexible - Global Mixed Asset TRY Aggressive Mixed Asset TRY Balanced Mixed Asset TRY Conservative Mixed Asset TRY Flexible Mixed Asset TWD Aggressive Mixed Asset TWD Balanced Mixed Asset TWD Conservative Mixed Asset TWD Flexible Mixed Asset USD Aggressive Mixed Asset USD Balanced - Global Mixed Asset USD Balanced - US Mixed Asset USD Conservative Mixed Asset USD Flexible - Global Mixed Asset USD Flexible - US Mixed Asset ZAR Aggressive Mixed Asset ZAR Balanced Mixed Asset ZAR Conservative Mixed Asset ZAR Flexible lipperweb.com [26]

27 HEDGE CLASSES INTRODUCTION Lipper has extended the hedge fund classification system by separating fund of hedge funds from single hedge fund vehicles. Each of the single vehicle LGC categories below also has a corresponding fund of hedge fund (FOHF) category. For convenience we have also introduced two additional composite sectors: single hedge funds composite and fund of hedge funds composite. Please note that the latter two groupings are contained within a separate scheme called Lipper Hedge Composite. All the funds are separately classed again by appropriate strategy in the Lipper Global Classification scheme. HEDGE FUNDS STRATEGY OVERVIEW Strategy Type LGC category Sub strategies (not available as classification) Relative Value Strategies Hedge/Convertible Arbitrage Hedge/Equity Market Neutral Statistical arbitrage Fundamental arbitrage Hedge/Fixed Income Arbitrage Swap-spread arbitrage Yield curve arbitrage Volatility Arbitrage Capital structure arbitrage Hedge/Options Arbitrage/Strategies Directional Strategies Hedge/Dedicated Short Bias Hedge/Emerging Markets Hedge/Global Macro Hedge/Long Bias Hedge/Long/Short Equity Hedge/Managed Futures/CTAs Systematic trend-following Discretionary Event Driven Strategies Hedge/Event Driven Event-Driven Distressed Securities Event-Driven Risk Arbitrage (merger arbitrage) Event-Driven Multi-Strategy Credit Hedge/Credit Focus Asset- and Mortgage-Backed, Structured Securities High Yield Long/Short Credit Long Bias Credit Arbitrage Stressed/Distressed Private Placement Asset-based Lending Credit Multi-Strategy Mixed and Other Strategies Hedge/Multi Strategies Hedge/Other Hedge lipperweb.com [27]

28 RELATIVE VALUE STRATEGIES Hedge/Convertible Arbitrage Hedge/Equity Market Neutral Hedge/Fixed Income Arbitrage Hedge/Options Arbitrage/Strategies HEDGE/CONVERTIBLE ARBITRAGE Convertible Arbitrage strategies aims at locking in profits whenever there is a pricing discrepancy in the conversion factor of a security by taking long positions in convertible securities and hedging those positions by selling short the underlying common stock, i.e. "working the spread" between them. The number of stocks sold short usually reflects a delta neutral or market neutral ratio. Under normal market conditions, it is expected that a delta neutral portfolio exposure remain insensitive to fluctuations in the price of the underlying stock. HEDGE/EQUITY MARKET NEUTRAL Equity market neutral hedge fund strategies aim at generating a positive return in both up and down markets by selecting positions with a total net exposure of zero. An equity market-neutral strategy seeks to generate returns by exploiting equity market inefficiencies, and involves simultaneously holding long and short equity portfolios of approximately the same dollar amount. Trades involve buying under-priced stocks, the long portion of the portfolio, and selling over-priced stocks, the short portion of the portfolio. The spread between the performance of the longs and the shorts, and the interest earned from the short interest rebate, provides the primary return for this strategy. An equity market-neutral strategy can be established in terms of neutrality based on the following factors: dollar amount, beta, country, currency, industry or sector, market capitalization, style (value/growth), and other factors or a combination thereof. Two main approaches to equity market-neutral strategies can be followed: statistical arbitrage and fundamental arbitrage. Statistical arbitrage implies model-based, short-term trading using quantitative and technical analysis to select profit opportunities. Fundamental arbitrage is mainly based on fundamental analysis and is less quantitative than statistical arbitrage. However, some managers use technical and price momentum indicators (e.g., moving averages, relative strength index, and trading volumes) to support in the decision making process. HEDGE/FIXED INCOME ARBITRAGE Fixed Income Arbitrage is a strategy that generally aims at taking profit "playing the spread" between similar fixed income securities. The Fixed Income Arbitrage is often highly leveraged. Four main arbitrage sub strategies can be identified: Swap-spread arbitrage, Yield curve arbitrage, Volatility arbitrage, and Capital structure arbitrage. Swap-spread arbitrage is a bet on the direction of swap rates, Libor, Treasury coupon rates and repo rates. A typical swap-spread arbitrage trade would consist of a fixed receiver swap and a short position in a par Treasury bond of the same maturity. The proceeds of the sale of the Treasury bond would be invested in a margin account earning the repo rate. This trade is a simple bet that the difference between the swap rate and coupon rate will be more than the lipperweb.com [28]