Ascenta Bullion Plus Fund Introducing the.. Ascenta Bullion Plus Fund Introducing the.. Ascenta...

Ascenta Bullion Plus Fund

Introducing the..

Ascenta Bullion Plus FundIntroducing the..


PLUS$


Contents

1 About the Ascenta Bullion Plus Fund

2 Why Invest In Precious Metals?

3 Using The Bullion/Mining Equities Disconnect

4 The Fund’s Portfolio Managers

5 The Smart Way To Buy Precious Metals


1 About the Ascenta Bullion Plus FundAims and Objectives

The Fund aims to outperform the appropriate Precious Metals benchmark by investing in a combination of:

• bullion Exchange Traded Funds (ETFs)

• major mining equities

This approach aims to preserve the defensive investment qualities associated with bullion investment and reducing the volatility typically associated with equity investing.

The Fund’s objective is to offer:

• capital preservation

• capital appreciation

• portfolio diversification

• portfolio hedging


Key Characteristics

• actively managed, open-ended, long-only investment fund investing in a blend of bullion ETFs and related equities, with an option of defensively holding cash

• aims to outperform its proprietary blended bullion index **

• bullion component is invested exclusively in un-hedged and un-leveraged ETFs

• equities sub-portfolio is a highly risk-managed selection of precious metals mining companies; not exceeding 50% of Fund assets

• exploits short-term market mis-pricing of major mining co’s, utilizing long-only positions with "covered-call" options and stop-loss strategies to reduce downside risk

• Mauritius regulated

• daily dealing & liquidity and minimums of USD10,000

** London daily spot prices: 50% gold; 30% silver; 20% platinum/palladium

1 About the Ascenta Bullion Plus Fund



Overview

Precious Metals are a select group of metals highly valued for a combination of their scarcity, their unique qualities and their suitability for industrial and other commercial applications.

Gold, Silver, Platinum and Palladium are the most recognized precious metals.

There are two main reasons to have precious metals in your portfolio:

Event Hedge: in times of economic or political uncertainty, precious metals tend to hold or increase their value as a safe haven investment.

Inflation Hedge: exposure to “hard assets” such as precious metals provides a hedge against devaluation in an inflationary environment.


Gold: The World’s Favourite Store of Value

Total gold ever produced worldwide = 165,000 tonnes or 3.5 Olympic size pools

Annual global production = 2,500 tonnes (roughly a cube 5m x 5m x 5m)

Annual consumption of top 3 countries: USA China India

Usage by sector:


745428

129

(in tonnes)


Emerging Market Central Bank Investment in Gold

Emerging economies, many of which have strong domestic demand and cultural affinity for gold, will boost global demand via central bank buying.



Silver: Used as a Store of Value and in Industry

Silver is a hybrid precious metal of many uses in a balance of industrial, investment and consumer sectors as well as in photography and coinage.

Mexico, Peru and China are the biggest producers.



Silver Supply and Demand

Silver, with industrial and investment uses, is in increasingly short supply.



Platinum: the Most Precious Metal

Annual production is 130 tonnes: only 6% of Gold production. 90% is mined in South Africa.

Platinum is, like Silver, a hybrid used in jewellery and to produce 20% of all consumer goods including catalytic converters, gasoline, fertilizer, refrigerators and pharmaceuticals.



Palladium: Key to Catalytic Converters

Annual production is 300 tonnes, 14% of Gold produced, with 80% from South Africa and Russia, and the USA, Canada and Zimbabwe being the other major producers.

Palladium is mainly used for catalytic converters, making it the most industrial precious metal.



3 Using The Bullion/Mining Equities DisconnectWhat is the Bullion/Equities Disconnect?

Bullion prices and mining equity prices should be closely correlated as mines have quantifiable reserves and costs to compare with metal prices. However general market sentiment affects mining stocks. Conversely gold is seen as a safe haven in downturns.

This causes a “disconnect” in the expected correlation that the Ascenta Bullion Plus Fund seeks to exploit and outperform its Bullion benchmark index, allocating up to 50% of its portfolio to precious metal mining equities.

The Fund buys only companies with a market capitalisation > US$1 billion and with proven precious metal reserves. Larger companies are affected by general market movements, and metal reserves underpin the underlying value of the company.

This approach involves holding more bullion in times of market uncertainty when equity values are depressed, and leaning towards equities as sentiment improves.


3 Using The Bullion/Mining Equities DisconnectThe Current Disconnect

Recent years have seen a rise in bullion prices, particularly gold, which have not been reflected in underlying equity prices. This has set the stage for a reversal and buying opportunity.


Diversion From Mean

* Agnico-Eagle, AngloGold Ashanti, Barrick, Eldorado, Goldfields, Goldcorp, Harmony, IAMGold, Kinross, New Gold, Newmont, Randgold , Yamana

Gold Equities Decline Against Gold Bullion

This shows a disconnect in the price of gold and mining equities, presenting a buying opportunity.

Equities Testing New Lows


Gold Price

Gold Mining Equities*

Gold Testing New Highs


$100

$300

$500

$700

$900

$1,100

$1,300

$1,500

5.0x

10.0x

15.0x

20.0x

25.0x

30.0x

35.0x

40.0x

P/CF Margin Avg Gold PriceSource: Bloomberg,Company Report

Case Study: Barrick Gold (ABX-T)

Long-term trend of declining market value, measured by Price/Cash Flow (P/CF) ratio, coinciding with an increase in both gold price and margins, indicating a bargain.



* Hecla, Pan American, Coeur d’Alene, Silver Wheaton, First Majestic, Silver Standard

Diversion from mean

3 Using The Bullion/Mining Equities DisconnectSilver Equities Decline Against Silver Bullion

Silver, a hybrid of value and industrial usage, is also strongly affected by the disconnect.

Diversion From Mean

Equities Test New Lows

Silver Price

Silver Mining Equities*

Silver Testing New Highs


Diversion from meanDiversion from mean

3 Using The Bullion/Mining Equities DisconnectPlatinum and Palladium Equities Decline Against

Bullion

Platinum and Palladium, with mainly industrial usage, are also affected by the disconnect.

- Platinum/Palladium Mining Equities (in both charts)

Platinum Price

Palladium Price


Barrick Gold Corp.Diversion from mean

3 Using The Bullion/Mining Equities DisconnectEquities Range Trading

As well as macro strategies, the Fund will use range-trading strategies to benefit from short-term mispricing.


Hecla MiningSilver Wheaton

3 Using The Bullion/Mining Equities DisconnectEquities Range Trading

A combination of options-writing and stop-losses maximize trading exposure while minimizing risk.


4 The Fund’s Portfolio Managers

Alan Manzie

Alan is currently a senior portfolio manager and Vice President of Haywood Securities Inc., and was previously a partner in Toron Capital Markets, a Toronto-based discretionary money manager. He joined Toron after a 16-year career with the Bank of Montreal group of companies, rising to Director of Investments, BMO Harris Private Banking. Before that Alan was a Vice President and Director of Nesbitt Burns and was also a member of Nesbitt Burns' President's Council.Greg Flower

Greg has 17 years as a licensed Investment Advisor and 10 years as a discretionary portfolio manager, most recently with Haywood Securities. Previously he was Assistant Auditor General of Bermuda. Greg offers a wealth of experience and a strong philosophy of capital preservation, risk management, and managed growth.



Reasons to Choose the Ascenta Bullion Plus Fund

• Precious metals outperformed equities and bonds in recent years. Volatility similar to the S&P 500 index and low correlation to markets, alternative investment.

• Gold has been a popular hedge against inflation, a safe haven in times of uncertainly and benefits from being culturally valued in emerging markets.

• Gold is defensive and a store of value, Palladium is primarily an industrial metal and Silver and Platinum are hybrids of the two functions. Thus there are opportunities to select to the best performing precious metals at any time.

• Mining equities, despite calculable metal resources underground, are largely influenced by general market sentiment. This creates “disconnects” in the correlation between equity and especially gold prices, presenting opportunities to buy during pessimistic times and sell in optimistic market conditions.

• The Ascenta Bullion Plus Fund is the Smart Way To Buy Precious Metals!


Summary of Key Characteristics

• actively managed, open-ended, long-only investment fund investing in a blend of bullion ETFs and related equities, with an option of defensively holding cash

• aims to outperform its proprietary blended bullion index

• bullion component is invested exclusively in un-hedged and un-leveraged ETFs

• equities sub-portfolio is a highly risk-managed selection of mining companies producing of precious metals, not exceeding 50% of Fund assets

• exploits short-term market pricing of major miners, utilizing long-only positions with "covered-call" options and stop-loss strategies to reduce downside risk



Fund Specifics• Daily Dealing and Liquidity• Low minimum investment of US$10,000• Back-end charged• Mauritius regulated• Can be bought through all major insurance company

personalised portfolio bonds and leading investment platforms


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