Post on 30-May-2018
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I N V I C T U S
G l o b a l
E m e r g i n g
M a r k e t F u n d
The Next Fund Manager 2010
N e l s o n L i m
D a r r y l K o h
K oh Y o n g S e n g
Presented By:
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The Scenario
Windstorm from Atlantic Ocean made a
landfall in New York
Caused billions of dollars in damages and
brought businesses in New York to a standstill
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Agenda: The Preview
Fund Composition The Overview
Reassuring Investors
The Effects
Adjusted Fund Portfolio The Strategy
InvestmentOpportunities
The Overview The Effects The Strategy The Analysis
The Analysis
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Invictus Global Emerging Markets Fund
Fund Composition
Fix Income
30%
Equities
70%
Aberdeen GlobalOpportunities
15%
First State GEM
Leaders
55%
United GEMsInvestments10%
DWS Lion Fund
20%
The Overview The Effects The Strategy The Analysis
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Effects of Natural Disaster on
Financial Markets
Past Similar Case: Hurricane Katrina(Aug 2005)
Caused damages in excess of US$100 billion
Devastated several US states and disrupted oil supply
Effects of Hurricane Katrina on Financial Markets:
Initial fall in stock prices
Shortly after, Markets recovered and continued to rise
higher than before disaster
Hurricane Katrina
Hurricane Katrina
The Overview The Effects The Strategy The Analysis
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Effects of Natural Disaster on
Financial Markets
Observed similar findings during Hurricane
Andrew (1992), Hurricane Hugo (1989) and
even during September 11 Terrorist AttackInvestors should be advised not to do
panic exit as this will result in selling at
an unfavourable price
The Overview The Effects The Strategy The Analysis
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How will our Fund be Affected
Pre-dominantly invested in Emerging Markets
Minimum exposure in US markets (3%)
Negative impacts of US markets on our fundshould be minimal
The Overview The Effects The Strategy The Analysis
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How will our Fund be Affected
However, we need to take a
Economy is just recovering
Fragile state
Possibility of triggering another recession in US
Cautious Approach!
The Overview The Effects The Strategy The Analysis
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Investment Opportunities During
a Natural Disaster
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Implementing Changes to
Portfolio Composition
ModeratelyAggressive
MaintaningExisting
Strategy
EmergingMarkets
Maintaining
Key RevenueDriver
The Overview The Effects The Strategy The Analysis
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Moderately Aggressive Portfolio
Composition
Equity, 70%
Fixed Income,
30%First State GEM,
45%
Material , 10%Construction, 5%
Global Aberdeen,
10%
DWS Lion Fund,
20%
United GEM
Investments, 10%
The Overview The Effects The Strategy The Analysis
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Moderately Aggressive Portfolio
Composition
DWS Lion
Fund, 20%
United GEM
Investments,
10%
Increasing
SovereignRisk,especiallyEurozone
US Incurring
AdditionalDebt tofinancereconstruction
Focus on High
GradeInvestmenetCorporateBonds
The Overview The Effects The Strategy The Analysis
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Emerging Market as Key
Revenue Driver
EmergingMarkets,
55%
Global
Markets,45%
The Overview The Effects The Strategy The Analysis
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Analysis of Investment
Opportunities
Material , 10%
Construction,
5%
The Overview The Effects The Strategy The Analysis
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URS Corporation
Leading US federal government contractor
Provides planning, design and program and
construction management services forpublic buildings
Strong fundamentals, with stable growth in
earnings Participated in the rebuilding work in the
aftermath of Hurricane Katrina
The Overview The Effects The Strategy The Analysis
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URS Corporation
Annualized return of approximately 17%
between 2005 and 2007, compared to 10-yr
annualized return of 13%
The Overview The Effects The Strategy The Analysis
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Worlds largest steel company
10% of worlds steel output in 2007
23% of steel sales to USA, 39% to EM
Demand of steel, a key material for
construction, is expected to rise substantially
during the rebuilding stage of natural disasterrecovery
ArcelorMittal
The Overview The Effects The Strategy The Analysis
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ArcelorMittal
Annualized return of approximately 49%
between 2005 and 2007, compared to
10-yr annualized return of 10.7%
The Overview The Effects The Strategy The Analysis
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Largest steel producer in China, 3rd largest in
the world
An increase in demand for steel will raise the
price of steel
Share price is highly correlated to world steel
price
High growth potential given the likelihood on
increase in demand of steel caused by disasterShare Price Chart for
Baosteel (2005-2009)
The Overview The Effects The Strategy The Analysis
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Projected Fund Performance
Security 10-yr
Annualized
Return
Annualize
d Return
between
2005-07
Projected
2-yr
Annualized
Return
URS
Corp.
13.0% 17% 17%
Arcelor
Mittal
10.7% 49% 49%
Bao
steel
3.9% N/A 11.1%*
First
State
GEM,45%
Arcelor
Mittal,
5%
URS
Corp, 5%
Aberdeen,
10%
DWS
LionFund,
20%
United
GEM,
10%
Baosteel,
5%
* approximated using rise in steel price from 2005-07
The Overview The Effects The Strategy The Analysis
Invictus Global Emerging Markets Fund
Proportion Returns Std Dev
First State GEM Leaders SGD0.45 11.25% 5.30
Aberdeen Global Opportunities
SGD0.10 2.49% 4.84
United GEMs Investments SGD0.10 6.84% 2.04
DWS Lion Fund 0.20 2.70% 0.46
Arcelor Mittal 0.05 49% 27.40
URS Corporation0.05 17% 6.92
Baosteel Group 0.05 11.1% 13.02Expected Returns
10.39% (7.79%)
Std Dev5.532 (3.937)
Coefficient of Variation0.53 (0.51)
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Overview Challenges Implications Measures Evaluation
Divest into USdisaster recovery
industries
Balance of portfolioAllocation
PROPOSED STRATEGY IMPLEMENTATIONCurrent 2011 2012 Onwards
Re-Analyse MarketConditions
Exploreopportunities
Consistent withObjectives
Capitalize and reap theprofits of projected
growth in disasterrecovery companies
MAIN STRATEGY
BACKUP STRATEGIES
US market becomes too volatile
Re-allocate portfolio by pulling out of USA
Possible use of gold fund as hedging tool
Looking Forward
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INVICTUSGlobal Emerging Market Fund
todays investment for tomorrows growth
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Appendix
Additional Fund Information:Client Profile
First State GEM Leaders Fund
Aberdeen Global Opportunities Fund
United GEMs Investments Fund
DWS Lion Bond Fund
United Gold and General Fund
Original Fund Overview
B.Strategy 1 Bearish EM OutlookB.Strategy 2 Bearish Equities
First State Peer Comparison/ Additional Info
Aberdeen Peer Comparison/ Additional Info
United GEMs Peer Comparison/ Add Info
DWS Lion Bond Peer Comparison/ Additional Info
United Gold & General Fund Additional Info
Slides:Fund Composition
Effects on Capital Market
Effects on the Fund
Investment Opportunities
Implementing ChangesModerately Aggressive Portfolio
Key Revenue Driver
Analysis of Opportunities
URS Corp
Arcelor MittalBaosteel
Projected Fund Performance
Looking Forward
New Assets Information:
Analysis on URS Corporation
Analysis on Arcelor Mittal
Analysis on Baosteel
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Main Strategy
Invictus
GlobalEmerging
Market Fund
EquitiesFunds
(70%)
Fixed IncomeFunds
(30%)
CommodityFunds
(Backup)
Mid to Long TermCapital Appreciation
Main driver of return
Key focus on Emerging
Markets
Diversification
Cushion downside
riskMore emphasis on
global bond funds
Hedging purpose
Times of highly
volatile market
conditions
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First State GEM
Leaders
Consistently outperforming the emerging
market
5-yr annualized returns of 11.25%
Low volatility with standard deviation of 5.3%
Performance of First State GEM Leaders Fund Versus MSCI Emerging Markets Index
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Strong emphasis on Asia region of high
growth
Heavily focused on defense industries
creating stable growth
First State GEM
Leaders
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Uptrend shift, consistently support by 100-day
and 200-day moving average since mid-July 2009
Highest returns (2.49%) with least volatility
(4.84%) among peers
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Investments in developed countries
Primary allocations in financials, energy and IT
Well poised to capture effects of economic
recovery
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United GEMs
Investments
Stable growth even in times of volatile market
conditions
Highest annualized returns per unit risk taken
Impressive excess return (alpha) of 0.35
Performance of United Global Emerging Markets versus MSCI World Index and MSCI Asia EX Japan
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Performance of DWS Lion Fund versus MSCI World Index and MSCI Asia EX Japan
Resistant to market fluctuations
Stable growth of 2.70% (annualized)
2X Sharpe ratio of competing funds at 0.11
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Mainly in developed Asian countries which are
less affected by recent economic crisis
Comprising of corporate bonds from key
sectors such as banking and transportation
64.21%10.79%
8.61%
5.23% 11.16%
Asset Allocation - by Country
Singapore
South Korea
USA
Hong Kong
Others
26.34%
18.40%
10.29%
3.98%
3.75%
37.24%
Asset Allocation - by Industry
Banks
Real Estate
Transport
Finance
Electronic
Others
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Used as a hedging tool given negative
correlation with the global market
Cumulative return of 88.25%, 6.16% YTDFund
Annualised
Return
Standard
Deviation
Sharpe
RatioCurrent NAV
United Gold & General Fund 15.57% 10.10 0.10 1.861
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Over 70% investments in gold and precious
metals good hedging instrument
Used as backup strategy to hedge against
downside risk of a possible W-shaped recovery
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Original Fund Overview
Invictus Global Emerging Markets FundProportion Returns Std Dev
First State GEM Leaders
SGD0.55 11.25% 5.30
Aberdeen Global
Opportunities SGD0.15 2.49% 4.84
United GEMs Investments
SGD0.1 6.84% 2.04
DWS Lion Fund0.2 2.70% 0.46
United Gold & General Fund0 15.57% 10.10
Expected Returns 7.79
Std Dev3.937
Coefficient of Variation0.51
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20%
40%
10%
20%
10%
Bearish Expectations on Emerging Markets
Backup Strategy 1
Backup Strategy + Gold Options
Proportion ReturnsStd
Dev
First State GEM Leaders
SGD
0.2 11.25% 5.30
Aberdeen Global
Opportunities SGD
0.4 2.49% 4.84
United GEMs Investments
SGD
0.1 6.84% 2.04
DWS Lion Fund 0.2 2.70% 0.46
United Gold & General
Fund
0.1 15.57% 10.10
Expected Returns 6.03
Std Dev 4.302
Coefficient of Variation 0.71
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20%
20%
20%
30%
10%
Bearish Expectations on Equities Market
Backup Strategy 2
Backup Strategy + Gold Options
Proportion Returns Std Dev
First State GEM Leaders
SGD0.2 11.25% 5.3
Aberdeen GlobalOpportunities SGD
0.2 2.49% 4.84
United GEMs Investments
SGD0.2 6.84% 2.04
DWS Lion Fund 0.3 2.70% 0.46
United Gold & General
Fund 0.1 15.57% 10.1
Expected Returns 6.48
Std Dev 3.584
Coefficient of Variation 0.55
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First State GEM Peer Comparison
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First State GEM Peer Comparison
FundAnnualise
d Return
Standard
DeviationAlpha Beta
Sharpe
Ratio
Current
NAV (caa
03/02/10)
First State GEM
Leaders SGD
11.25% 5.3 0.23 0.69 0.13 1.86
Aberdeen Global
Emerging Markets4.33% 7.36 0.28 0.84 0.03 1.57
RIC Emerging
Markets Equity J
Acc
10% 7.47 -0.1 1.02 0.09 41.58
Schroder Emerging
Markets
9.58% 6.94 -0.07 0.94 0.08 1.43
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First State GEM Additional Information
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Aberdeen Global Peer Comparison
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Aberdeen Global Peer Comparison
FundAnnualised
Return
Standard
DeviationAlpha Beta
Sharpe
Ratio
Current
NAV
(caa
03/02/10)
Aberdeen GlobalOpportunities SGD
2.49% 4.84 0.30 1.06 0.01 0.80
United International
Growth Fund-1.73% 4.33 -0.07 0.98 -0.07 1.59
Henderson Global
Technology1.97% 5.38 0.11 0.93 0.00 1.32
Schroder Global
Smaller Companies
1.09% 4.97 0.09 0.91 -0.02 1.76
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Aberdeen Global Additional
Information
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United GEMs Peer Comparison
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United GEMs Peer Comparison
Fund
Annualized
Return
Standard
Deviation
Alpha Beta Sharpe
Ratio
Current
NAV
(caa
03/02/10)
United GEMs
Investments SGD
6.84% 2.04 0.35 0.29 0.21 1.42
Fidelity Emerging
Market Debt A SGD
4.20% 3.99 0.04 0.95 0.05 1.00
Schroder Emerging
Market Bond
3.15% 1.65 0.12 0.2 0.11 0.91
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United GEMs Additional Information
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DWS Lion Bond Peer Comparison
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DWS Lion Bond Peer Comparison
Fund
Annualized
Return
Standard
Deviation
Alpha Beta Sharpe
Ratio
Current
NAV
(caa
03/02/10)
DWS Lion Bond
SGD
2.70% 0.46 0.05 0.07 0.11 1.48
Legg Mason
Global Bond
Trust
1.03% 1.72 (0.06) 0.85 (0.05) 1.20
LionGlobal Bond
A SGD
1.98% 1.1 0.06 0.08 0.05 1.56
DWS Li B d Addi i l
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DWS Lion Bond Additional
Information
U it d G ld & G l F d P
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United Gold & General Fund Peer
ComparisonCumulative Performance by %
Fund 1 m 3 m 6 m 1 y 2 y 3 y 5 y SI
United Gold &
General Fund
-10.39 -2.52 2.43 32.12 -9.96 17.90 106.13 88.25
Equity Sector
Gold&Prec Metals
-7.79 1.96 10.23 36.18 -- 5.60 78.61 --
FTSE AW/Mining
TR
-11.91 -0.41 4.54 60.58 -24.56 14.14 98.50 --
Cust Benchm UOB
United Gold &
General Fund
-10.88 -1.84 2.43 28.32 -13.91 13.43 76.00 --
SIBOR SGD 3
Months
0.04 0.13 0.25 0.52 1.81 4.57 10.71 --
U it d G ld & G l F d P
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United Gold & General Fund PeerComparison
Calendar Year Performance by %
Name 2005 2006 2007 2008 2009 YTD
United Gold & General
Fund
51.84 15.15 29.02 -30.84 32.12 6.16
Equity Sector Gold&PrecMetals
58.30 6.84 23.82 -37.37 36.18 --
FTSE AW/Mining TR 66.36 4.80 45.60 -52.47 67.80 -10.08
Cust Benchm UOB United
Gold & General Fund
64.11 -5.46 31.76 -32.91 28.32 -10.88
SIBOR SGD 3 Months 2.30 3.49 2.71 1.29 0.52 0.05
United Gold & General Fund
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United Gold & General Fund
Additional Information
Eff t f H i H d C ill
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Effects of Hurricane Hugo and Camille
on Financial Markets
Markets move upwards subsequent to the
occurrence of the natural disasters
C l ti b t US d EM it
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MSCI Emerging Markets Index
S&P 500
Dow Jones
Correlation between US and EM equity
markets
Past financial market trends have shown slight
positive co-relation between US equities and
Emerging Markets equities
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Analysis of URS Corp
Average increase of 15% in EPS for the past 5years
Healthy financial leverage, D/E ratio of 17%
Operating income at approx. 5% of revenue,increasing over the past 5 years.
Revenue from Federal sector (energy andconstruction) increased by 67% over past year
Key Competitors: Fluor & Jacobs Engineering
Key Competitive Advantage: Relationship withGovernment
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Analysis of Arcelor Mittal
Showing signs of recoveryfrom the economic crisis
Improved EDITBA and CFfrom Operations in 2009
Improved leverage with aUSD13.7 billion reductionin debt since theeconomic crisis
Key Competitors: Ternium,US Steel Corp.
Outperformed duringHurricane Relief
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Analysis of Baosteel
Low financial leverage, D/E Ratio approx. 10%
CF from operating activities take up 50% of
net CF of the year in 2009
Good growth potential with heavy
investments in research and development
Key Competitors: Angang Steel, Wuhan Iron
and Steel